Health Care Tithing

As Mr. Romney continues his uninspiring march toward the Republican Presidential nod in Tampa, voters will have a chance to familiarize themselves with the practice of religious "tithing."  

If giving up 10% seems like a lot, the Disease Management Care Blog says think again. The concept may not be all that foreign after all, because Americans practically (if unknowingly) already "tithe" to health care.

The amateur economist Disease Management Care Blog cannot resist and naively explores the implications of tithing, beginning with a "thought experiment."

Imagine two neighboring towns. One is populated with persons who earn $50,000 a year. The other has richer persons who earn $100,000 a year.  Assume that, for both towns, voluntarily buying comprehensive health insurance costs $10,000 a year (according to the White House, an average premium is $12,680 a year).

Smart DMCB readers know that $50,000 isn't necessarily a lot of money. Persons in that lower income town won't have much left over after they pay for clothing, food, housing, transportation and energy (and in the case of the DMCB spawn, internet access, gaming consoles, tatoos, cable TV and consumer electronics).

Persons in the higher income $100,000 town can afford the basic necessities and more.  That means once income passes a certain threshold, the top margin is comparatively more disposable. That makes makes the option of buying expensive health insurance bearable.

In other words, the richer town can effectively "tithe" by devoting a big percent off the top to health insurance and health care.  While the cost of clothing, food and housing are elastic, those necessities come first.  Health insurance has to wait its turn.

With that in mind, check out the following infamous, public domain and very downloadable graph.  No PowerPoint on health care costs is complete without it.  While this one is from 2002, the 2006 data can also be easily accessed and aren't much different. While the U.S. is wealthier on a per individual ("capita") GDP ("gross domestic product") basis than the rest of the developed world, it spends far more per individual than would be expected:

Most economists explain that big the gap between the U.S and the other countries represents "waste" from the economic drag of evil insurer-driven administrative costs, unnecessary care in an economically  misaligned non-system, an overindulgence in specialists, our love for the latest technology, a widespread belief in taking drugs for every ailment and time wasted reading the DMCB.

All that (except for the DMCB reading) may be true, but the DMCB also wonders if the graph above is a display of a world filled with $50,000 towns and one $100,000 town. The DMCB thinks it's only natural to for a uniquely wealthy country to be willing to spend much of its excess "top" income on health insurance and health care. When that happens, spending will mathematically jump and the U.S. will appear to be a "nonlinear" outlier.

Functionally, that's tithing.  The DMCB doesn't think that's unexpected.

Of course, the economics of wealth and health care is more complicated.  Wealth not only results in "parallel" increases in spending (allowing the purchase of dried cranberries for tonight's salad or outfitting that man-cave with miniature gargoyle statuary) but "serial" increases that also lead to the purchase of new goods and services like health care. It may not mathematically equate to 10%, but it is still a fraction that is taken off the top. 

The U.S. can afford to commit the top margins of its excess income toward health insurance and health care. It's also "all or none," which may also explain some of the non-linear and disproportionate non-linear compared to other countries.

Contrarian economists have been arguing this for years, but the DMCB never heard it described as "tithing."  While health insurance has "stolen" income from U.S. employees' paychecks and employers' profits, what's also happened is that that economic damage is partially limited to top "excess" levels (or brackets) of our nation's business and personal income.

You heard the concept of health care tithing here first.  That being said, the DMCB can think of some wrinkles:

1. The Fat Lady teaches that humbly religious tithing takes the first 10%, even if there are other necessities. The political version of that in the U.S. is "entitlements."

2. The other "$50,000"countries devote a percent of their budget to health care, but the DMCB thinks that they're buying "preference insensitive" care at the lowest level of service.  Thanks to our wealth, the U.S. can technically afford to indulge in preference sensitive care services - and the variation that comes with it.

3. Many persons in the U.S. are very low income and can't afford any care.  That's true, but thanks to our GDP, they get the worst of both worlds: they have the appearance of a higher than average income compared to the world without the ability to pay the tithe.

4. Just because we're willing to "tithe" doesn't mean we're getting our money's worth and that there isn't diminishing marginal utility.  We aren't and there is.

