Utilization of physician services at the end of life: differences between the United States and Canada.

This study draws on physician claims for the elderly from the U.S. Medicare program and the Canadian provinces of Quebec and British Columbia to compare physician service use by people with fewer than six months to live relative to those who liver longer. Physician service quantities are expressed in relative value units (RVUs), and aggregated into clinical type-of-service categories. Relative to survivors, those in the United States approaching death receive about the same amount of evaluation and management services as those in Quebec and British Columbia, though less in absolute value; they also receive about the same amount of procedures as those nearing death in British Columbia, but half as much in proportion as people nearing death in Quebec. Further analyses of appropriateness of care to the dying appear no less necessary in Canada than in the United States.

What does Medicare pay for? Disentangling the flow of funds to health care providers.

Many Medicare policies pertain to only part of an expenditure category for which there are publicly available data. Integrating three types of data sources, this DataWatch disaggregates Medicare spending by type of provider. It also disaggregates payments to hospital outpatient departments by type of service. The results reveal a number of patterns obscured by more aggregate figures. For instance, although Medicare pays for most skilled nursing facility (SNF) services through Part A, Part B paid SNFs almost a billion dollars for rehabilitation services in fiscal year 1996. The recipients were not eligible for Part A SNF benefits but were residents of nursing homes.

Bundled Medicare payment for acute and postacute care.

One legislative policy option for controlling postacute care costs is for Medicare to make a "bundled" payment to hospitals to cover episode costs: acute plus postacute care costs. But a bundled payment might not match the costs of treatment as well as payment now does under Medicare's prospective payment system (PPS). Simulating hospital margins with and without postacute care costs, this paper finds that risks to the typical hospital would not increase under postacute care bundling. A central characteristic of a bundled payment is that it would cover multiple providers. From this characteristic comes bundled payment's major strength: cost containment.

Exploring the relationship between inpatient facility and physician services.

OBJECTIVES: Medicare hospitalizations involve both facility and physician services. Although several studies analyze hospital-level variations in Medicare inpatient facility and inpatient physician services per admission, few studies directly explore the relationship between these services. Theoretically, inpatient facility and physician services may be complements or substitutes. That is, an increase in facility services may lead to an increase or decrease in physician services and vice versa. This article contributes to the existing literature by exploring directly the relationship between facility and physician services. METHODS: Medicare physician claims were linked to inpatient hospital stays using data from the Medicare hospital cost reports, the Medicare Patient Analysis and Review file, and the Medicare National Claims History System. RESULTS: In multivariate regression analyses, the (partial) correlations between facility and physician services were positive, which is consistent with complementarity. Standardized regression coefficients indicate that physician services are the single most important determinant of facility services; however, facility services are a less important determinant of physician services. A 10% increase in physician services is associated with at least a 3.0% increase in facility services. CONCLUSIONS: Proposals that reduce inpatient physician expenditures also would reduce facility expenditures in the long-run.

Growth in HMO share of the Medicare market, 1989-1994.

Between 1989 and 1994 the health maintenance organization (HMO) share of the Medicare market grew rapidly. It is still heavily concentrated geographically, however. The most influential factor in this growth is HMO penetration into an area's general health care market. Medicare payment rates and prior Medicare HMO penetration also have an impact, but their effects are much weaker. Thus, payment rate reform is likely to have only a modest impact on Medicare HMO growth in the short term. In the longer term, the HMO share of the Medicare market will continue to grow, because HMO penetration in the general health care market is growing rapidly.

The use of Medicare home health care services.

BACKGROUND: Medicare's home health care program, consisting primarily of home visits by nurses and health aides, was conceived as a means to facilitate hospital discharge. Because home health care is now one of the fastest-growing categories of Medicare expenditures, we analyzed Medicare claims data to determine current patterns of use. METHODS: We used 1993 data from Medicare's National Claims History File to examine the temporal relation between home visits and hospital discharge, as well as the number of months Medicare enrollees received home health care. To determine whether home visits replaced hospital services, we calculated population-based utilization rates, adjusted for age and sex, for enrollees living in the 310 U.S. metropolitan statistical areas and determined whether the areas with higher rates of home health care also had lower admission rates or shorter lengths of stay. Finally, we compared the geographic variation in use of home health care with that of other Medicare services. RESULTS: Roughly 3 million Medicare enrollees received over 160 million home health care visits in 1993. Seventy-eight percent of the visits either occurred more than a month after hospital discharge (35 percent) or were not associated with any inpatient care during the previous six months (43%). Home health care often represented a long-term intervention: 61 percent of the visits were to enrollees who received home health care for six months or more. We could find no evidence that home health care was substituted for hospital care; the metropolitan statistical areas with higher rates of home health care did not have fewer hospital admissions or shorter lengths of stay. There was more geographic variation in the use of home health care than in the use of other major categories of Medicare services (e.g., hospital admissions and physicians' services). Five states (all in the South) had more than 9000 visits per 1000 enrollees, and 14 states had fewer than 3000 visits per 1000 enrollees. CONCLUSIONS: Home health care visits are used primarily to provide long-term care. There is no evidence that services provided at home replace hospital services, and the dramatic geographic variation in home visits suggests a lack of consensus about their appropriate use.

