Performance Improvement 1998. Health Care Financing Administration

02/01/1998

Contents

Limited-Service Hospital Pioneers: Challenges and Successes of the Essential Access Community Hospital/Rural Primary Care Hospital (EACH-RPCH) Program and Medical Assistance Facility (MAF) Demonstration

Comparative Study of the Use of EPSDT and Other Preventive and Curative Health Care Services by Children Enrolled in Medicaid: Final Project Synthesis Report

Costs and Consequences of Case Management for Medicare Beneficiaries: Final Report

Evaluation of the Utah Prepaid Mental Health Plan

Monitoring and Evaluation of the Medicare Cataract Surgery Alternate Payment Demonstration: Final Evaluation Report

Evaluation of the Demonstration to Improve Access to Care for Pregnant Substance Abusers

Evaluation of the Medicaid Uninsured Demonstrations

Access to Physicians' Services for Vulnerable Beneficiaries: Impact of the Medicare Fee Schedule

A Study of the Appropriateness, Process of Care, and Outcomes of Medical Care for Medicaid Patients

An Evaluation of Implementation of the Medicaid Community Supported Living Arrangements (CLSA) Program in Eight States

Evaluation of the Community Nursing Organization Demonstration Interim Evaluation Report

Evaluation of the Effectiveness of the Operation Restore Trust Demonstrations

The Impact of Report Cards on Employees: A Natural Experiment

Consequences of Paying Medicare HMOs and Health Care Prepayment Plans (HCPPs)

Toward a Prospective Payment System for Outpatient Services: Implementation for Outpatient Services-- Implementation of APGs by State Medicaid Agencies and Private Payers

Payment of Pharmacists for Cognitive Services: Results of the Washington State C.A.R.E. Demonstration Project

Assessing the Viability of All-Payer Systems for Inpatient Hospital Services

Second Update of the Geographic Practice Cost Index: Final Report

Validation of Nursing Home Quality Indicators Study

1995 Influenza Immunizations Paid for by Medicare: State and County Rates

Impact of the Medicare Fee Schedule on Teaching Physicians

TITLE: Limited-Service Hospital Pioneers: Challenges and Successes of the Essential Access Community Hospital/Rural Primary Care Hospital (EACH-RPCH) Program and Medical Assistance Facility (MAF) Demonstration

ABSTRACT: Small communities in rural America are struggling to maintain health care resources in the face of increasing competition and a dwindling population and economic base. In response to the threatened survival of small rural hospitals, the Health Care Financing Administration has supported two initiatives to introduce innovative limited-service hospitals: the Essential Access Community Hospital/Rural Primary Care Hospital (EACH-RPCH) program, implemented in seven States; and the Medical Assistance Facility (MAF) demonstration in Montana. Both establish a new Medicare provider that is exempt from specific key requirements of participation, and both offer enhanced reimbursement. Other States have looked to these two programs as possible models for their rural communities. This report documents the evaluation of the EACH-RPCH program from its start in October 1991 through September 1994. The report assesses the implementation process, initial operating experience, and potential impact of the programs on access and cost as related to limited hospital service. The introductory chapter reviews the background of the EACH-RPCH and MAF programs, discusses the evaluation issues to be examined, and summarizes the evaluation methodology and data sources. Chapters II and III examine the development of networks and the shift to limited service licensure under the EACH-RPCH program. Chapter IV reviews the implementation and operation of the MAF demonstration. Chapters V and VI focus on the two programs' impact on access to care and mechanisms for quality assurance, respectively. The report concludes with Chapter VII, which assesses the impact of both programs on facility finances and the Medicare program. (Final report: 260 pages, plus appendices.)

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Sheldon Weisgrau

PHONE NUMBER: (410) 786-6675

PIC ID: 5200.1

PERFORMER ORGANIZATION: Mathematica Policy Research, Incorporated, Plainsboro, NJ

TITLE: Comparative Study of the Use of EPSDT and Other Preventive and Curative Health Care Services by Children Enrolled in Medicaid: Final Project Synthesis Report

