Payment levels, resource use, and insurance risk of medicaid versus private insured in three states.

Concerns with access and costs in the Medicaid program often lead policy makers to consider alternatives. These include subsidizing poor persons' purchases of health insurance in private markets or integrating Medicaid beneficiaries into commercial managed care systems. As policy makers consider such alternatives, a persistent question is, apart from the disabled within Medicaid, do younger Medicaid enrollees represent a different insurance risk than people of similar age and sex within private insurance pools? We use 1994 data from Georgia, Mississippi, and California to assess relative payment levels, resource use/costs, and risk-adjusted utilization of fee-for-service (FFS) Medicaid enrollees versus privately insured people. When resources are valued at private prices, the use by Medicaid enrollees represents a higher cost. After risk adjustment, Medicaid enrollee resource use appears higher than expected for the privately insured only for outpatient facility visits in the southern states and for inpatient days by pregnant women in California Medi-Cal. Indeed, we find evidence that Medicaid enrollees are underserved relative to their health needs. Given the higher dollar value of their resource usage, apparently obtained under FFS at discounted provider rates, and the lack of evidence on significant overuse relative to need, their integration into private provider systems appears challenging.

Comparing clinical outcomes in high-volume and low-volume off-pump coronary bypass operation programs.

UNLABELLED: sites and then analyzed the patient and hospital characteristics that had an impact on clinical outcomes. RESULTS: The mortality rates for the high- and low-volume OPCAB facilities both averaged 2.9% (p = NS). Patients at the high-volume OPCAB facilities had significantly lower rates of major complications (shock/hemorrhage, neurologic, renal, and cardiac) than those at the low-volume OPCAB facilities. Of the seven minor complications, rates for six were lower in the high-volume OPCAB facilities, but none of the differences reached statistical significance. High-volume OPCAB sites were significantly more likely to discharge their patients directly home than were low-volume OPCAB sites (80% versus 66%; p = 0.001). CONCLUSIONS: The results suggested that surgical team experience and choice of approaches to performing CABG had an impact on patient outcomes.

Physician services in an academic neurology department: using the resource-based relative-value scale to examine physician activities.

The inability of physician managers and decision makers to critically analyze the resource utilization of physicians has hindered a more comprehensive understanding of the role of neurologists in the patterns and organization of medical practice. This article outlines an approach for using the physician work relative value units (RVUs) in the Medicare Fee Schedule (MFS) to address this problem and profile physician clinical activities in a comparative manner. These techniques are then used to profile the physician services associated with the neurology department at a large academic hospital. All 28,048 physician services associated with a neurology department in 1995 were studied. Using billing data, physician work RVUs were assigned to each service and the results analyzed by major services, type of service, and physician workload for physician work RVUs and physician charges. For the average service, mean physician charges were $187 per service while median physician charges were $120. Mean physician work RVUs per service averaged 1.3 RVUs, and the median was 0.94 per service. Of all the services provided in the neurology department, 65 percent are visits and consultations, while medicine services (e.g., nerve conduction studies, needle electromyography, neuropsychological testing, and electroencephalogram) make up 31 percent. All the other services combined represented less than five percent of the services in the department. The top five physicians in the department account for 33 percent of all physician work RVUs in the neurology department. Using the physician work relative values in the MFS provides a unique perspective for analyzing and understanding neurologists' work activities.

Costs of revascularization over eight years in the randomized and eligible patients in the Emory Angioplasty versus Surgery Trial (EAST).

The Emory Angioplasty versus Surgery Trial (EAST) was a randomized trial that compared, by intention to treat, the clinical outcome and costs of percutaneous transluminal coronary angioplasty (PTCA) and coronary bypass grafting (CABG) for multivessel coronary artery disease. We present the findings of the economic analysis of EAST through 8 years of follow-up and compare the cost and outcomes of patients randomized in EAST versus patients eligible but not randomized (registry patients). Charges were assessed from hospital UB82 and UB92 bills and professional charges from the Emory Clinic. Hospital charges were reduced to cost through step-down accounting methods. All costs and charges were inflated to 1997 dollars. Costs were assessed for initial hospitalization and for cumulative costs of the initial hospitalization and additional revascularization procedures up to 8 years. Total 8-year costs were $46,548 for CABG and $44,491 for PTCA (p = 0.37). Cost of CABG in the eligible registry group showed a pattern similar to that for randomized patients, but total cost of PTCA was lower for registry patients than for randomized patients. Thus, the primary procedural costs of CABG are more than those for PTCA; this cost advantage, given the limits of measurement, is largely or even completely lost for randomized patients over the course of 8 years because of additional procedures after a first revascularization by PTCA.