5. If inflation and stagnant wages are eating away our ability to pay for the more basic necessities, it's easier to stop tithing and jettison health insurance altogether. That means we're less able to cut health care by 10% to make up for a 10% increase in the cost of other goods and services. This may partially explain ....

1) why persons are willing to completely "drop" their health insurance and use 100% of the top marginal money for life's more basic necessities;

2) why employers would be willing to drop health insurance altogether as a benefit.  We may be underestimating the likelihood of a flood of persons being pushed into the individual market when the ACA kicks in.

6. Tithing is an expensive proposition.  No wonder Professor Fuchs is proposing a simple solution: pay for it all with a VAT.

7.  Think the cavernous edifices, expansive lobbies and pricy stonework of premier health care institutions sometimes make them resemble cathedrals? Now you know why.

What Do You Know: Quality Doesn't Automatically Translate Into Savings

Goin' goin' gone!

The Disease Management Care Blog recalls years ago when it was walking with some residents and students through a decommissioned wing of a hospital as a short-cut between patient floors.  Our footsteps echoed off the dreary beige tile while we chatted up the likelihood that we could get the next patient home this afternoon.  Then the  DMCB paused and took in the eerie fluorescent silence. "What you see around you," it mused, "is some valuable and unused capital."  The team then resumed the pace. That's when the DMCB looked at the young docs and said "If we keep it up, they'll need to close another wing!" 

The fly in the ointment.  The monkey in the wrench.  The doc's raised hand at a hospital board of trustees' meeting.  Call it what you like, but sometimes our most cherished assumptions and best laid plans have a way of going all akimbo.  True to that tradition, curmudgeonly Dartmouth authors Stephen Rauh, Eric Wadsworth, William Weeks and James Weinstein examine the "illusion" of  expecting "lower costs" to come out the back end of a health system system after "quality" is put in the front end. 

The authors' real focus is on hospitals and define "quality" as any intervention that reduces the utilization of health care services (versus other definitions). Despite the narrow view, the Disease Management Care Blog believes the article makes an important and yet obvious point: large and small health care organizations have rigid cost structures that cannot be flexed.  As a result, any increase in quality - such as reducing length of stay, admissions, readmissions or surgeries -  mostly results in additional dead space capacity, not bottom line savings.

Clinical improvement can reduce costs is in the general category of supplies and medications.  Unfortunately, those costs are at the margins.  Just because there are fewer readmissions won't mean all those expensive operating rooms. equipment, personnel costs and other administrative overhead will simply go away.  They don't.  They'll be idle and cost just as much.

Some economists will argue that hospitals can take beds off line and furlough nurses.  It's also been pointed out that multiple health systems can regionally consolidate high-cost low-frequency services.
Unfortunately, the quarter to quarter business cycle facing the typical hospital administrator doesn't really accommodate that kind of wishful thinking.  The only way out is to find other revenue by either charging more or providing other services.

Despite many valiant attempts, the DMCB never managed to close another hospital wing.

Warfarin, Insulin, Anti-platelet Agents, and Hypoglyemic Medications in the Elderly May Warrant a Population Health Management Program to Reduce Avoidable Hospitalizations

Got warfarin?

100,000.

That's how many persons aged 65 years or more are seen in U.S. emergency rooms and then hospitalized every year because of an adverse drug event.

Writing in the New England Journal, Daniel Budnitz and colleagues report data from the "National Electronic Injury Surveillance System - Cooperative Adverse Drug Event Surveillance" (NEISS-CADES) project.  The Disease Management Care Blog never heard of it either, but it's a consortium of 58 typical U.S. hospitals that are participating in an ongoing observational research project.  Whenever a physician blames a drug for an emergency room (ER) visit, trained chart reviewers go through the medical record.  From 2007 through 2009, there were 12,666 drug-related ER visits in the NEISS-CADES hospitals, which extrapolates to over 265,000 in the U.S.  More than a third required hospitalization, which rounds to approximately 100,000.

Medical Directors and quality assurance types may wonder how many hospitalizations were due to HEDIS high risk medications.  The answer was very few: only 1.2%.

