Prescription Drug Spending in Fee-for-Service Medicare, 2008-2019.

Importance: Prescription drug spending is a topic of increased interest to the public and policymakers. However, prior assessments have been limited by focusing on retail spending (Part D-covered drugs), omitting clinician-administered (Part B-covered) drug spending, or focusing on all fee-for-service Medicare beneficiaries, regardless of their enrollment into prescription drug coverage. Objective: To estimate the proportion of health care spending contributed by prescription drugs and to assess spending for retail and clinician-administered prescriptions. Design, Setting, and Participants: Descriptive, serial, cross-sectional analysis of a 20% random sample of fee-for-service Medicare beneficiaries in the United States from 2008 to 2019 who were continuously enrolled in Parts A (hospital), B (medical), and D (prescription drug) benefits, and not in Medicare Advantage. Exposure: Calendar year. Main Outcomes and Measures: Net spending on retail (Part D-covered) and clinician-administered (Part B-covered) prescription drugs; prescription drug spending (spending on Part B-covered and Part D-covered drugs) as a percentage of total per-capita health care spending. Measures were adjusted for inflation and for postsale rebates (for Part D-covered drugs). Results: There were 3 201 284 beneficiaries enrolled in Parts A, B, and D in 2008 and 4 502 718 in 2019. In 2019, beneficiaries had a mean (SD) age of 71.7 (12.0) years, documented sex was female for 57.7%, and 69.5% had no low-income subsidies. Total per-capita spending was $16 345 in 2008 and $20 117 in 2019. Comparing 2008 with 2019, per-capita Part A spending was $7106 (95% CI, $7084-$7128) vs $7120 (95% CI, $7098-$7141), Part B drug spending was $720 (95% CI, $713-$728) vs $1641 (95% CI, $1629-$1653), Part B nondrug spending was $5113 (95% CI, $5105-$5122) vs $6702 (95% CI, $6692-$6712), and Part D net spending was $3122 (95% CI, $3117-$3127) vs $3477 (95% CI, $3466-$3489). The proportion of total annual spending attributed to prescription drugs increased from 24.0% in 2008 to 27.2% in 2019, net of estimated rebates and discounts. Conclusions and Relevance: In 2019, spending on prescription drugs represented approximately 27% of total spending among fee-for-service Medicare beneficiaries enrolled in Part D, even after accounting for postsale rebates.

Comparing apples with oranges: administrative expenses and finances in Medicare systems.

OBJECTIVES: Proponents of a single-payer or public option health care system often cite the lower administrative expenses in public Medicare compared with those in private Medicare, claiming that this difference represents efficiency. We check the validity of this comparison in terms of accuracy and definitions and suggest expanding its scope to include expanded financial data of the 2 Medicare systems. STUDY DESIGN: Using annual Medicare Boards of Trustees and National Health Expenditure Accounts data from CMS and health insurers' financial statement data, we compare the level and percentage of the administrative expenses of the Medicare systems and show incompatible and not reconcilable definitions of administrative expenses. We expand our analysis to income, benefits, gains and losses, and loss ratios of the programs. METHODS: Our methodology is a careful comparison of categories of expenses between public and private insurers using official data sources. The comparison is both qualitative and quantitative. RESULTS: We validate the low administrative expenses of Medicare parts A, B, and D (1.35% of benefits in 2018) compared with Medicare Part C (10.86% of benefits without loss adjustment expenses [LAE] and 14.84% with LAE for 2018). Expanding the focus, the income and benefits per beneficiary grew faster and larger in Medicare parts A, B, and D than in Medicare Part C-a reversal of earlier trends. The public Medicare program suffered losses in 11 years during 2002-2018, whereas private insurers' Medicare remained solvent with about an 85% loss ratio. CONCLUSIONS: Comparisons of the systems in the United States would benefit from expanding the focus beyond incomparable administrative expenses. For the current period of coronavirus disease 2019, if the trends continue, public Medicare may suffer greater deficits relative to the private Medicare Part C.

