Efficient utilization of the expanded criteria donor (ECD) deceased donor kidney pool: an analysis of the effect of labeling.

We investigated the effect of the expanded criteria donor (ECD) label on (i) recovery of kidneys and (ii) acceptance for transplantation given recovery. An ECD is age > or = 60, or age 50-59 with > or = 2 of 3 specified comorbidities. Using data from the Scientific Registry of Transplant Recipients from 1999 to 2005, we modeled recovery rates through linear regression and transplantation probabilities via logistic regression, focusing on organs from donors just-younger versus just-older than the ECD age thresholds. We split the sample at July 1, 2002 to determine how decisions changed at the approximate time of implementation of the ECD definition. Before July 2002, the number of recovered kidneys with 0-1 comorbidities dropped at age 60, but transplantation probabilities given recovery did not. After July 2002, the number of recovered kidneys with 0-1 comorbidities rose at age 60, but transplantation probabilities contingent on recovery declined. No similar trends were observed at donor age 50 among donors with > or = 2 comorbidities. Overall, implementation of the ECD definition coincided with a reversal of an apparent reluctance to recover kidneys from donors over age 59, but increased selectiveness on the part of surgeons/centers with respect to these kidneys.

Beyond managed long-term care: paying for home care based on risk of adverse outcomes.

Evaluations of home care for chronically ill elderly people have shown disappointing results for many years. Improvements in outcomes have been slight and costs high. We offer a system for setting budget targets based upon effectiveness of home care in mitigating certain adverse outcomes, the risk of those outcomes those outcomes. We believe that such a budgeting system will encourage improved measurement of outcomes and more rigorous justification for expenditures. Moreover, such a system is designed to reallocate resources to higher-risk patients and those more likely to benefit, focusing caregiving on specific outcomes and improving those outcomes.

Preference diversity and the breadth of employee health insurance options.

OBJECTIVE: To examine the effect of worker heterogeneity, firm size, and establishment size on the breadth of employer health insurance offerings. DATA SOURCES: The data were drawn from the 1993 Robert Wood Johnson Foundation Employer Health Insurance Survey of 22,000 business establishments selected randomly from ten states. STUDY DESIGN: The analysis was cross-sectional, using ordered probit models to relate the breadth of plan offerings to firm characteristics. PRINCIPAL FINDINGS: Firms with more diverse workforces offered a more diverse set of health insurance options. Firm and establishment size independently influenced the breadth of plan offerings. CONCLUSIONS: Employers are responsive to worker heterogeneity when determining the breadth of their health insurance offerings. However, diseconomies of scale in the purchase and administration of health insurance appear to limit the extent to which small employers can accommodate diverse worker preferences.

Extent and sources of geographic variation in Medicare end-stage renal disease expenditures.

Geographic variations in practices and expenditures have been widely documented, leading to concerns that care in some regions is clinically suboptimal and/or economically inefficient. Our objectives are to determine the extent and sources of geographic variation in Medicare expenditures per patient with end-stage renal disease (ESRD) per year. The study population included all patients with ESRD with Medicare as primary payer during 1997 (n = 284,670). Medicare expenditures were summarized at the hospital referral region (HRR) level. Using regression analysis, we estimated the relationship between expenditures and demographics, case mix, dialysis provider characteristics, distribution of patients across renal replacement therapy modalities, standardized hospitalization ratios, and healthcare wages. Spending per patient-year varied threefold across HRRs, ranging from $17,791 to $59,025 (mean, $38,966 +/- $6,774 [SD]). The regression equation explained 80% of this variation. Although several demographic and case-mix indicators that have been related to spending at the individual level were statistically significant predictors of spending at the HRR level, they did not show enough geographic variation to explain a large fraction of spending variation. Rather, patient distributions across renal replacement modalities, hospitalization patterns, and healthcare wages were the most powerful predictors of spending. Compared with Medicare generally, both the mean and SD of ESRD expenditures were approximately seven times larger. The substantial geographic variability in expenditures for patients with ESRD indicates the potential for improving efficiency and quality of care. Interventions designed to increase transplantation rates, ensure access to peritoneal dialysis, and reduce hospitalization appear most promising.

Heterogeneity of risk in a managed home health care population.

