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PubMed2004

Net health plan savings from reference pricing for angiotensin-converting enzyme inhibitors in elderly British Columbia residents.

BACKGROUND: Reference drug pricing (RP) is a cost-sharing strategy commonly used to control drug expenditures. Under RP, a benefit plan fully reimburses medications that are equally or less expensive than the reference price, and requires patients to pay the extra cost of therapeutically equivalent but higher priced drugs. Critics argued that drug plan savings are offset by administrative costs and increased spending on other health services. OBJECTIVE: We evaluated net healthcare savings in beneficiaries >or=65 years from the perspective of the British Columbia provincial health insurance system after it applied RP to angiotensin-converting enzyme (ACE) inhibitors in 1997. METHODS: We estimated savings in new users of antihypertensives after the start of RP plus associated administrative costs and savings from reductions in retail drug prices. Findings were integrated with earlier results on the consequences of RP on expenditures for drugs, physicians, and hospitalizations among all seniors who used ACE inhibitors before the introduction of RP. RESULTS: During the first year after the implementation of RP, savings for continuous users were CAN dollars 6.0 million. Savings for new users were dollars 0.2 million. Approximately five sixths thereof were achieved by utilization changes and one sixth by cost shifting to patients. There were no savings through drug price changes. Administering RP cost dollars 0.42 million. Overall net savings were estimated to be dollars 5.8 million during the first year after the start of RP. The magnitude of these savings is equal to 6% of all cardiovascular drug expenditures in seniors. After 10 years, approximately 50% of savings will be achieved by new users. CONCLUSION: We observed substantial net savings from RP for ACE inhibitors for the provincial health insurance system in British Columbia, although there were generous exemptions from the policy. In other jurisdictions, savings could be higher if drug prices decline after the start of reference pricing.

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PubMed2005

Toward a new payment system for inpatient rehabilitation. Part I: Predicting resource consumption.

BACKGROUND: The measures of clinical status used to predict costs must pay the most attention possible to medical conditions and clinical complexity. Length of stay (LOS), which has been used as a proxy for resource consumption, is not a direct measure of costs. Classification and regression trees, which are used in defining iso-resource groups, can be affected by overfitting and are based on a priori choices of the splitting attributes. Finally, current approaches are mainly concerned in estimating average group costs and do not attempt to estimate individual case costs. OBJECTIVES: We sought to define comprehensive measures of clinical status and detailed measures of resource consumption. We also sought to predict individual inpatient rehabilitation costs through multiple regression models. RESEARCH DESIGN: A prospective analysis was conducted of all rehabilitation cases admitted to 5 Italian inpatient facilities during a period of 12 months. All admissions underwent repeated Minimum Data Set-Post Acute Care (MDS-PAC) schedules to collect information on clinical status and treatment provided. We used factorial analysis to yield continuous variables representing clinical characteristics, and we priced treatments to obtain cost of stay. We used linear regression models to predict cost of stay and validated the model-based cost predictions by data-splitting. RESULTS: We collected 9720 MDS-PAC schedules from 2702 hospital admissions. The multivariate regression models fitted costs reasonably well with r(2) values of at least 0.34. On cross-validation, the ability of the regression models to predict cost was confirmed. CONCLUSION: We were able to estimate actual rehabilitation costs and define reliable regression models to predict costs from individual patient characteristics. Our approach identifies the contribution of any single patient characteristic to rehabilitation cost and tests the assumptions of the analysis.

Diagnosis-Related Groups↗
PubMed2005

Toward a new payment system for inpatient rehabilitation. Part II: Reimbursing providers.