Health care utilization by old-old long-term care facility residents: how do Medicare fee-for-service and capitation rates compare?

OBJECTIVE: To describe the healthcare utilization of a long-term care population receiving primary and specialty care in a closed system and to compare Medicare fee-for-service (FFS) reimbursement with the amount that would have been paid under capitation for these services. SETTING: A life care community in California composed of two facilities, both having residential care and nursing facility (NF) beds. PARTICIPANTS: Residents (n = 700) living in the community between September 1995 and February 1996. METHODS: Data on Medicare Part A and Part B reimbursements were gathered from billing records for hospitalizations, based on diagnostic related group payments, primary and specialty care visits, various procedures, diagnostic tests, and therapeutic services. These data were compared with what the facility, in collaboration with the providers and an affiliated hospital, would have received under Medicare capitated rates at that time. RESULTS: Annually, residents averaged 16.3 primary care visits, 7.7 specialist visits, and 3453 hospital days per thousand. Nursing facility residents received significantly more primary care than did those in residential care. Total Medicare Part A and B payments per resident per month averaged $558. The monthly capitation rate in effect at the time for this population was substantially higher at $1085, generating an annual "risk pool" of $9.1 million. Care provided in the two facilities varied greatly. Hospitalization rates, clinic-based primary care and specialist visits, and therapy sessions were greater in facility one. Overall expenditures were lower for residents at facility two, where the majority of care was provided by trained geriatricians in collaboration with physician extenders and without sophisticated clinical pathways and utilization controls. CONCLUSIONS: Our data support other studies that suggest that teams of geriatricians and physician extenders can reduce hospitalization rates and overall expenditures. Capitated rates for the frail, geriatric population warrant careful study. These rates must balance fiscal responsibility with the need for adequate, risk-adjusted payments that create incentives for providers to produce high quality as well as cost-effective care.

Hospital resource consumption in patients with diabetes and multivessel coronary disease undergoing revascularization.

OBJECTIVE: To identify factors responsible for the variation in real hospital costs and length of stay for patients with diabetes undergoing coronary angioplasty or coronary bypass surgery. STUDY DESIGN: Retrospective study of patients with diabetes and coronary artery disease treated at a single hospital. PATIENTS AND METHODS: The study population included 1809 patients with diabetes and multivessel (2-vessel or 3-vessel) coronary artery disease who underwent an initial coronary angioplasty or coronary bypass surgery between 1988 and 1996. After accounting for the extent and severity of the patient's coronary artery disease, a sequential model was used to assess if diabetic characteristics were independently associated with higher hospital resource utilization during revascularization. RESULTS: Multivariate regression results indicated that for patients with diabetes who underwent coronary angioplasty, a baseline creatinine level of > or = 2.0 mg/dL was associated with significantly higher hospital costs and longer length of stay. For patients with diabetes who underwent a coronary bypass surgery only, a baseline creatinine level of > or = 2.5 mg/dL was associated with higher hospital costs and longer hospital length of stay. CONCLUSIONS: After controlling for coronary risk factors, selected diabetes-specific characteristics are associated with higher hospital resource utilization. Risk adjustments in hospital reimbursement may be needed to assure that patients with diabetes who have cardiovascular disease have access to revascularization procedures.

Impact of patient characteristics, complications, and facility volume on the costs and time of cardiac catheterization and coronary angioplasty in 70 catheterization laboratories.

