FACT SHEET Health Care Costs A g e n by djmbenga


									                                             FACT SHEET

                                                    Health Care
A g e n c y f o r H e a l t h c a re R e s e a rc h a n d Q u a l i t y • 2 1 0 1 E a s t J e ff e r s o n S t re e t • R o c k v i l l e , M D 2 0 8 5 2

                                                    The United States spends a larger share                   improved our understanding of how
                                                    of its gross domestic product (GDP) on                    the employment-related health
                                                    health care than any other major                          insurance market functions and the
                                                    industrialized country. Expenditures for                  cost and availability of coverage for
                                                    health care represent nearly one-seventh                  workers in different economic and
                                                    of the Nation’s GDP, and they continue                    employment circumstances.
                                                    to be one of the fastest growing
                                                                                                          • AHRQ-supported studies have
                                                    components of the Federal budget. In
                           www.ahrq.gov                                                                     examined out-of-pocket care costs for
                                                    1960, for example, health care
                                                                                                            different segments of the population,
 AHRQ is the lead Federal agency charged with       expenditures accounted for about 5
                                                                                                            the costs associated with expanding
                                                    percent of the GDP; by 2000, that figure
  supporting research designed to improve the                                                               health care coverage to the uninsured,
                                                    had grown to more than 13 percent.
 quality of health care, reduce its cost, address                                                           the financial consequences of
                                                    Although the rate of growth in health                   preventable hospital admissions, and
          patient safety and medical errors, and
                                                    care costs slowed somewhat in the mid-                  the use of waivers for home and
   broaden access to essential services. AHRQ       1990s, it has once again started to rise at             community-based care for people with
 sponsors and conducts research that provides       a rate that exceeds other sectors of the                AIDS.
                                                    economy. Thus, identifying ways to                    • Extramural researchers supported by
     evidence-based information on health care
                                                    contain health care costs and obtain high               AHRQ have analyzed the cost
  outcomes; quality; and cost, use, and access.     value for our health care investments                   consequences of a variety of policy
              The information helps health care     continues to be a priority for the Nation,              choices, such as prescription
                                                    particularly for policymakers and public                formularies, the use of prior
decisionmakers—patients and clinicians, health
                                                    and private payers.                                     authorization programs, and the use
system leaders, and policymakers—make more
                                                    All players in the health care system—                  of physician and organizational
 informed decisions and improve the quality of                                                              incentives.
                                                    employers, insurers, providers, and
                           health care services.    consumers, as well as Federal and State               Two major AHRQ initiatives—the
                                                    policymakers—need objective, science-                 Medical Expenditure Panel Survey
                                                    based information to help them make                   (MEPS) and the Healthcare Cost and
                                                    critical decisions about how to allocate              Utilization Project (HCUP)—provide
                                                    scarce health care resources. For more                essential data that have been used across
                                                    than 10 years, the Agency for Healthcare              the country by researchers and
                                                    Research and Quality (AHRQ)—and its                   policymakers in tracking health care use
                                                    predecessor, the Agency for Health Care               and costs and assessing trends over time.
                                                    Policy and Research—has been working
                                                    to meet this need. For example:                       • MEPS data have been used
                                                                                                            extensively by the research and policy
          U.S. Department of Health                 • AHRQ research focused on health                       communities. For example, MEPS
                and Human Services                    expenditures, health insurance
               Public Health Service
                                                                                                            data have been applied to study the
                                                      premiums, and payment sources has
                                             Reducing Costs —AHRQ Research Makes a Difference
                                             • Acute Cardiac Ischemia-Time Insensitive Predictive Instrument. Widespread use of
                                               the ACI-TIPI could result in more than 200,000 fewer hospital admissions and
                                               112,000 fewer coronary care unit admissions each year, for an overall annual savings
                                               of $728 million. This software runs a new electrocardiogram (EKG) machine that can
                                               help ER physicians more quickly identify patients who are having a heart attack and
                                               make decisions about thrombolytic therapy to break up blood clots. FDA has
                                               approved this software for use in hospital emergency rooms and by prehospital
                                               emergency personnel. ACI-TIPI was developed with AHRQ support.
