Price setting for doctors.
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Cost Control↗
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The market for pharmaceuticals.
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Drug Approval↗
An integrative model of cash collections for mental health centers.
Little has been published regarding Community Mental Health Centers and the collection of fees from clients. As centers of the 1980s have faced a sudden decrease in government funding, an effective system of cash collections has become paramount. Many locally-controlled centers have changed their mission to serving a broad spectrum of people with personal problems as well as the chronically mentally ill. This paper documents a system used by a midwestern center resulting in a 230% increase in client fee collections over four years. An integrative model describes collections assessment, developing an accountability system, basic principles of collections, fee setting and client mix. The ability to serve the poor, chronically mentally ill in the future will depend on the ability to serve the broader population of a community.
Accounting↗
A case mix simulation decision support system model for negotiating hospital rates.
The institution of prospective payment systems by many health care insurers has drawn increased attention to case-based financial planning in hospitals. When hospital revenues are directly linked to patient diagnoses rather than to the types and quantities of services supplied to patients, managers must be aware of the financial implications of different case mixes and must be prepared to influence insurers' price structures. A case-based financial planning model is presented here for the purpose of assisting managerial decision making in the strategic areas of case mix planning and pricing. The computerized model characterizes hospitals as product manufacturers, the product being discharged patients. Diagnosis serves to differentiate the "products"; however, diagnoses are grouped by payor and similar treatment cost experiences to create a limited set of managerially meaningful case types. Diagnostic and treatment costs are also aggregated to facilitate the modeling of the hospital production process. The computerized model projects the number of patients of each case-type and total patient volume, based on estimated patient volume growth rates. The model also projects prices and contribution margins for each case-type, as well as total contribution to hospital overhead. Testing the model with a hypothetical example of a hospital strategic planning problem demonstrates the model's potential as a decision-making aid in case mix planning and case-type pricing. It also reveals several model shortcomings that require further developmental effort.
California↗
[Main results of the Swiss study on DRGs (Casemix Study)].
Sponsored by the Health Administrations of nine cantons, this study was conducted by the University Institute of Social and Preventive Medicine in Lausanne in order to assess how DRGs could be used within the Swiss context. A data base mainly provided by the Swiss VESKA statistics was used. The first step provided the transformation of Swiss diagnostic and intervention codes into US codes, allowing direct use of the Yale Grouper for DRG. The second step showed that the overall performance of DRG in terms of variability reduction of the length of stay was similar to the one observed in US; there are, however, problems when the homogeneity of medicotechnical procedures for DRG is considered. The third steps showed how DRG could be used as an account unit in hospital, and how costs per DRG could be estimated. Other examples of applications of DRG were examined, for example comparison of Casemix or length of stay between hospitals.
Costs and Cost Analysis↗
A community ability scale for chronically mentally ill consumers: Part II. Applications.
The authors describe uses for a 17-item instrument that efficiently measures the functioning level of chronically mentally ill persons living in the community. The Multnomah Community Ability Scale is designed to be completed by case managers who work with chronically mentally ill consumers. The instrument is sensitive to differences among individuals within this special population of consumers and is easy to complete. Community mental health program staff can be trained to use the scale reliably. The scale has been used to compare levels of severity between urban and rural community mental health program clients. The authors discuss the application of the Multnomah Community Ability Scale to a capitated payment system for severely mentally ill, involuntary clients.
Activities of Daily Living↗
Using information to guide managed behavioral health care.
This evaluation of substance abuse and mental health treatment services in Arizona discusses and illustrates the use of data already collected by the State to manage and monitor the public behavioral health sector. The authors utilize a framework that focuses on rate-setting and financial incentives; provider profiling and education; and monitoring of data quality and system-wide performance. Information and analysis can contribute to key management activities and forces that guide behavior in the system toward optimal system performance. Using data from 33,208 Medicaid-covered and uninsured adults, service mix varied substantially by region; for example, spending on residential care ranged from 0% to 40% for substance abuse treatment clients. By focusing on a smaller group of client with functional assessments, it also appears that regional spending levels varied considerably, for reasons not explained by client demographics or clinical measures. Finally, longitudinal data show that the regional managed care organizations are moving in different directions with regard to client mix and spending priorities. All of this variation suggests that there may be considerable latitude to guide and improve system-wide performance.
Adolescent↗
Oil and water? Lessons from Maryland's effort to protect safety net providers in moving to Medicaid managed care.
