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Objective. The long-run cost savings potential of private sector reform efforts, such as selective contracts with providers, depends in part on the relationship between procedure-specific volume and average hospital resources that are consumed in treating patients associated with that specific procedure. Study examines a model that estimates the relationship between hospital procedure-specific volume and average hospital treatment costs, using an elective surgical procedure as an example. Data Sources. Medicare Provider Analysis and Review (MedPAR) files for 1989 for hospitalizations in which a Medicare beneficiary received a knee replacement (KR) surgery during 1989. Hospital information was obtained from the American Hospital Association's 1989 Annual Survey. All patient-level data were aggregated to the hospital level to create a data file, with the hospital as the unit of observation. Study Design. This study used administrative claims data and regression analysis to estimate the effect of hospital procedure-specific volume on average hospital treatment costs of patients receiving KR surgery. We also examined the stability of the volume-cost relationship across hospitals of different sizes. Principal Finding. The average treatment costs associated with KR surgery are inversely related to a hospital's KR volume in the regression equation estimated using all hospitals performing KR surgery. The inverse relationship between cost and volume is found to be robust for different-size hospitals. Conclusions. The potential cost savings associated with performing KR surgery at incrementally higher hospital volume level can amount to as much as 10 percent of the hospital's average treatment cost. However, the incremental cost savings associated with increased patient volume depends on the hospital's current volume level and its size. Key Words. Hospital cost, volume, elective surgery, In the evolving market-driven healthcare system, third party payers have been negotiating with hospitals for price concessions in return for being included as providers in managed care networks. These reform [...]

Objective. The aim of this study is to describe the practice variation of knee replacements (KRs) in the elderly ([greater than or equal to] 65) over time from 1985-1990 in terms of the number of primary, bilateral, and revision KRs; the extent of large area variation in performance rates; and the degree to which demographic variables are the determinants of area rates. Data Sources/Study Setting. Data analyzed are from every hospital in the United States that performed a KR on a Medicare patient during the study period. Data were obtained from the MEDPAR, HISKEW, and denominator files of the Medicare Statistical System. Study Design. This is a cohort study of all Medicare beneficiaries who received a KR between 1985 and 1990. The dependent variable in the analyses was the count of the KRs performed in each area. Data Collection/Extraction Methods. This is a population-based sample of Medicare enrollees in the United States. All hospitalizations for Medicare-reimbursed KRs were included in the initial data set. Exclusion criteria were used to identify the Medicare covered population with a definite KR. These criteria resulted in 7.3 percent exclusions and a final set of 414,079 KR hospitalizations. Principal Findings. The number of Medicare-funded KRs increased in each of the study years corresponding to an annual rate of increase of 18.45 percent. The likelihood of receiving a KR was a function of age, gender, and race. For each year, KRs were almost twice as likely to be performed on women than on men. The odds of whites getting the surgery were over 1.5 times greater than for blacks. Even after adjusting for demographic factors, significant regional variation remained. Conclusions. Much about area variation and the rate of growth in KR rates remains unexplained. For answers to emerge, better data and different types of studies are required. Key Words. Practice variation, knee replacement, outcomes research, osteoarthritis, The escalation in health care costs and the push for national and state health reform has provoked societal and governmental interest in the apparent geographic variation in the frequency of [...]

In an effort to structure and coordinate healthcare service delivery, primary care gatekeeper programs were developed to enlist the participation of primary care physicians. Participating providers agree to be the primary physician for a group of enrollees in the program. One anticipated benefit of gatekeeper programs is that the elimination of 'doctor shopping' will cut down on inefficient services and discontinuous care, preventing patients from going from doctor to doctor. Cost efficiency was also once anticipated as a benefit of this type of program, but cost-savings have been limited. Professional resistance, along with high resource requirements have also led to difficulties in implementation. These programs are designed to change care-seeking and providing behaviors. Patients have little choice; it is left up to physicians to decide which conditions they will treat and which cases they will refer to specialists. Data from two gatekeeper programs were gathered and compared with data from beneficiaries not enrolled in such programs; all patients were Medicaid recipients. Data samplings groups use in this study contained approximately 1,000 adults and 2,000 children. Access to specialists was restricted for program participants. Providers tended to be primary care physicians and tended to perform most treatments themselves. Enrollees usually saw only one or two providers a year, hence care was consolidated as intended by the programs. Evaluation of whether decreased access to specialists for enrollees in gatekeeper programs had a negative effect on overall patient care was not a part of this study. It is suggested that the gatekeeper programs be expanded so that appropriate medical care can be more efficient and available. However, such programs are not necessarily as cost-efficient as they had once been hoped to be. (Consumer Summary produced by Reliance Medical Information, Inc.), Public and private purchasers of medical services have turned to the enrollment of beneficiaries with primary care gatekeepers to contain cost and improve access. Physicians who agree to contain cost [...]