Associations of Intensive Lifestyle Intervention in Type 2 Diabetes With Health Care Use, Spending, and Disability: An Ancillary Study of the Look AHEAD Study.

Importance: Intensive lifestyle interventions focused on diet and exercise can reduce weight and improve diabetes management. However, the long-term effects on health care use and spending are unclear, especially for public payers. Objective: To estimate the association of effective intensive lifestyle intervention for weight loss with long-term health care use and Medicare spending. Design, Setting, and Participants: This ancillary study used data from the Look AHEAD randomized clinical trial, which randomized participants with type 2 diabetes to an intensive lifestyle intervention or control group (ie, diabetes support and education), provided ongoing intervention from 2001 to 2012, and demonstrated improved diabetes management and reduced health care costs during the intervention. This study compared Medicare data between study arms from 2012 to 2015 to determine whether the intervention was associated with persistent reductions in health care spending. Exposure: Starting in 2001, Look AHEAD's intervention group participated in sessions with lifestyle counselors, dieticians, exercise specialists, and behavioral therapists with the goal of reducing weight 7% in the first year. Sessions occurred weekly in the first 6 months of the intervention and decreased over the intervention period. The controls participated in periodic group education sessions that occurred 3 times per year in the first year and decreased to 1 time per year later in the trial. Main Outcomes and Measures: Outcomes included total Medicare spending, Part D prescription drug costs, Part A and Part B Medicare spending, hospital admissions, emergency department visits, and disability-related Medicare eligibility. Results: This study matched Medicare administrative records for 2796 Look AHEAD study participants (54% of 5145 participants initially randomized and 86% of 3246 participants consenting to linkages). Linked intervention and control participants were of a similar age (mean [SD] age, 59.6 [5.4] years vs 59.6 [5.5] years at randomization) and sex (818 [58.1%] women vs 822 [59.3%] women). There was no statistically significant difference in total Medicare spending between groups (difference, -$133 [95% CI, -$1946 to $1681]; P = .89). In the intervention group, compared with the control group, there was statistically significantly higher Part B spending (difference, $513 [95% CI, $70 to $955]; P = .02) but lower prescription drug costs (difference, -$803 [95% CI, -$1522 to -$83]; P = .03). Conclusions and Relevance: This ancillary study of a randomized clinical trial found that reductions in health care use and spending associated with an intensive lifestyle intervention for type 2 diabetes diminished as participants aged. Intensive lifestyle interventions may need to be sustained to reduce long-term health care spending. Trial Registration: ClinicalTrials.gov Identifier: NCT03952728.

A Policy Option to Enhance Access and Affordability for Medicare's Low-Income Beneficiaries.

Issue: An estimated 40 percent of low-income Medicare beneficiaries spend 20 percent or more of their incomes on premiums and health care costs. Low-income beneficiaries with multiple chronic conditions or high need are at particular risk of financial hardship. High cost burdens reflect Medicare premiums and cost-sharing, gaps in benefits, and limited assistance. Existing policies to help people with low incomes are fragmented ­ meaning that beneficiaries apply separately, sometimes to different offices ­ and require Medicare beneficiaries to navigate complex applications. Goals: With the goal of enhancing access and affordability for people vulnerable due to low incomes and poor health, this issue brief proposes a policy that would reduce Medicare's cost-sharing and premiums for beneficiaries with incomes below 150 percent of the federal poverty level. Methods: Profile current cost burdens by income groups and assess the potential impact of a policy to expand cost-sharing and premium assistance using the 2012 Medicare Current Beneficiary Survey projected to 2016. Results and Conclusion: The policy described could help 8.1 million low-income beneficiaries, significantly lowering their risk of high cost burdens. It also could simplify the administration of assistance provided to these enrollees.

Understanding Trends in Medicare Spending, 2007-2014.

