Tag reimbursement

Thesis Thursday: Feng-An Yang

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On the third Thursday of every month, we speak to a recent graduate about their thesis and their studies. This month’s guest is Dr Feng-An Yang who has a PhD from Ohio State University. If you would like to suggest a candidate for an upcoming Thesis Thursday, get in touch.

Title
Three essays on access to health care in rural areas
Supervisors
Daeho Kim, Joyce Chen
Repository link
http://rave.ohiolink.edu/etdc/view?acc_num=osu152353045188255

What are the policy challenges for rural hospitals in the US?

Rural hospitals have been financially vulnerable, especially after the implementation of Medicare Prospective Payment System (PPS) in 1983, under which hospitals receive a predetermined, fixed reimbursement for their inpatient services. Under the PPS, they suffer from financial losses as their costs tend to exceed the reimbursement rate due to their smaller size and lower patient volume than their urban counterparts (Medicare Payment Advisory Commission, 2001 [PDF]). As a result, a noticeable number of rural hospitals have closed since the implementation of PPS (Congressional Budget Office, 1991 [PDF]).

This closure trend has slowed down thanks to public payment policies such as the Critical Access Hospitals (CAH) program, but rural hospitals are continuing to close their doors and a total of 107 rural hospitals have closed from 2010 to present according to the North Carolina Rural Health Research Program. This issue has raised public concern for rural residents’ access to health services and health status, and how to keep rural hospitals open has become an important policy priority.

Which data sources and models did you use to identify key events?

My dissertation investigated the impact of the CAH program and hospital closure by compiling data from various sources. The primary data come from the Medicare cost report, which contains detailed financial statements for nearly every U.S. hospital. Historical data on health care utilization at the county-level are obtained from the Area Health Resource File. County-level mortality rates are calculated from the national mortality files. Lastly, the list of CAHs and closed hospitals is obtained from the Flex Monitoring Team and American Hospital Association Annual Survey, respectively. This list contains information on the hospital identifier and year of event which is key to my empirical strategy.

To identify the impact of key events (i.e., CAH conversion and hospital closure), I use an event-study approach exploiting the variation in the timing of events. This approach estimates the changes in outcome for the time relative to the ‘event time’. A primary advantage of this approach is that it allows a visual examination of the evolution of changes in outcome before and after the event.

How can policies relating to rural hospitals benefit patients?

This question is not trivial because public payment policies are not directly linked to patients. The primary objective of these policies is to strengthen rural hospitals’ financial viability by providing them with enhanced reimbursement. As a result, it has been expected that, under these policies, rural hospitals will improve their financial conditions and stay open, thereby maintaining the access to health services for rural residents. Broadly speaking, public payment policies can lead to an increase in accessibility if we compare patient access to health services between counties with at least one hospital receiving financial support and counties without any hospitals receiving financial support.

I look at patient benefits from three aspects: accessibility, health care utilization, and mortality. My research shows that the CAH program has substantially improved CAHs’ financial conditions and as a result, some CAHs that otherwise would have been closed have stayed open. This in turn leads to an increase in rural residents’ access to and use of health services. We then provide suggestive evidence that the increased access to and use of health care services have improved patient health in rural areas.

Did you find any evidence that policies could have negative or unexpected consequences?

Certainly. The second chapter of my dissertation focused on skilled nursing care which can be provided in either swing beds (inpatient beds that can be used interchangeably for inpatient care or skilled nursing care) or hospital-based skilled nursing facilities (SNFs). Since the services provided in swing beds and SNFs are equivalent, differential payments, if present, may encourage hospitals to use one over the other.

While the CAH program provides enhanced reimbursement to rural hospitals, it also changes the swing bed reimbursement method such that swing bed payments are more favorable than SNF payments. As a result, CAHs may have a financial incentive to increase the use of swing beds over SNFs. By focusing on CAHs with a SNF, my research shows a remarkable increase in swing bed utilization and this increase is fully offset by the decrease in SNF utilization. These results suggest that CAHs substitute swing beds for SNFs in response to the change in swing bed reimbursement method.

Based on your research, what would be your key recommendations for policymakers?

Based on my research findings, I would make two recommendations for policymakers.

