Trends in Medicare Part B mental health utilization and expenditures: 1987-92

This article examines the impact of expanding Medicare Part B coverage of mental health services, based on analysis of 6 years of Medicare Part B claims data (1987-92). Inflation-adjusted per capita spending more than doubled (from $9.91 to $21.63) following the elimination of the annual outpatient treatment limit and extension of direct reimbursement to clinical psychologists and social workers. There was a 73-percent increase in the user rate (from 23.25 to 40.20 per 1,000 Medicare beneficiaries), and a 27-percent increase in the average number of services per user (from 8.9 to 11.3). Mental health spending increased from 1 percent to 2 percent of expenditures for Part B professional services. Ongoing monitoring of mental health utilization is desirable to ensure that recent access gains are not eroded with the increasing shift to managed care and implementation of gatekeeper mechanisms.     

Medicare's use of cost-effectiveness analysis for prevention (but not for treatment)

ContextMedicare currently pays for 23 preventive services in its benefits package, the majority of which were added since 2005. In the past decade, the program has transformed from one essentially administering treatment claims, to one increasingly focused on health promotion and maintenance. What is largely unappreciated is the role cost-effectiveness analysis has played in the coverage of preventive services.MethodsWe review the role of cost-effectiveness analysis in Medicare coverage of preventive services and contrast it to the lack of such consideration in the coverage of treatments.FindingsWhile not considered for coverage of treatment, cost-effectiveness analysis played a role in the coverage of nine preventive services, and was evaluated in a number of instances when the service was not added. Pneumococcal vaccine, the first preventive service added to the benefit (1981), followed a Congressionally requested cost-effectiveness analysis, which showed it to be cost-saving. More recently, the Centers for Medicare and Medicaid Services (CMS) reviewed cost-effectiveness evidence when covering preventive services such as HIV screening (2010) and screening and behavioral counseling for alcohol misuse (2011) (studies reported cost-effectiveness ratios of $55,440 per QALY, and $1755 per QALY, respectively).ConclusionsCost-effectiveness analysis has played a longstanding role in informing the addition of preventive services to Medicare. It offers Medicare officials information they can use to help ensure health gains are achieved at reasonable cost. However, limiting cost-effectiveness evidence to prevention and not treatment is inconsistent and potentially inefficient.     

Achievable Cost Saving and Cost-Effective Thresholds for Diabetes Prevention Lifestyle Interventions in People Aged 65 Years and Older: A Single-Payer Perspective

BackgroundMore than 75% of people older than 65 years of age in the United States have prediabetes or diabetes. Diabetes is a burden on Medicare, the US health care payer. Intensive lifestyle interventions have successfully prevented diabetes cases, and medical nutrition therapy has also significantly reduced diabetes risk factors. Including medical nutrition therapy coverage for prediabetes is a policy decision to be made by Medicare, and cost-effectiveness data must support that decision.ObjectiveThe aims of this study were to determine the thresholds of diabetes cases that need to be averted by prediabetes lifestyle interventions in order to be cost saving and/or cost-effective to a single health care insurance payer, such as Medicare; and to compare those thresholds with published intervention data to determine the feasibility of cost savings and/or cost-effectiveness.DesignThis analysis used standard methods of cost-effectiveness and cost saving analysis. A health system perspective was used. Cost estimates for diabetes treatment and lifestyle interventions were based on published data. Costs for 3-, 6-, and 10-year lifestyle interventions were calculated. Sensitivity analyses were performed using least and most-conservative published data for health care and intervention costs.ResultsThe number of cases averted needed for base-case cost savings ranged from 882,883 to 2,443,686, and in sensitivity analysis from 394,148 to 6,738,678. Cost savings are likely in the base and least-conservative scenarios. The number of cases averted needed for base-case cost-effectiveness ranged from 454,755 to 1,258,692, and in sensitivity analysis from 212,225 to 4,843,262. Cost-effectiveness is likely in all interventions, except the 10-year interventions in the most-conservative scenario.ConclusionsPrediabetes lifestyle interventions for people aged 65 years or older are highly cost-effective and possibly cost saving to a health care insurance payer such as Medicare. It is likely that medical nutrition therapy could be even more cost saving and/or cost-effective than intensive lifestyle interventions. These results suggest that Medicare would receive financial benefit from providing coverage for these services.     