ABSTRACT: This report includes (1) a description of the Medicaid program in Michigan, Georgia, Tennessee, and California and these States' responses to the Omnibus Budget Reconciliation Act of 1989 provisions relating to children's and Medicaid coverage and on the Early Periodic Screening, Diagnosis, and Treatment (EPSDT) program; (2) results of analyses of the impact of these responses on participating providers and enrolled children; and (3) an assessment of the national context through a review of the national survey data analyses. It finds that (1) State efforts to increase provider participation in Medicaid and EPSDT included recruitment activities, training in billing, and increased fees; (2) the States' efforts were successful in increasing provider participation and average caseloads among all types of providers, except for dentists in Michigan, which declined 10 percent from 1989 to 1992; (3) these increases may not have been adequate to meet the increased demand from a growing caseload; (4) the ratios of Medicaid children to participating providers and the percentages of counties with provider shortages rose from 1989 to 1992 in all four study States; (5) counting all EPSDT and all other well-child visits paid for by Medicaid, only 42 to 54 percent of Medicaid children were recommended to have preventive care visits, and of these, only 36 to 59 percent made the recommended visits; (6) compared with other low-income children, Medicaid coverage increased service use and improved access to illness-related care; and (7) Medicaid children had very low completion rates for age-appropriate immunizations, from 48 percent in Michigan to 61 percent in Georgia in 1992. The report concludes that State efforts to expand the EPSDT provider base and to enhance outreach had significant impacts on the use of preventive, diagnostic, and treatment services. See also PIC ID Nos. 6236-6236.6 and 6236.8-6236.A. (Final report: 49 pages.)

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Feather Davis

PHONE NUMBER: (410) 786-6590

PIC ID: 6236.7

PERFORMER ORGANIZATION: MEDSTAT Group, Cambridge, MA

TITLE: Costs and Consequences of Case Management for Medicare Beneficiaries: Final Report

ABSTRACT: This report studies the appropriateness of providing case management services to beneficiaries with catastrophic illnesses and high medical costs. The study tests case management as a way of controlling costs in the fee-for-service sector. These demonstrations, mandated by the Omnibus Reconciliation Act of 1990, and are aimed at a number of chronic illnesses, including congestive heart failure. The resulting demonstrations were implemented in three sites, began operations in October 1993, and continued through November 1995. The target conditions and case management protocols differed in each site, though all three generally focused on increased education regarding proper patient monitoring and management of the target chronic condition. All three sites anticipated reduced hospitalizations and medical costs compared to the beneficiary control groups. (Final report: 216 pages, plus appendices.)

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Leslie M. Greenwald

PHONE NUMBER: (410) 786-6502

PIC ID: 6291

PERFORMER ORGANIZATION: Mathematica Policy Research, Incorporated, Plainsboro, NJ

TITLE: Evaluation of the Utah Prepaid Mental Health Plan

ABSTRACT: This report is an evaluation of a demonstration project conducted in Utah, in which three mental health centers provided mental health services to all Medicaid beneficiaries in their catchment areas (these areas include over 50 percent of all Utah Medicaid beneficiaries). The hope was that this program would control the cost inflation and improve patient outcomes in mental health services. The evaluator examines three areas: (1) organizational and financial characteristics and evolution over time, (2) impact on the organization of service delivery and use of services, and (3) financial impact on providers and the Medicaid program in Utah. The development of the demonstration proceeded fairly smoothly, albeit somewhat more slowly than planned. Three centers chose to enter the demonstration and eight chose to not join. Several changes in the program's environment affected the development during the initial 3 years. (Final report: 68 pages.)

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Paul J. Boben

PHONE NUMBER: (410) 786-6629

PIC ID: 6293

PERFORMER ORGANIZATION: University of Minnesota, Minneapolis, MN

TITLE: Monitoring and Evaluation of the Medicare Cataract Surgery Alternate Payment Demonstration: Final Evaluation Report

ABSTRACT: This report assisted the Health Care Financing Administration (HCFA) in tracking the 3-year demonstration that tested the concept of a single global Medicare payment for outpatient cataract procedures. The payment amount represented payment for the physician, facility, and intraocular lens costs. The analysis portion of the project tested whether there were any net savings to the Medicare program, changes in the use of services included and excluded from the bundle, beneficiary satisfaction, and quality of care. The evaluation found that the project was reasonably successful in encouraging provider flexibility and in managing the bundle of services. There was ample anecdotal evidence that the cost effectiveness incentives were working; e.g., cost reduction efforts by surgeons in the techniques and time required to perform the surgery and actions to standardize the interocular lenses and other supplies and materials. While the effort to become a part of the demonstration was substantial, once operations began, government activities related to pricing were greatly reduced and limited to simple verification and payment of the global fee. The evaluator was not able to measure appropriateness, but in terms of quality control and utilization review the demonstration was successful in that the outcomes were unchanged. The project did produce some insights into the strengths and weaknesses of particular incentives in encouraging providers to participate. However, it provided limited new information on what factors influenced beneficiaries to participate.