First, my research speaks to the ongoing debate over the elimination of CAH designation for certain hospitals. Loss of CAH designation could have serious financial consequences and subsequently have potentially adverse impacts on patient access to and use of health care. Therefore, I would recommend policymakers to maintain the CAH designation.

Second, while the CAH program has improved rural hospitals’ financial conditions, it has also created a financial incentive for hospitals to use the service with a higher reimbursement rate. Thus, my recommendation to policymakers would be to consider potentially substitutable health care services when designing reimbursement rates.

Chris Sampson’s journal round-up for 31st December 2018

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Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot. If you’d like to write one of our weekly journal round-ups, get in touch.

Perspectives of patients with cancer on the quality-adjusted life year as a measure of value in healthcare. Value in Health Published 29th December 2018

Patients should have the opportunity to understand how decisions are made about which treatments they are and are not allowed to use, given their coverage. This study reports on a survey of cancer patients and survivors, with the aim of identifying patients’ awareness, understanding, and opinions about the QALY as a measure of value.

Participants were recruited from a (presumably US-based) patient advocacy group and 774 mostly well-educated, mostly white, mostly women responded. The online survey asked about cancer status and included a couple of measures of health literacy. Fewer than 7% of participants had ever heard of the QALY – more likely for those with greater health literacy. The survey explained the QALY to the participants and then asked if the concept of the QALY makes sense. Around half said it did and 24% thought that it was a good way to measure value in health care. The researchers report a variety of ‘significant’ differences in tendencies to understand or support the use of QALYs, but I’m not convinced that they’re meaningful because the differences aren’t big and the samples are relatively small.

At the end of the survey, respondents were asked to provide opinions on QALYs and value in health care. 165 people provided responses and these were coded and analysed qualitatively. The researchers identified three themes from this one free-text question: i) measuring value, ii) opinions on QALY, and iii) value in health care and decision making. I’m not sure that they’re meaningful themes that help us to understand patients’ views on QALYs. A significant proportion of respondents rejected the idea of using numbers to quantify value in health care. On the other hand, some suggested that the QALY could be a useful decision aid for patients. There was opposition to ‘external decision makers’ having any involvement in health care decision making. Unless you’re paying for all of your care out of pocket, that’s tough luck. But the most obvious finding from the qualitative analysis is that respondents didn’t understand what QALYs were for. That’s partly because health economists in general need to be better at communicating concepts like the QALY. But I think it’s also in large part because the authors failed to provide a clear explanation. They didn’t even use my lovely Wikipedia graphic. Many of the points made by respondents are entirely irrelevant to the appropriateness of QALYs as they’re used (or in the case of the US, aren’t yet used) in practice. For example, several discussed the use of QALYs in clinical decision making. Patients think that they should maintain autonomy, which is fair enough but has nothing to do with how QALYs are used to assess health technologies.

QALYs are built on the idea of trade-offs. They measure the trade-off between life extension and life improvement. They are used to guide trade-offs between different treatments for different people. But the researchers didn’t explain how or why QALYs are used to make trade-offs, so the elicited views aren’t well-informed.

Measuring multivariate risk preferences in the health domain. Journal of Health Economics Published 27th December 2018

Health preferences research is now a substantial field in itself. But there’s still a lot of work left to be done on understanding risk preferences with respect to health. Gradually, we’re coming round to the idea that people tend to be risk-averse. But risk preferences aren’t (necessarily) so simple. Recent research has proposed that ‘higher order’ preferences such as prudence and temperance play a role. A person exhibiting univariate prudence for longevity would be better able to cope with risk if they are going to live longer. Univariate temperance is characterised by a preference for prospects that disaggregate risk across different possible outcomes. Risk preferences can also be multivariate – across health and wealth, for example – determining the relationship between univariate risk preferences and other attributes. These include correlation aversion, cross-prudence, and cross-temperance. Many articles from the Arthur Attema camp demand a great deal of background knowledge. This paper isn’t an exception, but it does provide a very clear and intuitive description of the various kinds of uni- and multivariate risk preferences that the researchers are considering.

For this study, an experiment was conducted with 98 people, who were asked to make 69 choices, corresponding to 3 choices about each risk preference trait being tested, for both gains and losses. Participants were told that they had €240,000 in wealth and 40 years of life to play with. The number of times that an individual made choices in line with a particular trait was used as an indicator of their strength of preference.

