Estimating cost-offsets of new medications: use of new antipsychotics and mental health costs for schizophrenia.

Estimation of the effect of one treatment compared to another in the absence of randomization is a common problem in biostatistics. An increasingly popular approach involves instrumental variables-variables that are predictive of who received a treatment yet not directly predictive of the outcome. When treatment is binary, many estimators have been proposed: method-of-moments estimators using a two-stage least-squares procedure, generalized-method-of-moments estimators using two-stage predictor substitution or two-stage residual inclusion procedures, and likelihood-based latent variable approaches. The critical assumptions to the consistency of two-stage procedures and of the likelihood-based procedures differ. Because neither set of assumptions can be completely tested from the observed data alone, comparing the results from the different approaches is an important sensitivity analysis. We provide a general statistical framework for estimation of the casual effect of a binary treatment on a continuous outcome using simultaneous equations to specify models. A comparison of health care costs for adults with schizophrenia treated with newer atypical antipsychotics and those treated with conventional antipsychotic medications illustrates our methods. Surprisingly large differences in the results among the methods are investigated using a simulation study. Several new findings concerning the performance in terms of precision and robustness of each approach in different situations are obtained. We illustrate that in general supplemental information is needed to determine which analysis, if any, is trustworthy and reaffirm that comparing results from different approaches is a valuable sensitivity analysis.

Some economics of mental health 'carve-outs'.

We discuss the rationale for benefit carve-out contracts in general and for mental health and substance abuse in particular. We focus on the control of adverse selection as a principal explanation and find that this is consistent with the wide-spread use of sole-source contracting with periodic rebidding. We also find that some degree of risk sharing is common; we interpret this as a method of balancing cost-containment incentives with incentives to maintain access and quality on unmeasured dimensions.

Cost-effectiveness of treatments for major depression in primary care practice.

BACKGROUND: This study augments a randomized controlled trial to analyze the cost-effectiveness of 2 standardized treatments for major depression relative to each other and to the "usual care" provided by primary care physicians. METHODS: A randomized controlled trial was conducted in which primary care patients meeting DSM-III-R criteria for current major depression were assigned to pharmacotherapy (where nortriptyline hydrochloride was given) or interpersonal psychotherapy provided in a standardized framework or a primary physician's usual care. Two outcome measures, depression-free days and quality-adjusted days, were developed using information on depressive symptoms over time. The costs of care were calculated. Cost-effectiveness ratios comparing the incremental outcomes with the incremental costs for the different treatments were estimated. Sensitivity analyses were performed. RESULTS: In terms of both economic costs and quality-of-life outcomes, patients assigned to the pharmacotherapy group did slightly better than those assigned to interpersonal psychotherapy. Both standardized therapies provided better outcomes than primary physician's usual care, but each consumed more resources. No meaningful cost-offsets were found. The incremental direct cost per additional depression-free day for pharmacotherapy relative to usual care ranges from $12.66 to $16.87 which translates to direct cost per quality-adjusted year gained from $11270 to $19510. CONCLUSIONS: Standardized treatments for depression lead to better outcomes than usual care but also lead to higher costs. However, the estimates of the cost per quality-of-life year gained for standardized pharmacotherapy are comparable with those found for other treatments provided in routine practice.

Partial versus full hospitalization for adults in psychiatric distress: a systematic review of the published literature (1957-1997).

OBJECTIVE: The authors reviewed published research that compared partial and full hospitalization as alternative programs for the care of mentally ill adults, with the goal of both systematizing the knowledge base and providing directions for future research. METHOD: Studies published since 1950 were obtained through manual and electronic searches. Results were stratified by outcome domain, type of measure used to report between-group differences (global, partial, or rate-based), and time of assessment. Effect sizes were computed and combined within a random-effects framework. RESULTS: Eighteen investigations published between 1957 and 1997 were systematically reviewed. Over half of eligible patients were excluded a priori; diagnostic severity of enrollees varied widely. On measures of psychopathology, social functioning, family burden, and service utilization, the authors found no evidence of differential outcome in the selected patient population admitted to the studies reviewed. Rates of satisfaction with services suggested an advantage for partial hospitalization within 1 year of discharge, with the gap being largest at 7-12 months. CONCLUSIONS: Although partial hospitalization is not an option for all patients requiring intensive services, outcomes of partial hospitalization patients in these studies were no different from those of inpatients. Further, patients and families were more satisfied with partial hospitalization in the short term. Weaknesses of the studies limited the scope of our inquiry and the generalizability of findings. Positive findings require replication under the present circumstances of mental health care, and more research is needed to identify predictors of differential outcome and successful partial hospitalization. A clearer definition of partial hospitalization will help consolidate its role in the continuum of mental health services.