BACKGROUND: The major fault with existing reimbursement systems lies in their failure to discriminate for the effectiveness of stay, both when paying per day and when paying per episode of treatment. OBJECTIVES: We sought to define an average length of effective stay and recovery trends by impairment category, to design a prospective payment system that takes into account costs and expected recovery trends, and to compare the calculated reimbursement with the predicted costs estimated in a previous study (Saitto C, Marino C, Fusco D, et al. A new prospective payment system for inpatient rehabilitation. Part I: predicting resource consumption. Med Care. 2005;43:844-855). RESEARCH DESIGN: We considered all rehabilitation admissions from 5 Italian inpatient facilities during a 12-month period for which total cost of care had already been estimated and daily cost predicted through regression model. We ascertained recovery trends by impairment category through repeated MDS-PAC schedules and factorial analysis of functional status. We defined effective stay and daily resource consumption by impairment category and used these parameters to calculate reimbursement for the admission. We compared our reimbursement with predicted cost through regression analysis and evaluated the goodness of fit through residual analysis. RESULTS: We calculated reimbursement for 2079 admissions. The r(2) values for the reimbursement to cost correlation ranged from 0.54 in the whole population to 0.56 for "multiple trauma" to 0.85 for "other medical disorders." The best fit was found in the central quintiles of the cost and severity distributions. CONCLUSION: For each impairment category, we determined the number of days of effective hospital stay and the trends of functional gain. We demonstrated, at least within the Italian health care system, the feasibility of a reimbursement system that matches costs with functional recovery. By linking reimbursement to effective stay adjusted for trends of functional gain, we suggest it is possible to avoid both needless cuts and extensions of hospital admissions.

Diagnosis-Related Groups↗
PubMed1998

Health care utilization by the elderly in HMOs: comparing risk and cost contracts.

Data are utilized collected from the American Association of Health Plans, a trade association representing HMOs, to study differences in utilization patterns between medicare beneficiaries enrolled in Medicare risk and cost contracts with health plans. Utilization is measured by the number of ambulatory procedures performed, outpatient and emergency room visits, and acute and nonacute discharges. Compared to elders enrolled in risk plans, those in cost arrangements appear to exhibit higher inpatient and outpatient use. Members of for-profit plans experienced greater outpatient visits, accreditation did not appear to influence utilization, and IPA arrangements resulted in a decrease in outpatient utilization. Financial and policy issues are discussed.

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PubMed2002

Nursing home case-mix reimbursement in Mississippi and South Dakota.

OBJECTIVE: To evaluate the effects of nursing home case-mix reimbursement on facility case mix and costs in Mississippi and South Dakota. DATA SOURCES: Secondary data from resident assessments and Medicaid cost reports from 154 Mississippi and 107 South Dakota nursing facilities in 1992 and 1994, before and after implementation of new case-mix reimbursement systems. STUDY DESIGN: The study relied on a two-wave panel design to examine case mix (resident acuity) and direct care costs in 1-year periods before and after implementation of a nursing home case-mix reimbursement system. Cross-lagged regression models were used to assess change in case mix and costs between periods while taking into account facility characteristics. DATA COLLECTION: Facility-level measures were constructed from Medicaid cost reports and Minimum Data Set-Plus assessment records supplied by each state. Resident case mix was based on the RUG-III classification system. PRINCIPAL FINDINGS: Facility case-mix scores and direct care costs increased significantly between periods in both states. Changes in facility costs and case mix were significantly related in a positive direction. Medicare utilization and the rate of hospitalizations from the nursing facility also increased significantly between periods, particularly in Mississippi. CONCLUSIONS: The case-mix reimbursement systems appeared to achieve their intended goals: improved access for heavy-care residents and increased direct care expenditures in facilities with higher acuity residents. However, increases in Medicare utilization may have influenced facility case mix or costs, and some facilities may have been unprepared to care for higher acuity residents, as indicated by increased rates of hospitalization.

Diagnosis-Related Groups↗
PubMed1989

The proposed general practice descriptors--will they influence preventive medicine?

The proposed descriptor bill to change Medicare rebates to general practice patients could have a benefit to general practice preventive medicine. This seems possible through rewarding practitioners who spend more time with their patients and the positive effects of continuing medical education. However, the potential exists for whittling away any rewards for these practitioners by future governments and the audit of general practices could become a method of political control of Australian general practice.

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PubMedDate not supplied

Perspective: healthcare on a diet.

Both state healthcare reform and the market are shrinking the healthcare infrastructure and changing the needs of the workforce. Managed care, in its various forms, generally uses fewer doctors and makes more efficient use of hospitals. This will have a profound effect on medical schools, existing specialties, and underutilized hospitals. After many false starts, Adam Smith's "invisible hand" is having its impact. This article explores some of the consequences.

Cost Control↗