OBJECTIVES: To analyze the sources of per-beneficiary Medicare spending growth between 2007 and 2014, including the role of demographic characteristics, attributes of Medicare coverage, and chronic conditions. DATA SOURCES: Individual-level Medicare spending and enrollment data. STUDY DESIGN: Using an Oaxaca-Blinder decomposition model, we analyzed whether changes in price-standardized, per-beneficiary Medicare Part A and B spending reflected changes in the composition of the Medicare population or changes in relative spending levels per person. DATA EXTRACTION METHODS: We identified a 5 percent sample of fee-for-service Medicare beneficiaries age 65 and above from years 2007 to 2014. RESULTS: Mean payment-adjusted Medicare per-beneficiary spending decreased by $180 between the 2007-2010 and 2011-2014 time periods. This decline was almost entirely attributable to lower spending levels for beneficiaries. Notably, declines in marginal spending levels for beneficiaries with chronic conditions were associated with a $175 reduction in per-beneficiary spending. The decline was partially offset by the increasing prevalence of certain chronic diseases. Still, we are unable to attribute a large share of the decline in spending levels to observable beneficiary characteristics or chronic conditions. CONCLUSIONS: Declines in spending levels for Medicare beneficiaries with chronic conditions suggest that changing patterns of care use may be moderating spending growth.

The Role of Medicare's Inpatient Cost-Sharing in Medicaid Entry.

OBJECTIVE: To isolate the effect of greater inpatient cost-sharing on Medicaid entry among Medicare beneficiaries. DATA SOURCES: Medicare administrative data (years 2007-2010) were linked to nursing home assessments and area-level socioeconomic indicators. STUDY DESIGN: Medicare beneficiaries who are readmitted to a hospital must pay an additional deductible ($1,100 in 2010) if their readmission occurs more than 59 days following discharge. In a regression discontinuity analysis, we take advantage of this Medicare benefit feature to test whether beneficiaries with greater cost-sharing have higher rates of Medicaid enrollment. DATA EXTRACTION METHODS: We identified 221,248 Medicare beneficiaries with an initial hospital stay and a readmission 53-59 days later (no deductible) or 60-66 days later (charged a deductible). PRINCIPAL FINDINGS: Among beneficiaries in low-socioeconomic areas with two hospitalizations, those readmitted 60-66 days after discharge were 21 percent more likely to join Medicaid compared with those readmitted 53-59 days following their initial hospitalization (absolute difference in adjusted risk of Medicaid entry: 3.7 percent vs. 3.1 percent, p = .01). CONCLUSIONS: Increasing Medicare cost-sharing requirements may promote Medicaid enrollment among low-income beneficiaries. Potential savings from an increased cost-sharing in the Medicare program may be offset by increased Medicaid participation.

Medicare Program; Medicare Shared Savings Program; Accountable Care Organizations--Pathways to Success and Extreme and Uncontrollable Circumstances Policies for Performance Year 2017. Final rules.

Under the Medicare Shared Savings Program (Shared Savings Program), providers of services and suppliers that participate in an Accountable Care Organization (ACO) continue to receive traditional Medicare fee-for-service (FFS) payments under Parts A and B, but the ACO may be eligible to receive a shared savings payment if it meets specified quality and savings requirements. The policies included in this final rule provide a new direction for the Shared Savings Program by establishing pathways to success through redesigning the participation options available under the program to encourage ACOs to transition to two-sided models (in which they may share in savings and are accountable for repaying shared losses). These policies are designed to increase savings for the Trust Funds and mitigate losses, reduce gaming opportunities, and promote regulatory flexibility and free-market principles. This final rule also provides new tools to support coordination of care across settings and strengthen beneficiary engagement; and ensure rigorous benchmarking. In this final rule, we also respond to public comments we received on the extreme and uncontrollable circumstances policies for the Shared Savings Program that were used to assess the quality and financial performance of ACOs that were subject to extreme and uncontrollable events, such as Hurricanes Harvey, Irma, and Maria, and the California wildfires, in performance year 2017, including the applicable quality data reporting period for performance year 2017.