                                             • Outpatient treatment of pelvic inflammatory disease. Often, women who have mild
                                               to moderate cases of PID can be successfully treated as outpatients, which would
                                               result in substantially reduced costs. PID affects more than 1 million U.S. women
                                               each year, with annual estimated direct and indirect costs of more than $4 billion. A
                                               recent AHRQ-supported study of more than 800 women with clinical signs and
                                               symptoms of mild to moderate PID found no differences in outcomes among women
                                               who were hospitalized and those treated as outpatients.
                                             • Use of less expensive antibiotics to treat middle ear infection in children. Middle
                                               ear infection (otitis media) is the most frequent reason for prescribing antibiotics to
                                               children. In Colorado, low-cost antibiotics accounted for 21 percent of antibiotic
                                               expenditures for otitis media, while high-cost antibiotics accounted for 76 percent of
                                               expenditures. A recent AHRQ-funded study found that less costly antibiotics were just
                                               as effective as high-cost antibiotics in treating otitis media, and that use of the less
                                               expensive antibiotics could have saved nearly $400,000 in Medicaid expenditures for
                                               the State of Colorado.
                                             • Self-management programs reduce the use of health care services among people
                                               with chronic diseases. About 70 percent of all health care expenditures are related to
                                               chronic disease. A recent study found that patients with chronic diseases who
                                               participated in a brief self-management training program improved their health or had
                                               less deterioration and used fewer health care services over a 2-year period, compared
    burden of out-of-pocket health care        with their status before the program. The program resulted in savings of $590 per
    expenditures, estimate prescription        participant over the 2 years, due to fewer hospital days and outpatient visits. The
    drug expenditures by the elderly,          program has been implemented in a number of health care settings across the United
    characterize the insured and               States and abroad.
    uninsured populations, identify
    payment sources, estimate personal
    expenditures for selected health            about conditions treated and                 employers who sponsor insurance
    conditions, and determine the               procedures performed in U.S.                 coverage, and especially to the Medicare
    concentration of expenditures among         hospitals and ambulatory surgery             and Medicaid programs.
    various segments of the population.         centers for the population as a whole
                                                and for population subsets, such as          • Reducing the risk of stroke for
• HCUP provides information on                  children and the elderly. HCUP data            elderly patients with atrial
  inpatient hospital charges at the             provide information on reasons for             fibrillation (irregular heartbeat).
  national and State levels, including all      hospitalization, how long people stay          About 80,000 strokes occur in
  inpatient records with charge data,           in the hospital, the procedures they           America each year that can be
  clinical data, and demographic                undergo while hospitalized, and how            attributed to atrial fibrillation (AF).
  information from 80 percent of all            specific conditions are treated in the         Although warfarin, a blood thinning
  hospital discharges in the United             hospital.                                      agent, lowers the risk of stroke in AF
  States. HCUP is a Federal-State-                                                             patients, less than half of appropriate
  industry partnership that provides a                                                         candidates for warfarin were receiving
  geographically representative sample       Research on Lowering Health                       it. The use of warfarin to prevent
  of hospital discharges across the          Care Costs                                        stroke could save an estimated $1.45
  United States. HCUP data help              AHRQ-funded research provides                     million each year per 100,000 people
  researchers, policymakers, and health      essential information to help reduce              aged 65 and older, of whom about
  care administrators answer questions       health care costs—to consumers, to                6,000 would have AF. AHRQ-
   supported researchers identified why     • Changing Medicaid coverage for             that copayments and other forms of
   physicians were reluctant to prescribe     anti-ulcer drugs reduced use of            cost-sharing can lead to reduced use
   warfarin and developed a program to        these drugs without increasing             of services, we do not know what
   help them increase the appropriate         hospitalizations. Anti-ulcer               effects these incentives have on
   use of warfarin. Medicare Peer             medications account for 10 to 13           patient outcomes. These investigators
   Review Organizations began projects        percent of State Medicaid pharmacy         will evaluate the effects of different
   to increase the use of warfarin and        budgets. After AHRQ-supported              copayment levels on emergency
   other anticoagulation drugs in 20          researchers published their findings,      department (ED) use on treatment
   States. As a result, use of                the Florida Medicaid program revised       costs and patient outcomes within the
   anticoagulation therapy increased 58       its coverage policies to reduce            Kaiser Permanente-Northern
   to 71 percent, with a projected 1,285      inappropriate use of anti-ulcer drugs.     California health system. The main
   strokes prevented.                         As a result, Medicaid reimbursement        outcomes of interest are hospital
                                              for the drugs decreased 33 percent.        admissions, ICU admissions,
• Employers may lower costs by
                                              There was no associated increase in        mortality, and treatment costs.