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Cynthia K. Mason

PHONE NUMBER: (410) 786-6680

PIC ID: 6295

PERFORMER ORGANIZATION: Abt Associates, Incorporated, Cambridge, MA

TITLE: Evaluation of the Demonstration to Improve Access to Care for Pregnant Substance Abusers

ABSTRACT: This report evaluates demonstration project effectiveness in (1) outreach and assessment; (2) expansion, integration, and coordination of program services; and (3) improvement of client case management. The evaluator examined access to prenatal care and substance abuse treatment services and assessed the effects of these services on the health of drug-addicted pregnant women and birth outcomes of their infants. The evaluation showed that the number of abusers enrolled in the demonstrations was low relative to all pregnant substance abusers in the area, since women were reluctant to be identified. The project found higher enrollment rates in States that implemented broad-based outreach efforts; higher levels of and greater retention in substance abuse treatment resulted in higher birth weight infants. (Final report: 104 pages, plus appendices.)

AGENCY SPONSOR: Center for Beneficiary Services

FEDERAL CONTACT: Suzanne Rotwein

PHONE NUMBER: (410) 786-6621

PIC ID: 6297

PERFORMER ORGANIZATION: Mathematica Policy Research, Incorporated, Washington, DC

TITLE: Evaluation of the Medicaid Uninsured Demonstrations

ABSTRACT: This project evaluated three demonstration project conducted in Maine, South Carolina, and Washington State. These demonstrations, implemented in response to a Congressional mandate under section 4745 of the Omnibus Budget Reconciliation Act of 1990, tested the effect of allowing States to extend Medicaid coverage to low-income families. The evaluation resulted in a series of annual reports, an interim and a final report to Congress, and a final evaluation report. The project examined intra- and inter-site processes and outcomes, including (1) the ability of the programs to enroll significant numbers of eligible persons; (2) conditions under which eligible persons and their families are willing to participate in such programs, given their scarce financial resources; (3) ability of the programs to induce adequate numbers of providers to ensure the availability of necessary services at appropriate utilization levels; (4) willingness of employers to participate in the programs and the conditions under which they participate or choose not to participate; (5) the program's effect on service utilization and health outcomes of participants; (6) the cost-effectiveness of such programs for the various public and private interests; and (7) the extent to which the demonstration's interventions could be applied nationally to assist in achieving program goals. An initial series of site visits was conducted during 1993. The first annual report in the series used data collected during these site visits and data from State-administered baseline surveys to describe the implementation phase and early operational phase of the demonstrations.

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: James Hadley

PHONE NUMBER: (410) 786-6626

PIC ID: 6298

PERFORMER ORGANIZATION: Health Economics Research, Incorporated, Waltham, MA

TITLE: Access to Physicians' Services for Vulnerable Beneficiaries: Impact of the Medicare Fee Schedule

ABSTRACT: In 1992, Medicare introduced the Medicare Fee Schedule (MFS), which alters the relative prices paid to physicians for services and arguably the incentives to provide one service over another. This project evaluates the impact of the MFS on individual access to health care. Since the introduction of the MFS, the Health Care Financing Administration and the Physician Payment Review Commission have monitored access to physicians' services and have failed to document any barriers to health care access resulting from the MFS. This study builds on this work by (1) oversampling groups of beneficiaries thought to be particularly vulnerable to payment changes, (2) evaluating changes in treatment patterns for specific episodes of care, and (3) conducting multivariate analyses that measure actual payment changes over time rather than expected changes due to MFS. A stratified random sampling design took advantage of the differential impacts of the MFS across geographic areas and ensured adequate numbers of vulnerable beneficiaries. The study divided all geographic areas into six groups based on their expected 1992 payment changes under MFS, compared with the earlier payment scheme. The report finds that (1) there is little evidence that the MFS either improved or worsened health care access for Medicare beneficiaries; (2) while some vulnerable groups experienced MFS-related changes in access, the actual size of these changes is relatively small and is not consistently negative or positive; (3) substantial access gaps exist for vulnerable beneficiaries and there is evidence that access to primary care may have worsened for dual Medicaid-eligibles; and (4) Medicare beneficiaries reduced out-of-pocket payments over the 1991-1993 period, including lower copayments and lower extra billing liability. (Final report: variously paginated, plus appendices.)