Studies have highlighted the tensions that can arise between Medicaid managed care organizations and safety net providers. This article seeks to identify what other states can learn from Maryland's effort to include protections for safety net providers in its Medicaid managed care program--HealthChoice. Under HealthChoice, traditional provider systems can sponsor managed care organizations, historical providers are assured of having a role, patients can self-refer and have open access to certain public health providers, and capitation rates are risk adjusted through the use of adjusted clinical groups and claims data. The article is based on a week-long site visit to Maryland in fall 1998 that was one part of a seven-state study. Maryland's experience suggests that states have much to gain in the way of "good" public policy by considering the impact of their Medicaid managed care programs on the safety net, but states should not underestimate the challenges involved in balancing the need to protect the safety net with the need to contain costs and minimize the administrative burden on providers. No amount of protection can compensate for a poorly designed or implemented program. As the health care environment continues to change, so may the need for and the types of protections change. It also may be most difficult to guarantee adequate protections to those who need it most--among relatively financially insecure providers that have a limited management infrastructure and that depend heavily on Medicaid and the state for funds to care for the uninsured.
Community Participation↗
[Holistic medicine and patient care management by family practice/ specialists].
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Continuity of Patient Care↗
[The medical profession and social accountability. Opening address at the 103. German Doctors' Day in Cologne, May 9, 2000].
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Ethics, Medical↗
A decade of decline: an analysis of Medicare reimbursement for vascular surgical procedures.
Despite inflation and a robust economy, standard Medicare reimbursements for vascular surgical procedures have progressively declined. The objective of this analysis was to quantitatively and objectively evaluate the decline of vascular surgical reimbursement over the past decade. In this study, data for the analysis of specific vascular surgical procedures was obtained from the National Center for Health Statistics-National Hospital Discharge Survey (NCHS-NHDS) for all vascular procedures as reported by ICD-9-CM codes. The average Medicare reimbursement for each of the specified procedures for 1990 was compared to that of 2001 and the percent change in average reimbursement over this period was calculated. Comparisons between 1990 and 2001 dollar amounts were made after correction for inflation using the consumer price index. This correction factor allows for the calculation of the actual percentage reduction in "real dollars" that is reflected in buying power. We found significant decreases in Medicare reimbursement for each of the vascular procedures included in this analysis. Despite national economic prosperity, there was an average 41% decrease in the buying power per case for vascular surgical procedures over the past decade. We feel that these reductions in reimbursement are overzealous and need to be reexamined.
Aged↗
Priority setting for pharmaceuticals. The use of health economic evidence by reimbursement and clinical guidance committees.
Authorities in a number of countries rely increasingly on cost-effectiveness analysis to determine reimbursement status or clinical guidance for pharmaceuticals. This study compared the use of health economic evidence across five reimbursement committees (Australia, Ontario and British Columbia in Canada, Finland, and France) and one clinical guidance committee (England and Wales). Health economic evidence was found to support decision making, although cost-effectiveness is less important in some identifiable situations. Since the relative importance of cost-effectiveness varies, it will be difficult to implement a single explicit threshold. Further research may make patterns of decision making, distributional concerns, and the importance of different criteria more transparent, which would help to narrow the gap between the theory and practice of health economic evaluations. While the use of health economic evidence and the outcome of decision making are similar across committees, there is presently only limited knowledge to what extent prescribing patterns are influenced by decisions.
Advisory Committees↗
The risk-adjusted vision beyond casemix (DRG) funding in Australia. International lessons in high complexity and capitation.
Hospitals throughout the world using funding based on diagnosis-related groups (DRG) have incurred substantial budgetary deficits, despite high efficiency. We identify the limitations of DRG funding that lack risk (severity) adjustment for State-wide referral services. Methods to risk adjust DRGs are instructive. The average price in casemix funding in the Australian State of Victoria is policy based, not benchmarked. Average cost weights are too low for high-complexity DRGs relating to State-wide referral services such as heart and lung transplantation and trauma. Risk-adjusted specified grants (RASG) are required for five high-complexity respiratory, cardiology and stroke DRGs incurring annual deficits of $3.6 million due to high casemix complexity and government under-funding despite high efficiency. Five stepwise linear regressions for each DRG excluded non-significant variables and assessed heteroskedasticity and multicollinearlity. Cost per patient was the dependent variable. Significant independent variables were age, length-of-stay outliers, number of disease types, diagnoses, procedures and emergency status. Diagnosis and procedure severity markers were identified. The methodology and the work of the State-wide Risk Adjustment Working Group can facilitate risk adjustment of DRGs State-wide and for Treasury negotiations for expenditure growth. The Alfred Hospital previously negotiated RASG of $14 million over 5 years for three trauma and chronic DRGs. Some chronic diseases require risk-adjusted capitation funding models for Australian Health Maintenance Organizations as an alternative to casemix funding. The use of Diagnostic Cost Groups can facilitate State and Federal government reform via new population-based risk adjusted funding models that measure health need.
