Managing the care of schizophrenia. Lessons from a 4-year Massachusetts Medicaid study.

BACKGROUND: In 1992, Massachusetts launched a state-wide managed care plan for all Medicaid beneficiaries. METHODS: This retrospective, multi-year, cross-sectional study used administrative data from the Massachusetts Division of Medical Assistance and Department of Mental Health, consisting of claims for 16,400 disabled adult patients insured by Medicaid in Massachusetts between July 1, 1990, and June 30, 1994. The main outcome measures include annual rates of hospitalization, emergency department utilization, and follow-up care 30 days after discharge; length of inpatient stay; and per-person inpatient and outpatient expenditures. RESULTS: Between 1991 and 1994, the likelihood of an inpatient admission decreased from 29% to 24% and was accompanied by a slight reduction in length of stay (median number of bed-days per admission dropped by 3.3 days). There was a slight decrease in the number of patients who sought care in general hospital emergency department utilization. However, there was a small increase in the fraction of patients readmitted within 30 days of discharge. Medicaid and Department of Mental Health expenditures for mental health per treated beneficiary decreased slightly, from $11,060 to $10,640, during the 4-year study period. CONCLUSION: Although per-person expenditures dropped and most patient patterns of care remained the same, longer-term study is recommended to asses whether the trends can be maintained.

Addressing selection bias in dental health services research.

When randomization is not possible, researchers must control for non-random assignment to experimental groups. One technique for statistical adjustment for non-random assignment is through the use of a two-stage analytical technique. The purpose of this study was to demonstrate the use of this technique to control for selection bias in examining the effects of the The Supplemental Program for Women, Infants, and Children's (WIC) on dental visits. From 5 data sources, an analysis file was constructed for 49,512 children ages 1-5 years. The two-stage technique was used to control for selection bias in WIC participation, the potentially endogenous variable. Specification tests showed that WIC participation was not random and that selection bias was present. The effects of the WIC on dental use differed by 36% after adjustment for selection bias by means of the two-stage technique. This technique can be used to control for potential selection bias in dental research when randomization is not possible.

Are health states "timeless"? The case of the standard gamble method.

The standard gamble method, as currently recommended for use in health care program evaluation, provides an individual's preference score or "utility weight" for living in a given health state for the rest of the individual's life. Many researchers interpret this value as a time-independent or "timeless" one and order health states on a scale of zero (death) to one (full health), regardless of the time spent in the health state. This article examines whether preference scores for a severe pain health state are "timeless," or in other words whether the utility independence assumption is satisfied. Our study results suggest that for the majority of respondents, the preference scores are not independent of time.

Valuing outcomes in health care: a comparison of willingness to pay and quality-adjusted life-years.

Quality-adjusted life-years (QALYs) and willingness to pay (WTP) are two preference-based measures of health-related outcomes. In this article, we compare these two measures in eliciting individuals' preferences for health outcomes associated with shingles. To collect the necessary preference data, we administered computer-interactive interviews to a sample of 65- to 70-year-olds. We found no significant correlation between QALYs and WTP across individuals. We discuss our findings and argue that our results raise questions about whether QALYs and WTP are equivalent preference-based measures of health outcomes.

Analysis of prevention program effectiveness with clustered data using generalized estimating equations.

Experimental studies of prevention programs often randomize clusters of individuals rather than individuals to treatment conditions. When the correlation among individuals within clusters is not accounted for in statistical analysis, the standard errors are biased, potentially resulting in misleading conclusions about the significance of treatment effects. This study demonstrates the generalized estimating equations (GEE) method, focusing specifically on the GEE-independent method, to control for within-cluster correlation in regression models with either continuous or binary outcomes. The GEE-independent method yields consistent and robust variance estimates. Data from project DARE, a youth substance abuse prevention program, are used for illustration.

Incentive regulation of nursing homes.