The complexity of disease combinations in the Medicare population

Developing systems of care that address the mortality, morbidity, and expenditures associated with Medicare beneficiaries with multiple diseases would benefit from a greater understanding of the complexity of disease combinations (DCs) found in the Medicare population. To develop estimates of the number of DCs, we performed an observational analysis on 32,220,634 beneficiaries in the Medicare Fee-for-Service claims database based on a set of records containing each beneficiary's Part A and B International Classification of Diseases, 9(th) Revision, Clinical Modification (ICD-9-CM) claims data for the year of 2008. We made 2 simplifying adjustments. First, we mapped the individual ICD-9-CM codes to the Centers for Medicare and Medicaid Services-Hierarchical Conditions Categories (HCC) model that was developed in 2004 to risk adjust capitation payments to private health care plans based on the health expenditure risk of their enrollees. Second, we aggregated beneficiaries with identical HCCs regardless of the temporal order of these findings within the 2008 claims year; thus the DC to which they are assigned represents the summation of their 2008 claims data. We defined 3 distinct populations at the HCC level. The first consisted of 35% of the beneficiaries who did not fall into any HCC category and accounted for 6% of expenditures. The second was represented by the 100 next most prevalent DCs that accounted for 33% of the beneficiaries and 15% of expenditures. The final population, accounting for 32% of the beneficiaries and 79% of expenses, was complex and consisted of over 2 million DCs. Our results indicate that the majority of expenditures are associated with a complex set of beneficiaries.     

The Impact of Funding Inpatient Treatments for COVID-19 on Health Equity in the United States: A Distributional Cost-Effectiveness Analysis

ObjectivesWe conducted a distributional cost-effectiveness analysis (DCEA) to evaluate how Medicare funding of inpatient COVID-19 treatments affected health equity in the United States.MethodsA DCEA, based on an existing cost-effectiveness analysis model, was conducted from the perspective of a single US payer, Medicare. The US population was divided based on race and ethnicity (Hispanic, non-Hispanic black, and non-Hispanic white) and county-level social vulnerability index (5 quintile groups) into 15 equity-relevant subgroups. The baseline distribution of quality-adjusted life expectancy was estimated across the equity subgroups. Opportunity costs were estimated by converting total spend on COVID-19 inpatient treatments into health losses, expressed as quality-adjusted life-years (QALYs), using base-case assumptions of an opportunity cost threshold of $150 000 per QALY gained and an equal distribution of opportunity costs across equity-relevant subgroups.ResultsMore socially vulnerable populations received larger per capita health benefits due to higher COVID-19 incidence and baseline in-hospital mortality. The total direct medical cost of inpatient COVID-19 interventions in the United States in 2020 was estimated at $25.83 billion with an estimated net benefit of 735 569 QALYs after adjusting for opportunity costs. Funding inpatient COVID-19 treatment reduced the population-level burden of health inequality by 0.234%. Conclusions remained robust across scenario and sensitivity analyses.ConclusionsTo the best of our knowledge, this is the first DCEA to quantify the equity implications of funding COVID-19 treatments in the United States. Medicare funding of COVID-19 treatments in the United States could improve overall health while reducing existing health inequalities.     

Racial differences in health care use among medicare only and dual eligibles

It has been an important financial issue in the U.S. Medicare expenditures that health care expenses of Medicaid-Medicare dual eligibles (MMDE) are much higher than those of Medicare only beneficiaries (MOB). This paper compares health care use and health status of MMDEs and MOBs who are either Afro-American or white recipients. Using total health care use information from the Medical Expenditure Panel Survey (MEPS) 2000, we find that the proportion of dual eligibles with chronic health conditions is higher by 4% than that of the Medicare only beneficiaries and that dual eligibles make more frequent uses of various health care services. The number of office-based physician visits and outpatient physician visits are higher for Afro-American dual eligibles than white dual eligibles. This finding seems to be contributed to by relatively high medical needs among dual eligibles. Higher utilization of agency-related home health services among Afro-American dual eligibles than among white dual eligibles is considered as a consequence of different ethnicity-specific responses to insurance coverage.     