  offering their employees multiple
                                              Medicaid hospitalizations for
  insurance plans and making the                                                       • Impact of payment policies on the
                                              complicated peptic ulcer disease
  same dollar contribution to each.                                                      cost, content, and quality of care.
                                              (PUD), uncomplicated PUD, or
  The amount of cost-sharing an                                                          These researchers are combining data
                                              non-ulcer peptic disease.
  employer requires as well as the                                                       from health plans to examine how
  number of plans the employer offers       • Easy-to-use tool predicts which            economic incentives inherent in the
  to employees can significantly affect       nursing home residents with                relationship between health plans and
  the employer’s health care costs. A         pneumonia and other respiratory            health care providers (physicians and
  recent AHRQ study found that                infections can be treated safely
  employers may be able to lower their        without costly hospitalization.
  health insurance costs by offering          Aggregated charges to the Medicare
  their employees three or more health        program for hospital treatment of
  plans and making fixed-dollar               pneumonia in 2000 were estimated
  contributions to each, thus making          to be over $10.1 billion, and the
  employees more price sensitive.             Medicaid program paid for an
                                              additional $3.4 billion in hospital
• More competition among HMOs
                                              care for pneumonia that year. An
  means lower prices for consumers.
                                              average hospital stay for pneumonia
  AHRQ-funded researchers compared
                                              care in 2000 cost about $15,000.
  data on health maintenance
                                              AHRQ-funded researchers in
  organization (HMO) premiums in
                                              Missouri developed a tool that
  various markets. Premiums were
                                              nursing home clinical staff can use to
  lower in more competitive markets,
                                              determine the severity of pneumonia
  where a high percentage of the
                                              and whether a resident should be
  population was enrolled in HMOs
  and many HMOs competed for their
                                            Current Research on Health Care
• Managed care held down mental
  health costs for employers and            Costs
  insurers by using a carve-out plan.       AHRQ has many ongoing projects
  A recent AHRQ study looked at a           focused on health care costs, cost-
  large employer group faced with a         effectiveness, and financing, including
  State mandate calling for mental          private insurance, Medicare, Medicaid,
  health parity, which was expected to      and lack of insurance. Examples of
  lead to rising costs. One insurer         projects currently in progress include:
  introduced a carve-out (an
                                            • Safety and financial ramifications
  organization separate from the main
                                              of ED copayments. Copayments are
  insurer to manage health care in a
                                              a commonly used patient-level
  specific area) for mental health
                                              incentive for modulating the demand
  coverage. After 3 years of the carve-
                                              for services and the use of
  out plan, mental health costs had
                                              unnecessary care. Although we know
  dropped significantly.                                                                                                   3
    hospitals) influence the cost, quality,      cost-effectiveness between patients        Examples of priorities for future research
    and type of services received by             who receive a PAC and those who            in this area include:
    patients.                                    receive the less invasive central venous
                                                 catheter.                                  • How can we lower health care costs
• Incidence of reduced use of                                                                 without compromising quality? Also,
  prescribed medications in response          • Patient-centered care and health              how can we lower costs without
  to out-of-pocket costs among                  care costs. Preliminary research              simply shifting costs from one sector
  Medicare beneficiaries. This study is         suggests that patient-centered care—          to another?
  assessing the impact of out-of-pocket         which is characterized by
  costs incurred by Medicare+Choice             incorporating the patient's experience      • What factors are driving the recent
  beneficiaries on their use of                 of illness and psychosocial context           rise in overall health care
  prescription medications.                     into shared physician- patient                expenditures? For which services are
                                                decisionmaking—may reduce use of              costs rising, and what forces are
• Comorbidity, costs, and outcomes                                                            responsible for the increasing costs?