There is also a list of medications that meet the "Beers" criteria as being potentially inappropriate in the elderly.  Likewise, very few could be blamed here: only 6.6%

So what caused the mayhem?  Basically there were four bad actors that accounted for approximately two thirds of the hospitalizations: blood thinners (warfarin and antiplatelet agents) and diabetes drugs (insulin and hypoglycemic agents).  What's more, the rate of hospitalization was highest among persons aged 85 years or greater and if there were five or more medications being taken.  Warfarin accounted for a third, the antiplatelet drugs, insulin and hypoglycemics accounted for another third and the remainder were miscellaneous.

What should the population health management community do with this information?

1. The DMCB would advise against believing that the hospitalization rate could be driven to zero.  It's well known that despite the best of care, between 1% to 2% of persons on warfarin will experience a life threatening bleed every year and, depending on how it's defined, that between 2 and 10% of persons with diabetes will experience severe low blood sugar.  Until we develop better blood thinners and diabetes drugs, bleeding and low blood sugar may just be a price that has to be paid.

2. Nonetheless, there are 100,000 hospitalizations and while the authors don't speculate on how many are avoidable, the DMCB wonders if this doesn't represent an important opportunity for the population health service providers.  Based on these data, regular outreach and monitoring of those persons on four types of drugs (warfarin, anti-platelet agents, insulin and hypoglycemic meds) who are taking multiple other medications and who are 85 years or greater may benefit from intense monitoring.  If the hospitalization rate can be decreased, that's a whole lot of savings.

Image from Wikipedia

Potentially Preventable Hospitalizations (PPH) Among Persons With Diabetes Mellitus

All aboard!

If you’re expecting your newly established Patient Centered Medical Home (PCMH), Accountable Care Organization (ACO) or Population-Care Management Program to reduce hospitalizations among persons with diabetes, you may want to sprinkle the acronym “PPH” into your business plans, talking points and meeting pitches. It stands for “potentially preventable hospitalizations.”  It’s not only a timely topic, but by brandishing the term “PPH,” compared to all those unfortunate knuckleheads who don’t read the Disease Management Care Blog, you’ll once again remind everyone about your health industry chops.

That’s why a look at this AJMC article examining “PPH” in a population of persons with diabetes may be worth your time.  555,538 California ’05-’06 hospitalizations for 361,858 persons aged 65 years or greater were examined for the presence of an "ambulatory care sensitive condition" or "ACSC".  The science underlying the use of ACSC metrics in this study has shown that the effective outpatient care of persons with certain concurrent ACSCs can reduce hospitalizations. The ACSCs used by the researchers in the AJMC article were bacterial pneumonia, dehydration, urine infection, COPD, heart failure, hypertension, diabetes complications and uncontrolled diabetes. 

In addition to ACSCs, the the authors looked at the impact of age, gender, race, neighborhood, income, insurance type (Medicare, Medicaid or commercial) and the number of other chronic conditions (as determined by insurance claims).

The results?  More than 112,000 (about 20%) of the hospitalizations were due to an ACSC and therefore were PPHs.   The most common conditions were pneumonia and heart failure; the length of stay averaged 5 days with a per hospitalization cost of approximately $9900.  The authors estimated that PPHs resulted in 570,000 hospital days and a cost of more than $1.1 billion  Being female, Medicaid, rural dwelling, low income, having multiple co-morbidities and having to be admitted via the emergency room were all associated with PPHs.

How can this information help the PCMH-savvy, ACO-adroit and care management cognoscenti?  While the authors of the AJMC article vaguely suggest that better vaccination rates against flu and pneumonia may work, the DMCB offers up some additional observations:

1. Baseline:  Now readers have an idea of the extent of the problem in a diabetes population.  20% is a lot of PPHs, a lot of hospital days and a lot of money.

2. Reality Check:  In this study, 80% of the admissions for persons with diabetes were NOT potentially preventable.  This should give pause to anyone believing that their initiative can precipitously reduce hospitalization rates.  Doctors (the kind that actually take care of patients) will also tell you that many PPHs are not truly preventable also: many people get acute pneumonia and heart failure exacerbations despite the best of care. As a result, more than 90% of hospitalizations among elderly persons with diabetes may not be preventable.