The impact of practicing in multiple hospitals on physician profiles.

Although physicians are all too familiar with the psychologic impact of having multiple responsibilities, the associated impact on practice styles has not been examined systematically. To provide some data on the effects of "work dispersion," we examined the hypothesis that the inpatient resource use of physicians would rise with the number of hospitals in which they work. Data for 1991 from Medicare's National Claims History File were used to profile a sample of attending physicians (n = 33,756) in seven states. The attending physician "profile" was the case mix-adjusted relative value of all physician services (regardless of who delivered them) that were delivered during each patient's hospital stay. Relative value was measured in relative value units, used by Medicare in determining physician payments. The authors then categorized physicians in terms of the number of hospitals to which they admitted patients. Physician profiles were adjusted further to control for geography, physician specialty, and characteristics of the physician's primary (ie, most used) hospital. One third of the physicians in the sample had admissions to more than one hospital. Physicians working in one hospital had inpatient practice profiles 2.1% below the sample mean. Additional hospital affiliations were associated with progressively higher profiles: two hospitals, 2.3% above the mean; three hospitals, 4.5% above; four hospitals, 8.2% above; and five or more hospitals, 11.5% above (all P < 0.01). The practice of medicine in more than one hospital is associated with higher inpatient profiles and shows a dose-response relationship. Physicians and policy makers will need to consider carefully whether there are any associated benefits to justify the increased cost.

A detailed comparison of physician services for the elderly in the United States and Canada.

OBJECTIVE: To assess the relative volume and price of physician services in Canada and the United States. DESIGN: A comparative analysis of 1992 claims data from Canadian provincial ministries of health and from the US Health Care Financing Administration. PATIENTS: All elderly individuals in the 3 largest Canadian provinces, Ontario, Quebec, and British Columbia, and a 1% random sample of US elderly Medicare beneficiaries not enrolled in health maintenance organizations. MAIN OUTCOME MEASURE: The volume of physician services measured in terms of the relative value units used in the Medicare fee schedule to calculate payments, with services disaggregated into clinically meaningful categories. RESULTS: Canadian elderly receive a higher volume of physician services than US elderly. Because the provinces examined paid a much lower price per service, Canada had overall lower expenditures per elderly person than the United States. Canadian elderly received 44% more evaluation and management services, but 25% fewer procedures. Canada has a disproportionately lower volume of procedures for which there is low clinical consensus as to when they are indicated. Such procedures include cataract extractions and knee replacements. CONCLUSION: The lower prices for physician services in Canada permit Canadian elderly to receive a higher volume of evaluation and management services, on the other hand, are constrained by both price and volume. These differences in the volume of physician services may be the result of differences in facility and physician supply.

Physicians practicing in hospitals: implications for a medical staff policy.

President Clinton's health reform package included a proposal that would limit Medicare payments to the medical staffs of hospitals whose inpatient physician service volume was systematically above national norms. Under this policy, it would be possible for a physician practicing in more than one hospital to be penalized in one and not the other. Physicians might direct their admissions to certain hospitals to avoid penalties, and thereby would threaten the viability of some hospitals. However, to engage in large-scale admission shifting, physicians must practice in multiple hospitals. Using a national database, we find that, on average, physicians are affiliated with 1.56 hospitals and that 62% are affiliated with one hospital. On average, 90% of a physician's admissions are in a single hospital. We also find that, in the average hospital, a relatively small percentage of physicians (20%) admit a majority (60%) of Medicare patients. We discuss policy implications.

Fee-for-data: a strategy to open the HMO black box.

This paper outlines a simple proposal to maintain utilization data in the face of managed care growth. Health maintenance organizations (HMOs) would be required to submit claims (encounter-level data) and in return would be paid a percentage of what Medicare would pay fee-for-service providers. The capitation payment rate would be lowered to maintain budget-neutrality. This proposal would enable the collection of key data that might not otherwise be captured in a Medicare program dominated by HMOs and other forms of managed care. The data are necessary to drive Medicare policies and to gauge the impact of changes to the program. The program would be well advised to make the small additional investment to make the data system complete. The key issue in implementing such a proposal will be HMOs' ability to generate those data at reasonable cost.

The relative cost of Medicaid enrollees and the commercially insured in HMOs.

