The impact of the prospective payment system on the treatment of hip fractures in the elderly.

A review of 386 Medicare patients with hip fractures admitted to a private, suburban, teaching hospital from 1981 through 1987 revealed that since the implementation of the prospective payment system in 1984, average hospital stays declined from 17.0 days to 12.9 days (24.1%). Although the mean number of physical therapy sessions declined from 11.1 to 9.8 (11.7%), the average number of treatments per day during the physical therapy phase actually increased from 1.2 before to 1.4 after the prospective payment system. The proportion of patients discharged to nursing homes remained the same (52.9% vs 53.6%); the proportion of patients remaining in a nursing home 6 months after hospital discharge did not differ significantly (22.6% vs 19.9%). Furthermore, there were no differences in the 6-month ambulation status. Total adjusted average hospital charges for the pre- and post-prospective payment system groups did not increase significantly ($7295 vs $7565). These findings do not support the contention that the quality of care provided Medicare patients with hip fractures has deteriorated in this hospital environment.

Gene therapy: socioeconomic and ethical issues. A roundtable discussion.

Gene therapy research has the potential to revolutionize the way in which many human diseases are treated. Despite its enormous potential, roundtable panelists concluded that the field needs time to mature scientifically without pressure to develop a marketable therapeutic product. In addition, health care decision makers, physicians, and the lay public need to be educated on the future medical, economic, and ethical ramifications of gene therapy.

Cost per service differentials in local health departments.

An emerging issue in health care is the relative efficiency with which local health departments provide their services. The problem is complicated by the fact that many factors may contribute to variations in efficiency. We have developed a framework for analyzing such variations across departments, using cost per service (CPS) as the measure of efficiency. The approach is illustrated with data from all 82 county or district health departments in North Carolina. CPS levels can be differentially affected by selected uncontrollable characteristics of the serviced population. Thus, when used to evaluate departmental performance, or to determine reimbursement rates, the CPS must be adjusted for relevant exogenous factors. Our method of cluster analysis accounts "naturally" for these factors, thereby allowing for development of policy decisions more responsive to actual health department circumstances.

Comparison of general internists, family physicians, and rheumatologists managing patients with symptoms of osteoarthritis of the knee.

OBJECTIVE: To evaluate the nature, risks, and benefits of osteoarthritis (OA) management by primary care physicians and rheumatologists. METHODS: Subjects were 419 patients followed for symptoms of knee OA by either a specialist in family medicine (FM) or general internal medicine (GIM) or by a rheumatologist (RH). Management practices were characterized by in-home documentation by a visiting nurse of drugs taken to relieve OA pain or to prevent gastrointestinal side effects of nonsteroidal anti-inflammatory drugs (NSAIDs) and by patient report (self-administered survey) of nonpharmacologic treatments. Changes in outcomes (knee pain and physical function) over 6 months were measured with the Western Ontario and McMaster Universities Osteoarthritis Index. RESULTS: Patients of RHs were 2-3 years older (P = 0.035) and tended to exhibit greater radiographic severity of OA (P = 0.064) and poorer physical function (P = 0.076) at baseline than the other 2 groups. In all 3 groups, knee pain and physical function improved slightly over 6 months; however, between-group differences were not significant. Compared to drug management of knee pain by FMs or RHs, that by the GIMs was distinguished by greater utilization of acetaminophen and nonacetylated salicylates (P = 0.008), lower prescribed doses of NSAIDs (P = 0.007), and, therefore, lower risk of iatrogenic gastroenteropathy (P < 0.001). In contrast, patients of RHs were more likely than those of FMs and GIMs to report that they had been instructed in use of isometric quadriceps and range-of-motion exercises (P < or = 0.001), application of heat (P = 0.051) and cold (P < 0.001) packs, and in the principles of joint protection (P = 0.016). Neither physician specialty nor specific management practices accounted for variations in patient outcomes. CONCLUSION: This observational study identified specialty-related variability in key aspects of the management of knee OA in the community (i.e., frequency and dosing of NSAIDs, use of nonpharmacologic modalities) that bear strong implications for long-term safety and cost. However, changes in knee pain and function over 6 months were unrelated to variations in management practices.

Does hospital procedure-specific volume affect treatment costs? A national study of knee replacement surgery.

OBJECTIVE: The long-run cost savings potential of private sector reform efforts, such as selective contracts with providers, depends in part on the relationship between procedure-specific volume and average hospital resources that are consumed in treating patients associated with that specific procedure. Study examines a model that estimates the relationship between hospital procedure-specific volume and average hospital treatment costs, using an elective surgical procedure as an example. DATA SOURCES: Medicare Provider Analysis and Review (MedPAR) files for 1989 for hospitalizations in which a Medicare beneficiary received a knee replacement (KR) surgery during 1989. Hospital information was obtained from the American Hospital Association's 1989 Annual Survey. All patient-level data were aggregated to the hospital level to create a data file, with the hospital as the unit of observation. STUDY DESIGN: This study used administrative claims data and regression analysis to estimate the effect of hospital procedure-specific volume on average hospital treatment costs of patients receiving KR surgery. We also examined the stability of the volume-cost relationship across hospitals of different sizes. PRINCIPAL FINDING: The average treatment costs associated with KR surgery are inversely related to a hospital's KR volume in the regression equation estimated using all hospitals performing KR surgery. The inverse relationship between cost and volume is found to be robust for different-size hospitals. CONCLUSIONS: The potential cost savings associated with performing KR surgery at incrementally higher hospital volume level can amount to as much as 10 percent of the hospital's average treatment cost. However, the incremental cost savings associated with increased patient volume depends on the hospital's current volume level and its size.