OBJECTIVE: To examine the distribution of risk and the correlation between risks in a home care population with regard to several important adverse outcomes. BACKGROUND: Researchers and policy makers have long recognized the heterogeneity of home care populations. Most research in this area focuses on identifying predictors of adverse outcomes. The degree of the heterogeneity of risks is much more poorly understood. Yet understanding the degree of risk heterogeneity at the population level is important because it has implications for the extent to which the level of care should vary among recipients. STUDY SETTING: Patients enrolled in the Arizona Health Care Cost Containment System (AHCCCS) program, between the December 1992 and April 1998. OUTCOME MEASURES: Estimating the risk for nursing home placement, hospitalization, death, and functional decline. METHODS: Estimating discrete time hazard models. From these models the predicted risk for each outcome is estimated and the distribution and correlation of predicted risks is examined. Model fit is assessed through split sample techniques and by examining the ratio of predicted to actual outcomes for selected sub-groups. RESULTS: The estimates reveal a wide variation in predicted risk. The ratio of predicted risk at the 90th percentile relative to the 10th percentile ranges from 4.99 for nursing home admission to 6.65 for hospitalization. The distributions of predicted risks are all skewed, particularly the distributions for death and nursing home admission. Predicted nursing home risk is highly correlated with the predicted risk for death (rho = 0.71). The predicted risk for hospitalization is not strongly correlated with the predicted risk for either death or nursing home admission. CONCLUSION: The wide variation in risk among home care patients suggests that efficient allocation of resources would require variation in spending and targeting of services based on patient characteristics. Greater research regarding the effectiveness of home care for different sub-populations is called for.

Ownership, competition, and the adoption of new technologies and cost-saving practices in a fixed-price environment.

Advances in medical technology have been implicated as the primary cause of rising health care expenditures. It is not yet known whether the increasing prevalence of managed care mechanisms, particularly capitation, will change substantially incentives for acquiring and using cost-increasing innovations. We examined the decisions of dialysis units (a set of providers that has faced capitation and real decreases in payment for several decades) with respect to use of cost-increasing technologies that enhance quality of care, cost-cutting practices that reduce quality of care, and amenities desired by patients that are unrelated to quality of care. We found that the dialysis payment system does not appear to have blocked access to a number of new, quality-enhancing technologies that were developed in the 1980s. However, facilities made adjustments along other valuable margins to facilitate adoption of these technologies; use of new technologies varied with numerous facility, regulatory, and case-mix characteristics including ownership, chain membership, size, market competition, and certificate of need programs. Interestingly, the trade-offs made by for-profit and nonprofit facilities when faced with fixed prices appeared quite different. For-profits tended to deliver lower technical quality of care but more amenities, while nonprofits favored technical quality of care over amenities. Our findings may have implications for the response of other types of health care providers to capitation and increasing economic constraints.

Willingness to pay for a quality-adjusted life year: in search of a standard.

Cost-benefit analysis (CBA) provides a clear decision rule: undertake an intervention if the monetary value of its benefits exceed its costs. However, due to a reluctance to characterize health benefits in monetary terms, users of cost-utility and cost-effectiveness analyses must rely on arbitrary standards (e.g., < $50,000 per QALY) to deem a program "cost-effective." Moreover, there is no consensus regarding the appropriate dollar value per QALY gained upon which to base resource allocation decisions. To address this, the authors determined the value of a QALY as implied by the value-of-life literature and compared this value with arbitrary thresholds for cost-effectiveness that have come into common use. A literature search identified 42 estimates of the value of life that were appropriate for inclusion. These estimates were classified by method: human capital (HK), contingent valuation (CV), revealed preference/job risk (RP-JR) and revealed preference/non-occupational safety (RP-S), and by U.S. or non-U.S. origin. After converting these value-of-life estimates to 1997 U.S. dollars, the life expectancy of the study population, age-specific QALY weights, and a 3% real discount rate were used to calculate the implied value of a QALY. An ordinary least-squares regression of the value of a QALY on study type and national origin explained 28.4% of the variance across studies. Most of the explained variance was attributable to study type; national origin did not significantly affect the values. Median values by study type were $24,777 (HK estimates), $93,402 (RP-S estimates), $161,305 (CV estimates), and $428,286 (RP-JR estimates). With the exception of HK, these far exceed the "rules of thumb" that are frequently used to determine whether an intervention produces an acceptable increase in health benefits in exchange for incremental expenditures.

The clinical and economic impact of alternative staging strategies for adenocarcinoma of the pancreas.