For gains, risk aversion was common for both wealth and longevity, and prudence was a common trait. There was no clear tendency towards temperance. For losses, risk aversion and prudence tended to neutrality. For multivariate risk preferences, a majority of people were correlation averse for gains and correlation seeking for losses. For gains, 76% of choices were compatible with correlation aversion, suggesting that people prefer to disaggregate fixed wealth and health gains. For losses, the opposite was true in 68% of choices. There was evidence for cross-prudence in wealth gains but not longevity gains, suggesting that people prefer health risk if they have higher wealth. For losses, the researchers observed cross-prudence and cross-temperance neutrality. The authors go on to explore associations between different traits.

A key contribution is in understanding how risk preferences differ in the health domain as compared with the monetary domain (which is what most economists study). Conveniently, there are a lot of similarities between risk preferences in the two domains, suggesting that health economists can learn from the wider economics literature. Risk aversion and prudence seem to apply to longevity as well as monetary gains, with a shift to neutrality in losses. The potential implications of these findings are far-reaching, but this is just a small experimental study. More research needed (and anticipated).

Prospective payment systems and discretionary coding—evidence from English mental health providers. Health Economics [PubMed] Published 27th December 2018

If you’ve conducted an economic evaluation in the context of mental health care in England, you’ll have come across mental health care clusters. Patients undergoing mental health care are allocated to one of 20 clusters, classed as either ‘psychotic’, ‘non-psychotic’, or ‘organic’, which forms the basis of an episodic payment model. In 2013/14, these episodes were associated with an average cost of between £975 and £9,354 per day. Doctors determine the clusters and the clusters determine reimbursement. Perverse incentives abound. Or do they?

This study builds on the fact that patients are allocated by clinical teams with guidance from the algorithm-based Mental Health Clustering Tool (MHCT). Clinical teams might exhibit upcoding, whereby patients are allocated to clusters that attract a higher price than that recommended by the MHCT. Data were analysed for 148,471 patients from the Mental Health Services Data Set for 2011-2015. For each patient, their allocated cluster is known, along with a variety of socioeconomic indicators and the HoNoS and SARN instruments, which go into the MHCT algorithm. Mixed-effects logistic regression was used to look at whether individual patients were or were not allocated to the cluster recommended as ‘best fit’ by the MHCT, controlling for patient and provider characteristics. Further to this, multilevel multinomial logit models were used to categorise decisions that don’t match the MHCT as either under- or overcoding.

Average agreement across clusters between the MHCT and clinicians was 36%. In most cases, patients were allocated to a cluster either one step higher or one step lower in terms of the level of need, and there isn’t an obvious tendency to overcode. The authors are able to identify a few ways in which observable provider and patient characteristics influence the tendency to under- or over-cluster patients. For example, providers with higher activity are less likely to deviate from the MHCT best fit recommendation. However, the dominant finding – identified by using median odds ratios for the probability of a mismatch between two random providers – seems to be that unobserved heterogeneity determines variation in behaviour.

The study provides clues about the ways in which providers could manipulate coding to their advantage and identifies the need for further data collection for a proper assessment. But reimbursement wasn’t linked to clustering during the time period of the study, so it remains to be seen how clinicians actually respond to these potentially perverse incentives.

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Sam Watson’s journal round-up for 12th November 2018

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Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot. If you’d like to write one of our weekly journal round-ups, get in touch.

Estimating health opportunity costs in low-income and middle-income countries: a novel approach and evidence from cross-country data. BMJ Global Health. Published November 2017.

The relationship between health care expenditure and population health outcomes is a topic that comes up often on this blog. Understanding how population health changes in response to increases or decreases in the health system budget is a reasonable way to set a cost-effectiveness threshold. Purchasing things above this threshold will, on average, displace activity with greater benefits. But identifying this effect is hard. Commonly papers use some kind of instrumental variable method to try to get at the causal effect with aggregate, say country-level, data. These instruments, though, can be controversial. Years ago I tried to articulate why I thought using socio-economic variables as instruments was inappropriate. I also wrote a short paper a few years ago, which remains unpublished, that used international commodity price indexes as an instrument for health spending in Sub-Saharan Africa, where commodity exports are a big driver of national income. This was rejected from a journal because of the choice of instruments. Commodity prices may well influence other things in the country that can influence population health. And a similar critique could be made of this article here, which uses consumption:investment ratios and military expenditure in neighbouring countries as instruments for national health expenditure in low and middle income countries.

