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.

Recovery Audit Contractor audits and appeals at three academic medical centers.

BACKGROUND: Outpatient (observation) and inpatient status determinations for hospitalized Medicare beneficiaries have generated increasing concern for hospitals and patients. Recovery Audit Contractor (RAC) activity alleging improper status, however, has received little attention, and there are conflicting federal and hospital reports of RAC activity and hospital appeals success. OBJECTIVE: To detail complex Medicare Part A RAC activity. DESIGN, SETTING AND PATIENTS: Retrospective descriptive study of complex Medicare Part A audits at 3 academic hospitals from 2010 to 2013. MEASUREMENTS: Complex Part A audits, outcome of audits, and hospital workforce required to manage this process. RESULTS: Of 101,862 inpatient Medicare encounters, RACs audited 8110 (8.0%) encounters, alleged overpayment in 31.3% (2536/8110), and hospitals disputed 91.0% (2309/2536). There was a nearly 3-fold increase in RAC overpayment determinations in 2 years, although the hospitals contested and won a larger percent of cases each year. One-third (645/1935, 33.3%) of settled claims were decided in the discussion period, which are favorable decisions for the hospitals not reported in federal appeals data. Almost half (951/1935, 49.1%) of settled contested cases were withdrawn by the hospitals and rebilled under Medicare Part B to avoid the lengthy (mean 555 [SD 255] days) appeals process. These original inpatient claims are considered improper payments recovered by the RAC. The hospitals also lost appeals (0.9%) by missing a filing deadline, yet there was no reciprocal case concession when the appeals process missed a deadline. No overpayment determinations contested the need for care delivered, rather that care should have been delivered under outpatient, not inpatient, status. The institutions employed an average 5.1 full-time staff in the audits process. CONCLUSIONS: These findings suggest a need for RAC reform, including improved transparency in data reporting.

Health care: economic impact of caring for geriatric patients.

National health care expenditures constitute a continuously expanding component of the US economy. Health care resources are distributed unequally among the population, and geriatric patients are disproportionately represented. Characterizing this group of individuals that accounts for the largest percentage of US health spending may facilitate the introduction of targeted interventions in key high-impact areas. Changing demographics, an increasing incidence of chronic disease and progressive disability, rapid technological advances, and systemic market failures in the health care sector combine to drive cost. A multidisciplinary approach will become increasingly necessary to balance the delicate relationship between our constrained supply and increasing demand.

Prevalence and risk factors for periprosthetic fracture in older recipients of total hip replacement: a cohort study.

BACKGROUND: The growing utilization of total joint replacement will increase the frequency of its complications, including periprosthetic fracture. The prevalence and risk factors of periprosthetic fracture require further study, particularly over the course of long-term follow-up. The objective of this study was to estimate the prevalence and risk factors for periprosthetic fractures occurring in recipients of total hip replacement. METHODS: We identified Medicare beneficiaries who had elective primary total hip replacement (THR) for non-fracture diagnoses between July 1995 and June 1996. We followed them using Medicare Part A claims data through 2008. We used ICD-9 codes to identify periprosthetic femoral fractures occurring from 2006-2008. We used the incidence density method to calculate the annual incidence of these fractures and Cox proportional hazards models to identify risk factors for periprosthetic fracture. We also calculated the risk of hospitalization over the subsequent year. RESULTS: Of 58,521 Medicare beneficiaries who had elective primary THR between July 1995 and June 1996, 32,463 (55%) survived until January 2006. Of these, 215 (0.7%) developed a periprosthetic femoral fracture between 2006 and 2008. The annual incidence of periprosthetic fracture among these individuals was 26 per 10,000 person-years. In the Cox model, a greater risk of periprosthetic fracture was associated with having had a total knee replacement (HR 1.82, 95% CI 1.30, 2.55) or a revision total hip replacement (HR1.40, 95% CI 0.95, 2.07) between the primary THR and 2006. Compared to those without fractures, THR recipients who sustained periprosthetic femoral fracture had three-fold higher risk of hospitalization in the subsequent year (89% vs. 27%, p<0.0001). CONCLUSION: A decade after primary THR, periprosthetic fractures occur annually in 26 per 10,000 persons and are especially frequent in those with prior total knee or revision total hip replacements.

The effect of severity of disease on cost burden of 30-day readmissions following total joint arthroplasty (TJA).

