non-Medicare Patients Research Articles

Are Medicare Patients Sicker, More Complex, and at a Higher Risk for Perioperative Complications?

To the Editor: We are concerned about the recent decision of the Health Care Finance Administration (HCFA) to remove the physician involvement rule for anesthesia care for Medicare patients (1). Recently, Silber et al. (2) showed that the involvement of an anesthesiologist in medical direction was associated with a decreased incidence of complications and death in elderly (over 65 yr) Medicare recipients. This is consistent with our clinical impression that Medicare beneficiaries present more medically complex situations, thus making the task of providing safe perioperative management more difficult. Because medical complexity, as assessed by the ASA physical status classification system, correlates highly with perioperative morbidity and mortality (3,4), we tested our clinical impression by performing a one-year retrospective review of patients who were scheduled for ambulatory surgery or for admission on the morning of surgery and who were evaluated preoperatively by an anesthesiologist in the Department of Anesthesiology at the University of Texas Medical Branch between September 1, 1995, and August 31, 1996. Both payer class and ASA physical status were noted. We grouped together ASA physical status I and II patients (representing relatively healthy patients or patients with mild systemic disease) and ASA physical status III and IV patients (representing medically complex patients with severe or incapacitating systemic disease). We then compared Medicare patients with non-Medicare patients (those who had other or no insurance coverage) and their ASA physical status using χ2 analysis (P < 0.05 significant). We reviewed records of 6412 patients, 917 of whom were insured by Medicare and 5495 of whom were not. The percentage of each group in each ASA physical status is displayed in Table 1. Of the total number of Medicare patients represented, 50% had severe or incapacitating systemic disease compared with only 21% of non-Medicare patients. This difference was statistically significant (P < 0.001).Table 1: Payer and ASA Physical Status DistributionBecause ASA physical status is defined by the extent of systemic disease and correlates with anesthetic morbidity and mortality, our results confirm the clinical impression that Medicare patients are more medically complex and have a higher risk of perioperative morbidity than non-Medicare patients. Thus, the decision of HCFA to remove physician supervision as a minimum benefit to Medicare patients undergoing anesthesia is highly questionable, primarily because it removes the requirement for supervision for exactly those patients who are most likely to present complex medical management challenges. HCFA’s zeal to give hospitals greater flexibility in delivering care is not without consequences—their decision must be viewed with the understanding that the patients affected by this change in the minimum standard of care are sicker, medically more complex, and at higher risk for perioperative complications. Amr E. Abouleish MD, MBA Donald S. Prough MD

Effects of health insurance and race on colorectal cancer treatments and outcomes.

We hypothesized that health insurance payer and race might influence the care and outcomes of patients with colorectal cancer. We examined treatments received for all incident cases of colorectal cancer occurring in Florida in 1994 (n = 9551), using state tumor registry data. We also estimated the adjusted risk of death (through 1997), using proportional hazards regression analysis controlling for other predictors of mortality. Treatments received by patients varied considerably according to their insurance payer. Among non-Medicare patients, those in the following groups had higher adjusted risks of death relative to commercial fee-for-service insurance: commercial HMO (risk ratio [RR] = 1.40; 95% confidence interval [CI] = 1.18, 1.67; P = .0001), Medicaid (RR = 1.44; 95% CI = 1.06, 1.97; P = .02), and uninsured (RR = 1.41; 95% CI = 1.12, 1.77; P = .003). Non-Hispanic African Americans had higher mortality rates (RR = 1.18; 95% CI = 1.01, 1.37; P = .04) than non-Hispanic Whites. Patients with colorectal cancer who were uninsured or insured by Medicaid or commercial HMOs had higher mortality rates than patients with commercial fee-for-service insurance. Mortality was also higher among non-Hispanic African American patients.

Struggling toward easier endoscopy

Struggling toward easier endoscopy

Insurance or a regular physician: which is the most powerful predictor of health care?

This study compared the relative effects on access to health care of relationship with a regular physician and insurance status. The subjects were 1952 nonretired, non-Medicare patients aged 18 to 64 years who presented with 1 of 6 chief complaints to 5 academic hospital emergency departments in Boston and Cambridge, Mass, during a 1-month study period in 1995. Access to care was evaluated by 3 measures: delay in seeking care for the current complaint, no physician visit in the previous year, and no emergency department visit in the previous year. After clinical and socioeconomic characteristics were controlled, lacking a regular physician was a stronger, more consistent predictor than insurance status of delay in seeking care (odds ratio [OR] = 1.6, 95% confidence interval [CI] = 1.2, 2.1), no physician visit [OR] = 4.5%, 95% CI = 3.3, 6.1), and no emergency department visit (OR = 1.8, 95% CI = 1.4, 2.4). For patients with a regular physician, access was no different between the uninsured and the privately insured. For privately insured patients, those with no regular physician had worse access than those with a regular physician. Among patients presenting to emergency departments, relationship with a regular physician is a stronger predictor than insurance status of access to care.