High out-of-pocket health care spending by the elderly

We use data from the Health and Retirement Study to examine the elderly's out-of-pocket health care spending. We find that Medicare HMOs, employer supplements, and Medicaid effectively insulate against the risk of high expenditures. At the ninetieth percentile, Medicare beneficiaries with employer supplements or enrolled in Medicare HMOs spend 1,600 dollars less out of pocket than beneficiaries with traditional Medicare spend. For the poor elderly, Medicaid offers similar protection. Among the near-poor elderly, there is little employer coverage, so Medicare HMOs provide most of the protection against financial risk. There is evidence that Medicare HMO benefits have eroded since 1998, raising the question of whether the near-poor have lost financial protection since then.     

Profile of Medicare beneficiaries with AIDS: application of an AIDS casefinding algorithm.

This profile of Medicare beneficiaries with acquired immunodeficiency syndrome (AIDS) was developed by applying a casefinding algorithm to virtually all Medicare claims from 1991-93. The algorithm identified more than 37,000 beneficiaries with AIDS, approximately 21,000 of whom were living at the end of 1993. These estimates suggest that as many as 12 percent of people living with AIDS at the end of 1993 were covered by Medicare. Medicare expenditures for these beneficiaries averaged more than $2,400 per month and totaled more than $500 million in 1993. These expenditures are likely to rise as more people with AIDS live long enough to qualify for Medicare coverage.     

Designing health insurance information for the Medicare beneficiary: a policy synthesis.

Can Medicare beneficiaries make rational and informed decisions about their coverage under the Medicare program? Recent policy developments in the Medicare program have been based on the theory of competition in medical care. One of the key assumptions of the competitive model is the free flow of adequate information, enabling the consumer to make an informed choice from among the various sellers of a particular product. Options for Medicare beneficiaries in supplementing their basic Medicare coverage include the purchase of private supplementary insurance policies or enrollment in a Medicare HMO. These consumers, in a complex health insurance market, have only limited information available to them because many health plans do not make adequate comparable product information available. Moreover, since the introduction of the Medicare HMO option, the long-range plan for management of the Medicare budget has become based on the large-scale voluntary enrollment of beneficiaries into capitated health plans. The policy instrument that has been used to improve beneficiary decisions on how to supplement Medicare coverage is the informational or educational program. This synthesis presents findings regarding the relative effectiveness of different types of health insurance information programs for the Medicare beneficiary in an effort to promote practical use of the most effective types of information.     

The Economic Value of Innovative Treatments over the Product Life Cycle: The Case of Targeted Trastuzumab Therapy for Breast Cancer

ObjectivePharmacoeconomic analyses typically project the expected cost-effectiveness of a new product for a specific indication. This analysis develops a dynamic life-cycle model to conduct a multiindication evaluation using the case of trastuzumab licensed in the United States for both early-stage and metastatic (or late-stage) human epidermal growth factor receptor 2 (HER2)-positive breast cancer therapy (early breast cancer [EBC]; metastatic breast cancer [MBC]), approved in 2006 and 1998, respectively.MethodsThis dynamic model combined information on expected incremental cost-utility ratios for specific indications with an epidemiologically based projection of utilization by indication over the product life cycle—from 1998 to 2016. Net economic value was estimated as the cumulative quality-adjusted life years (QALYs) gained over the life cycle multiplied by a societal valuation of health gains ($/QALY) minus cumulative net direct treatment costs. Sensitivity analyses were performed under a range of assumptions.ResultsWe projected that the annual number of EBC patients receiving trastuzumab will be more than three times that of MBC by 2016, in part because adjuvant treatment reduces the future incidence of MBC. Over this life cycle, the estimated overall incremental cost-effectiveness ratio (ICER) was $35,590/QALY with a total of 432,547 discounted QALYs gained. Under sensitivity analyses, the overall ICER varied from $21,000 to $53,000/QALY, and the projected net economic value resulting from trastuzumab treatment ranged from $6.2 billion to $49.5 billion.ConclusionsAverage ICERs for multiindication compounds can increase or decrease over the product life cycle. In this example, the projected overall life-cycle ICER for trastuzumab was less than one half of that in the initial indication. This dynamic perspective—versus the usual static one—highlights the interdependence of drug development decisions and investment incentives, raising important reimbursement policy issues.     