Psychiatry under prospective payment: experience in the first year.

The authors present data on changes in resource use by Medicare psychiatric patients in general hospitals after the introduction of the prospective payment system in 1984. Length of stay and charges per discharge during fiscal year 1984 fell 13.8% and 15.9%, respectively, after the new system began, even though 31.8% of the discharges for Medicare psychiatric cases were from exempt psychiatric units. The decrease in length of stay was considerably larger (23.2%) in hospitals with no psychiatric units, which were not exempt from prospective payment.

Depression and adrenal function in spinal cord injury.

Of 32 patients with spinal cord injury, 14 had a DSM-III diagnosis of depressive disorder: 12 had major depression (five with melancholia) and two were dysthymic. In those with major depression, a dexamethasone suppression test lacked sensitivity (30%) and specificity (50%).

Past-year use of outpatient services for psychiatric problems in the National Comorbidity Survey.

OBJECTIVE: The authors present nationally representative descriptive data on 12-month use of outpatient services for psychiatric problems. They focused on the relationship between DSM-III-R disorders and service use in four broadly defined service sectors as well as the distribution of service use in multiple service sectors. METHOD: Data from the National Comorbidity Survey were examined. RESULTS: Summary measures of the seriousness and complexity of illness were significantly related to probability of use, number of sectors used, mean number of visits, and specialty treatment. One-fourth of the people in outpatient treatment were seen in multiple service sectors, but no evidence was found of multisector offset in number of visits. CONCLUSIONS: Use of outpatient services for psychiatric problems appears to have increased over the decade between the early 1980s and early 1990s, especially in the self-help sector. Aggregate allocation of treatment resources was related to need, highlighting the importance of making provisions for specialty care in the triage systems currently evolving as part of managed care.

Depression among amputees.

A 35% prevalence of major depressive disorder was found in a prospective study of 65 amputees evaluated in a Physical Medicine and Rehabilitation Department. The findings indicate significantly more alcohol abuse among the depressed group. Higher percentages of female than male amputees were found to be depressed and unmarried. The prevalence of smoking was significantly higher among those whose amputations were due to vascular disease rather than other causes (e.g., trauma). In addition to the physical care of amputees, their emotional needs and well-being merit serious consideration.

One-year costs of second-line therapies for depression.

BACKGROUND: We compared patterns of medical resource utilization and costs among patients receiving a serotonin-norepinephrine reuptake inhibitor (venlafaxine), one of the selective serotonin reuptake inhibitors (SSRIs), one of the tricyclic agents (TCAs), or 1 of 3 other second-line therapies for depression. METHOD: Using claims data from a national managed care organization, we identified patients diagnosed with depression (ICD-9-CM criteria) who received second-line antidepressant therapy between 1993 and 1997. Second-line therapy was defined as a switch from the first class of antidepressant therapy observed in the data set within 1 year of a diagnosis of depression to a different class of antidepressant therapy. Patients with psychiatric comorbidities were excluded. RESULTS: Of 981 patients included in the study, 21% (N = 208) received venlafaxine, 34% (N = 332) received an SSRI, 19% (N = 191) received a TCA, and 25% (N = 250) received other second-line antidepressant therapy. Mean age was 43 years, and 72% of patients were women. Age, prescriber of second-line therapy, and prior 6-month expenditures all differed significantly among the 4 therapy groups. Total, depression-coded, and non-depression-coded 1-year expenditures were, respectively, $6945, $2064, and $4881 for venlafaxine; $7237, $1682, and $5555 for SSRIs; $7925, $1335, and $6590 for TCAs; and $7371, $2222, and $5149 for other antidepressants. In bivariate analyses, compared with TCA-treated patients, venlafaxine- and SSRI-treated patients had significantly higher depression-coded but significantly lower non-depression-coded expenditures. Venlafaxine was associated with significantly higher depression-coded expenditures than SSRIs. However, after adjustment for potential confounding covariables in multivariate analyses, only the difference in depression-coded expenditures between SSRI and TCA therapy remained significant. CONCLUSION: After adjustment for confounding patient characteristics, 1-year medical expenditures were generally similar among patients receiving venlafaxine, SSRIs, TCAs, and other second-line therapies for depression. Observed differences in patient characteristics and unadjusted expenditures raise questions as to how different types of patients are selected to receive alternative second-line therapies for depression.

Prescription drug prices: why do some pay more than others do?