A social experiment was conducted in San Diego to test the effectiveness of monetary incentives in improving the health of nursing home residents and lowering Medicaid expenditures. Use of a Markov model to represent the resulting health changes of nursing home residents shows that the monetary incentives had beneficial effects on both the quality and the cost of nursing home care. Moreover, the nursing homes admitted more people with severe disabilities, and the average length of their stays was shortened. If implemented, this kind of incentive program would save Medicaid substantial amounts of money, but not through lowering nursing home payments. Instead, the more efficient use of nursing homes would transfer more people out of hospitals and thereby save unnecessary hospital reimbursement.

Revisiting Rogowski and Newhouse on the indirect costs of teaching: a note on functional form and retransformation in Medicare's payment formulas.

In 1992 Rogowski and Newhouse identified errors in functional form and retransformation in the econometric model that underlies Medicare's payments to teaching hospitals. We re-estimate their model and expand on their work, with data from the following decade. We find: (1) the functional form imposed by Health Care Financing Administration's original specification of the teaching variable is supported by the data; (2) there is no evidence of a threshold effect when the teaching intensity variable is appropriately specified; (3) there is no longer evidence of heteroscedasticity across teaching hospital types, consequently there is no need to incorporate re-transformation factors into the payment formula. We attribute the differences in our findings to secular changes in the hospital industry and improvements in variable measurement.

Standard errors for the retransformation problem with heteroscedasticity.

Economists often estimate models with a log-transformed dependent variable. The results from the log-transformed model are often retransformed back to the unlogged scale. Other studies have shown how to obtain consistent estimates on the original scale but have not provided variance equations for those estimates. In this paper, we derive the variance for three estimates--the conditional mean of y, the slope of y, and the average slope of y--on the retransformed scale. We then illustrate our proposed procedures with skewed health expenditure data from a sample of Medicaid eligible patients with severe mental illness.

Competitive behavior in local physician markets.

Competition often is viewed as a mechanism for controlling cost. Competition may work well in urban areas with many providers; competition may not exist in rural areas with few providers. The authors use the empirical framework developed by Bresnahan and Reiss to analyze the entry behavior of physicians into local markets to determine the level of physician supply consistent with competitive behavior. The study estimates entry patterns for total and specialty physicians located in nonmetropolitan health service areas using longitudinal data. The authors find a surprising drop in the population increments necessary for entry by the second provider, possibly due to the unattractiveness of being the solo physician in an area. Subsequent population increments stabilize at three to five physicians. Since more than 93 percent of the U.S. population lives in areas that can support three to five physicians, competition between physicians through mechanisms such as managed care may be feasible.

A longitudinal study of the effects of graduate medical education on hospital operating costs.

OBJECTIVE: To examine the effect of graduate medical education sponsorship on hospital operating costs over a seven-year period, to test for a longitudinal association between teaching intensity and cost, and to determine whether the indirect medical education (IME) payment adjustments made under Medicare's Prospective Payment System are appropriate. DATA SOURCES: Medicare cost and payment data from the Hospital Cost Report Information System and other related HCFA files, from FFY 1989 through 1995. The study population consists of all short-stay hospitals (approximately 5,000) participating in Medicare and receiving case payments by diagnosis-related groups. STUDY DESIGN: The original cost functions used to develop indirect medical education payment adjustments under PPS are re-estimated with panel data. Specification changes are included based on findings from critiques of the original hospital cost model. Additional variations on the model are explored to test for differences by hospital status, to control for the effect of additional disproportionate share and outlier payments, and to isolate the effects of improved case-mix measurement on model results. PRINCIPAL FINDINGS: Fixed effects regression produces no evidence of a significant within-hospital association between increased sponsorship of medical residents and increased cost per case. In models designed to capture a cross-sectional association, operating costs are positively related to teaching activity, but the association shows a decline in strength over time. In all years, the strength of the association is significantly greater among hospitals eligible for disproportionate share adjustments and among major teaching hospitals. Controlling for secular trends of increased teaching intensity results in a pattern of declining cross-sectional teaching coefficients that supports a theory that observed teaching effects are the result of unmeasured case severity. CONCLUSIONS: A significant but declining cost differential is observed between teaching and nonteaching hospitals. The association appears to be related to hospital and patient characteristics that cannot be controlled using currently available case-mix and wage indices. Longitudinal models do not provide evidence to support a payment adjustment formula that allows individual hospitals to recompute their IME adjustment rates as their teaching ratios rise or fall from year to year. Cross-sectional findings suggest that re-estimations of the teaching effect may be appropriate when significant improvements occur in Medicare case-mix measurement.

