An examination of cross-specialty linkage applied to the resource-based relative value scale.

OBJECTIVES: Analyses were performed to reproduce and examine the sensitivity of the cross-specialty linkage algorithm used by Hsiao et al(1) to obtain the currently implemented resource-based relative value scale for Medicare physician reimbursement. METHODS: The cross-specialty linkage procedure designed and implemented in Hsiao et al is an important component of the resource-based relative value scale underlying current Medicare Fee Schedule. This linkage procedure aligns independent intraspecialty relative value scales onto a common scale, and therefore determines the level of reimbursement accruing to each specialty. The complexity of the algorithm to perform this alignment has prevented critical review of the methodology. The authors examine the statistical properties of the algorithm, and diagnose its sensitivity from changes in the data and small modifications to the numerical procedure. RESULTS: Our examination of the linkage algorithm uncovered some issues requiring further consideration. These include the questions raised about the use of "biweighting," and about the benefits of incorporating correlation information into the analysis. Moreover, simulation analyses demonstrate that the existing relative value scale is sensitive to changes in the input data and methodology. Certain specialties' reimbursement can shift by as much as 32% using Hsiao's algorithm. Most importantly, the interspecialty linkage algorithm underlying the current fee schedule downweights pairs of linked services even when such links are deemed more important from a clinical point of view. As a result, in some cases clinically superior links received little or no importance in the algorithm. CONCLUSIONS: The cross-specialty linkage procedure described in Hsiao et al may not adequately perform the task of aligning intraspecialty relative value scales onto a common scale because of the sensitivity of the algorithm and the choice of statistical methodology. The authors suggest improvements to Hsiao's method resulting from our analyses. If widespread adoption of the Medicare Fee Schedule is a component of health care reform, reconsideration of the process determining each specialty's payment level assumes new importance.

Profiling primary care physicians for a new managed care network.

We developed methods for comparing physicians who would be selected to participate in a major employer's self-insurance program. These methods used insurance claims data to identify and profile physicians according to deviations from prevailing practice and outcome patterns, after considering differences in case-mix and severity of illness among the patients treated by those providers. The discussion notes the usefulness and limitations of claims data for this and other purposes. We also comment on policy implications and the relationships between our methods and health care reform strategies designed to influence overall health care costs.

Estimating increases in outpatient dialysis costs resulting from scientific and technological advancement.

The Medicare program's base payment rate for outpatient dialysis services has never been adjusted for the effects of inflation, productivity changes, or scientific and technological advancement on the costs of treating patients with end-stage renal disease. In recognition of this, Congress asked the Prospective Payment Assessment Commission to annually recommend an adjustment to Medicare's base payment rate to dialysis facilities. One component of this adjustment addresses the cost-increasing effects of technological change--the scientific and technological advances (S&TA) component. The S&TA component is intended to encourage dialysis facilities to adopt technologies that, when applied appropriately, enhance the quality of patient care, even though they may also increase costs. We found the appropriate increase to the composite payment rate for Medicare outpatient dialysis services in fiscal year 1995 to vary from 0.18% to 2.18%. These estimates depend on whether one accounts for the lack of previous adjustments to the composite rate. Mathematically, the S&TA adjustment also depends on whether one considers the likelihood of missing some dialysis sessions because of illness or hospitalization. The S&TA estimates also allow for differences in the incremental costs of technological change that are based on the varying advice of experts in the dialysis industry. The major contributors to the cost of technological change in dialysis services are the use of twin-bag disconnect peritoneal dialysis systems, automated peritoneal dialysis cyclers, and the new generation of hemodialysis machines currently on the market. Factors beyond the control of dialysis facility personnel that influence the cost of patient care should be considered when payment rates are set, and those rates should be updated as market conditions change. The S&TA adjustment is one example of how the composite rate payment system for outpatient dialysis services can be modified to provide appropriate incentives for producing high-quality care efficiently.

Using claims data to select primary care physicians for a managed care network.

An insurance claims databased profiling system was developed to help select new primary care physicians (PCPs) for a managed care network. PCPs (family practitioners, internists, and pediatricians) were ranked based on how closely their actual use of outpatient services conformed to the predictions of a mathematical model that adjusted for differences in age, sex, and case mix.