3. Generalist Care Management, not just diabetes care: your organization's nursing care plans have to not only address blood glucose control, but a host of other co-morbidities that are the real short term drivers of inpatient use.

4. But, Cake and Eat It Too: There are scant data on this, but the DMCB believes that good blood glucose control leads to fewer infections and atherothrombotic complications.  If it is correct, good care management not only has to manage multiple co-morbidities (the cake) but achieve good blood sugar control (the eats).

5. ER Chicken and Egg:  Does becoming very ill with an ACSC make ER visits more likely which, in turn, makes a PPH more likely?  The DMCB agrees that that is one causal pathway accounting for the data above.  However, it also wonders if presenting to an ER with any ACSC at any stage of illness is more likely to lead to an admission.  If the DMCB is correct, it stands to reason that 1) developing initiatives that keep patients away from the ER (with outpatient care options) may materially reduce admissions and 2) putting care management resources in the ER to assist with discharge planning is an option because it may divert patients to the outpatient setting.

Another Reason Why There Was A Decline In U.S. Hospitalizations for Heart Failure

By now, many Disease Management Care Blog readers have become aware of this JAMA research study that used Medicare fee-for-service claims data to examine the nationwide rate of hospitalizations for chronic heart failure.  From 1998 to 2008, there was a counterintuitive 30% decline in the U.S. from a baseline rate of 2845 to a new rate of 2007 admissions per 100,000 person-years. 

The authors credit better care of heart attacks (damage from a heart attack to can lead to a flabby dilated heart), better prevention (such as more aggressive treatment of high blood pressure, which also causes heart damage) and a more "effective" medical system (such as better outpatient follow-up, use of alternate levels of care, flu shots prescriptions of ACE inhibitors and beta blocker medications).  The authors of the study think the numbers are remarkable because the U.S. population is getting older and healthier persons (without heart failure) seem to be signing up for managed care Medicare Advantage.

The DMCB is wondering about another possibility that has nothing to do with epidemiology or quality.  Rather, it could be the impact of Medicare payment rates on billing patterns.  After all, if heart failure is the leading Medicare inpatient diagnosis, shouldn't a decrease there have an impact on the overall hospitalization rate?

The DMCB explains:

When beneficiaries are discharged from a hospital, the bill (or the claim) submitted to Medicare is based on a "Diagnosis Related Group."  While the invention and logic of DRGs complicated, they're important because the principal diagnosis determines the amount of the global payment for that hospitalization. While this may be overly simplistic, a discharge with a diagnosis of "heart failure" prompts Medicare to pay a hospital "X" dollars, while a diagnosis of pneumonia or kidney failure will render payments of "Y" and "Z" dollars, respectively.  In general, the more complicated the diagnosis, the greater the payment.

All well and good, but suppose the hospital has a patient with several concurrent problems and has a choice on which DRG to use?  As anyone who has taken care of hospitalized patients knows, there are usually multiple diagnoses present in any patient at one time.  Pneumonia may or may not have provoked the heart attack that led to the kidney failure that led to the leg swelling and the shortness of breath.  Given three simultaneous diagnoses, Medicare billing guidelines state that the hospital should use their best judgement to determine which DRG to bill. All things being equal, smart hospitals will probably use the DRG that renders the greatest payment.

The DMCB isn't saying that fraudulent billing (for example) accounts for the decrease in heart failure hospitalizations for Medicare. However, it knows some diagnosis related groups can be less remunerative than others and that in the last ten years, DRG payment rates have evolved and that hospitals have learned how to "code" more accurately and aggressively.  Based on the example at the bottom of this page, the DMCB wonders if some patients that were diagnosed with heart failure in 1988 would have been diagnosed with something more remunerative in 2007. 

In other words, there may have been the same number of hospitalizations involving the same patients with the same disease burden.  It was the case mix that changed?

The authors of the study to their credit can't discount the possibility:  They argue that if coding had changed there would have been a shift in the mortality rate of patients with heart failure:

"We were unable to determine whether the observed changes were due to changes by hospitals in medical coding; however, substantial up-coding or down-coding would likely result in changes to the coefficients of the CMS HF mortality model, and these coefficients remained stable from 2005 to 2008."