Services utilization before and after the prospective payment system by patients with somatization disorder.

This study analyzed services utilization before and after the implementation of Medicare's Prospective Payment System (PPS) in psychiatric patients with somatization disorder in two samples: one recruited before the PPS and the other after the PPS. Individuals with this psychiatric disorder present with multiple unexplained medical complaints and consume a great number of health resources. The results from this study indicated that Medicare PPS was associated with fewer hospital admissions and fewer hospital days, with a greater number of physician visits (for Medicare patients) and emergency room visits (for non-Medicare patients) and with lower overall health expenditures. However, there were no significant changes in the average length of stay after PPS. In contrast to previous studies, Medicare PPS was significantly associated with changes in service utilization by non-Medicare patients as well, a possible "spillover effect." This study confirms the results from other research indicating that higher levels of efficiency may be achieved for certain psychiatric disorders through prospective payment mechanisms.

II. Incidence and prevalence of ESRD

The number of patients starting ESRD therapy continues to increase, although this report shows evidence that the incidence rates are growing at a slower pace than they did in earlier years. The number of patients undergoing ESRD therapy also continues to increase, but the rate of increase is down to 7% from 9% to 10%. There is some uncertainty in these estimates in part because the reporting of non-Medicare patients has changed.

Changes in hospital service mix and cost allocations in response to changes in Medicare reimbursement schemes

After 1983, Medicare paid hospitals for inpatient services at fixed rates, but continued to reimburse outpatient services based on reported cost. Using data from Washington State we find that hospitals responded by increasing outpatient services to Medicare patients compared to non-Medicare patients-the ratio of Medicare outpatient revenues as a percentage of total Medicare revenues increased after 1983 to a significantly greater extent than for non-Medicare patients. We also find that allocations of overhead costs to outpatient departments increased after 1983. These findings suggest that hospitals change their patient mix and cost allocations to maximize hospital cash flows.

Managed care in the United States.

Medical care in the United States continues to consume an increasing amount of the Gross Domestic Product. To control the rising costs of health care many industries have turned to a controlled form of financing and delivery of health care--often referred to as managed care. Many types of managed care exist, including preferred provider organizations (PPO), exclusive provider organization (EPO), and health maintenance organizations (HMO). HMOs involve prepaid premiums, limited panels of providers and assumption of financial risk on the part of the providers. A variety of HMOs are currently operating in the United States. Managed care involves taking risks by those who administer it. Some methods of controlling patient and physician behaviour by taking risks are capitation, risk pools and withholds. With capitation the physician is paid a 'per member per month' fee regardless of whether the patient uses the service. Risk pools are concerned with who shares the risk; for example, the primary physician shares the financial risk with specialists. Withholds involve a fee-for-service with a portion withheld which may be returned to the provider if he/she is parsimonious. A concern expressed about HMOs is the possibility of restricted services. Moreover, hospital expenses make up a large portion of the total health care dollar. In 1995 the average length of stay for a Medicare patient was 6.1 days as opposed to 3.9 days for the non-Medicare patient. Indeed, HMOs were the leaders in the development of same-day surgery and out-patient treatment. Increasingly, in the United States, public and social insurance plans are turning to managed care as a method to control health care expenditure. Some government insurance plans, such as Medicare and Medicaid, also increasingly offer managed health options. The trend, for now, in the United States increases enrollment in managed care plans. Although this is occurring at a rapid pace, managed care will probably not be the final solution to provision of medical care in the United States.