The long-term effects of Medicaid managed care on obstetrics care in three California counties.

OBJECTIVE: To evaluate the long-term effects of Medicaid managed care (MMC) on obstetric service use and program costs in California. DATA SOURCES/STUDY SETTING: Longitudinal administrative data on Medi-Cal enrollment and claims and encounters related to pregnancy and delivery services were gathered from three counties--two long-standing MMC counties and one traditional fee-for-service Medicaid county--in California between 1987 and 1992. STUDY DESIGN: We studied Aid to Families with Dependent Children (AFDC) beneficiaries with live singleton vaginal deliveries with associated hospital stays of 14 days or less. Effects of managed care were examined with respect to prenatal visits, length of stay for delivery, maternal postpartum readmission rates, and total program expenditures. Multivariate analyses examined how the relative effect of managed care on service use and program expenditures in each MMC county evolves over time in comparison to fee-for-service. We controlled for length of Medi-Cal enrollment prior to delivery, data censoring, and individual characteristics such as race and age. PRINCIPAL FINDINGS: Prenatal care use is consistently lower in the MMC counties, although all three counties' prenatal care provision is well below the national standard. Drastic increases in one-day-stay deliveries were found: up to almost 50 percent of deliveries in MMC counties were one-day stays. Program cost savings associated with MMC enrollment are unambiguous. CONCLUSIONS: MMC cost savings might have come at the expense of reduced provision of prenatal care and shorter delivery length of stay. Future studies should verify any possible causal link and the effects on maternal and infant health outcomes.

A method for constructing case-mix indexes, with application to hospital length of stay.

This article presents the methodological development of an index for case-mix adjustment of hospital data exemplified by our construction of an index for studying length of stay. We describe the development and evaluation of this index, including internal and external validation procedures, and show an example of its use in a policy-relevant context by applying it to the analysis of length-of-stay differences between investor-owned and voluntary hospitals. Some advantages of this approach to adjusting for case mix are applicability to many hospital or patient output measurements/diagnostic scheme situations; usefulness in reducing heterogeneity in other case-mix adjustments, e.g., the Diagnosis-Related Group (DRG) approach; interpretation possibilities; production of a single score for each patient/hospital; statistical approach allowing more accurate and reliable interpretation of hospital and patient output measurements, ability to deal with hospital deaths; and consideration of the complete set of secondary diagnoses. We also suggest other possible uses of this approach.

Demographic variation in the rate of knee replacement: a multi-year analysis.

OBJECTIVE: The aim of this study is to describe the practice variation of knee replacements (KRs) in the elderly ( > or = 65) over time from 1985-1990 in terms of the number of primary, bilateral, and revision KRs; the extent of large area variation in performance rates; and the degree to which demographic variables are the determinants of area rates. DATA SOURCES/STUDY SETTING: Data analyzed are from every hospital in the United States that performed a KR on a Medicare patient during the study period. Data were obtained from the MEDPAR, HISKEW, and denominator files of the Medicare Statistical System. STUDY DESIGN: This is a cohort study of all Medicare beneficiaries who received a KR between 1985 and 1990. The dependent variable in the analyses was the count of the KRs performed in each area. DATA COLLECTION/EXTRACTION METHODS: This is a population-based sample of Medicare enrollees in the United States. All hospitalizations for Medicare-reimbursed KRs were included in the initial data set. Exclusion criteria were used to identify the Medicare covered population with a definite KR. These criteria resulted in 7.3 percent exclusions and a final set of 414,079 KR hospitalizations. PRINCIPAL FINDINGS: The number of Medicare-funded KRs increased in each of the study years corresponding to an annual rate of increase of 18.45 percent. The likelihood of receiving a KR was a function of age, gender, and race. For each year, KRs were almost-twice as likely to be performed on women than on men. The odds of whites getting the surgery were over 1.5 times greater than for blacks. Even after adjusting for demographic factors, significant regional variation remained. CONCLUSIONS: Much about area variation and the rate of growth in KR rates remains unexplained. For answers to emerge, better data and different types of studies are required.

Overview of Medicaid capitation and case-management initiatives.

Case-management programs have grown in number and in acceptance in the Medicaid program since 1981. In this article, we review their structure and incentives as well as what is known about their impact on cost and use. These programs also have been difficult to implement, posing myriad management challenges for prepaid program managers and State administrators. We highlight the problems in the following areas: eligibility, enrollment, rate setting, and management information systems.

Evaluation of the Medicaid competition demonstrations.