Although over 1 million procedures are performed in cardiac catheterization laboratories (CCLs) annually, little comparative data exist on costs or resource use in these settings. In this study, data from 70 CCLs were used to profile CCL times and total direct costs for 2 high-volume procedures: left heart catheterization (LHC) and percutaneous transluminal coronary angioplasty (PTCA) with or without stent placement. In total, 70,677 consecutive patient examinations for a 12-month period from January 1, 1998 to December 31, 1998 were analyzed. For LHC mean total direct costs averaged $306, whereas for PTCA catheterization laboratory costs averaged $3,172. The average total times for these procedures were 63 and 108 minutes, respectively. Seventy-two percent of the PTCA patients underwent coronary stenting with an associated incremental cost of $1,244. By multivariate linear regression, baseline patient characteristics such as age, gender, and clinical factors had little impact on total time and total costs. The major determinants of CCL time and cost were procedural factors (e.g., number and type of interventions) and in-lab complications, including profound hypotension, abrupt vessel closure, and emergency bypass surgery. Using facility procedure volume as a proxy for potential economies of scale, we found no relation between CCL volume and total direct CCL costs. There did appear to be a significant inverse relation between facility volume and total procedural time with CCLs that performed the highest volumes of LHC and PTCA procedures saving an average of 5 to 9 minutes per procedure. These findings may be useful in defining specific time and cost benchmarks for these commonly performed procedures and serve to underscore the critical role of reducing complications in both quality improvement and cost-saving efforts.

The role of cost effectiveness analysis in health care evaluation.

This paper provides an overview of the key elements of cost effectiveness analysis (CEA). CEA is a method for evaluating the relative costs and benefits of treatments and procedures. Typically, CEA compares a proposed intervention with (at least) one alternative intervention, yielding an incremental cost effectiveness ratio. This ratio reflects both the longevity and health status of the differing interventions and permits the researcher to more completely compare and evaluate the "payoff" of the interventions. This paper discusses different perspectives CEA studies might adopt, and reviews the major methods for measuring both outcomes and costs.

Economic aspects of transesophageal echocardiography and atrial fibrillation.

Cardiovascular disease is the leading cause of complications and death in the United States, affecting nearly 60 million Americans in 1998 and costing an estimated $274.2 billion. A major contributor to the costs of cardiovascular disease is atrial fibrillation (AF). AF is the most common sustained arrhythmia and affects > 2.2 million people and approximately 5% of all persons over the age of 60. Transesophageal echocardiography (TEE) with short-term anticoagulation has been proposed as a viable strategy to guide patients with AF. Here, we (1) review the current environmental context for a TEE-guided approach, (2) summarize the existing literature on the economic aspects of TEE, and (3) outline an economic framework for an economic analysis of TEE investigation or any major clinical therapy. We conclude that more powerful analytical tools are evolving to analyze the important economic, clinical, and social aspects of a patient's medical encounter.

State maternal and child expenditures and low birthweight infants: a descriptive analysis.

This study examines the relationship over time between state public health spending for maternal and child health and rates of low birthweight infants. Using expenditure data from the Public Health Foundation and National Center for Health Statistics, we compare the 10 states with the highest and lowest rates of low birthweight infants in 1980 and the 10 states with the most improved and least improved low birthweight rates over a 10-year period. We hypothesize that the 10 states with the best low birthweight rates and 10 states with the most improvement in low birthweight rates will be the states with the highest levels of maternal and child health expenditures per birth. We find no support for the hypothesis in either group of states. At the state level, maternal and child public health expenditures do not appear correlated with states that are the most successful or are making the most improvement in low birthweight infants.

Targeting patients undergoing angioplasty for thrombus inhibition: a cost-effectiveness and decision support model.

BACKGROUND: In recent clinical trials, glycoprotein IIb/IIIa blockers have demonstrated effectiveness in preventing adverse events after angioplasty in high-risk patients. However, uncertainty exists regarding the cost-effective selection of patients to receive antiplatelet therapy. METHODS AND RESULTS: All 4962 patients at Emory University Hospitals who underwent coronary intervention procedures (n=6062) from 1993 to 1995 were studied. Multivariate models to predict death and the composite of death, Q-wave and non-Q-wave myocardial infarction, and emergency additional revascularization were developed. Hospital costs and professional costs were determined. A cost-effectiveness analysis with therapy targeted to high-risk patients was performed. If patients with a >5% probability of events received antiplatelet therapy that reduced events by 24% and cost $1000, 40.1% of patients would receive therapy; complications would be reduced from 6.39% to 5.37%, and cost would increase $261 from $10343 to $10604, or $25504 per event prevented. The marginal cost per event prevented by moving from a 7% to a 5% probability of an event cutoff would be $57 799. CONCLUSIONS: For high-risk patients, there may be cost savings; for low-risk patients, therapy may not be cost effective; and for patients in the midrange (between 5% and 7% probability of an adverse event), events may be prevented at an acceptable level of cost.