In order to control the unsustainable rise in healthcare costs the Federal Government is experimenting with the bundled payment model for total joint arthroplasty (TJA). In this risk sharing model, providers are given one payment, which covers the costs of the TJA, as well as any additional medical costs related to the procedure for up to 90 days. The amount and severity of comorbid conditions strongly influence readmission rates and costs of readmissions in TJA patients. We identified 2026 TJA patients from our database with APR-DRG SOI data for use in this study. Both the costs of readmission and the readmission rate tended to increase as severity of illness increased. The readmission burden also increased as SOI increased, but increased most markedly in the extreme SOI patients.

Total joint arthroplasty: trends in medicare reimbursement and implant prices.

Total joint arthroplasty (TJA) continues to be a popular target of cost control efforts. In order to provide a unique overview of financial trends facing TJA, we analyzed Medicare databases including 100% of beneficiaries, as well as industry surveys of implant list prices. Although there was a substantial increase in TJA utilization over the period 2000-2011 (+26.9%), growth has been stagnant since 2005. New coding schemes have made complicated cases more lucrative for hospitals (+2.5% to 6.5% per year), while reimbursements for uncomplicated cases have fallen (-0.7% to -0.6%). Physician reimbursements have declined on all case types (-2.5% to -2.1% per year), while list prices of orthopedic implants have risen (+4.8% to 5.5%). These trends should be kept in mind while contemplating future changes to TJA payment.

Regional variation in medicare imaging utilization and expenditures: 2007-2011 trends and comparison with other health services.

PURPOSE: A 2008 federal report expressed concern regarding substantial regional variation in imaging expenditures. The aims of this study were to evaluate trends in regional variation in Medicare imaging utilization and expenditures from 2007 to 2011 and to compare these trends with regional variation in other health service categories. METHODS: Data were based on CMS's Chronic Condition Data Warehouse and organized on the basis of 306 US health referral regions (HRRs). Imaging costs per beneficiary, standardized for regional differences in reimbursement rates, and imaging utilization per beneficiary were recorded per HRR from 2007 through 2011. Costs and utilization were also recorded for other service categories in 2011. Regional variation was assessed via relative risk (RR; the ratio between the highest and lowest HRRs) and coefficient of variation (CV; the standard deviation divided by the mean among all HRRs). Correlations between imaging and other service categories were assessed using Pearson's correlation coefficient. RESULTS: There was minimal change in regional variation in imaging costs or utilization between 2007 and 2011. Regional variation in imaging costs (RR, 5.70-5.88; CV, 33.0%-33.3%) was considerably greater than variation in imaging utilization (RR, 2.11%-2.25%; CV, 14.2%-14.6%). Imaging costs and utilization showed moderate to strong correlations with those of other service categories (r = 0.572-0.869). In 2011, regional variation in imaging utilization (RR, 2.25; CV, 14.2%) was considerably lower than variation in utilization of other service categories (RR, 2.80-10.78; CV, 20.9%-33.3%). CONCLUSIONS: Regional variation in imaging utilization is considerably lower than both variation in imaging costs and variation in utilization of other major service categories. It is unclear whether variation in imaging utilization provides an optimal individual target for major policy decisions.

Tracking stroke hospitalization clusters over time and associations with county-level socioeconomic and healthcare characteristics.

BACKGROUND AND PURPOSE: This study evaluated clustering of stroke hospitalization rates, patterns of the clustering over time, and associations with community-level characteristics. METHODS: We used Medicare hospital claims data from 1995-1996 to 2005-2006 with a principal discharge diagnosis of stroke to calculate county-level stroke hospitalization rates. We identified statistically significant clusters of high- and low-rate counties by using local indicators of spatial association, tracked cluster status over time, and assessed associations between cluster status and county-level socioeconomic and healthcare profiles. RESULTS: Clearly defined clusters of counties with high- and low-stroke hospitalization rates were identified in each time. Approximately 75% of counties maintained their cluster status from 1995-1996 to 2005-2006. In addition, 243 counties transitioned into high-rate clusters, and 148 transitioned out of high-rate clusters. Persistently high-rate clusters were located primarily in the Southeast, whereas persistently low-rate clusters occurred mostly in New England and in the West. In general, persistently low-rate counties had the most favorable socioeconomic and healthcare profiles, followed by counties that transitioned out of or into high-rate clusters. Persistently high-rate counties experienced the least favorable socioeconomic and healthcare profiles. CONCLUSIONS: The persistence of clusters of high- and low-stroke hospitalization rates during a 10-year period suggests that the underlying causes of stroke in these areas have also persisted. The associations found between cluster status (persistently high, transitional, persistently low) and socioeconomic and healthcare profiles shed new light on the contributions of community-level characteristics to geographic disparities in stroke hospitalizations.