Expectations among the elderly about nursing home entry.

OBJECTIVE: To assess whether the covariates that explain expectations of nursing home entry are consistent with the characteristics of those who enter nursing homes. DATA SOURCES: Waves 1 and 2 of the Assets and Health Dynamics Among the Oldest Old (AHEAD) survey. STUDY DESIGN: We model expectations about nursing home entry as a function of expectations about leaving a bequest, living at least ten years, health condition, and other observed characteristics. We use an instrumental variables and generalized least squares (IV-GLS) method based on Hausman and Taylor (1981) to obtain more efficient estimates than fixed effects, without the restrictive assumptions of random effects. PRINCIPAL FINDINGS: Expectations about nursing home entry are reasonably close to the actual probability of nursing home entry. Most of the variables that affect actual entry also have significant effects on expectations about entry. Medicaid subsidies for nursing home care may have little effect on expectations about nursing home entry; individuals in the lowest asset quartile, who are most likely to receive these subsidies, report probabilities not significantly different from those in other quartiles. Application of the IV-GLS approach is supported by a series of specification tests. CONCLUSIONS: We find that expectations about future nursing home entry are consistent with the characteristics of actual entrants. Underestimation of risk of nursing home entry as a reason for low levels of long-term care insurance is not supported by this analysis.

Health plan decision making with new medicare information materials.

OBJECTIVE: To examine the effect of providing new Medicare information materials on consumers' attitudes and behavior about health plan choice. DATA SOURCE: New and experienced Medicare beneficiaries who resided in the Kansas City metropolitan statistical area during winter 1998-99 were surveyed. More than 2,000 computer-assisted telephone interviews were completed across the two beneficiary populations with a mean response rate of 60 percent. STUDY DESIGN: Medicare beneficiaries were randomly assigned to a control group or one of three treatment groups that received varying amounts and types of new Medicare information materials. One treatment group received the Health Care Financing Administrations's pilot Medicare & You 1999 handbook, a second group received the same version of the handbook and a Medicare version of the Consumer Assessment of Health Plans (CAHPS) report, and a third treatment group received the Medicare & You bulletin, an abbreviated version of the handbook. PRINCIPAL FINDINGS: Results of the study suggest that the federal government's new consumer information materials are having some influence on Medicare beneficiaries' attitudes and behaviors about health plan decision making. Experienced beneficiary treatment group members were significantly more confident with their current health plan choice than control group members, but new beneficiaries were significantly less likely to use the new materials to choose or change health plans than control group members. In general the effects on confidence and health plan switching did not vary across the different treatment materials. CONCLUSIONS: The 1999 version of the Medicare & You materials contained a message that it is not necessary to change health plans. This message appears to have decreased the likelihood of using the new materials to choose or change plans, whereas other materials to which beneficiaries are exposed may encourage plan switching. Because providing more information to beneficiaries did not result in commensurate increases in confidence levels or rate of health plan switching, factors other than the amount of information, such as how the information is presented, may be more critical than volume.

The effect of hospital volume on the in-hospital complication rate in knee replacement patients.