A retrospective study of 6,671 patients comparing coronary stenting and balloon angioplasty.

OBJECTIVE: To determine whether coronary stenting, compared to percutaneous transluminal coronary angioplasty, reduces the incidence of five clinical endpoints during a six-month follow-up period. BACKGROUND: There is considerable debate concerning whether coronary stents improve clinical outcomes, especially given the rapid growth in the use of coronary stents and their economic impact. METHODS: Study population included a total of 6,671 consecutive patients at 32 hospitals in 16 different states who underwent single or multi-vessel revascularization during 1997. Patients were divided into one of two groups: those who only underwent standard balloon angioplasty (PTCA) for all treated vessels and those who received coronary stents (STENT) in all treated vessels. RESULTS: STENT patients were significantly less likely to have emergency coronary artery bypass surgery (CABG) (p = 0.001) or die during initial procedure (p = 0.034) but were more likely than PTCA patients to be treated for hematoma (p = 0.002) and bradycardia (p = 0.004). After accounting for difference in patient characteristics, risk factors, procedure complications, and number of devices utilized, the estimated odds-ratio indicates that coronary stenting, compared to PTCA, significantly (p < 0.05) reduced adverse outcomes for only one clinical event, myocardial infarction. CONCLUSIONS: Compared to balloon angioplasty patients, coronary stent patients have no statistically significant differences in regard to additional percutaneous coronary intervention or coronary artery bypass during a six-month follow-up period. Since direct cardiac catheterization lab costs associated with coronary stenting is nearly 2.5 times greater than standard balloon angioplasty, our results suggest the cost-effectiveness of coronary stenting, especially for "hard" clinical outcomes, needs to be established.

Applying the resource-based relative value scale to the Emory angioplasty versus surgery trial.

The resource-based relative value scale developed for use in the Medicare fee schedule can also be very useful in profiling and comparing physicians' cardiovascular utilization across different medical activities. This article applies relative value units (RVUs) to data from the Emory Angioplasty versus Surgery Trial. The Emory Angioplasty versus Surgery Trial was a randomized clinical trial to determine the efficacy of percutaneous transluminal coronary angioplasty (PTCA) versus coronary artery bypass surgery (CABG). All physician services in the clinical trial provided to 2 groups of patients--those undergoing CABG and those receiving PTCA-over the course of 4 years were assigned physician work RVUs (representing the intensity of physician work required) and total RVUs (representing both the intensity and practice costs). Physician charges were also compiled. These data were used to profile and compare physician services to the 2 groups of patients by type of service, distribution over time, and clinical department. Comparisons based on RVUs contrast sharply with differences based on charges. Mean physician charges, in 1996 dollars, were $27,158 for CABG patients and $21,491 for PTCA patients, a 26% difference (p <0.001). Physician work RVUs generated an 18.3% difference (p = <0.001). Using total RVUs, the difference between the 2 groups was 3.3% (p = 0.249). Resource-based relative value weights are a valuable tool for analyzing and comparing physicians' use of cardiovascular resource. The results suggest that conclusions about physician resource utilization based on physician charges should be carefully evaluated. When possible, physician work RVUs should be compiled and evaluated along with physician charges.

Can cardiovascular clinical characteristics be identified and outcome models be developed from an in-patient claims database?