OBJECTIVE: Several innovative imaging modalities, including endoscopic ultrasound, have increased the number of available preoperative staging methods in patients with adenocarcinoma of the pancreas. Our goal was to estimate the clinical outcomes and cost-effectiveness of alternative staging strategies for pancreatic adenocarcinoma. METHODS: Decision analysis was used to simulate alternative staging strategies. Cost inputs were based on Medicare reimbursements; clinical inputs were obtained from the available literature. Model endpoints of interest were cost per curative resection and appropriateness of treatment allocation based on pathological stage. RESULTS: Endoscopic ultrasound followed by laparoscopy yielded the lowest cost per curative resection ($37,600) and minimized the number of unnecessary surgical explorations (5.4 per 100 patients staged). Requiring angiographic confirmation when endoscopic ultrasound demonstrated an unresectable tumor yielded an intermediate cost-effectiveness ratio and virtually eliminated the risk of overstaging. Laparoscopy alone maximized the resection rate, but each additional resection would cost approximately $2 million relative to a strategy employing both endoscopic ultrasound and angiography. CONCLUSIONS: Staging strategies incorporating endoscopic ultrasound may improve treatment allocation and are cost-effective relative to angiography-based strategies. A staging protocol that does not incorporate an imaging modality to detect vascular invasion dramatically increases the cost per additional curative resection compared with more comprehensive staging protocols.

Nursing home-to-nursing home transfers: prevalence, time pattern, and resident correlates.

OBJECTIVES: To characterize the time pattern of nursing home-to-nursing home transfers and assess which resident characteristics are associated with transfers. METHODS: Minimum Data Set assessments of all Maine and New York nursing home residents were obtained for 1994-1996. The hazard rate for nursing home transfers was estimated by nonparametric statistical techniques, censored at loss to follow-up. Comparisons of resident characteristics were made between those who transferred and those who stayed at their initial facility. RESULTS: Residents of Maine nursing homes were considerably more likely to transfer than were New York residents. Transfer rates declined during the first 2 years after admission and remained stable thereafter. Correlates of transfers were similar across states. Residents who transferred were more likely to be male, to be married, to be younger, to have better cognitive and physical health, to have Medicare or private payment sources (vs. Medicaid), and to have pressure ulcers. Rural location did not affect the likelihood of transfer. CONCLUSIONS: This study provides the most detailed information to date on the prevalence, timing, and correlates of nursing home transfers. These transitions occur most frequently early in the stay but continue at a lower rate even among long stayers. This information is useful for understanding lifetime dynamics of long-term-care utilization. Several barriers to mobility appear to be present (eg, less generous payment source, health limitations, and absence of a spouse). The higher transfer rates observed in Maine might imply that institutional or other factors limit the mobility of New York residents.

Patient, physician, and payer perceptions and misperceptions of willingness to pay for diagnostic certainty.

Little is known about the value patients, physicians, and payers place on intangible attributes of care. Differences in valuations among these groups and misperceptions of value of intangible attributes to other groups can contribute to conflicts about treatment recommendations or coverage decisions. We surveyed patients, physicians, and managed care executives to assess their willingness to pay (WTP) for diagnostic certainty for peptic ulcer disease (PUD) and gastroesophageal reflux disease (GERD). To determine if patients, physicians, and payers accurately perceive each other's valuations of diagnostic certainty, participants were also asked to estimate the WTP of each of the other types of respondents. Patients were most likely, and executives least likely, to value diagnostic certainty. For PUD, 84% of patients, 61% of physicians, and 43% of executives expressed a positive WTP. Median WTP was low for all three groups ($1-9 for patients and physicians; $0 for payers). Physicians and executives both correctly predicted patient WTP. For GERD, 87% of patients, 52% of physicians, and 29% of executives expressed a positive WTP. Executives underestimated patient WTP. For both diseases, physicians' WTP was overestimated by patients and underestimated by executives. The inconsistency in the value that patients, physicians, and managed care executives place on diagnostic certainty indicates the potential for conflict over practice guidelines or access to services. WTP surveys can provide information to aid in anticipating and addressing areas of disagreement.

Optimal health insurance: the case of observable, severe illness.

We explore optimal cost-sharing provisions for insurance contracts when individuals have observable, severe diseases with a discrete number of medically appropriate treatment options. Variation in preferences for alternative treatments is unobserved by the insurer and non-contractible. Interest in such situations is increasingly common, exemplified by disease carve-out programs and shared decision-making (SDM) tools. We demonstrate that optimal insurance charges a copay to patients choosing the high-cost treatment and provides consumers of the low-cost treatment a cash payment. A simulation of the effect of such a policy, based on prostate cancer, indicates a substantial reduction in moral hazard.