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Renee Mentnech

PHONE NUMBER: (410) 786-6692

PIC ID: 6301

PERFORMER ORGANIZATION: Center for Health Economics Research, Waltham, MA

TITLE: A Study of the Appropriateness, Process of Care, and Outcomes of Medical Care for Medicaid Patients

ABSTRACT: The Congress requires the Health Care Financing Administration to report on the relative quality of care in the Medicaid program. This study assesses the variation that exists in the rate of performance of selected treatments and procedures provided to Medicaid beneficiaries for small areas within and between States. The report's first phase shows that the overall rate of inpatient use in the Medicaid population is higher than the rate expected based on non-Medicaid utilization patterns. In the report's second phase, data are abstracted from medical records at 118 hospitals in California, Georgia, and Michigan for a selected series of index diagnoses: pediatric asthma, hysterectomy, and complicated labor and delivery. This second phase develops five indicators to assess quality: (1) appropriateness to hospitalize or perform a procedure, (2) process of care, (3) outcomes of treatments and procedures, (4) severity at time of admission, and (5) intensity of care. Medicaid-covered children in two States, and women in all three States, are younger and represent more minority groups than their privately-insured counterparts. The appropriateness of the decision to hospitalize a child with asthma, perform a hysterectomy, and do a Cesarean section in the presence of labor and delivery complications are comparable between Medicaid and privately-insured patients. Most important, the outcomes of care for the two groups were essentially similar, for each condition, across the three States. Medicaid patients were more seriously ill at admission, which suggests that the Medicaid-covered patients may not be practicing the same level of preventative care as their privately-insured counterparts. As a result, the differences in patient outcomes were not a result of the inpatient quality of care provided. The inpatient care for the Medicaid patients was considered adequate and comparable with care received by privately-insured patients. (Final report: 46 pages.)

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Beth Benedict

PHONE NUMBER: (410) 786-7724

PIC ID: 6302

PERFORMER ORGANIZATION: MEDSTAT Group, Cambridge, MA

TITLE: An Evaluation of Implementation of the Medicaid Community Supported Living Arrangements (CLSA) Program in Eight States

ABSTRACT: This report describes the effectiveness of developing a continuum-of-care concept as an alternative to the Medicaid-funded residential services provided to individuals with mental retardation and related conditions. The program serves individuals who are living in the community either independently, with their families, or in homes with three or fewer other individuals receiving the same services. These services were provided in eight States between fiscal years 1991 and 1995. By the end of the program only 73 percent of the expected number of individuals were receiving services in the Community Supported Living Arrangement (CSLA), and the expenditures were only 58 percent ($38.4 million) of the amount authorized. A number of factors contributed to this smaller-than-expected program: (1) late 1990 authorization of CSLA and subsequent delay in regulations, application procedures, and State selection put back the first program enrollments by 16-22 months; (2) simultaneously expanded Federal latitude allowed rapid growth of Medicaid Home and Community Based Services; (3) implementers found that planning and designing services "one person at a time" were slower than expected; (4) States experienced delays in establishing the new systems of quality assurance required by the CSLA program; and (5) recruitment was sometimes delayed by the inclusion of groups of persons who were not traditional users of developmental disabilities services and who were not already known to the system. The report concludes that specific financing problems limit the effectiveness of the program. (Final report: 54 pages.)