                                                health care services while improving
  in dialysis patients. Previous research
                                                health status and patient satisfaction,     • What is the relative burden of out-of-
  has shown that patients with end-
                                                particularly among patients who               pocket expenditures for vulnerable
  stage renal disease (ESRD) who have
                                                present with unexplained, hard-to-            population groups?
  high comorbidity—for example,
                                                diagnose complaints. These University
  people with diabetes have higher rates                                                    • How do expenditures vary by
                                                of Rochester researchers are
  of peritoneal dialysis failure.                                                             insurance status, and what factors
                                                examining the relationship between
  Increasing comorbidity may                                                                  account for variation within insurance
                                                the provision of patient-centered care
  profoundly impact illness severity, risk                                                    groups?
                                                and health care costs, health status,
  of death, resource use, and overall
                                                and satisfaction. Other goals include       • What are the costs and factors
  health care costs in the dialysis
                                                characterizing the features of patient-       associated with use of alternative and
  population. Researchers at the
                                                physician communication that                  complementary care?
  University of Utah are developing a
                                                contribute to lower health care costs
  comorbidity tool to help clinicians                                                       • What proportion of overall health
                                                and identifying modifiable factors in
  identify high-risk patients and select                                                      care expenditures is associated with
                                                physician interaction style that can
  the optimal dialysis modality at the                                                        end-of-life care?
                                                lead to decreased use of services, lower
  initiation of treatment. This will be of
                                                costs, and recognition of patient
  particular interest to the Medicare                                                       More Information
                                                emotional stress.
  ESRD program, since most dialysis
  patients are aged 60 or older and have      • Analysis of managed care spending           To find out more about AHRQ and our
  one or more comorbid conditions.              for high-cost illnesses. Recent             extensive portfolio of research on health
  The primary outcomes of interest will         AHRQ research revealed that the use         care costs and financing, visit the AHRQ
  be hospital days and Medicare                 of health care services is highly           Web site at www.ahrq.gov or contact:
  hospital costs.                               concentrated—just 1 percent of the          Joel Cohen, Ph.D.
                                                population accounts for 27 percent of       Center for Cost and Financing Studies
• Economic analysis of pulmonary
                                                all health care expenditures. These         jcohen@ahrq.gov
  artery catheter use. The pulmonary
                                                findings were based on data from            301-594-7084
  artery catheter (PAC) is a commonly
                                                AHRQ’s Medical Expenditure Panel
  used device that helps to guide care of                                                   Mike Hagan, Ph.D.
                                                Survey (MEPS). The study also
  critically ill patients, such as those                                                    Center for Organization and Delivery
                                                found that the concentration of
  with acute lung injury or acute                                                           Studies
                                                expenditures has been remarkably
  respiratory distress syndrome.                                                            mhagan@ahrq.gov
                                                stable over the past decade, indicating
  Although clinicians believe that PAC                                                      301-594-6818
                                                that managed care has had little
  is useful for decisionmaking, PAC
                                                impact on how resources are spent in
  substantially increases health care
                                                treating high-cost illnesses.
  costs, and recent data suggest that it
  also may increase mortality. These
  University of Pittsburgh researchers        Future Research
  are conducting an economic analysis         This list represents only a small sample
  of PAC to compare long-term                 of the many pressing research questions
  survival, quality of life, costs, and       on health care costs and financing.
                                                                                                       AHRQ Pub. No. 02-P033
4                                                                                                            September 2002

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