Consumer information and competition between nonprofit and for-profit nursing homes.

This paper develops implications of Arrow's hypothesis that nonprofit organizations are prevalent in health care because of quality uncertainty. The model analyzes the ability of nonprofits to mitigate market failures created by asymmetric information in an environment characterized by potential competition from both explicitly for-profit firms and for-profits in disguise (profit-motivated firms who obtain nonprofit status in order to exploit the perceived trustworthiness of the nonprofit sector). Under certain conditions, it is shown that nonprofit status can serve as a credible signal of quality and that nonprofits can decrease the underprovision of quality both by providing high quality services and indirectly via a spillover effect on quality in the for-profit sector. Applicability to long-term care and implications for empirical research and policy towards nonprofits in health care are discussed.

Willingness to pay for diagnostic certainty: comparing patients, physicians, and managed care executives.

Cost-effectiveness analyses routinely ignore the value of diagnostic certainty. Moreover, no previous study has compared this value among different stakeholders. We surveyed 25 patients, 28 physicians, and 23 managed care executives to compare their willingness to pay for diagnostic information for peptic ulcer disease. Patients (84%) were most likely, and executives (43%) least likely, to be willing to pay at least $1 (median willingness to pay < $50). Differences in willingness to pay among stakeholders indicate potential for conflicts over access to tests. Although nearly all patients valued diagnostic certainty, its value was generally small and insufficient to change the cost-effectiveness ranking of treatment alternatives.

Practice patterns, case mix, Medicare payment policy, and dialysis facility costs.

OBJECTIVE: To evaluate the effects of case mix, practice patterns, features of the payment system, and facility characteristics on the cost of dialysis. DATA SOURCES/STUDY SETTING: The nationally representative sample of dialysis units in the 1991 U.S. Renal Data System's Case Mix Adequacy (CMA) Study. The CMA data were merged with data from Medicare Cost Reports, HCFA facility surveys, and HCFA's end-stage renal disease patient registry. STUDY DESIGN: We estimated a statistical cost function to examine the determinants of costs at the dialysis unit level. PRINCIPAL FINDINGS: The relationship between case mix and costs was generally weak. However, dialysis practices (type of dialysis membrane, membrane reuse policy, and treatment duration) did have a significant effect on costs. Further, facilities whose payment was constrained by HCFA's ceiling on the adjustment for area wage rates incurred higher costs than unconstrained facilities. The costs of hospital-based units were considerably higher than those of freestanding units. Among chain units, only members of one of the largest national chains exhibited significant cost savings relative to independent facilities. CONCLUSIONS: Little evidence showed that adjusting dialysis payment to account for differences in case mix across facilities would be necessary to ensure access to care for high-cost patients or to reimburse facilities equitably for their costs. However, current efforts to increase dose of dialysis may require higher payments. Longer treatments appear to be the most economical method of increasing the dose of dialysis. Switching to more expensive types of dialysis membranes was a more costly means of increasing dose and hence must be justified by benefits beyond those of higher dose. Reusing membranes saved money, but the savings were insufficient to offset the costs associated with using more expensive membranes. Most, but not all, of the higher costs observed in hospital-based units appear to reflect overhead cost allocation rather than a difference in real resources devoted to treatment. The economies experienced by the largest chains may provide an explanation for their recent growth in market share. The heterogeneity of results by chain size implies that characterizing units using a simple chain status indicator variable is inadequate. Cost differences by facility type and the effects of the ongoing growth of large chains are worthy of continued monitoring to inform both payment policy and antitrust enforcement.

Clinical and economic effects of population-based Helicobacter pylori screening to prevent gastric cancer.