Under several national health care reform proposals in 1994, many Medicaid beneficiaries would have enrolled in health maintenance organizations (HMOs) with other persons. Several states already enroll Medicaid beneficiaries in HMOs with commercial enrollees. This DataWatch examines the cost of Medicaid enrollees in HMOs relative to the cost of commercial enrollees. Data from nine HMOs indicate that, on average, Aid to Families with Dependent Children (AFDC) and poverty-related Medicaid enrollees cost 13 percent more than commercial enrollees cost. If one adjusts for enrollees' age and sex, Medicaid costs are 23 percent higher than commercial costs.

Physician profiling. An analysis of inpatient practice patterns in Florida and Oregon.

BACKGROUND: Physician profiling is a method of cost control that focuses on patterns of care instead of on specific clinical decisions. It is one cost-control method that takes into account physicians' desire to curb the intrusion of administrative mechanisms into the clinical encounter. To provide a concrete example of profiling, we analyzed the inpatient practice patterns of physicians in Florida and Oregon. METHODS: Data for 1991 from Medicare's National Claims History File were used to profile 12,720 attending physicians in Florida and 2589 in Oregon. For each attending physician, we determined the total relative value of all physicians' services delivered during each patient's hospital stay. Relative value was measured in relative-value units (RVUs), according to the resource-based relative-value scale used by Medicare in determining payments to physicians. The mean number of RVUs per admission was then adjusted for the physician's case mix according to the patients' assigned diagnosis-related groups. The influence of the physician's specialty and of selected types of services (such as imaging and endoscopy) was also examined. RESULTS: Florida physicians used markedly more resources, on average, than their colleagues in Oregon (46 vs. 30 case-mix-adjusted RVUs per admission). The difference was apparent for all specialties and all types of service. To illustrate the profiling data potentially available to the medical staffs of individual hospitals, we examined specific data on individual attending physicians and for various types of service for three hospitals' staffs. Despite similar overall profiles that fell below the national mean, each staff had a different practice pattern and would require different efforts to improve efficiency. CONCLUSIONS: In an effort to encourage further debate, we have described one method of physician profiling. Profiling data help identify and characterize differences in practice style to which individual physicians or hospital staffs can respond. Because profiling is not based on rigid rules, it is a cost-containment strategy that can easily accommodate legitimate exceptions; it is therefore preferable to methods in which the appropriateness of each clinical decision is judged separately.

Proposals to control high-cost hospital medical staffs.

Several health care reform bills would limit Medicare payments to high-cost medical staffs, that is, physicians in hospitals with a high volume of physician services per admission. In a given year, Medicare's payment to the physicians on each hospital's medical staff could not collectively exceed a limit defined as a certain percentage above the national median. Limits of various forms are used in other parts of the Medicare program. This policy would combine cost containment incentives with a clear organizational structure. In addition, medical staffs could be provided with detailed information on their practice styles.

Medicare inpatient physician charges: an econometric analysis.

To control Medicare physician payments, Congress in 1989 established volume performance standards (VPS) that tie future physician fee increases to the growth in expenditures per beneficiary. The VPS risk pool is nationwide, and many observers believe it is too large to affect behavior. VPS could be modified by defining a separate risk pool for inpatient physician services and placing each hospital medical staff at risk for those services. Using a national random sample of 500,000 Medicare admissions, we explore the determinants of medical staff charges and comment on the policy implications. Multivariate analysis shows that charges increase with case mix and bed size but, surprisingly, decrease with the level of teaching activity. The teaching result is explained by the substitution of residents for physicians in these hospitals.

Could distance be a proxy for severity-of-illness? A comparison of hospital costs in distant and local patients.

OBJECTIVE: We test the hypothesis that hospital costs, after adjusting for DRG mix, are higher in distant patients than in local patients. DATA SOURCES AND STUDY SETTING: Data were obtained from the Washington State Commission Hospital Abstract Reporting System (CHARS) and included all patients discharged from 15 metropolitan hospitals in the state of Washington during fiscal year 1987 (N = 181,072). STUDY DESIGN: Distant patients were initially defined as those patients residing outside a 15-mile radius of the hospital from which they were discharged; all other patients were considered local. Distance was determined using the patient's residence zip code. Hospital charge, calculated for all patients regardless of payer, served as a proxy for cost and was adjusted using the DRG weight. PRINCIPAL FINDINGS: Average charge (adjusted for DRG weight) was higher for distant patients in all but two hospitals. Overall adjusted charge for distant patients was 15 percent higher (p < .001). This finding persisted when different distances were used to dichotomize distant and local patients. When the 20 most common DRGs were examined individually, little charge difference was found in surgical DRGs that require tertiary center services (tertiary DRGs) and in those DRGs with both moderate and predictable resource use (routine DRGs); the charge difference seemed most prominent in those DRGs with a wide array of possible resource use (heterogeneous DRGs). CONCLUSIONS: Results suggest that patients traveling long distances use more resources and incur higher hospital charges than local patients. This is not accounted for in prospective payment. We postulate that distance might serve in part as a proxy for severity-of-illness.