OBJECTIVE: To examine the effect of hospital volume on in-hospital surgical outcomes for knee replacement using six years of Medicare claims data. DATA SOURCES/STUDY SETTING: The data include inpatient claims for a 100 percent sample of Medicare patients who underwent primary knee replacement during 1985-1990. We supplemented these data with information from HCFA's denominator files, the Area Resource File, and the American Hospital Association survey files. STUDY DESIGN: We estimated the probability that a patient has an in-hospital complication in the initial hospitalization for the first primary knee replacement, using a Logit model, for three definitions of complication. The models controlled for hospital volume, other hospital characteristics, patient demographics, and patient health status. We tested for the endogeneity of hospital volume. DATA COLLECTION/EXTRACTION METHODS: A panel of two orthopaedic surgeons and two internists reviewed diagnosis codes to determine whether a complication was likely, possible, or due to anemia. After removing the few observations with bad or missing data, the final population has 295,473 observations. PRINCIPAL FINDINGS: The probability of a likely in-hospital complication declines rapidly from 53 through 107 operations per year, then levels off. Statistical tests imply that hospital volume is exogenous in this patient-level data. Complication rates increased steadily through the study period. Although obesity appeared to lower the probability of a complication, a counterintuitive result, further investigation revealed this to be an artifact of the claims data limit of listing no more than five diagnoses. Controlling for this restriction reversed the effect of obesity. CONCLUSIONS: Rather than uncontrolled expansion of knee surgery to small hospitals, decentralization to regional centers where at least about 50, and preferably about 100, operations per year are assured appears to be the optimal policy to reduce in-hospital complications.

Cost shifting in a mental health carve-out for the AFDC population.

This study tests whether the managed care vendor shifted costs to Medicaid-reimbursed medical care after the start of the mental health carve-out for the Aid to Families with Dependent Children (AFDC) population in Massachusetts. We used claims data over a 4-year period to estimate expenditures for four types of health services, two of which were paid for by the managed care vendor and two by Medicaid. Total per person public expenditures declined by only about 3 percent. Inpatient psychiatric services were replaced by outpatient psychiatric services and some pharmaceuticals, but overall there was little or no evidence of cost shifting to the medical sector. These results are in contrast to what was found in a sample of Medicaid beneficiaries eligible due to a mental health disability.

Impact of Medicare SELECT on cost and utilization in 11 states.

In this article, the authors evaluate the cost and utilization effects of the SELECT implementations in 11 States. In particular they compare the before-and-after enrollment experiences of Medicare beneficiaries newly enrolled in SELECT plans with the experiences of those newly enrolled in traditional medigap plans. Using Medicare claims data for 1991 through 1994, the authors find that Medicare SELECT increased costs in five States, decreased costs in three States, and had no effect in three States. Cost increases were generally related to Part B utilization.

China's one-child policy: the economic choices and consequences faced by pregnant women.

This paper addresses the important issue of the effect of China's one-child policy on prenatal and obstetric care utilization. The paper provides the first detailed empirical approach to this question, exploiting a unique high quality household survey. China officially codified a set of rules and regulations in 1979 governing the approved size of Chinese families, commonly known as the one-child policy. The policy imposed economic and social costs on families failing to adhere to the family size limits. In particular, the policy raised the price of obstetric medical services for unapproved pregnancies in comparison to approved pregnancies and imposed fines on families with unapproved births. Using data from an eight-province longitudinal household survey (The China Health and Nutrition Survey), we investigate whether or not the one-child policy's financial penalties were associated with the avoidance of obstetric care by pregnant Chinese women with unapproved pregnancies. The one-child policy variables of particular interest were a dichotomous measure of the approval status of the pregnancy, a continuous measure of the fine imposed upon families with unapproved births, and a continuous measure of the prices of prenatal care and delivery services net of any subsidy available for approved births. The results partially confirm the hypotheses that the one-child policy's economic and social costs caused women to forego seeking modern obstetric care services. The fine was found to be a significant deterrent to the utilization of prenatal care. Additionally, the unapproved-status of a pregnancy was strongly negatively associated with "the use of obstetric care. However, higher prices were not consistently found to be a significant deterrent to the use of obstetric care.

Formation of trusts and spend down to Medicaid.