The Performance of Urban and Public Hospitals and NHCs under Medicaid Capitation Programs Summary This article reports the results of a study that examined what happened to the utilization of [...]

Objective. To evaluate the long-term effects of Medicaid managed care (MMC) on obstetric service use and program costs in California. Data Sources/Study Setting. Longitudinal administrative data on Medi-Cal enrollment and [...]

We investigated the extent to which children continuously enrolled in two mature county-organized Medicaid managed care plans for 6, 12, and 24 months received recommended well-child visits and immunizations. We also investigated whether any improvements in compliance were evident during the period 1989-92. Compliance was low for well-child visits and immunizations at the recommended ages regardless of eligibility group. Although slight improvements in immunizations were made over time, little progress was made in compliance with well-child visits. Continued vigilance is required to achieve the government's goal of 90 percent immunization compliance among 2-year-olds., INTRODUCTION The Santa Barbara Health Initiative (SBHI) and the Health Plan of San Mateo (HPSM) are two of the longest-running 1915(b) waiver programs in the United States; the SBHI was [...]

Medical care for the nonelderly seriouly ill is not possible through the private health insurance market alone. The number of privately insured or uninsured Americans is decreasing, employer-sponsored health insurance may continue declining and when it is offered it may continue going down in scope because legal reforms mandate the inclusion of more seriously ill people in such plans, thus increasing the expense for employers. Strategies to help the private insurance market cover these people are needed.

The Medicare prospective payment system (PPS) began in October 1984 as a means of reducing patients' length of stay (LOS). Under this system, hospitals are reimbursed based on the amount of care a given condition is expected to require. Reducing LOS is perceived to be a critical factor in lowering the cost of medical care. It remains to be established if shorter hospital stays can be equated with a decline in the quality of care, and there are numerous investigations into the impact of PPS on the cost and quality of care. Some studies have suggested that quality of care may have deteriorated since the institution of PPS, but these studies have been flawed by small patient population sizes. This study reviewed the cases of 386 elderly Medicare patients with similar types of hip fractures admitted to a large private, not-for-profit, teaching hospital during the period 1981 through 1987. Of the 386 patient records reviewed, 190 were from the pre-PPS period and 196 were from the period following the initiation of the Medicare PPS. Hospital charges ranged from $1,328 to $34,052 in 1987 dollars. The average charge was $7,295 for the pre-PPS group and $7,565 for the post-PPS group. A hip fracture procedure charge attained a high of $8,189 in 1984 and subsequently dropped to $7,671 the following year. Taking the rate of inflation into account, the pre- and post-PPS difference in the average charge for treatment is negligible. The total LOS decreased by 24 percent and the time between admission and surgery decreased by 21 percent. Time in the physical therapy (PT) phase decreased from 10.0 days before PPS to 7.9 days after PPS, while the average number of PT treatments per day increased slightly after PPS began, from 1.2 to 1.4. The number of patients remaining in extended care facilities six months after discharge from the hospital following hip fracture surgery was 22.6 percent before PPS, versus the post-PPS figure of 19.9 percent. PPS-impact studies often take place in different types of hospitals, which may influence the outcome of studies and the manner in which the results are interpreted. PPS-impact studies must be conducted in different types of hospital settings, involving different types of physicians and patients, in order to provide complete answers concerning the impact of PPS on the quality of medical care.

Evaluation of the Medicaid Competition Demonstrations Introduction This article contains a detailed overview and summary of the activities and findings of the Nationwide Evaluation of Medicaid Competition Demonstrations(1). Six States [...]