The fact that sick elderly people without prescription drug coverage pay far more for drugs than do people with private health insurance has created a call for state and federal governments to take action. Antitrust cases have been launched, state price control legislation has been enacted, and proposals for expansion of Medicare have been offered in response to price and spending levels for prescription drugs. This paper offers an analysis aimed at understanding pricing patterns of brand-name prescription drugs. I focus on the basic economic forces that enable differential pricing of products to exist and show how features of the prescription drug market promote such phenomena. The analysis directs policy attention toward how purchasing practices can be changed to better represent groups that pay the most and are most disadvantaged.

Estimating costs of mental health and substance abuse coverage.

The cost of expanding mental health and substance abuse treatment coverage is a major impediment to reforming insurance coverage for these types of conditions. The recent experience with national health care reform offers a case study in cost estimation for mental health and substance abuse coverage. The impact of managed care and the cost of expanding coverage to currently uninsured persons introduced uncertainty into predictions. This paper critically reviews that experience and draws lessons for estimating future costs of policy initiatives.

The politics and economics of mental health 'parity' laws.

The enactment of the Domenici-Wellstone amendment in September 1996, which calls for the elimination of certain limits on coverage for mental health care under private insurance, is being hailed as a major step forward in the quest for "parity" in mental health coverage. Parity legislation is being introduced in a number of state legislatures and is finding new enthusiasm in Congress. In this paper we consider the efficiency rationale for these laws and examine their likely impact in the era of managed care. We conclude that although such successes represent important political events, they may offer only small gains in the efficiency and fairness of insurance markets.

Risk contracts in managed mental health care.

Private employers and state Medicaid programs are increasingly writing risk contracts with managed behavioral health care companies to manage mental health and substance abuse benefits. This paper analyzes the case for a carve-out program and makes recommendations about the form of the payer-managed behavioral health care contract. Payers should consider using a "soft" capitation contract in which only some of the claims' risk is transferred to the managed behavioral health care company. To avoid incentives to underserve seriously ill persons, we recommend that payers not allow choice by enrollees among risk contractors.

The Medicare prescription drug benefit: how will the game be played?

Most recent proposals to add a prescription drug benefit to the Medicare program suggest using pharmacy benefit managers (PBMs) to control costs and promote quality. However, the proposals give little detail on the institutional arrangements that would govern PBM operations and drug procurement. The recent Congressional Budget Office cost estimate of the Clinton administration's proposal reflects this lack of detail on how PBMs would function. We sketch an approach for structuring PBM operations that focuses on competition among PBMs, manufacturers, and distributors; incentive pricing; and risk sharing with PBMs.

The value of mental health care at the system level: the case of treating depression.

The value of mental health services is regularly questioned in health policy debates. Although all health services are being asked to demonstrate their value, there are special concerns about this set of services because spending on mental health care has grown markedly over the past twenty years. We propose a method for using administrative data to develop a comprehensive assessment of value for mental health care, which we call systems cost-effectiveness (SCE). We apply the method to acute-phase treatment of depression in a large insured population. Our results show that SCE of treatment for depression has improved during the 1990s.

Mental health and substance abuse coverage under health reform.

President Clinton's health care reform proposal articulates a complete vision for the mental health and substance abuse care system that includes a place for those traditionally served by both the public and the private sectors. Mental health and substance abuse services are to be fully integrated into health alliances under the president's proposal. If this is to occur, we must come to grips with both the history and the insurance-related problems of financing mental health/substance abuse care: (1) the ability of health plans to manage the benefit so as to alter patterns of use; (2) a payment system for health plans that addresses biased selection; and (3) preservation of the existing public investment while accommodating in a fair manner differences in funding across the fifty states.

Paying for mental health and substance abuse care.

Fifty-four billion dollars was spent on alcohol/drug abuse and mental health treatment in 1990. These expenditures were concentrated in the area of inpatient psychiatric care and on persons with severe mental health and substance abuse problems. The data on expenditure patterns for mental health and substance abuse care suggest that successful health care reform in this area must implement mechanisms for controlling inpatient utilization and managing the care of persons with the most severe disorders.

Scale and structure of capitated physician organizations in California.

Physician organizations in California broke new ground in the 1980s by accepting capitated contracts and taking on utilization management functions. In this paper we present new data that document the scale, structure, and vertical affiliations of physician organizations that accept capitation in California. We provide information on capitated enrollment, the share of revenue derived by physician organizations from capitation contracts, and the scope of risk sharing with health maintenance organizations (HMOs). Capitation contracts and risk sharing dominate payment arrangements with HMOs. Physician organizations appear to have responded to capitation by affiliating with hospitals and management companies, adopting hybrid organizational structures, and consolidating into larger entities.