Cost Implications of Primary Versus Revision Surgery in Adult Spinal Deformity.

BACKGROUND: Adult spinal deformity (ASD) is an important problem to consider in the elderly. Although studies have examined the complications of ASD surgery and have compared functional and radiographic results of primary surgery versus revision, no studies have compared the costs of primary procedures with revisions. We assessed the in-hospital costs of these 2 surgery types in patients with ASD. METHODS: The PearlDiver Database, a database of Medicare records, was used in this study. Mutually exclusive groups of patients undergoing primary or revision surgery were identified. Patients in each group were queried for age, sex, and comorbidities. Thirty-day readmission rates, 30-day and 90-day complication rates, and postoperative costs of care were assessed with multivariate analysis. For analyses, significance was set at P < 0.001. RESULTS: The average reimbursement of the primary surgery cohort was $57,078 ± $30,767. Reimbursement of revision surgery cohort was $52,999 ± $27,658. The adjusted difference in average costs between the 2 groups is $4773 ± $1069 (P < 0.001). The 30-day and 90-day adjusted difference in cost of care when sustaining any of the major medical complications in primary surgery versus revision surgery was insignificant. CONCLUSIONS: Patients undergoing primary and revision corrective procedures for ASD have similar readmission rates, lengths of stays, and complication rates. Our data showed a higher cost of primary surgery compared with revision surgery, although costs of sustaining postoperative complications were similar. This finding supports the decision to perform revision procedures in patients with ASD when indicated because neither outcomes nor costs are a hindrance to correction.

Damage caps and defensive medicine, revisited.

Does tort reform reduce defensive medicine and thus healthcare spending? Several (though not all) prior studies, using a difference-in-differences (DiD) approach, find lower Medicare spending for hospital care after states adopt caps on non-economic or total damages ("damage caps"), during the "second" reform wave of the mid-1980s. We re-examine this issue in several ways. We study the nine states that adopted caps during the "third reform wave," from 2002 to 2005. We find that damage caps have no significant impact on Medicare Part A spending, but predict roughly 4% higher Medicare Part B spending. We then revisit the 1980s caps, and find no evidence of a post-adoption drop (or rise) in spending for these caps.

Medicare Program; Advancing Care Coordination Through Episode Payment Models (EPMs); Cardiac Rehabilitation Incentive Payment Model; and Changes to the Comprehensive Care for Joint Replacement Model (CJR). Final rule.

This final rule implements three new Medicare Parts A and B episode payment models, a Cardiac Rehabilitation (CR) Incentive Payment model and modifications to the existing Comprehensive Care for Joint Replacement model under section 1115A of the Social Security Act. Acute care hospitals in certain selected geographic areas will participate in retrospective episode payment models targeting care for Medicare fee-forservice beneficiaries receiving services during acute myocardial infarction, coronary artery bypass graft, and surgical hip/femur fracture treatment episodes. All related care within 90 days of hospital discharge will be included in the episode of care. We believe these models will further our goals of improving the efficiency and quality of care for Medicare beneficiaries receiving care for these common clinical conditions and procedures.

Meaningful Use of Electronic Health Records and Medicare Expenditures: Evidence from a Panel Data Analysis of U.S. Health Care Markets, 2010-2013.