Results from the cardiothoracic and vascular surgery work survey by Abt Associates Inc.

This article presents findings from the Abt Associates survey, commissioned by The Society of Thoracic Surgeons and other cooperating organizations, used to collect data to develop a resource-based relative value scale for cardiothoracic and vascular surgery. The methodology used by Abt Associates to measure the total work of surgical procedures is described, and differences between the Abt methodology and that used in the Harvard study are highlighted. The report also compares the total work measured by the Harvard and Abt studies for several specific operations. Discrepancies in relative total work measures between the two studies are shown to result primarily from differences in the measurement of preoperative and postoperative work. Background information on responding physicians is summarized. Physicians asked to respond to the survey were randomly selected from a combined list of all members of the six cardiothoracic and vascular organizations as well as those physicians included on the American Medical Association Masterfile with a primary specialty indication of cardiovascular, general thoracic, or peripheral vascular surgery. Therefore, these data should be reasonably representative of the cardiothoracic and vascular surgery profession as a whole. Information provided includes board certification status, age, sex, practice type, reimbursement source, hours worked per week, and number of operations performed. In addition, data describe the types of hospitals at which cardiothoracic and vascular surgeons typically practice. The survey also provides data on current surgical practice. Statistics are available on the average number of various types of operations surgeons perform, and on what percentage are reoperations. Finally, the work of reoperations and emergency procedures relative to primary elective operations is compared directly.(ABSTRACT TRUNCATED AT 250 WORDS)

Frequency and costs of diagnostic imaging in office practice--a comparison of self-referring and radiologist-referring physicians.

BACKGROUND: To assess possible differences in physicians' practices with respect to diagnostic imaging, we compared the frequency and costs of imaging examinations as performed by primary physicians who used imaging equipment in their offices (self-referring) and as ordered by physicians who always referred patients to radiologists (radiologist-referring). METHODS: Using a large, private insurance-claims data base, we analyzed 65,517 episodes of outpatient care by 6419 physicians for acute upper respiratory symptoms, pregnancy, low back pain, or (in men) difficulty urinating. The respective imaging procedures studied were chest radiography, obstetrical ultrasonography, radiography of the lumbar spine, and excretory urography, cystography, or ultrasonography. RESULTS: For all four clinical presentations, the self-referring physicians obtained imaging examinations 4.0 to 4.5 times more often than the radiologist-referring physicians (P less than 0.0001 for all four). For chest radiography, obstetrical ultrasonography, and lumbar spine radiography, the self-referring physicians charged significantly more than the radiologists for imaging examinations of similar complexity (P less than 0.0001 for all three). The combination of more frequent imaging and higher charges resulted in mean imaging charges per episode of care that were 4.4 to 7.5 times higher for the self-referring physicians (P less than 0.0001). These results were confirmed in a separate analysis that controlled for the specialty of the physician. CONCLUSIONS: Physicians who do not refer their patients to radiologists for medical imaging use imaging examinations more frequently than do physicians who refer their patients to radiologists, and the charges are usually higher when the imaging is done by the self-referring physician. From our results it is not possible to determine which group of physicians uses imaging more appropriately.

Competition among hospitals.

The traditional view of hospital competition has posited that hospitals compete primarily along 'quality' dimensions, in the form of fancy equipment to attract admitting physicians and pleasant surroundings to entice patients. Price competition among hospitals is thought to be non-existent. This paper estimates the effects of various hospital market characteristics on hospital prices and expenses in an attempt to determine the form of hospital competition. The results suggest that both price and quality competition are greater in markets that are less concentrated, although the net effect of the two on prices is insignificant. It appears, therefore, that, despite important distortions, hospital markets are not immune to standard competitive forces.

How profitable is a medical career?

To assess correctly the economic profitability of any career, it is insufficient to focus only on the income earned in practicing that career. Rather, one must also account for any costs of training and for the income that is fore-gone by not pursuing the next best alternative career; in other words, earnings must be compared to their opportunity cost. When this type of analysis is applied to a medical career, it is evident that the return to physician training has declined substantially over the last 10 years. This paper discusses the methodology for correctly computing the return to a career in medicine and suggests some reasons why that return has fallen in recent years.