A Collaborative Project in Connecticut to Improve the Care of Patients with Acute Myocardial Infarction

State-based peer review organizations (PROs) and individual hospitals are challenged to achieve their quality improvement (QI) goals with shrinking resources. In 1993-1994 the Connecticut PRO and 15 local hospitals generated a comparative QI database on acute myocardial infarction (AMI) care for 1,202 Medicare and non-Medicare patients discharged in 1992 and 1993. A steering committee composed of hospital and PRO representatives was assembled to provide oversight. PRO staff developed a chart abstraction tool and trained hospital abstractors who collected and submitted data to the PRO for comparative analyses. Written feedback was provided to all hospitals and supplemented with onsite presentations when requested. Each hospital prepared a written QI plan based on its unique data profile. Opportunities for improvement were identified at all hospitals. The most commonly targeted areas for improvement included the use of thrombolytics at presentation, aspirin at presentation and at discharge, and beta blockers at discharge. Improvement interventions included staff education sessions, development of AMI critical paths and standing orders, and storage of appropriate medications in emergency departments. Self-report data from the hospitals indicate improvements in care. PROs and hospitals can augment their individual QI activities by working together to share data, resources, and lessons learned. Twenty-three hospitals are now collaborating with the Connecticut PRO on a similarly designed QI project aimed at improving the care of patients hospitalized with atrial fibrillation. This project includes a more formal means of communicating QI interventions.

The growth of medical groups paid through capitation in California.

In California, it is common for health maintenance organizations (HMOs) to contract with large medical groups that are paid through capitation and are responsible for managing a full spectrum of medical services. We studied six large medical groups in California--Bristol Park Medical, Friendly Hills HealthCare Network, HealthCare Partners Medical Group, Mullikin Medical Centers, Palo Alto Medical Foundation, and San Jose Medical Group--that are paid through capitation and that are growing as a result of contracts with managed-care organizations. We conducted interviews and obtained data on factors such as patient enrollment, capitation and other revenue, numbers of days spent by enrollees in the hospital, and numbers of visits to physicians per enrollee. Between 1990 and 1994, the number of HMO enrollees whose care was paid for through capitation in the six medical groups increased by 91 percent, from 398,359 to 759,474. In 1994, the mean number of hospital days per 1000 HMO enrollees ranged from 120 to 149 for non-Medicare patients and from 643 to 936 days for Medicare patients. By comparison, in 1993 the mean numbers of hospital days per 1000 HMO enrollees not covered by Medicare were 232 for California and 297 for the United States; for HMO enrollees covered by Medicare, the numbers were 1337 for California and 1698 for the United States. In 1994, the average annual number of visits to physicians for HMO patients in the six groups not covered by Medicare ranged from 3.1 to 3.9; for Medicare patients, it ranged from 7.2 to 9.3; these rates were slightly lower than statewide and national rates. Four of the groups have sold their assets (such as facilities, supplies, equipment, and patients' charts) to outside investors; the physicians remain employed by physician-owned professional corporations. Medical groups paid through capitation offer a model for the status of physicians in managed-care systems that differs from the employee status offered by staff-model HMOs and the subcontractor status offered by HMOs that negotiate directly with individual physicians. Despite their growth, such medical groups in California face substantial challenges, such as obtaining the financial assets necessary to sustain rapid growth.

Institutional responses to Medicare's prospective payment system

The introduction of Medicare's prospective payment system (PPS) meant an important change in the environment of US hospitals. The new payment system was expected to improve clinical and non-clinical efficiency in hospitals. A case study in a non-profit Pennsylvania hospital was performed to analyse the impact of PPS on hospital services. The hospital responded to PPS by a twofold strategy. First, attempts were made to achieve effective cost containment by improving the efficiency of intermediate and final outputs. Here special attention is paid to the activities of the DRG coordinator and the Utilization Review Committee and to the activities of nurses in their role as case manager. The second strategy was directed at revenue enhancement, initially mainly by shifting more costs to non-Medicare patients and later by trying to strengthen the position of the hospital in the local health care market. This second strategy was considered more important than the strategy of cost containment. With respect to organizational structure and policy-making, the following changes can be observed: a growing importance of strategic management; more integrated hospital-physician relationships; and the development of an adequate medical information system and a medical records department.

