End-Of-Life Medical Spending In Last Twelve Months Of Life Is Lower Than Previously Reported

Health Affairs
French EB, McCauley J, Aragon M, Bakx P, Chalkley M, Chen SH, Christensen BJ, Chuang H, Côté-Sergent A, De Nardi M, Fan E, Échevin D, Geoffard PY, Gastaldi-Ménager C, Gørtz M, Ibuka Y, Jones JB, Kallestrup-Lamb M, Karlsson M,Klein TJ, de Lagasnerie G, Michaud PC, O’Donnell O, Rice N, Skinner JS, van Doorslaer E, Ziebarth NR, Kelly E.

Although end-of-life medical spending is often viewed as a major component of aggregate medical expenditure, accurate measures of this type of medical spending are scarce. We used detailed health care data for the period 2009–11 from Denmark, England, France, Germany, Japan, the Netherlands, Taiwan, the United States, and the Canadian province of Quebec to measure the composition and magnitude of medical spending in the three years before death. In all nine countries, medical spending at the end of life was high relative to spending at other ages. Spending during the last twelve months of life made up a modest share of aggregate spending, ranging from 8.5 percent in the United States to 11.2 percent in Taiwan, but spending in the last three calendar years of life reached 24.5 percent in Taiwan. This suggests that high aggregate medical spending is due not to last-ditch efforts to save lives but to spending on people with chronic conditions, which are associated with shorter life expectancies.

McAllen and El Paso Revisited: Medicare Variations Not Always Reflected in the Under-65 Population

Health Affairs
Franzini L, Mikhail OI, Skinner JS

Medicare spending for the elderly is much higher in McAllen, Texas, than in El Paso, Texas, as reported in a 2009 New Yorker article by Atul Gawande. To investigate whether this disparity was present in the non-Medicare populations of those two cities, we obtained medical use and expense data for patients privately insured by Blue Cross and Blue Shield of Texas. In contrast to the Medicare population, the use of and spending per capita for medical services by privately insured populations in McAllen and El Paso was much less divergent, with some exceptions. For example, although spending per Medicare member per year was 86 percent higher in McAllen than in El Paso, total spending per member per year in McAllen was 7 percent lower than in El Paso for the population insured by Blue Cross and Blue Shield of Texas. We consider possible explanations but conclude that health care providers respond quite differently to incentives in Medicare compared to those in private insurance programs.

Prices Don’t Drive Regional Medicare Spending Variations

Health Affairs
Gottlieb D, Zhou W, Song Y., Gilman K, Skinner JS, Sutherland JM

Per capita Medicare spending is more than twice as high in New York City and Miami than in places like Salem, Oregon. How much of these differences can be explained by Medicare’s paying more to compensate for the higher cost of goods and services in such areas? To answer this question, we analyzed Medicare spending after adjusting for local price differences in 306 Hospital Referral Regions. The priceadjustment analysis resulted in less variation in what Medicare pays regionally, but not much. The findings suggest that utilization—not local price differences—drives Medicare regional payment variations, along with special payments for medical education and care for the poor.

How Much Do Patients’ Preferences Contribute to Resource Use?

Health Affairs
Anthony DL, Herndon MB, Gallagher PM, Barnato AE, Bynum JPW, Gottlieb DJ, Fisher ES and Skinner JS

Regional variation in health care use may stem, in part, from the fact that patients in high-utilization regions demand and receive more-intensive care. We examine the association between patients’ care-seeking preferences and use of services, using a national survey of Medicare patients. Patients’ preferences, in addition to health and socio-demographic characteristics, are associated with differences in individuals’ use of office visits. However, we find that patients’ preferences for seeking primary and specialty medical care do not play a significant role in explaining regional variation in health care use.

Hospital Quality And Intensity Of Spending: Is There An Association?

Health Affairs
Yasaitis L, Fisher ES, Skinner JS, and Chandra A

Numerous studies in the United States have examined the association between quality and spending at the regional level. In this paper we evaluate this relationship at the level of individual hospitals, which are a more natural unit of analysis for reporting on and improving accountability. For all of the quality indicators studied, the association with spending is either nil or negative. The absence of positive correlations suggests that some institutions achieve exemplary performance on quality measures in settings that feature lower intensity of care. This finding highlights the need for reporting information on both quality and spending.