The current status of local medicare payment policy: how specialty societies can influence local coverage determinations.

The Medicare Fee-for-Service Program is in the midst of numerous administrative and regulatory changes that may affect the way local Medicare payment policy is implemented. These changes involve redefining the contractors' jurisdictions, competitive bidding for the contractor selection process, combining the administration of Part A and Part B services, and error rate auditing. In addition, the roles of the Contractor Medical Directors and Contractor Advisory Committees are yet to be defined, and the future of the existing advisory process, while currently unchanged, remains uncertain. Most likely, the majority of coverage decisions will continue to be made at the local level; however, the Centers for Medicare & Medicaid Services (CMS) has begun to increase its use of Technology Assessments and National Coverage Determinations for new technology and has developed a new payment category for coverage of new technology: Coverage with Evidence Development. Specialty societies continue to have the ability to exert influence on the coverage process. The American College of Radiology (ACR) monitors the activity of the local contractors and assists local physicians through the ACR Carrier Advisory Committee Network. The ACR has used a combination of clinical and economic experts to develop model Local Coverage Determinations for use by the local contractors, and some of these model policies have been developed in conjunction with other specialty societies, which bolsters their effectiveness. The changing administrative environment presents challenges and opportunities for specialty societies to influence local CMS payment policy.

New directions in Medicaid payment for hospital care.

Medicaid now pays for 20 percent of all inpatient stays and plays an especially important role in funding obstetric, pediatric, and mental health care. In coming years, policy decisions on inpatient payment may be the most consequential since diagnosis-related groups (DRGs) were introduced two decades ago. This study describes Medicaid's growing role in purchasing inpatient care, reports Medicaid-specific results from an evaluation of three DRG algorithms, provides a case study of a new payment method designed in Mississippi, and summarizes recent developments in paying for quality.

On solid ground. Revenue gains continue to outpace growth in expenses, allowing U.S. hospitals to enjoy record profit and margin.

Hospitals enjoyed a surge in profits last year, reporting an aggregate profit margin of 6%. Executives at financially strong systems credit long-term efforts to improve performance for the results. Elizabeth Concordia, left, of the University of Pittsburgh Medical Center system, says its efforts stressed ongoing consolidation and integration to wipe out waste and errors.

Trends in Medicare disproportionate share (DSH) distribution in US hospitals: 1996-2003.

Implemented in 1986, Medicare's disproportionate share (DSH) adjustment is intended to recognize hospitals' additional resource investment in caring for low-income patients. This project analyzed changes in the DSH percentage between 1996 and 2003 and examined the association between selected hospital characteristics and such changes. Results obtained revealed some interesting findings. First, minimal changes in DSH percentage occurred during the period 1996-1999 with a hike in that ratio in 2000-2001. However, even with the absence of any legislative or executive changes to the DSH threshold or formula during 2002 and 2003, significant increases occurred during 2001-2003 (11 percent increase between 2001 and 2003). Such an increase may be caused by the nation's economic situation during that timeframe (i.e., more people depending on public programs for coverage).

Medicare program; changes to the hospital inpatient prospective payment systems and fiscal year 2004 rates. Final rule.

We are revising the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital costs to implement changes arising from our continuing experience with these systems. In addition, in the Addendum to this final rule, we are describing changes to the amounts and factors used to determine the rates for Medicare hospital inpatient services for operating costs and capital-related costs. These changes are applicable to discharges occurring on or after October 1, 2003. We also are setting forth rate-of-increase limits as well as policy changes for hospitals and hospital units excluded from the IPPS that are paid on a cost basis subject to these limits. Among other changes that we are making are: changes to the classification of cases to the diagnosis-related groups (DRGS); changes to the long-term care (LTC)-DRGs and relative weights; the introduction of updated wage data used to compute the wage index; the approval of new technologies for add-on payments; changes to the policies governing postacute care transfers; payments to hospitals for the direct and indirect costs of graduate medical education; pass-through payments for nursing and allied health education programs; determination of hospital beds and patient days for payment adjustment purposes; and payments to critical access hospitals (CAHs).