OBJECTIVE: To determine if recent growth in hospital and physician electronic health record (EHR) adoption and use is correlated with decreases in expenditures for elderly Medicare beneficiaries. DATA SOURCES: American Hospital Association (AHA) General Survey and Information Technology Supplement, Health Information Management Systems Society (HIMSS) Analytics survey, SK&A Information Services, and the Centers for Medicare & Medicaid Services (CMS) Chronic Conditions Data Warehouse Geographic Variation Database for 2010 through 2013. STUDY DESIGN: Fixed effects model comparing associations between hospital referral region (HRR) level measures of hospital and physician EHR penetration and annual Medicare expenditures for beneficiaries with one of four chronic conditions. Calculated hospital penetration rates as the percentage of Medicare discharges from hospitals that satisfied criteria analogous to Meaningful Use (MU) Stage 1 requirements and physician rates as the percentage of physicians using ambulatory care EHRs. PRINCIPAL FINDINGS: An increase in the hospital penetration rate was associated with a small but statistically significant decrease in total Medicare and Medicare Part A acute care expenditures per beneficiary. An increase in physician EHR penetration was also associated with a significant decrease in total Medicare and Medicare Part A acute care expenditures per beneficiary as well as a decrease in Medicare Part B expenditures per beneficiary. For the study population, we estimate approximately $3.8 billion in savings related to hospital and physician EHR adoption during 2010-2013. We also found that an increase in physician EHR penetration was associated with an increase in lab test expenses. CONCLUSIONS: Health care markets that had steeper increases in EHR penetration during 2010-2013 also had steeper decreases in total Medicare and acute care expenditures per beneficiary. Markets with greater increases in physician EHR had greater declines in Medicare Part B expenditures per beneficiary.

Variation in Payment Rates under Medicare's Inpatient Prospective Payment System.

OBJECTIVE: To measure variation in payment rates under Medicare's Inpatient Prospective Payment System (IPPS) and identify the main payment adjustments that drive variation. DATA SOURCES/STUDY SETTING: Medicare cost reports for all Medicare-certified hospitals, 1987-2013, and Dartmouth Atlas geographic files. STUDY DESIGN: We measure the Medicare payment rate as a hospital's total acute inpatient Medicare Part A payment, divided by the standard IPPS payment for its geographic area. We assess variation using several measures, both within local markets and nationally. We perform a factor decomposition to identify the share of variation attributable to specific adjustments. We also describe the characteristics of hospitals receiving different payment rates and evaluate changes in the magnitude of the main adjustments over time. DATA COLLECTION/EXTRACTION METHODS: Data downloaded from the Centers for Medicare and Medicaid Services, the National Bureau of Economic Research, and the Dartmouth Atlas. PRINCIPAL FINDINGS: In 2013, Medicare paid for acute inpatient discharges at a rate 31 percent above the IPPS base. For the top 10 percent of discharges, the mean rate was double the IPPS base. Variations were driven by adjustments for medical education and care to low-income populations. The magnitude of variation has increased over time. CONCLUSIONS: Adjustments are a large and growing share of Medicare hospital payments, and they create significant variation in payment rates.

Comparing the Cost of Caring for Medicare Beneficiaries in Federally Funded Health Centers to Other Care Settings.

OBJECTIVE: To compare total annual costs for Medicare beneficiaries receiving primary care in federally funded health centers (HCs) to Medicare beneficiaries in physician offices and outpatient clinics. DATA SOURCES/STUDY SETTINGS: Part A and B fee-for-service Medicare claims from 14 geographically diverse states. The sample was restricted to beneficiaries residing within primary care service areas (PCSAs) with at least one HC. STUDY DESIGN: We modeled separately total annual costs, annual primary care costs, and annual nonprimary care costs as a function of patient characteristics and PCSA fixed effects. DATA COLLECTION: Data were obtained from the Centers for Medicare & Medicaid Services. PRINCIPAL FINDINGS: Total median annual costs (at $2,370) for HC Medicare patients were lower by 10 percent compared to patients in physician offices ($2,667) and by 30 percent compared to patients in outpatient clinics ($3,580). This was due to lower nonprimary care costs in HCs, despite higher primary care costs. CONCLUSIONS: HCs may offer lower total cost practice style to the Centers for Medicare & Medicaid Services, which administers Medicare. Future research should examine whether these lower costs reflect better management by HC practitioners or more limited access to specialty care by HC patients.