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Samuel L. Brown

PHONE NUMBER: (410) 786-6667

PIC ID: 6304

PERFORMER ORGANIZATION: MEDSTAT Group, Cambridge, MA

TITLE: Evaluation of the Community Nursing Organization Demonstration Interim Evaluation Report

ABSTRACT: This report examines a set of demonstration projects mandated in the Omnibus Budget Reconciliation of 1987. The legislation directed the establishment of demonstration projects to test a capitated, nurse-managed system of care. The two fundamental elements of the demonstration are capitation payment and nurse case management. It was designed to promote timely and appropriate use of community health services and to reduce the use of costly acute care services. By October 1995, more than 5,400 beneficiaries were enrolled in the four Community Nursing Organizations (CNOs). The evaluation report covers the first 15 months of operation. The applicants have been healthier and more independent, on average, than the general Medicare population in their respective market areas. Analyses of measures of death, physical functioning, and satisfaction with care detected no statistically significant differences. Analysis of a subsample of persons who were impaired in Activities of Daily Living indicated that members of the CNO treatment group were more likely to improve (or less likely to deteriorate further) than members of the control. An even stronger result, in the same direction, was found for individuals who were limited in Instrumental Activities of Daily Living. (Final report: variously paginated.)

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Melissa Hulbert

PHONE NUMBER: (410) 786-8494

PIC ID: 6306

PERFORMER ORGANIZATION: Abt Associates, Incorporated, Cambridge, MA

TITLE: Evaluation of the Effectiveness of the Operation Restore Trust Demonstrations

ABSTRACT: Operation Restore Trust (ORT) was jointly developed by the Office of Inspector General (OIG), the Administration on Aging (AoA), and the Health Care Financing Administration (HCFA) as a model to demonstrate improved methods for investigation and prosecution of fraud and abuse in health programs. ORT targets a set of initiatives that focus on a few States, a few areas of the Medicare benefit, and a few standard operating procedures (especially failures to coordinate among the most central agencies and to exploit available data resources). The report finds that (1) ORT is associated with a net increase of more than 100 percent in ORT-type cases investigated by the OIG; (2) these cases should generate substantial incremental receivables, some fraction of which will translate into true savings as collections are made; (3) HCFA and its contractors had a series of successful projects under ORT, with notably large collections or avoidances of payment accompanying many of these efforts, although it cannot be said with certainty that these savings would not have been realized without ORT; (4) ORT encourages several important policy changes made during, or immediately following, the demonstration; (5) ORT may have important "sentinel effects" (e.g., ORT may have deterred providers from certain kinds of suspect behavior); (6) there are considerable process effects of ORT; (7) giving the AoA a fraud and abuse mission led to active training, outreach, and education efforts; and (8) the infrastructure of information for combating fraud and abuse has significantly improved, although these improvements include many efforts outside ORT itself. The evaluation concludes that ORT turned around certain troubling trends of the early 1990s and has brought new vigor to government efforts to combat health care fraud and abuse.

AGENCY SPONSOR: Office of Financial Management

FEDERAL CONTACT: Edward Norwood

PHONE NUMBER: (410) 786-6571

PIC ID: 6311

PERFORMER ORGANIZATION: Abt Associates, Incorporated, Cambridge, MA

TITLE: The Impact of Report Cards on Employees: A Natural Experiment

ABSTRACT: This report seeks to determine whether the dissemination of information about health plans to consumers (who choose health plans within a managed care competition framework) would influence their knowledge of plan characteristics, attitudes toward the plans, or choice of plan. Investigators found no "report card" effect on employees' knowledge of health plans, their attitude about quality of health plans, or their choices in selecting a managed care health plan. The study did find that certain health plan characteristics (such as price) were strongly related to health plan choice. The investigators suggest that the current versions of health plans are works in progress and that consumers do not seem to be influenced by the information in any of the ways measured in this study. (Final report: 41 pages.)

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Sherry Terrell

PHONE NUMBER: (410) 786-6601

PIC ID: 6312

PERFORMER ORGANIZATION: Park Nicollet Medical Foundation, St. Louis Park, MN

TITLE: Consequences of Paying Medicare HMOs and Health Care Prepayment Plans (HCPPs)

ABSTRACT: This study examined the operational aspects of health care prepayment plans (HCPPs) and the cost-effectiveness of cost health maintenance organizations (HMOs) and HCPPs. The report contains a case study of HCPPs: it looks at plans' utilization management and quality assurance programs, marketing practices, and contingency plans in case of insolvency. It also examines the cost-effectiveness to the Health Care Financing Administration (HCFA) of cost HMOs and HCPPs with respect to the fee-for-service and risk contracting program during calendar year 1993. The report found that costs to HCFA increased substantially under both the cost HMO and HCPP programs. Cost increases relative to fee-for-service were larger than those relative to the risk-based approach. Only a handful of the 63 plans examined appeared to have generated savings for HCFA. The main reason for the cost increase appears to be a lack of incentive for plans to drive hard bargains with physicians on prices. Furthermore, the report found that most of the cost-based plans experienced favorable selection, where the relatively more healthy segments of the population are enrolled. (Final report: 178 pages, plus appendices.)