OBJECTIVE: To identify the proportion of community-dwelling elderly persons (70+) who could affect their eligibility for Medicaid financing of a nursing home stay through the use of a trust and to quantify the prevalence and predictors of trusts. METHODS: State-specific Medicaid eligibility regulations were used to determine eligibility and to identify those who could affect the same through the use of trusts. Multivariate logistic regression was used to identify correlates of having a trust. Wave 1 of the Assets and Health Dynamics of the Oldest Old (AHEAD) data base was used. RESULTS: Four in 10 elderly community dwellers could potentially qualify for Medicaid by using a trust; however, less than 10% had a trust. On average, wealthier persons had trusts. Avoidance of probate and controlling assets after death appear to be stronger motivations for trust creation among the elderly than achieving Medicaid spend down. DISCUSSION: The use of trusts was not common, and motives other than spend down were more important for those with trusts. Our results suggest little need for policy efforts to limit the use of trusts to achieve spend down.

Managed care and children's behavioral health services in Massachusetts.

OBJECTIVE: The authors investigated changes in treatment patterns and costs of care for children after the implementation of the Massachusetts Medicaid carve-out managed care plan. METHODS: The authors hypothesized that after the introduction of managed care, per-child expenditures would be reduced, continuity of care would not improve, and per-child mental health expenditures would undergo larger reductions for disabled children, compared with children enrolled in the Aid to Families With Dependent Children program. Using data from Medicaid and the Massachusetts Department of Mental Health, the authors studied 16,664 Massachusetts Medicaid beneficiaries aged one to 17 years for whom reimbursement claims were submitted for psychiatric or substance use disorder treatment at least once during the two years before the introduction of managed care (1991 to 1992) or during the two years afterward (1994 to 1995). Multivariate analysis was used to estimate changes in probability of admission, and, among patients admitted, to identify factors accounting for variation in length of stay. To assess the variation in expenditures, we regressed the same variables, using the natural logarithm function to transform total mental health expenditures data and inpatient expenditures data to reduce skewness. RESULTS: After the introduction of managed care, per-child expenditures were lower, especially for disabled children, and the Department of Mental Health was used as a safety net for the most seriously ill children without increasing state expenditures. Continuity of care appeared to decline for disabled children. CONCLUSIONS: It is likely that a combination of factors related to the reported changes in patterns of care and expenditures were responsible for the overall per-child expenditures.

School and neighborhood characteristics associated with school rates of alcohol, cigarette, and marijuana use.

Previous research has noted that schools vary in substance use prevalence rates, but explanations for school differences have received little empirical attention. We assess variability across elementary schools (N = 36) in rates of early adolescent alcohol, cigarette, and marijuana use. Characteristics of neighborhoods and schools potentially related to school prevalence rates are examined, as well as whether these characteristics have independent effects or whether neighborhood characteristics are mediated by school characteristics. Neighborhood and school characteristics were measured using student, parent, and archival data. The findings show substantial variation across schools in substance use. Attributes of neighborhoods and schools are statistically significantly related to school rates of lifetime alcohol use, lifetime cigarette use, and current cigarette use. Contrary to expectations, lifetime alcohol and cigarette use rates are higher in schools located in neighborhoods having greater social advantages as indicated by the perceptions of residents and archival data. Neighborhood effects are expressed both directly and indirectly through school characteristics. The findings are discussed in light of contagion and social disorganization theories.

The long-run effect of the Medicare Catastrophic Coverage Act.

This study examines the long-run effect of the 1988 Medicare Catastrophic Coverage Act (MCCA). Although most of the MCCA provisions were repealed after only one year, remaining in the law today are the provisions that directly affected the ability of married people to live in the community when their spouses were in a nursing home. We use longitudinal data from the National Long-Term Care Survey and exploit the differential effect of the MCCA on single and married people to test for changes in the probability of going to a nursing home, in wealth, and in the probability of living with others. Our study showed that the MCCA did not achieve its desired effect of preventing spousal impoverishment in the aggregate, even when the sample was restricted to those people most likely to be affected.