The authors may have a point, but that assumes the modeling - also based on claims - is trustworthy.

Of course, there is no way, based on Medicare billing claims alone, to determine whether measurement also played a role in the decline in heart failure admissions.  That would take an audit of the medical records themselves.

Hospitals, Insurers and Pricing: What It Can Mean For Patients

The Disease Management Care Blog remembers Emily (name changed). She had a rare and lethal cancer that had spread to her liver.  When her oncologist had nothing more to offer, she wanted to go to a large academic medical center for a second opinion.  Because it was outside her health insurance company's network, her out-of-pocket expenses promised to be unaffordable.  The DMCB's case manager couldn't get her insurer to change its mind and cover the referral.

How can we help patients like Emily?  To many amateur politicians and regulators, the answer is to force health insurers to pay for every visit with "any willing provider."  However, as noted in this just published New England Journal Perspective, that approach often leads to unsustainable cost increases.  Unable to negotiate on price, health insurers are forced to charge everyone higher premiums because of too many Emilys seeking too much care at too many large expensive medical centers.

Thankfully, the article's author, Dr. Paul Ginsburg, doesn't condemn health insurers as the Evil Devil Incarnate.  Instead, he discusses two realistic options:

1) regulate hospital prices (a topic that the DMCB examined here) so that Emily and her insurer can better afford the treatments, or

2) use out-of-pocket expense "tiering," with insurance benefit plans that pay proportionately more for physicians and hospitals that are willing to negotiate on price.

Dr. Ginsburg points out that increasing provider consolidation, the hiring of physicians by hospitals and the formation of accountable organizations has complicated option 2 above.  Thanks to increased market power, they don't have to negotiate.  What's more, they're less willing to come to terms because of the real threat of unilateral Medicare and Medicaid rate cuts.

Savvy DMCB readers may wonder if hospital and provider tiering should be based on quality.  Excellent thought, but in the DMCB's experience, 1) its difficult to find quality metrics that are big or meaningful enough to translate into pricing differences and 2) if the quality is truly high, shouldn't that ultimately translate into lower hospital costs?  Fewer readmissions and complications should enable hospitals to charge less and still have a high margin, right?  The DMCB has found the answer is generally "no."

Unfortunately, Emily never made it to the academic medical center.  Not only did the insurer refuse to cover it, but the medical center refused to make an exception and give Emily a discount.  She was offered a referral to another large institution for evaluation and treatment, which she accepted.  She passed away approximately 9 months later.

Never Mind Regulating Insurance Rates, What About Hospital Fees? A Look At Maryland's Health Services Cost Review Commission

Do believe that government should regulate health insurance premium rates?

If so, then why not agree with the government's regulation of hospital fee rates?

This article in JAMA explains how largely Democratic Maryland is using its "Health Services Cost Review Commission, or "HSCRC" to do precisely that to its 51 hospitals.  Its independent 7 member Board of Commissioners is appointed by the governor for four year terms.  Only 3 can be hospital administrators, hospital board members or hospital staff physicians.  Its budget of 7 million is paid for by a fee assessed on hospitals and much of it is used to collecting and publicly reporting cost and quality data.  The HSCRC uses patient risk adjustments, uncompensated care adjustments and other statistical factors to determine a "charge per case" which all insurers in the state are required to follow.  Medicare and Medicaid follows suit through a waiver system.

After the system was instituted in 1976, the rate of hospital cost inflation plummeted, making Maryland the lowest hospital charges of any state in the Union.  And by the way, the HSCRC is also incorporating pay-for-performance and a no-pay for certain complications in its fee schedule.

While the DMCB tends to be pro"market" and anti-regulation, that's not going to stop it from congratulating Maryland for taking a health care bull by the horns.  It thinks this is another example of a state that is stepping up with its own local version of health reform without having to necessarily wait for the federal government.  While the DMCB doubts that other states could pull this off, the HSCRC works in Maryland and the voters seem to like it.  That's quite a contrast when it's compared to  the Affordable Care Act.