Cost Drivers After Surgical Management of Proximal Humerus Fractures in Medicare Patients.

OBJECTIVES: This comparative effectiveness study sought to determine the impact of complications, readmission, and procedure choice on in-hospital and total 90-day costs for surgical management of proximal humerus fractures. METHODS: Medicare claims data from the Upstate New York area (2008-2009) were evaluated. The study included all patients treated with open reduction and internal fixation (ORIF) or hemiarthroplasty for proximal humerus fracture identified by ICD-9 codes. The primary end points included in-hospital costs and total health care costs within 90 days after the index operation. Multivariable generalized linear models with negative binomial distributions and log link function were used for cost analysis. RESULTS: ORIF was performed in 52 cases and hemiarthroplasty in 57 cases, total n = 109. On univariate analysis, readmission increased in-hospital cost by $54,345 and total 90-day costs by $63,104, whereas complications increased in-hospital cost by $23,300 and total 90-day costs by $30,237. On multivariable analysis, ORIF was associated with 29% lower in-hospital cost compared with hemiarthroplasty [Odds Ratio 0.71; 95% Confidence Interval (CI), 0.54-0.92; P = 0.01], and readmission was associated with a 5.68-fold in-hospital cost increase (Odds Ratio 5.68; CI, 3.57-9.03; P < 0.0001). CONCLUSIONS: Complications and hospital readmission continue to drive cost upward underscoring the need for best practice. The acute inpatient period costs may be decreased with ORIF in appropriately selected patients with proximal humerus fractures in comparison with hemiarthroplasty. This study provides real world cost estimates with the cost implications of complications, readmissions, and procedure choice. LEVEL OF EVIDENCE: Economic Level IV. See Instructions for Authors for a complete description of levels of evidence.

Medicare Program; Comprehensive Care for Joint Replacement Payment Model for Acute Care Hospitals Furnishing Lower Extremity Joint Replacement Services. Final rule.

This final rule implements a new Medicare Part A and B payment model under section 1115A of the Social Security Act, called the Comprehensive Care for Joint Replacement (CJR) model, in which acute care hospitals in certain selected geographic areas will receive retrospective bundled payments for episodes of care for lower extremity joint replacement (LEJR) or reattachment of a lower extremity. All related care within 90 days of hospital discharge from the joint replacement procedure will be included in the episode of care. We believe this model will further our goals in improving the efficiency and quality of care for Medicare beneficiaries with these common medical procedures.

Total cost of care lower among Medicare fee-for-service beneficiaries receiving care from patient-centered medical homes.

OBJECTIVE: To compare health care utilization and payments between NCQA-recognized patient-centered medical home (PCMH) practices and practices without such recognition. DATA SOURCES: Medicare Part A and B claims files from July 1, 2007 to June 30, 2010, 2009 Census, 2007 Health Resources and Services Administration and CMS Utilization file, Medicare's Enrollment Data Base, and the 2005 American Medical Association Physician Workforce file. STUDY DESIGN: This study used a longitudinal, nonexperimental design. Three annual observations (July 1, 2008-June 30, 2010) were available for each practice. We compared selected outcomes between practices with and those without NCQA PCMH recognition. DATA COLLECTION METHODS: Individual Medicare fee-for-service (FFS) beneficiaries and their claims and utilization data were assigned to PCMH or comparison practices based on where they received the plurality of evaluation and management services between July 1, 2007 and June 30, 2008. PRINCIPAL FINDINGS: Relative to the comparison group, total Medicare payments, acute care payments, and the number of emergency room visits declined after practices received NCQA PCMH recognition. The decline was larger for practices with sicker than average patients, primary care practices, and solo practices. CONCLUSIONS: This study provides additional evidence about the potential of the PCMH model for reducing health care utilization and the cost of care.