The objective of this study was to assess whether administrative (claims) databases can be used to assess clinical variables and predict outcome. Although administrative databases are useful for assessing resource utilization, their utility for assessing clinical information is less certain. Prospectively gathered clinical databases, however, are expensive and not widely available. The UB92 formulation of the hospital bill was used as an administrative source of data and compared with the clinical cardiovascular database at Emory University. The claims database was compared with the clinical database for 11 variables. Outcome models were developed with multivariate methods. A total of 11,883 patients who underwent catheterization (5,255 underwent percutaneous transluminal coronary angioplasty [PTCA] and 3,794 underwent coronary artery bypass surgery [CABG]) between 1991 and 1995 were included. For some variables, the claims database correlated well (diabetes, sensitivity 87%, specificity 99%), whereas for others the claims database was less accurate (peripheral vascular disease, sensitivity 20%, specificity 99%). Uncertain coding in the claims database, which can result in the same code being used for co-morbid states and severity of disease, as well as complications, limited the ability of claims to predict outcome. Clinical databases may also be limited by lack of objectivity and missing data. The utility of claims databases to assess severity of disease and co-morbid states is limited, and outcome modeling and risk assessment from claims databases may be inappropriate and spurious. Developing better data standards and less expensive methods for acquisition of clinical data is necessary for improved outcome assessment.

Economics, health-related quality of life, and cost-effectiveness methods for the TACTICS (Treat Angina With Aggrastat [tirofiban]] and Determine Cost of Therapy with Invasive or Conservative Strategy)-TIMI 18 trial.

Concern over escalating health care costs has led to increasing focus on economics and assessment of outcome measures for expensive forms of therapy. This is being investigated in the Treat Angina With Aggrastat [tirofiban] and Determine Cost of Therapy with Invasive or Conservative Strategy (TACTICS)-TIMI 18 trial, a randomized trial comparing outcome of patients with unstable angina or non-Q-wave myocardial infarction treated with tirofiban and then randomized to an invasive versus a conservative strategy. Hospital and professional costs initially and over 6 months, including outpatient costs, will be assessed. Hospital costs will be determined for patients in the United States from the UB92 formulation of the hospital bill, with costs derived from charges using departmental cost to charge ratios. Professional costs will be determined by accounting for professional services and then converted to resource units using the Resource Based Relative Value Scale and then to costs using the Medicare conversion factor. Follow-up resource consumption, including medications, testing and office visits, will be carefully measured with a Patient Economic Form, and converted to costs from the Medicare fee schedule. Health-related quality of life will be assessed with a specific instrument, the Seattle Angina Questionnaire, and a general instrument, the Health Utilities Index at baseline, 1, and 6 months. The Health Utilities Index will also be used to construct a utility. By knowing utility and survival, quality-adjusted life years will be determined. These measures will permit the performance of a cost-effectiveness analysis, with the cost-effectiveness of the invasive strategy defined and the difference in cost between the invasive and conservative strategies divided by the difference in quality-adjusted life years. The economic and health-related quality of life aspects of TACTICS-TIMI 18 are an integral part of the study design and will provide a comprehensive understanding of the impact of invasive versus conservative management strategies on a broad range of outcomes after hospitalization for unstable angina or non-Q-wave myocardial infarction.

The changing healthcare market and how it has influenced the treatment of cardiovascular disease--Part 1.

The dramatic transformations taking place in the healthcare environment have created a new paradigm for healthcare and pose far-reaching changes for cardiovascular care. This 2-part paper reviews these changes and discusses the major implications for cardiovascular specialists, based on literature reviews and summaries of legislative initiatives. The new healthcare paradigm focuses on a continuum of care, wellness maintenance and promotion, accountability for the healthcare of defined populations, and provider differentiation based on ability to add 'value' to the patient's healthcare outcome. This paradigm will become 'standard operating procedure' in the cardiovascular market. As a result, major areas of change in the cardiovascular environment include: continuing growth of managed care arrangements, expanding physician and other payment reforms, growing influence of state and private payer initiatives, expanding role of 'centers of excellence,' continuing surplus of physicians, growth in pharmaceuticals and new technologies, and extension of evidence-based guidelines. Practice guidelines, in particular, will become an integral part of medical practice and will represent the standards against which medical practice will be measured. Given the prominent position of cardiovascular disease in healthcare, cardiovascular specialists will remain in the forefront of these developments.

The changing healthcare market: outlook for the future of cardiovascular disease treatment--Part 2.

This paper, the second in a series of 2, reviews major developments and trends in the current healthcare arena that will affect cardiovascular disease (CVD) treatment over the next 10 years. The paper also discusses the implications and future outlook for cardiovascular services in a managed care environment.

