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Up to 23 percent of elderly Americans could be rejected for
private long-term care insurance at age 65
Private insurance is one strategy for financing the large and
growing cost of long-term care. Currently, insurance premiums are
based on individuals considered to be average risks, and medical
underwriting is used to reject those insurers fear may represent
above-average risks. Little is known, however, about how much
this practice limits the potential for private insurance to cover
nursing home care or how well underwriting criteria identify
New research from the Agency for Health Care Policy and Research
indicates that under current medical underwriting practices,
between 12 percent and 23 percent of Americans would be rejected
if they applied for this insurance at age 65. These figures rise
to between 20 and 31 percent at age 75, according to the study by
former AHCPR researchers Christopher M. Murtaugh, Ph.D., and
Peter Kemper, Ph.D., and Brenda C. Spillman, Ph.D., of AHCPR's
Center for Cost and Financing Studies. They arrived at these
conclusions by simulating underwriting criteria using a
nationally representative sample of elderly decedents.
Based on these criteria, the study simulates probable exclusion
of persons who are current or recent nursing home residents, are
unable to perform basic activities of daily living (ADLs), have
cognitive disabilities such as Alzheimer's disease or other forms
of dementia, or major illnesses such as cancer, cirrhosis of the
liver, long-term diabetes, or chronic obstructive pulmonary
disease. Underwriters possibly also would exclude persons who are
obese or heavy drinkers and those who have had a stroke or recent
heart attack with complications.
These criteria successfully identify persons who represent poor
financial risks to insurers, although the extent to which that is
true depends on policy characteristics. For a "low option" policy
lacking inflation protection and nonforfeiture benefits, all the
simulated criteria identify groups with insurance benefits
exceeding the premiums they paid into the policies. For example,
the simulations suggest that insurance benefits for those who are
cognitively impaired at age 65 would be more than seven times
their expected premium collections, and benefits for those unable
to perform ADLs at age 65 would be three times premium
collections. Under a more generous policy with inflation
protection and nonforfeiture, however, only those with cognitive
impairment, limitations in ADLs, and those who had suffered
stroke would have benefits exceeding premiums paid.
Based on the study results, the researchers suggest that
policymakers may want to consider options such as high-risk
insurance pools for those who are uninsurable. Insurers could
offer higher premium policies to those believed to be higher
risks or follow the life insurance practice of offering dividends
when experience is more favorable than expected. Both of these
options would allow insurers to gather more information about
actual risks represented by those now considered poor risks.
See "Risky Business: Long-Term Care Insurance Underwriting," by
Drs. Murtaugh, Kemper, and Spillman, in the Fall 1995 issue of
Inquiry 32, pp. 271-284.
Preconception care for diabetic women results in cost
Preconception care for women with diabetes saves $1,720 per
delivery by preventing adverse birth outcomes such as congenital
malformations. Even in the short term, preconception care saves
$480 per enrollee during the initial hospitalization.
Third-party payers can save money by paying for intensive medical
care to control the blood glucose levels of diabetic women before
they become pregnant. This preconception care avoids the high
costs of maternal and fetal complications associated with
uncontrolled diabetes during pregnancy, concludes Anne
Elixhauser, Ph.D., of the Center for Delivery Systems Research,
Agency for Health Care Policy and Research. She and her
colleagues used literature review, consensus development among an
expert panel of physicians, and surveys of medical care personnel
to gauge the costs and consequences of providing preconception
and prenatal care compared with prenatal care only to a
hypothetical group of women with established diabetes mellitus.
The researchers found that the cost of preconception plus
prenatal care was $17,519 per delivery, compared with $13,843 per
delivery for prenatal care only. However, the combined care
actually resulted in a savings of $1,720 per delivery over
prenatal care only, after accounting for the maternal and
neonatal adverse outcomes prevented by preconception care. The
adverse outcomes included in the analysis ranged from spontaneous
abortion to congenital malformations. Since women receiving only
prenatal care tend to seek care after the critical period when
their fetuses' organs are forming (5-8 weeks gestation),
achievement of good glycemic control after this period would not
reduce the rate of diabetes-related congenital anomalies such as
hydrocephalus and certain heart defects, which originate very
early in pregnancy.
To determine the generalizability of these findings to a
short-term perspective, such as third-party payers who may be
responsible only for costs associated with pregnancy and the
initial hospitalization of mother and infant, the researchers
recently recalculated the cost-benefit analysis excluding
postdischarge and long-term-care costs. According to Dr.
Elixhauser, preconception care for diabetic women still results
in cost savings of $480 per enrollee. Thus, long-term care costs
are not the determinants of the cost savings associated with
Details of the initial study are in "Cost-benefit analysis of
preconception care for women with established diabetes mellitus,"
by Dr. Elixhauser, Joan M. Weschler, B.S.N., M.A., John L.