Insurance Coverage of Prescription Drugs and the Rural Elderly

CONTEXT: Rural impacts of a Medicare drug benefit will ultimately depend on the number of elderly who are currently without drug coverage, new demand by those currently without coverage, the nature of the new benefit relative to current benefits, and benefit design. PURPOSE: To enhance understanding of drug coverage among rural elderly Medicare beneficiaries and their expenditures for pharmaceuticals. METHODS: Estimates of the extent of coverage, expenditures, and sources of drugs were obtained using data are from the 1997 Medicare Current Beneficiary Survey and the Pharmacy Verification and Household Components of the 1996 Medical Expenditure Panel Survey. FINDINGS: Three-quarters of the urban elderly had some type of drug coverage in 1997 versus 59% of the elderly in rural areas. Urban residents were more likely to have obtained their drug coverage from an employer-sponsored supplemental plan, and rural residents were more likely to have self-purchased Medigap drug coverage. Expenditures and use of drugs by Medicare beneficiaries are greater for those with than without coverage, and differences are invariant with respect to geographic location. Coverage under self-purchased supplemental plans appears less generous than under employer-sponsored plans in both rural and urban areas. Rural and urban elderly are more than twice as likely to receive at least 1 prescribed medication through the mail than the general population. CONCLUSION: A well-designed Medicare drug benefit would be especially beneficial to the rural elderly because relatively more rural elderly currently lack coverage or have less generous coverage than urban beneficiaries. Mail-order distribution may help contain future program expenditures.     

Comparison between US Preventive Services Task Force recommendations and Medicare coverage

PURPOSE The US Preventives Services Task Force (USPSTF) is authorized by the US government to review and disseminate the scientific evidence for clinical preventive services. The purpose of this study was to evaluate the alignment of Medicare preventive services coverage with the recommendations of the USPSTF before implementation of health reform.METHODS We recorded all Medicare coverage for preventive services as listed in the Medicare preventive services guide of 2007 (including the 2009 update) for all recommended (A-or B-rated) USPSTF and not recommended (D-rated) guidelines for preventive screening and counseling in adults aged 65 years and older. We analyzed 2 components of preventive care: preventive coordination (risk assessment, patient motivation, and arranging of preventive service) and the preventive service itself. The main outcome measure was the percentage of agreement between USPSTF recommendations and Medicare coverage.RESULTS The USPSTF recommended 15 preventive interventions for adults aged 65 years and older. Although Medicare partially reimbursed 93% of recommended services, full reimbursement for the preventive coordination, as well as the service, was available for only 7% of these services. This partial coverage is available mostly as part of the Welcome to Medicare Visit. Further, the USPSTF recommended against 16 preventive services; Medicare reimbursed clinicians for 44% of these services.CONCLUSIONS Medicare coverage for preventive services needs to be reassessed, with special focus on preventive coordination. Continuing previous practices will likely promote both inadequate and excessive delivery of preventive services. The new health care reform law has the potential to improve the provision of preventive services to Medicare beneficiaries.     

Racial and ethnic differences in public and private medical care expenditures among aged Medicare beneficiaries

This study examines the current allocation of medical care expenditures among non-Hispanic white, non-Hispanic black, and Hispanic seniors who are Medicare beneficiaries. Analyses of both "need-based" and "demand-based" perspectives found that white, black, and Hispanic seniors in similar health had similar total annual expenditures for medical care. The groups did, however, differ substantially in the distribution of expenditures between public and private sources of payment. Notably, racial and ethnic differences in public and private expenditures all but vanished when socioeconomic variables and health insurance coverage were included in the analyses. The findings suggest that public sources of payment for medical care services, especially public supplementary coverage have helped to eliminate racial and ethnic gaps in expenditures.     

Adverse selection and the purchase of Medigap insurance by the elderly

This study uses data on 8561 elderly respondents from the 1991 Medicare Current Beneficiary Survey to examine adverse selection in the supplemental private insurance market. Logit models of supplemental insurance choices provided modest but mixed evidence of self-selection on the basis of observable health status. Wealth had a strong influence on coverage. Two part models of Medicare utilization and expenditures showed that beneficiaries with individually purchased policies had higher total, part B and physician expenditures than those with employer-provided policies, even after controlling for observable differences, suggesting adverse selection. Results were similar for basic and more comprehensive policies.