I remain unconvinced by these instruments. The paper doesn’t present validity checks on them, which is forgiveable given medical journal word limitations, but does mean it is hard to assess. In any case, consumption:investment ratios change in line with the general macroeconomy – in an economic downturn this should change (assuming savings = investment) as people switch from consumption to investment. There are a multitude of pathways through which this will affect health. Similarly, neighbouring military expenditure would act by displacing own-country health expenditure towards military expenditure. But for many regions of the world, there has been little conflict between neighbours in recent years. And at the very least there would be a lag on this effect. Indeed, in all the models of health expenditure and population health outcomes I’ve seen, barely a handful take into account dynamic effects.

Now, I don’t mean to let the perfect be the enemy of the good. I would never have suggested this paper should not be published as it is, at the very least, important for the discussion of health care expenditure and cost-effectiveness. But I don’t feel there is strong enough evidence to accept these as causal estimates. I would even be willing to go as far to say that any mechanism that affects health care expenditure is likely to affect population health by some other means, since health expenditure is typically decided in the context of the broader public sector budget. That’s without considering what happens with private expenditure on health.

Strategic Patient Discharge: The Case of Long-Term Care Hospitals. American Economic Review. [RePEc] Published November 2018.

An important contribution of health economics has been to undermine people’s trust that doctors act in their best interest. Perhaps that’s a little facetious, nevertheless there has been ample demonstration that health care providers will often act in their own self-interest. Often this is due to trying to maximise revenue by gaming reimbursement schemes, but also includes things like doctors acting differently near the end of their shift so they can go home on time. So when I describe a particular reimbursement scheme that Medicare in the US uses, I don’t think there’ll be any doubt about the results of this study of it.

In the US, long-term acute care hospitals (LTCHs) specialise in treating patients with chronic care needs who require extended inpatient stays. Medicare reimbursement typically works on a fixed rate for each of many diagnostic related groups (DRGs), but given the longer and more complex care needs in LTCHs, they get a higher tariff. To discourage admitting patients purely to get higher levels of reimbursement, the bulk of the payment only kicks in after a certain length of stay. Like I said – you can guess what happened.

This article shows 26% of patients are discharged in the three days after the length of stay threshold compared to just 7% in the three days prior. This pattern is most strongly observed in discharges to home, and is not present in patients who die. But this may still be just by chance that the threshold and these discharges coincide. Fortunately for the authors the thresholds differ between DRGs and even move around within a DRG over time in a way that appears unrelated to actual patient health. They therefore estimate a set of decision models for patient discharge to try to estimate the effect of different reimbursement policies.

Estimating misreporting in condom use and its determinants among sex workers: Evidence from the list randomisation method. Health Economics. Published November 2018.

Working on health and health care research, especially if you conduct surveys, means you often want to ask people about sensitive topics. These could include sex and sexuality, bodily function, mood, or other ailments. For example, I work a fair bit on sanitation, where frequently self-reported diarrhoea in under fives (reported by the mother that is) is the primary outcome. This could be poorly reported particularly if an intervention includes any kind of educational component that suggests it could be the mother’s fault for, say, not washing her hands, if the child gets diarrhoea. This article looks at condom use among female sex workers in Senegal, another potentially sensitive topic, since unprotected sex is seen as risky. To try and get at the true prevalence of condom use, the authors use a ‘list randomisation’ method. This randomises survey participants to two sets of questions: a set of non-sensitive statements, or the same set of statements with the sensitive question thrown in. All respondents have to do is report the number of the statements they agree with. This means it is generally not possible to distinguish the response to the sensitive question, but the difference in average number of statements reported between the two groups gives an unbiased estimator for the population proportion. Neat, huh? Ultimately the authors report an estimate of 80% of sex workers using condoms, which compares to the 97% who said they used a condom when asked directly.

 

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