Economic effect of restaurant smoking restrictions on restaurant business in Massachusetts, 1992 to 1998.

OBJECTIVE: To determine if restaurant business declines or improves after the implementation of restrictive restaurant smoking policies. DESIGN: Analysis used a pre/post-quasi-experimental design that compared town meals tax receipts before and after the imposition of highly restrictive restaurant smoking policies in adopting versus non-adopting communities. The effect of restaurant smoking policies was estimated using a fixed effects regression model, entering a panel of 84 months of data for the 239 towns in the study. A separate model estimated the effect of restaurant smoking policies on establishments that served alcohol. MAIN OUTCOME MEASURE: Change in the trend in meals tax revenue (adjusted for population) following the implementation of highly restrictive restaurant smoking policies. RESULTS: The local adoption of restrictive restaurant smoking policies did not lead to a measurable deviation from the strong positive trend in revenue between 1992 and 1998 that restaurants in Massachusetts experienced. Controlling for other less restrictive restaurant smoking policies did not change this finding. Similar results were found for only those establishments that served alcoholic beverages. CONCLUSIONS: Highly restrictive restaurant smoking policies do not have a significant effect on a community's level of meal receipts, indicating that claims of community wide restaurant business decline under such policies are unwarranted.

Prevalence, expenditures, utilization, and payment for persons with MS in insured populations.

OBJECTIVE: To determine the prevalence, expenditures, and utilization of enrollees with MS relative to all enrollees in privately insured, Medicare, and Medicaid populations. METHODS: The authors used insurer administrative billing data to identify persons with MS, their insured medical expenditures and utilization, and benchmark general insured population expenditures and utilization. Three samples of insurer billing data were analyzed: nationally representative samples for the privately insured (1994 through 1995) and Medicare (1996 though 1997) populations, and Medicaid data for disabled (1991 through 1996) populations from six states. RESULTS: Using 2 years of diagnoses on claims, the prevalence of MS in the privately insured population was 24 per 10,000, 36 per 10,000 in the Medicare population, and 71 per 10,000 in the Medicaid disabled population. Annual insured expenditures were $7,677 per privately insured enrollee with MS vs $2,394 for all privately insured enrollees, $13,048 per Medicare beneficiary with MS compared with $6,006 for all Medicare beneficiaries, and $7,352 per Medicaid disabled recipient with MS vs $4,088 per disabled recipient without MS. Home health expenditures were very high for Medicare beneficiaries with MS and nursing facility expenditures were very high for Medicaid disabled recipients with MS. A small proportion of enrollees with MS accounted for most expenditures. CONCLUSIONS: Insured enrollees with MS are two to three times more expensive than average insured enrollees. If the premiums that employers or governments pay health insurers and the capitation amounts that insurers pay health care providers do not account for these higher costs, a disincentive is created for the enrollment and care of persons with MS.

Trends in funding and use of alcohol and drug abuse treatment at specialty facilities, 1990-1994.

OBJECTIVES: This study examined trends in funding and use of alcohol and drug abuse treatment at specialty facilities between 1990 and 1994. METHODS: The 1990 and 1994 National Drug and Alcohol Treatment Unit Surveys were used to estimate annual funding and number of clients in treatment. RESULTS: Public funding increased by 5%, whereas private funding decreased by 28% in real terms between 1990 and 1994. The number of publicly and privately funded clients decreased slightly. CONCLUSIONS: The rapid growth in private and public sector substance abuse funding during the 1980s has not continued into the 1990's.

Using diagnoses to describe populations and predict costs.

The Diagnostic Cost Group Hierarchical Condition Category (DCG/HCC) payment models summarize the health care problems and predict the future health care costs of populations. These models use the diagnoses generated during patient encounters with the medical delivery system to infer which medical problems are present. Patient demographics and diagnostic profiles are, in turn, used to predict costs. We describe the logic, structure, coefficients and performance of DCG/HCC models, as developed and validated on three important data bases (privately insured, Medicaid, and Medicare) with more than 1 million people each.