Benchmarking cardiac catheterization laboratories: the impact of patient age, gender and risk factors on variable costs, device costs, total time and procedural time in 53 catheterization laboratories.

Coronary catheterization laboratories (CCLs) are the cornerstones of the delivery system for many cardiovascular procedures performed in the United States. However, few comprehensive data exist benchmarking physician activities in CCLs. This study benchmarks cost and time data on 82,548 consecutive patient encounters in 53 CCLs for the 18-month period of January 1997 through June 1998. The data are compiled from the OEP program, a relational database developed by Boston Scientific/Scimed (Maple Grove, Minnesota) for use in CCLs. CCL productivity (total time and procedure time) and cost (variable costs and device costs) benchmarks are created for: 1) left heart catheterization; 2) right and left heart catheterization; 3) percutaneous transluminal coronary balloon angioplasty (PTCA); 4) atherectomy; and 5) coronary stents. Results show the variable costs (those costs that vary in direct proportion to changes in CCL activities) for the five procedures are: $308, left heart catheterization; $395, right and left heart catheterization; $841, PTCA; $2,768, atherectomy; and $3,186, coronary stent. These variable costs are lower than the typical average costs reported for these procedures because they do not include hospital, laboratory, and physician costs, only the procedure-specific activity-related costs most directly controlled and/or influenced by CCL physicians or administrators. The total time for the left heart catheterization averaged 64 minutes and 84 minutes for the right and left heart catheterization, respectively, and procedural times averaged 25 and 32 minutes, respectively. For the major interventional procedures N PTCA, atherectomy, and coronary stents, total times averages were 102, 135, and 117 minutes, respectively. Procedural times for these procedures averaged between 60 and 65 percent of the total time. The major implications of these findings are discussed and limitations noted.

Returns on investment in public health: effect of public health expenditures on infant health, 1983-1990.

In this study, we developed a broad conceptual framework focusing on how public health expenditures impact the nation's health. We then applied this framework to infant health outcomes and, using an eight-year state panel database, empirically analyzed how state public health expenditures, ceteris paribus, impact a state's level of teenage births and the receipt of prenatal care. Two hypotheses were tested. Hypothesis 1 states that over time, public health expenditures and public health activities, ceteris paribus, significantly decrease births to mothers less than 20 years of age. Hypothesis 2 states that over time, public health expenditures and public health activities, ceteris paribus, significantly decrease the number of infants whose mothers received late or no prenatal care. We find support for both hypotheses but observe that the way public health expenditures are measured has an impact on the findings. Other important implications of the study are noted. To our knowledge, this is the first article that has taken an aggregate state perspective over time and applied it to specific measures of infant health.

Economic winners and losers after introduction of an effective new therapy depend on the type of payment system.

An effective therapy for a costly illness has economic consequences. There may also be differences between provider costs and payer costs and initial versus long-term costs; costs may also vary with the reimbursement scheme. Consider the case of an effective therapy to prevent restenosis after coronary angioplasty. Assume that the initial provider cost of angioplasty is $12,000 and that restenosis within 6 months results in repeat angioplasty in 20% of cases, with a follow-up cost of $2,400, or $14,400 total. Assume that a therapy costs $1,000 per angioplasty and decreases restenosis by 50%, resulting in repeat angioplasty in 10% of cases. This will result in an initial cost of $13,000 and a follow-up cost of $1,300, or $14,300 total. The total societal costs will be -$100, a slight savings. Thus, the $1,100 cost of therapy is offset by reduced costs associated with restenosis, and the societal costs are almost neutral. Assume that under fee for service providers charge costs plus 10% and that without the new therapy either a package price or a capitated system is revenue neutral. Changes in costs resulting from therapy to prevent restenosis are as follows (plus sign indicates cost or loss; minus sign indicates savings or profit): [table: see text] Under fee for service, the payer takes the risks, and the economic consequences to providers are minimal. The situation is reversed under capitation. For whoever takes the risk, there is an initial loss to pay for the therapy, but a long-term gain due to less restenosis. Under package pricing, the providers lose because of the cost of therapy and fewer procedures, while the payers gain. A new therapy, even if it is revenue neutral to society overall, may have considerable economic consequences, which vary with time and with the different perspectives of providers and payers.