AGENCY SPONSOR: Center for Health Plans and Providers

FEDERAL CONTACT: Ron Lambert

PHONE NUMBER: (410) 786-6624

PIC ID: 6314

PERFORMER ORGANIZATION: Mathematica Policy Research, Incorporated, Plainsboro, NJ

TITLE: Toward a Prospective Payment System for Outpatient Services: Implementation for Outpatient Services-Implementation of APGs by State Medicaid Agencies and Private Payers

ABSTRACT: This report studies a Medicaid outpatient prospective payment system, which groups patients for payment purposes rather than paying on a cost basis. These groups are similar in concept to diagnosis-related groups, which form the heart of Medicare's prospective payment system for inpatient care. It involved a case study of Iowa's implementation of the ambulatory patient group (APG) system and an analysis of the reimbursement methodology. This report has two components: an in-depth study of three operational APG systems (based on site visits) and telephone interviews with other payers that have implemented or planned to implement the system. All six payers with operational experience tailored their APG systems to their own priorities and markets. They all implemented the system without major incident. The payers reported success in reducing outpatient costs, where that was the immediate goal, and they believe the system encourages higher-cost facilities to reduce costs and rewards lower-cost facilities. Providers' views were more mixed. Though they reported generally adequate overall payment, they also viewed the system as complex, had difficulty calculating expected payment, and often let payer computer systems group related claims rather than consolidating them prior to submission, as was the intent of the system. No evidence was found of much behavioral response by providers, but that could change if the system is implemented by a large payer such as HCFA. (Final report: 78 pages.)

AGENCY SPONSOR: Center for Health Plans and Providers

FEDERAL CONTACT: Joe Cramer

PHONE NUMBER: (410) 786-6676

PIC ID: 6320

PERFORMER ORGANIZATION: Mathematica Policy Research, Incorporated, Plainsboro, NJ

TITLE: Payment of Pharmacists for Cognitive Services: Results of the Washington State C.A.R.E. Demonstration Project

ABSTRACT: The Washington Cognitive Activities and Reimbursement Effectiveness (C.A.R.E.) Project was a demonstration authorized under the Omnibus Budget Reconciliation Act of 1990 to assess the impact of a financial incentive on pharmacists' performance of cognitive services. The premise of this demonstration was that direct reimbursement for pharmacists' cognitive services will remove financial barriers associated pharmacists' provision of these services and result in increased performance of cognitive services, with a subsequent impact on costs and outcomes. Data for the demonstration were drawn from three groups of pharmacies located throughout the State of Washington, each of which contained about 100 pharmacy sites. Pharmacists in the first two groups documented cognitive services for Medicaid patients using a problem-intervention-result format. The demonstration phase lasted from February 1994 through September 1995 and resulted in the documentation of 20,240 cognitive service events. The project found that (1) Group A pharmacists, who received financial incentives, consistently reported higher cognitive service intervention rates than did Group B, who did not receive financial incentives; (2) about half of all documented cognitive services problems were for patient-related problems, while 32.6 percent were for drug-related problems, 17.6 percent for prescription-related problems, and 1.4 percent for non-drug-related problems; (3) a drug therapy change occurred as a result of 28 percent of all cognitive services; (4) for each cognitive service associated with any type of drug therapy change, the average downstream drug cost savings was about $13, but these savings varied by type of drug therapy; and (5) the Medicaid program saved about $78,000 due to cognitive services resulting in drug therapy changes. The report concludes that the implementation of a prescription drug-related cognitive services documentation and reimbursement system is feasible and useful.