Australia↗
Pricing of pharmaceuticals. Assessing the pricing potential by a pricing matrix model.
Pricing and reimbursement of new pharmaceuticals have been based until recently on the traditional clinical trial outcomes (efficacy, safety, and quality parameters) used for registration. Now we can distinguish various additional data requirements which relate to the use of the drug in real daily practice. The most important new data requirements are effectiveness, cost-effectiveness, and budgetary impact. A main question is how much the impact is of the various types of data in the pricing and reimbursement process. The objective of this contribution is to present a method for quantifying this type of uncertainty in order to develop a more solid pricing and reimbursement strategy for a new innovative drug. The concepts are illustrated for a new hypothetical antidepressant drug in The Netherlands. This method is based on the analytic hierarchy process (AHP) concept which measures decision makers' preferences for the critical success factors. This study shows that the AHP concept may be applied to the pricing and reimbursement environment. The method may be used to assess the pricing potential of a new drug, considering the various data requirements in the reimbursement process.
Cost-Benefit Analysis↗
Pricing and reimbursement of drugs in Ireland.
Expenditure on healthcare in Ireland, which is mainly derived from taxation, has increased considerably in recent years to an estimated 9.2 billion euro in 2003. Pharmaceuticals account for approximately 10% of total healthcare expenditure. Approximately one-third of patients receive their medications free of charge whilst the remaining two-thirds are subject to a co-payment threshold of 78 euro per month, i.e. 936 euro per year. The price of medications in Ireland is linked to those of five other member states where the price to the wholesaler of any medication will not exceed the lesser of the currency-adjusted wholesale price in the United Kingdom or the average of wholesale prices in Denmark, France, Germany, The Netherlands and the United Kingdom. A price freeze at the introduction price has been in existence since 1993. Despite the price freeze, expenditure on medicines on the community drugs scheme has increased from 201 million euro in 1993 to 898 million euro in 2002. The two main factors contributing to the increased expenditure on medicines include "product mix", the prescribing of new and more expensive medication, and "volume effect" comprising growth in the number of prescription items. Changing demographics and the extension of the General Medical Services (GMS) Scheme to provide free medicines for all those over the age of 70 years have also contributed. Prior to reimbursement under the community drugs schemes, a medicine must be included in the GMS code book or positive list. A demonstration of cost-effectiveness is not a pre-requisite for reimbursement.
Costs and Cost Analysis↗
The high cost of medicines in Ireland. Is it time to change the pricing mechanism?
This study compared the prices of prescription medicines in Ireland to those in other countries to determine potential cost savings on the largest community drug scheme if an alternative pricing mechanism were adopted. The analysis covered a sample of 39 drugs (44.8% of the total ingredient cost) selected from the top 70 drugs in order of total ingredient cost. Potential cost savings ranged from Euro 20.73 million if a Danish price were adopted, to Euro 16.23 million for the average European price, to Euro 6.82 million for the UK price. The estimated savings were statistically significant for the Danish and average European price but not for the UK price. This study demonstrates the high ex-wholesale price of prescription medications in Ireland.
Cost Control↗
Changing surgical CPI valuation relationships: a method of determination (1970-1995).
Surgeons have, over the past 7 years, experienced a significant decrease in valuation of their services. This has been accomplished by use of the Resource-Based Relative Value System, and its interpretation and modification by various agencies of the federal government. Congress recently mandated a study of practice costs that could result in further reductions of up to 30%. In anticipation of this further reduction, it is important to understand in as accurate a way as possible what has happened thus far to the value for surgical services. Simple percentage in decrease of fees is well understood, but their decrease in relation to the cost of a constant market basket of goods has not been well publicized. We present a simple method for determining the change in value for any procedure or service done by a surgeon in relation to the cost of a constant market basket of goods for any period of time from 1970 to 1995. For example, the increase in the cost for the constant market basket of goods between 1972 and 1992 is shown to be 236%. The increase in value for a typical cardiothoracic procedure in the same time period was 52%. The valuation for this procedure has actually declined 55% from 1972 to 1992, relative to the market basket of goods. The service that would buy the complete basket in 1972 will now buy only 45% of the basket.
Fee Schedules↗
Applying business principles to a prosthodontic practice.
Determining the optimum fee for prosthodontic services is difficult. Most methods of determining fees are based on comparisons with other practitioners or with established fee schedules. However, comparisons alone are inadequate because they ignore the practitioner's underlying costs. Since it costs each individual practitioner different amounts to produce dentistry, dental fees should be highly individualized. This article presents a model for evaluating fees for prosthodontic services based on both underlying costs and intangible variables such as the dentist's skill, experience, and quality of care.
Costs and Cost Analysis↗