Hospital Cost Containment in the 1980s

A key strategy used to contain hospital costs during the 1980s was to reduce the total number of admissions and average lengths of stay. We assessed the magnitude of the savings achieved, the effect of the reductions on the rate of increase in costs, and the prospects for future savings through reductions in the number of days patients spend in the hospital (inpatient days). Using data from the American Hospital Association and the Health Care Financing Administration, we calculated the savings in the total number of inpatient days as the deviation from the historical increase in the number of inpatient days per year. We then estimated the real increase in costs that would have been observed if the reduction in the number of inpatient days had not occurred; we defined this value as the "underlying" rate of increase in costs. Finally, we compared the rates of increase in hospital reimbursement for Medicare beneficiaries and patients not covered by Medicare (non-Medicare patients). The total number of inpatient days per year decreased by 28 percent, in aggregate, between 1981 and 1988. The annual reduction was greatest in 1984 and 1985 and became progressively smaller in each subsequent year; by 1988 there was virtually no further reduction in the total number of inpatient days. The brief slowing of the increase in costs in the mid-1980s can be attributed entirely to the reduction in the number of inpatient days per year. The underlying rate of increase in costs was thus unaffected by efforts to contain spending. An increased number of outpatient visits partially offset the savings that resulted from the reduction in the number of inpatient days. This increase persisted even when the savings due to the lower number of inpatient days dwindled, and it virtually eliminated any dollar savings during the latter part of the 1980s. Between 1976 and 1982, Medicare spending on services provided by acute care hospitals rose by 9.2 percent per year in real terms, whereas non-Medicare expenditures rose by only 4.6 percent. This pattern has been reversed in recent years; in 1987-1988, Medicare spending rose by only 0.6 percent per year, whereas non-Medicare spending rose by 9 percent. Our findings suggest that the era of easy reductions in the number of inpatient days, with the associated attenuation of rising costs, is largely over. If further reductions in inpatient days are accompanied by an increase in the amount of ambulatory care similar to that during the past few years, the net savings will probably be negligible. Once the potential savings due to reductions in the number of inappropriate inpatient days has been exhausted, real hospital costs can be expected to rise, unless other effective measures to contain costs are implemented.

Grants and Outcomes

Grants and Outcomes

Impact of Medicare Prospective Reimbursement System on Nutritional Support Service Patients: The Importance of Pass Throughs

The financial data of all patients (535) admitted to the Nutritional Support Service (NSS) during 1985, including charges, true care costs, and actual reimbursement including pass-through payments (which are Medicare funds given directly to hospitals for education and capital equipment, and vary significantly from hospital to hospital), were analyzed. The NSS Medicare patients fell into 98 diagnostic related groups (DRGs). All 3,939 Medicare patients admitted in 1985 with the same DRGs as the NSS patients were also identified and their financial data analyzed. The NSS patients lost $999,643 because of the 266 medicare reimbursed NSS patients sustained high losses which overwhelmed the modest profits of the 269 non-Medicare patients. When data from all Medicare patients (which includes both NSS and non-NSS patients) with the same DRGs are analyzed, large profits are realized. These profits are totally due to pass-through payments received. Without pass throughs the loss for all 3,939 Medicare patients in these 98 DRGs would have been $1,641,273. The impact of eliminating pass throughs in the next few years needs to be determined. NSS patients represent a group that generates high financial losses under the federal prospective reimbursement system. However, present Medicare reimbursement of other less seriously ill patients with similar DRGs more than compensate these losses if pass throughs are used in determining reimbursements.

Financial analysis of an inner-city helicopter service: charges versus collections.

Trauma centers are now being perceived as financial burdens because of recent changes in trauma reimbursement for the Medicare Prospective Payment System population and the perception that collection rates are lower among trauma patients. We examined the demographic and clinical factors associated with the collection experience in a series of 114 trauma patients transferred by helicopter from the accident site to an inner-city trauma center. Factors affecting payment at 30, 60, 90, and 180 days included patient age, insurance class, and discharge status. While not as high as the collection rate for the facility as a whole, we found an average 71.2% collection rate for trauma patients at 180 days. As long as trauma reimbursement continues to be cost based for nonMedicare patients, collection rates remain an important consideration in determining the financial viability of trauma centers.

Medicare prospective payment and the use of medical technologies in hospitals.

Medicare's Prospective Payment System (PPS) created incentives to reduce the application of technology to hospitalized Medicare beneficiaries. Using data from 501 hospitals from 1980 and 1983-85, this study assesses changes in use of intensive care units and use of nonsurgical procedures before versus after implementation of PPS. The percent of hospitalized patients, both Medicare and non-Medicare, admitted to intensive care units increased post-PPS. Also, stays within such units remained constant. However, the percent of inpatients to whom several nonsurgical procedures were administered was lower post-PPS. For some (e.g., CAT scanning), the percentage of inpatients having the procedure continued to increase after PPS but at a much slower rate. For others, the percent of inpatients with the procedure declined at a faster rate (e.g., intravenous pyelogram). Still others showed utilization increases during 1980-83 followed by declines thereafter (e.g., occupational and physical therapy). Before 1983, there was almost no change in the number of routine tests per inpatient (e.g., serology and blood chemistry). Afterwards, there were major decreases. PPS has influenced the inhospital use of many nonsurgical procedures by both Medicare and non-Medicare patients.