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Jay Bae

PHONE NUMBER: (410) 786-6591

PIC ID: 6528

PERFORMER ORGANIZATION: University of Washington, School of Medicine, Seattle, WA

TITLE: Assessing the Viability of All-Payer Systems for Inpatient Hospital Services

ABSTRACT: This report explores the feasibility and possible structure of alternative approaches to developing an all-payer prospective system for reimbursing hospitals for inpatient care. The study tests the practicality of adapting or extending Medicare's Prospective Payment System (PPS) to either other payers or all payers as part of the health care reform legislation proposed by the Clinton Administration in 1993. The initial tasks were the development of data files necessary to construct such an all-payer PPS. The most basic components of a PPS are payment weights, rates, and adjustors. Separate analytic steps are required in order to derive each of these components, and several different types of data are required to complete each of these analytic tasks. Admission records are needed and must be categorized according to a specified classification system. Hospital-specific cost data by payer category are required to calculate costs per case, and hospital and area characteristic data are required in order to judge the need for and level of payment adjustors. Once these data were developed, they were used in two analyses: one addressing whether diagnosis-related group (DRG)-based payment rates for Medicare and non-Medicare patients should be adjusted based on hospital characteristics, and one focusing on an alternative approach to defining the Medicare standardized prospective payment rate. The report finds that current PPS rates are based on the mean adjusted cost for a given category of hospital, and that high-cost hospitals are penalized under the assumption that their costs are reflective of presumed inefficiency. The report develops hospital-specific measures of inefficiency and then excludes the costs of inefficient hospitals from the calculation of standardized payment rates. The report concludes that a frontier cost function model approach is superior to the current system and can result in substantial program savings. See also PIC ID No. 6594.1.

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Jesse Levy

PHONE NUMBER: (410) 786-6600

PIC ID: 6594

PERFORMER ORGANIZATION: Urban Institute, Washington, DC

TITLE: Second Update of the Geographic Practice Cost Index: Final Report

ABSTRACT: The Geographic Practice Cost Index (GPCI) is an input price index used to adjust Medicare Fee Schedule (MFS) payments for area variations in physicians' cost of practice. The original GPCI was implemented with the MFS in 1992. In 1995 and 1996, the GPCI was updated with 1990 Decennial Census data. This report documents the second update of the GPCI, which is scheduled to be fully phased in on January 1, 1999. During the previous year, 1998, a transition will occur between the 1997 GPCI and the updated 1999 GPCI, with one-half the total change implemented in 1998. The comparison between the 1997 and the 1999 GPCIs shows that (1) there is no change between the physician work GPCI or the non-physician employee wage index of the practice expense GPCI except that they are reweighted with 1994 county relative value units (RVUs); (2) the office rental index of the practice expense GPCI is updated with fiscal year 1996 Fair Market Rents published by the Department of Housing and Urban Development; (3) county rental adjustment factors are eliminated for all metropolitan areas, except for the New York City Primary Metropolitan Statistical Area; (4) the malpractice GPCI is updated with 1992, 1993, and 1994 premium data, and specialty premiums are weighted by national RVU proportions rather than allowed charges; (5) there is no change in the GPCI cost shares, which measure the share of the various inputs in total practice revenues; and (6) the county RVUs used to weight averages of county input prices for each Fee Schedule Area (FSA) are updated from 1992 to 1994. The report also examines changes in the Geographic Adjustment Factor between 1999 and 1997. It determines that changes in MFS payments resulting from implementation of the 1999 GPCIs will be small (less than 2.5 percent for each FSA). See also 5764 series. (Final report: variously paginated, plus appendices.)

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Benson Dutton

PHONE NUMBER: (410) 786-6603

PIC ID: 6611

PERFORMER ORGANIZATION: Health Economics Research, Incorporated, Waltham, MA

TITLE: Validation of Nursing Home Quality Indicators Study

ABSTRACT: This study developed a system by which a series of Quality Indicators (QIs) could be used in conjunction with claims data to monitor quality of care in nursing home facilities. Fifty QIs were developed and validated using a sample of nursing home residents' medical records for a 6-month period surrounding the time of nursing facility's Federal certification survey. The QIs focus on the occurrence of three broad potential problem areas, including adverse outcomes, lack of therapy, and inappropriate pharmaceutical treatments. The QI algorithm used ICD-9 CM diagnosis codes and CPT-4 and CRVS procedure codes to generate the QIs. These codes represent either medical or surgical conditions that define the indicator events (e.g., inpatient stay or emergency room visit), the covariant diagnoses, or case selection factors. It is anticipated that these validated QIs could be used as the basis for an automated system to continuously monitor the quality of care provided in federally certified nursing homes to assist Federal and State surveyors in implementing the survey process effectively. Such a system could contribute to lowering the costs of care and improving outcomes for Medicaid nursing home residents by reducing the incidence of potentially avoidable hospitalization and over-medication. The two volume report finds that (1) the utility of basing indicators of quality of nursing home care on Medicaid and Medicare claims data is clearly demonstrated; (2) the study QIs as a whole were generally better at predicting the absence of a quality issue, suggesting that the negative finding on the quality indicator represented the lack of a quality concern in the nursing home; and (3) using covariant diagnoses to adjust for the risk of a resident receiving a QI tag is useful. The report concludes with a discussion of the issues raised during the validation of the 50 QIs examined here. (Volume I: 88 pages; Volume II: appendices variously paginated.)