Principal inpatient diagnostic cost group model for Medicare risk adjustment.

The Balanced Budget Act (BBA) of 1997 required HCFA to implement health-status-based risk adjustment for Medicare capitation payments for managed care plans by January 1, 2000. In support of this mandate, HCFA has been collecting inpatient encounter data from health plans since 1997. These data include diagnoses and other information that can be used to identify chronic medical problems that contribute to higher costs, so that health plans can be paid more when they care for sicker patients. In this article, the authors describe the risk-adjustment model HCFA is implementing in the year 2000, known as the Principal Inpatient Diagnostic Cost Group (PIPDCG) model.

The economic effect of smoke-free restaurant policies on restaurant business in Massachusetts.

The objective of the study was to determine if local smoke-free restaurant policies in Massachusetts affected restaurant sales. The authors used a pre-/post-quasi-experimental design to compare town-level meals tax data before and after the imposition of local smoke-free restaurant policies. Data for 235 towns (including 32 adopting communities) were entered into a fixed effects regression model to estimate changes in restaurant sales over time. The study failed to find a statistically significant effect of local smoke-free policies on restaurant business. It provides evidence that local smoke-free policies do not cause a large decline in communities' restaurant industries.

Local restaurant smoking policy enactment in Massachusetts.

The objective of this study was to identify differences between communities that enact local restaurant smoking policies in Massachusetts and those that do not. Using data from 314 reporting cities and towns, the authors determined that communities with restaurant smoking policies were typically medium-sized towns and had a lower proportion of blue-collar workers than non-adopting communities. Highly restrictive communities had higher median incomes and educational attainment than non-adopting communities. Since the creation of the Massachusetts Tobacco Control Program, the number and strength of restaurant smoking policies have grown.

Diagnosis-based risk adjustment for Medicare capitation payments.

Using 1991-92 data for a 5-percent Medicare sample, we develop, estimate, and evaluate risk-adjustment models that utilize diagnostic information from both inpatient and ambulatory claims to adjust payments for aged and disabled Medicare enrollees. Hierarchical coexisting conditions (HCC) models achieve greater explanatory power than diagnostic cost group (DCG) models by taking account of multiple coexisting medical conditions. Prospective models predict average costs of individuals with chronic conditions nearly as well as concurrent models. All models predict medical costs far more accurately than the current health maintenance organization (HMO) payment formula.

National and state spending on specialty alcoholism treatment: 1979 and 1989.

The National Drug and Alcohol Treatment Unit Survey was used to measure changes in specialty alcoholism treatment spending between 1979 and 1989 nationally and by state. National spending more than doubled from $1.6 billion to $3.8 billion in 1989 dollars. Private spending increased more rapidly than public spending, although most clients continue to be publicly funded. Dramatic differences across states in public funding growth were partially explained by differential increases in per capita income and in federal substance abuse block grants. Access to treatment continues to vary widely across the states.

State variations in public and private alcoholism treatment at specialty substance abuse treatment facilities.

This article reports characteristics of state specialty alcoholism treatment systems estimated from the 1989 National Drug and Alcohol Treatment Unit Survey (Ndatus). Ndatus is adjusted to correct for item nonresponse and differential unit nonresponse across states. We estimate that $3.8 billion was spent nationally on specialty alcoholism treatment in 1989. Per capita funding ranged from $52 in Alaska to $6 in Mississippi. Clients in treatment per capita and funding per client-day each varied more than 10-fold across states. Comparison of treatment system measures with indicators of the need for alcoholism treatment showed little systematic relationship across states.

Allocating practice expense under the Medicare fee schedule.

Currently, relative value units for practice expense are determined under the Medicare fee schedule (MFS) using historical physician charges. This seems inconsistent with the goal of a resource-based fee schedule. A specialty resource-based method of determining practice expense payments is presented and simulated here. The method assumes that, for each service, the payment for practice expense should be the same proportion of the total payment as actual physician practice expenses are of total practice revenues. A comparison with the approach developed by the Physician Payment Review Commission (PPRC) shows similar fees, but the specialty-based method proposed here requires no data beyond what is already employed in the MFS.