The economic impact of DRG payment policies on air-evacuated trauma patients.

This study assessed the injury severity, patient outcome, the cost of care, and the economic impact of Medicare DRG payment policies on patients referred to a Level I trauma center. Only 11 of 283 admitted traumatized patients were Medicare patients. Yet, these 11 Medicare patients left the trauma center with a deficit of $249,601. No significant differences were found between the Medicare and non-Medicare groups for Trauma Score, CRAMS Score, Glasgow Coma Score, Injury Severity Score, ICU or hospital length of stay, disability, or mortality. Under DRG's, Medicare payments ($4,237 +/- 2,351/patient) have fallen to 20% of prior cost-based Medicare reimbursements ($21,542 +/- 34,170/patient), are providing only 16% of hospital costs ($26,928 +/- 42,713/patient), and are significantly (p less than 0.0001) less than non-Medicare reimbursements ($15,288 +/- 17,111/patient). Despite the high financial losses occurring when the trauma center treats referred traumatized Medicare patients, when all referred Medicare and non-Medicare patient trauma reimbursements are combined, overall trauma revenues have declined by only 4.3% under DRG's. If Medicare DRG payments were to be adopted by all third-party payers, reimbursement ($5,058 +/- 4,090/patient) would be significantly (p less than 0.0001) less than current hospital reimbursements ($14,801 +/- 16,537/patient) and costs ($16,121 +/- 17,624/patient). These results indicate that although high financial losses result when caring for traumatized Medicare patients, DRG's have not had a major financial effect upon centers receiving referred trauma patients because of the low numbers of admitted traumatized Medicare patients. However, if third-party payers were to enact the Medicare payment system, devastating economic losses would be inflicted upon major trauma centers.

The Early Effect of Medicare's Prospective Payment System on the Use of Medical Intensive Care Services in Three Community Hospitals

To assess the impact of Medicare's prospective payment system (PPS) on patient care and outcome from the medical intensive care unit (MICU), we reviewed the medical records of 400 MICU patients from three community hospitals: 200 patients were admitted before the PPS and 200 were admitted after the PPS. We sampled Medicare patients, aged 65 years and over, and non-Medicare comparison patients, aged 50 to 64 years, collecting data on case mix, treatment intensity and discharge disposition, hospital and six-month mortality, length of stay, and number of intensive care unit beds. After the PPS, the number of intensive care unit beds decreased 31%, without changes in MICU patients' illness severity or treatment intensity. Hospital length of stay decreased 15% in the Medicare group and 43% in the comparison group. For both Medicare and comparison patients combined, MICU length of stay decreased 14% and patients after the PPS were less likely to be discharged to go home. There were no significant changes in in-hospital or six-month mortality. Thus, clinically meaningful decreases in length of stay among seriously ill patients did not result in a change in in-hospital or six-month mortality.

The initial effects of the prospective payment system on nursing home patients.

We examined the discharge outcomes and admission characteristics of patients admitted to Southern California skilled nursing facilities (SNFs) for the first time following an episode of hospitalization in 1980, 1982-83 (all pre-prospective payment system), and all admissions during July through September 1984 (post-prospective payment). The proportion of patients covered by Medicare on admission was 18 per cent in 1980, 36 per cent in 1982-83, and 57 per cent in 1984. For patients discharged within 30-60 days to SNFs, in all three time periods more Medicare than non-Medicare patients were bed-bound, had indwelling catheters, and were comatose. There were only modest case-mix differences between the groups and no changes over time in discharge outcomes, including the proportion dying in the SNF, or being returned to a hospital. The time-related changes that were found preceded the implementation of the diagnosis related group (DRG) based prospective payment system.

Diagnosis-Related Groups and Severity

A GREAT deal has been written in the medical literature, the hospital industry literature, and the press about the insensitivity of the diagnosis-related groups (DRGs) to severity of illness.1This statement has even come from the Congress of the United States. Medisgrps Classification An article titled Review System Based on Illness Severity recently appeared inAmerican Medical News.2It describes the Medisgrps severity classification definitions. The article states: At admission, Medisgrps assigns a patient to one of five severity groups, and then compares that severity with severity at a later date, typically 10 days after admission or six days after surgery. Since the average length of stay of Medicare patients is now under 8.8 days and non-Medicare patients under 5.6 days, a majority of the patients will be discharged before this second severity assignment. The table concerning DRG 122 appearing in the article is reproduced herein, with