Fostering Accountable Health Care: Moving Forward In Medicare

Health Affairs
Elliott S. Fisher, Mark B. McClellan, John Bertko, Steven M. Lieberman, Julie J. Lee, Julie L. Lewis, and Jonathan S. Skinner

To succeed, health care reform must slow spending growth while improving quality. We propose a new approach to help achieve more integrated and efficient care by fostering local organizational accountability for quality and costs through performance measurement and “shared savings” payment reform. The approach is practical and feasible: it is voluntary for providers, builds on current referral patterns, requires no change in benefits or lock-in for beneficiaries, and offers the possibility of sustained provider incomes even as total costs are constrained. We simulate the potential expenditure impact and show that significant Medicare savings are possible.

Inpatient Care Intensity And Patients’ Ratings Of Their Hospital Experiences

Health Affairs
Wennberg JE, Bronner K, Skinner JS, Fisher ES, Goodman DC

The intensity of hospital care provided to chronically ill Medicare patients varies greatly among regions, independent of illness. We examined the associations among hospital care intensity, the technical quality of hospital care, and patients’ ratings of their hospital experiences. Greater inpatient care intensity was associated with lower quality scores and lower patient ratings; lower quality scores were associated with lower patient ratings. The common thread linking greater care intensity with lower quality and less favorable patient experiences may be poorly coordinated care.

Extending The P4P Agenda, Part 2: How Medicare Can Reduce Waste And Improve The Care of the Chronically Ill

Health Affairs
Wennberg JE, Fisher ES, Skinner JS, Bronner KK

The care of Americans with severe chronic illnesses is disorganized, unnecessarily costly, and undisciplined by sound clinical science. The federal government should invest in a crash program to improve the scientific basis of managing chronic illness, and the Centers for Medicare and Medicaid Services (CMS) should extend its pay-for-performance (P4P) agenda to ensure that within ten years all Americans with severe chronic illnesses have access to accountable health care organizations providing evidence-based prospective care. This paper recommends a strategy for achieving this goal.

Is Technological Change In Medicine Always Worth It? The Case Of Acute Myocardial Infarction

Health Affairs
Skinner JS, Staiger D, Fisher ES

We examine Medicare costs and survival gains for acute myocardial infarction (AMI) during 1986–2002. As David Cutler and Mark McClellan did in earlier work, we find that overall gains in post-AMI survival more than justified the increases in costs during this period. Since 1996, however, survival gains have stagnated, while spending has continued to increase. We also consider changes in spending and outcomes at the regional level. Regions experiencing the largest spending gains were not those realizing the greatest improvements in survival. Factors yielding the greatest benefits to health were not the factors that drove up costs, and vice versa.

Who You Are and Where You Live: How Race and Geography Affect the Treatment of Medicare Beneficiaries

Health Affairs
Baicker K, Chandra A, Skinner JS, and Wennberg JE

Will Volume-Based Referral Strategies Reduce Costs or Just Save Lives?

Health Affairs
Birkmeyer J., Skinner J.S., and Wennberg D.

Although recent policy initiatives aimed at concentrating selected surgical procedures in high-volume hospitals may reduce mortality, their economic implications have not been considered fully. From the hospital perspective, the primary effect of these policies will be to redistribute surgical profits to bigger centers. From the payer perspective, prices paid for procedures will likely increase in some geographic areas. From the societal perspective, how these policies will affect the true cost of providing surgical care is uncertain, but use of discretionary procedures will likely increase. For these reasons, the primary argument for volume-based referral strategies should be improving quality, not reducing costs.

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Geography and the Debate Over Medicare Reform

Health Affairs
Wennberg JE., Fisher E.S., and Skinner J.S.

Medicare spending varies more than twofold among regions, and the variations persist even after differences in health are corrected for. Higher levels of Medicare spending are due largely to increased use of “supply-sensitive” services–physician visits, specialist consultations, and hospitalizations, particularly for those with chronic illnesses or in their last six months of life. Also, higher spending does not result in more effective care, elevated rates of elective surgery, or better health outcomes. To improve the quality and efficiency of care, we propose a new approach to Medicare reform based on the principles of shared decision making and the promotion of centers of medical excellence. We suggest that our proposal be tested in a major demonstration project.

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