In 1983, the Health Care Financing Administration funded a multiyear evaluation of Medicaid demonstrations in six States. The alternative delivery systems represented by the demonstrations contained a number of innovative features, most notably capitation, case management, limitations on provider choice, and provider competition. Implementation and operation issues as well as demonstration effects on utilization and cost of care, administrative costs, rate setting, biased selection, quality of care, and access and satisfaction were evaluated. Both primary and secondary data sources were used in the evaluation. This article contains an overview and summary of evaluation findings on the effects of the demonstrations.

Principles of pharmacoeconomic analysis of drug therapy.

Economic analyses have become increasingly important in healthcare in general and with respect to pharmaceuticals in particular. If economic analyses are to play an important and useful role in the allocation of scarce healthcare resources, then such analyses must be performed properly and with care. This article outlines some of the basic principles of pharmacoeconomic analysis. Every analysis should have an explicitly stated perspective, which, unless otherwise justified, should be a societal perspective. Cost minimisation, cost-effectiveness, cost-utility and cost-benefit analyses are a family of techniques used in economic analyses. Cost minimisation analysis is appropriate when alternative therapies have identical outcomes, but differ in costs. Cost-effectiveness analysis is appropriate when alternative therapies differ in clinical effectiveness but can be examined from the same dimension of health outcome. Cost-utility analysis can be used when alternative therapies may be examined using multiple dimensions of health outcome, such as morbidity and mortality. Cost-benefit analysis requires the benefits of therapy to be described in monetary units and is not usually the technique of choice. The technique used in an analysis should be described and explicitly defended according to the problem being examined. For each technique, the method of determining costs is the same; direct, indirect, and intangible costs can be considered. The specific costs to be used depend on the analytical perspective; a societal perspective implies the use of both direct and indirect economic costs. A modelling framework such as a decision tree, influence diagram, Markov chain, or network simulation must be used to structure the analysis explicitly. Regardless of the choice of framework, all modelling assumptions should be described. The mechanism of data collection for model inputs must be detailed and defended. Models must undergo careful verification and validation procedures. Following baseline analysis of the model, further analyses should examine the role of uncertainty in model assumptions and data.

Competitive health plans and alternative payment arrangements for physicians in the United States: public sector examples.

The Medicaid program in the United States is moving to a competitive managed care system whereby patients no longer have freedom of choice of physicians and physicians are given incentives to provide care cost effectively. The wide variety of competitive managed care programs represents attempts to introduce rationality into the relationship between consumers and providers in a community. Early evidence, based largely on preliminary data analysis indicates that competing plans which place physicians at some financial risk and also employ administrative mechanisms, are more likely to show cost savings than health plans that do not employ these methods.

Determinants of provider selection or assignment in a mandatory case management program and their implications for utilization.

Mandatory managed-care programs for Medicaid beneficiaries typically require enrollees to select the provider who will act as gatekeeper to the medical care system. A substantial number of beneficiaries, however, do not exercise this choice and are assigned a gatekeeper. Using consumer survey data from the Missouri Managed Health Care Project, we examined characteristics and use experiences of assignees compared with selectors. We found that the assignees enjoyed better health than the selectors and were less likely to have had a regular source of care prior to the program. The utilization experience was similar for both groups. We conclude that the basis for not making a choice is one of indifference.

Rollover effects in gatekeeper programs: cushioning the impact of restricted choice.

Public and private medical care plans that restrict the beneficiary's choice of providers have experienced rapid growth in the past decade as a means to contain costs and coordinate care. Such plans have been criticized for engendering beneficiary dissatisfaction and potentially impeding access to necessary care. Some of the objections to primary care "gatekeeping" may be diminished by recruiting the physician who served previously as the beneficiary's "usual source of care" to assume the role of formal gatekeeper. This study examines how persons whose gatekeepers were their regular source of care before plan implementation differed in their use and satisfaction from persons required to change their regular source of care. Our findings indicate that satisfaction was significantly higher among individuals who experienced no change in usual source of care. These individuals also tended to be less likely to use the emergency department as a source of care. Although the data are from Medicaid managed care programs, the findings may also be applicable to private sector point-of-service plans that adopt the primary care gatekeeper model.

Serious illness and private health coverage: a unique problem calling for unique solutions.

Authors examine the experience of two nonelderly adult populations in Indiana and their difficulties in obtaining and retaining health insurance once diagnosed with a serious chronic or catastrophic disease.

Gatekeeper effects on patterns of physician use.

The impact of primary care gatekeeping on selected patterns of physician use was examined among Medicaid beneficiaries in two demonstration programs. The evidence indicates that beneficiaries enrolled with gatekeepers were significantly less likely to see specialists when compared with unenrolled beneficiaries in comparison groups. Primary care visits increased to offset these reductions only when gatekeepers were paid on a fee-for-service basis. Increased overall reliance on primary care physicians as opposed to specialists was also observed in the gatekeeper programs. Findings also indicate that enrolled beneficiaries received care from fewer sources than they had prior to enrollment. Although these changes in patterns of use have the potential to assure access to a more stable and structured system of care, the clinical and long-term economic consequences of such changes remain unknown.