Payment areas for physician services.

An important aspect of the Medicare Fee Schedule is defining payment areas for physician services. This paper analyzes the accuracy of alternative geographic configurations in tracking physician practice input price differences among counties. Tradeoffs among accuracy in accounting for input price variation, number and complexity of payment areas, and payment differences across area boundaries are also discussed.

Inefficiencies in physician practices.

Explosive growth in spending on physician services in the 1980s has focussed the attention of policymakers and researchers on inefficiencies in physician practices. This chapter surveys the recent literature on inefficiencies in physician practices and provides a review, critique, and synthesis of empirical findings. The major emphasis is on measurement and estimates of economies of scale in physician practices. The paper concludes with a discussion of limitations of current knowledge and methods, and directions for future research.

CRNA (certified registered nurse anesthetist) manpower forecasts: 1990-2010.

The delivery of anesthesia services is at a crossroads in the United States. In 1967, there were two certified registered nurse anesthetists (CRNAs) for every anesthesiologist providing anesthetics, and the numbers are nearly equal today. A CRNA manpower forecasting model is developed in this article that shows CRNA supply and requirements from 1990 through 2010. Two estimates of CRNA shortage are presented, one based on the current trend of anesthesiologists replacing CRNAs and another assuming that CRNAs are involved in every anesthetic under anesthesiologist supervision. The results imply that more than a twofold increase in CRNA school enrollments is needed just to fill conservative baseline needs given the predicted growth in operations in all settings. Limiting anesthesiologists to a supervisory role, at the other extreme, would require a doubling of CRNAs by 2010 and an even greater expansion of CRNA schools. However, it is estimated that reversing CRNA manpower trends could save society between $750 million and $1.2 billion annually.

Report of the National Commission on Nurse Anesthesia Education. Study of nurse anesthesia manpower needs.

Nurse anesthesia manpower needs over a 20-year period from 1990 through 2010 are examined using data from a study conducted by Health Economics Research, Inc., which was submitted to Congress in February 1990. Two scenarios were considered: one representing no change in the capacity of the educational system and the other an annual increase. Under either scenario, the U.S. faces a significant shortage of CRNAs, now and in the future. The study points to a $1.2 billion savings to society through the increased use of CRNAs in anesthesia care.

Measuring geographic variations in hospitals' capital costs.

The Health Care Financing Administration (HCFA) has proposed incorporating hospital capital payments into the Medicare prospective payment system. HCFA's proposal includes an adjustment to capital payments for geographic differences in capital costs, derived from the prospective payment system area hospital wage index. Alternatively, the geographic adjustment could be based on an area construction cost index. Geographic construction cost indexes calculated from the cost per square foot of finished structures or from construction labor and materials input prices are evaluated in this article.

Using hospital-specific costs to improve the fairness of prospective reimbursement.

Payment rates in Medicare's Prospective Payment System (PPS) are based on averages of historical hospital costs. Compared to reimbursing each hospital's own costs, pricing at the average of costs implies a massive redistribution of payments among hospitals. Because not all sources of hospital costs are accounted for in the PPS, some of this redistribution is 'unfair'. Information in hospital-specific costs on unmeasured patient severity and input prices can be exploited to reduce payment inequities. However, fully hospital-specific rates are not optimal because costs also reflect treatment intensity and efficiency differences among hospitals.

A geographic index of physician practice costs.

This paper develops a geographic index of physician practice costs. A Laspeyres index is derived for each Metropolitan Statistical Area and for the non-metropolitan portion of each state. Relative prices by area are obtained for four practice inputs: physicians' own time, employee wages, office rents, and malpractice insurance. Each input price proxy is weighted by the share of physician gross revenues spent on that input. The index is useful in explaining geographic variation in physician fees. It may be used in reforming the way Medicare pays physicians.