Variation in the Delivery of Medical Care: Is More Better?

Todd Gilmer, PhDProfessor of Health Policy and Economics

Department of Family and Preventive Medicine

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Variations in Medicare

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Hospital Expenditures in Connecticut and Massachusetts, 1975 (Wennberg, 1990)

Expenditures Vary by State

May not be for all medical procedures

Possible contributing factor : Variance in # Medical Resources Available (e.g. physicians)

Area Variations

• Large literature comparing regional variations in treatment intensity

• For the most part, increased treatment is associated with equal or worse outcomes

• Dartmouth Atlas of Health Care• Fisher et al. “Implications of Variations in

Medicare Spending.” Annals of Internal Medicine, 2003

Expenditures (last 6 months life) Vary by Region… even when adjusted for age, gender and illness

Treatment of Heart Attacks

• Sources: • Cutler and McClellan, “Is technological

change in medicine worth it?” Health Affairs. 2003.

• Skinner, Staiger, Fisher, “Is technological change in always medicine worth it?” Health Affairs. 2006.

Increases in Surgical Treatment, 1984-1998

• Surgical intervention (bypass surgery, angioplasty / stents) increased from 10% of admissions to over 50%

• Survival increased by approximately one year

• Costs increased by $10,000 per case• Cost : benefit = $10,000 / life year

Costs and Survival Gains 1986-2002

• Since 1996, survival gains have stagnated, yet costs have increased (ratio=$300,000 / year)

• Examine, at a regional level, changes in outcomes and costs related to:– Quality indicators : aspirin / beta-blockers at

discharge, reperfusion w/in 12 hours– Average number of physicians treating a patient

within one year

Findings

• Regions experiencing the largest spending gains were not those experiences the greatest improvements in survival

• Factors yielding the greatest benefits were not those that drove up costs

• Process, rather than technology, yields benefits

Variations in Medicaid

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Methods

• Focus on Cash-Assistance, Medicaid-Only, fee-for-service, beneficiaries with Disabilities (CAMODs)– Restrict to cash disabled because uniform national eligibility

standard for SSI increases comparability of the analysis sample across states

– Restrict to Medicaid-only (eliminate dual eligibles) to get a complete view of utilization and expenditures

– Restrict to FFS because encounter data are incomplete for beneficiaries in managed care

– In analyses of spending on CAMODs, exclude states with high managed care penetration or other data anomalies

Beneficiaries Total Expenditures Acute LTC 47.2 million $234.6 billion $149.2 billion $74.8 billion

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Distribution of Medicaid Beneficiaries and Expenditures, 2001-2005

Cash Assistance, Medicaid-only, Disabled (CAMOD Other disabled Aged Adults Children

Methods

• Estimated volume and price effects

– Inpatient: inpatient days and price per day

– Outpatient: outpatient visits and price per visit

– Pharmacy: pharmaceutical fills, price per fill, pharmaceutical mix

• Summarized by state and region

• Regression analysis

– HRR level

– Effect of market supply (HRR) and Medicaid program

characteristics

/Projects/Medicaid paper/final paper 2/Exhibit2.pdf

Spending is determined primarily by volume

• Spending in the top 10 states was $1,650 above average, 72% due to volume ($14 billion)

• Spending in the bottom 10 states was $1,161 below average, 58% due to volume ($9.5 billion)

Importance of Primary Care

• The supply of primary care physicians, the average number of primary care visits, and the price per visit were associated with reduced admissions

• This suggests that the provisions of the Affordable Care Act of 2010 that were aimed at increasing access to primary care may reduce admissions

How are Variations in Medicare and Medicaid Related?

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Distribution of state-level 2004 Medicare spending per beneficiary, and 2001-2005 acute care Medicaid spending per CAMOD

Source: Medicare, Dartmouth Atlas; Medicaid, MAX data, 2001-2005 AL, AZ, DE, MD, and ND are excluded.

2004 Medicare spending per beneficiary and 2001-2005 acute care Medicaid spending per CAMOD

Source: Medicare, Dartmouth Atlas; Medicaid, MAX data, 2001-2005 AL, AZ, DE, MD, and ND are excluded.

2004 Medicare admissions/1,000 and 2001-2005 Medicaid admissions per CAMOD

Source: Medicare, Dartmouth Atlas; Medicaid, MAX data, 2001-2005AL, AZ, DE, MD, and ND are excluded.Admissions to psychiatric hospitals and admissions to acute care hospitals with a primary mental health diagnosis are excluded from the Medicaid data.

Source: Medicare, Dartmouth Atlas; Medicaid, MAX data, 2001-2005AL, AZ, DE, MD, and ND are excluded.Medicaid 'Part B' spending includes MD/OPD/Clinic spending, and expenditures for laboratory and radiology services.

2004 Medicare Part B spending, and 2001-2005 Medicaid 'Part B' spending

2004 Medicare Part B spending, and 2001-2005 Medicaid 'Part B' spending Source: Medicare, Dartmouth Atlas; Medicaid, MAX data, 2001-2005AL, AZ, DE, MD, and ND are excluded.

2004 Medicare spending per beneficiary and 2001-2005 acute care Medicaid spending per CAMOD, by HRR, selected states

2004 Medicare spending per beneficiary and 2001-2005 acute care  Medicaid spending per CAMOD, by HRR, California

Health Gained

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Copyright ©2007 by Project HOPE, all rights reserved.

Ellen Kramarow, James Lubitz, Harold Lentzner, and Yelena Gorina, Trends In The Health Of Older Americans, 1970 2005, Health Affairs, Vol 26, Issue 5, 1417-1425

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Limitation of Activities due to Chronic Conditions - U.S.

0%

10%

20%

30%

40%

50%

60%

70%

1997 2000 2004

All Ages 45-54 55-64 65-74 75 +

Source: CDC; Health of the United States 33

Health Status (self reported) in U.S.Percentage with fair or poor health

0%

5%

10%

15%

20%

25%

1991 1997 2001 2006

All African American Hispanic Poor Non-Poor

Source: CDC; Health of the United States and Summary Health Statistics for the U.S. Population: National Health Interview Survey, 2006 Table 1

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