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Kay Lewandowski

PHONE NUMBER: (410) 786-6657

PIC ID: 6612

PERFORMER ORGANIZATION: MEDSTAT Group, Cambridge, MA

TITLE: 1995 Influenza Immunizations Paid for by Medicare: State and County Rates

ABSTRACT: In 1993, the Health Care Financing Administration began paying providers for influenza vaccine and its administration to Medicare beneficiaries aged 65 and older. This data book provides information about the national, State, and county rates of influenza vaccination in the Medicare fee-for-service (FFS) sector. Medicare-managed care beneficiaries are not counted. The data book presents maps that report rates as integers for ease of presentation. It also presents tables that measure rates to one tenth of one percent. State rates are also presented. The data book provides three tables for each State: (1) a table providing the State's rates and numbers of influenza immunizations for 1994 and 1995 according to age, gender, and race; (2) a table showing the State's number of elderly enrolled in Medicare Part B FFS and the number of individuals who received flu shots in 1995 according to race and county; and (3) a table presenting corresponding immunization rates for 1994 and 1995 according to race and county. The data show that (1) about 41 percent of elderly Medicare beneficiaries received an influenza vaccination in 1995 that was paid for by Medicare; (2) for all sectors of this population, there was an increase over 1994 immunization rates ranging from 2.3 percent to 6.4 percent, indicating progress toward the Healthy People 2000 goal of a 60 percent influenza immunization rate for this population; (3) African-American beneficiaries have an immunization rate one-half that of Caucasian beneficiaries, although between 1994 and 1995, the increase in the rate of immunizations was slightly greater for African Americans than for Caucasians; (4) there is no substantial variation in rates by gender; and (5) immunization rates are lowest for those beneficiaries 85 years and older. (Final report: 279 pages.)

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Marsha Davenport

PHONE NUMBER: (410) 786-6693

PIC ID: 6615

PERFORMER ORGANIZATION: Health Care Financing Administration, Baltimore, MD

TITLE: Impact of the Medicare Fee Schedule on Teaching Physicians

ABSTRACT: Prior to the implementation of the Medicare Fee Schedule (MFS) in 1992, several studies were conducted to determine the impact of this payment change on various groups of physicians. However, no studies examined the potential impact of the MFS on teaching physicians, even though anecdotal evidence from academic practices suggested that these physicians would be particularly hard hit for four reasons (1) teaching physicians perform relatively more high-technology procedures and less primary care, which could result in disproportionate net losses for many academic practices; (2) teaching hospitals and medical schools tend to be located in large urban areas, where the Geographic Practice Cost Index portion of the payment is lower; (3) customary charges for teaching physicians may be higher than the area-wide historical payments calculated for fee schedule transition; and (4) a number of academic medical practices had not signed Medicare participation agreements. This study determines the impact of the MFS on teaching physicians and examines variations in the impact across academic medical centers, other major teaching hospitals, and minor teaching hospitals. The net effects of MFS price changes and any observed quantity changes on inpatient physician revenues were examined. A total of 720 hospitals were selected for this study, including all U.S. academic medical centers. The report finds that there is no evidence that teaching physicians have been adversely impacted by the MFS. Inpatient revenues per admission fell by the same percentage amount in all types of hospitals. Revenues fell because of a reduction in prices and in the quantity of services provided per admission. Thus, while the theoretical expectation was that teaching physicians would have experienced a disproportionately large reduction in their average price per service, in practice these physicians have altered that service mix by providing less RVU-intensive visits.

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: William Buczko

PHONE NUMBER: (410) 786-6593

PIC ID: 6666

PERFORMER ORGANIZATION: Center for Health Economics Research, Waltham, MA

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