BACKGROUND: Helicobacter pylori infection has been identified as a risk factor for certain types of gastric cancer. However, the extent to which H. pylori eradication decreases the risk of gastric cancer is unknown, raising the question of whether population-based H. pylori screening should be undertaken. OBJECTIVE: To compare clinical and economic effects of H. pylori screening, with and without confirmatory testing, with no screening to prevent gastric cancer. DESIGN: Decision analysis incorporating a Markov simulation. PATIENTS: Simulated cohorts of men and women with varying risk of gastric cancer. INTERVENTION: Three strategies were evaluated: (1) no screening; (2) H. pylori serologic testing, treat those positive for H. pylori, no follow-up testing; and (3) H. pylori serologic testing, treat those positive for H. pylori, followed by a test to confirm H. pylori eradication, retreat those who test positive. In the principal analysis, the risk of gastric cancer after H. pylori eradication was assumed to be similar to that for those without H. pylori infection. Scenarios with less optimistic assumptions regarding risk reduction of cancer were evaluated. MAIN OUTCOME MEASURES: Gastric cancer rates, discounted cost per life-year saved. RESULTS: If H. pylori eradication reduced the risk of cancer to that of people never infected, both H. pylori intervention strategies reduced gastric cancer rates so that each yielded at least 12 additional life-years per 1000 40-year-old white men screened when compared with no screening. Helicobacter pylori serologic testing without posttreatment confirmatory testing resulted in the lowest cost per additional life-year saved (S6264). The cost-effectiveness of the H. pylori screening strategies varied substantially as the level of risk reduction of cancer was varied, but remained cost-effective even at moderate rates (<30%) of excess risk reduction of cancer in all cohorts evaluated. CONCLUSIONS: Population-based H. pylori screening has the potential to produce important health benefits at a reasonable cost at moderate rates of excess risk reduction of cancer. Controlled studies are necessary to confirm and quantify the impact of H. pylori eradication on the risk of gastric cancer.

Immediate eradication of Helicobacter pylori in patients with previously documented peptic ulcer disease: clinical and economic effects.

OBJECTIVES: The clinical and economic benefits of Helicobacter pylori eradication for patients with newly diagnosed peptic ulcer disease are widely accepted. The objective of this study was to estimate the cost-effectiveness of H. pylori eradication in the large cohort of asymptomatic patients receiving maintenance antisecretory therapy for a previously documented peptic ulcer disease. METHODS: A decision analytic model estimated the clinical and economic effects of two management strategies for asymptomatic patients receiving maintenance antisecretory therapy for a previously documented peptic ulcer: strategy 1-immediate H. pylori eradication therapy and cessation of maintenance therapy, and strategy 2-continued-maintenance antisecretory therapy, with H. pylori eradication therapy reserved for the first symptom recurrence. RESULTS: At 1 yr, the model estimated that immediate H. pylori eradication therapy (strategy 1) led to 22% fewer months with ulcers (28.7 vs. 36.8 ulcer months/100 patient years), 10% fewer months with ulcer symptoms (21.0 vs. 23.1 symptom months/100 patient years), and 24% lower per-patient expenditures ($587 vs. $767/patient year) than maintenance antisecretory therapy and symptom-based H. pylori eradication (strategy 2). Immediate H. pylori eradication, however, resulted in 14% more months with upper gastrointestinal symptoms from all causes (37.9 vs. 33.2 symptom months/100 patient years) than strategy 2, because maintenance antisecretory therapy was effective in treating symptoms due to causes other than peptic ulcer disease. CONCLUSIONS: Ulcer-related outcomes of asymptomatic patients receiving maintenance antisecretory agents for peptic ulcer disease can be improved with immediate H. pylori eradication at reduced cost. Therefore, H. pylori eradication should be aggressively pursued in all patients-symptomatic or not-with previously documented peptic ulcers, who are receiving maintenance antisecretory therapy.

Some of the small print on managed care proposals for end-stage renal disease.

In this article we discuss selected issues related to Medicare's end-stage renal disease (ESRD) managed care demonstration project and Congressional proposals to remove the barrier to ESRD patients enrolling in Medicare managed care plans. We discuss financial incentives to keep patients healthy; beneficiary obligations under fee-for-service and managed care; risk selection by beneficiaries among plans; and the baseline determination of a capitation rate. The ESRD demonstration offers the opportunity to evaluate the consequences of making Medicare managed care options available to a high cost and clinically vulnerable population. Careful evaluation is necessary to ensure that ESRD managed care options are structured to be beneficial to taxpayers, caregivers, and, most importantly, the beneficiaries choosing these options. Certainly, the potential exists for managed care to benefit patients by changing the fractured system in which each provider only has an incentive to worry about its own costs. However, the possible unintended consequences highlighted in this article strongly suggest that the evaluation of the demonstration project be undertaken before managed care options are made widely available outside the demonstration sites. Problems of a more technical nature, such as how to best use available Health Care Financing Administration data in the rate-setting process, are likely to be overcome, but the time and effort necessary to resolve them should not be underestimated.