Kitzmiller, M.D., and others, in Diabetes Care 16, pp.
1146-1157, 1993. It was republished in Diabetes Spectrum 8(5), pp. 271-280, 1995. (The reanalysis will be
reported in a Letter to the Editor, Diabetes Care, April
Researchers examine the costs of primary coronary
Recent studies have found that the initial use of coronary
angioplasty instead of thrombolytic therapy as the primary
treatment for patients with acute myocardial infarction (AMI) is
equally or more effective in opening up blocked (infarct-related)
arteries and may reduce the bleeding usually associated with
thrombolytics. In this study, researchers who were supported in
part by the Agency for Health Care Policy and Research (Ischemic
Heart Disease Patient Outcomes Research Team [PORT], HS06503),
examined the economic outcomes from a prospective multicenter
registry of primary coronary angioplasty.
The investigators found that the baseline hospital cost (not
charge) of primary coronary angioplasty was $13,113 with mean
physician fees of $5,694. Six-month mean hospital followup costs
for repeat angioplasty or bypass surgery were $3,174, with mean
physician fees of $1,443.
These costs were strongly influenced by complications related to
and/or the procedure but only modestly influenced by patient
factors. For example, a
10-year difference in age was associated with a 5 percent
increase in adjusted hospital costs, whereas recurrent ischemia
was associated with a 53 percent average increase in costs; the
need for bypass surgery after angioplasty was associated with a
142 percent increase in hospital costs.
In a population of patients at higher risk, patient selection
factors could be more strongly related to cost, explain the
researchers. They based their analysis on data derived from the
Primary Angioplasty Registry of 270 AMI patients treated at six
centers between 1990 and 1992.
See "Baseline and 6-month costs of primary angioplasty therapy
for acute myocardial infarction: Results from the Primary
Angioplasty Registry," by Daniel B. Mark, M.D., M.P.H., William
W. O'Neill, M.D., Bruce Brodie, M.D., and others, in the Journal
of the American College of Cardiology 26(3), pp. 688-695, 1995.
Hospital-based managed care plans reduce costs and
shorten stays for c-section patients
A managed care approach for cesarean-section (c-section) patients
reduces costs and shortens hospital stays by 13 percent,
according to a recent study supported by the Agency for Health
Care Policy and Research (HS07402). These savings were achieved
without sacrificing quality of care and while increasing patient
satisfaction, notes Mary A. Blegen, Ph.D., R.N., of the
University of Iowa Hospitals and Clinics, and her colleagues.
The investigators compared patient outcomes and costs of care for
women undergoing c-sections before and after implementation of a
hospital-based managed care plan. The plan calls for a nurse case
manager and a CareMap, which organizes and sequences obstetrical
care and outlines expected problems, needed tests, medications,
discharge planning, and so forth. The average length of stay for
women managed according to this regimen decreased by 13.5
percent—from 5.35 days to 4.62 days—and average
postoperative costs declined by 13.1 percent—from $3,950 to
$3,432. Also, women's perceptions of the overall quality of care
they received rose significantly from 4.26 to 4.41 on a 1-5
scale, perhaps because they felt they had greater participation
in their own care, suggests Dr. Blegen.
Medical outcomes were similar for women who underwent c-sections
before and after implementation of the plan, and there were no
significant differences in their physical recovery scores at
hospital discharge or number of complications following surgery.
However, patients' scores for physical recovery 1 month after
discharge were lower in the managed care group, suggesting that
patients experiencing early discharge may need supplemental care,
concludes Dr. Blegen.
Details are in "Outcomes of hospital-based
managed care: A multivariate analysis of cost and quality," by
Dr. Blegen, Robert C. Reiter, M.D., Colleen J. Goode, Ph.D.,
R.N., and Richard R. Murphy, M.B.A., in the November 1995 issue
of Obstetrics & Gynecology 86, pp. 809-814.
Medicare patients enrolled in HMOs receive fewer home
health care visits than those in fee-for-service plans
The average Medicare patient enrolled in a health maintenance
organization (HMO) receives about two-thirds as many home health
care visits (13 vs. 20) over a 3-month period as a Medicare
patient with traditional fee-for-service (FFS) coverage. When
national average costs per home visit are used to translate
visits into resource use, home health care also costs about
two-thirds as much for HMO patients as for FFS patients ($877 vs.
$1,305, respectively, in 1991 dollars). Adjusting for case-mix
differences and other variables reduces the cost difference only
slightly, from $428 to $393. But this savings may be achieved at
the cost of poorer outcomes for HMO patients, according to a
study led by Peter W. Shaughnessy, Ph.D., and colleagues at the
University of Colorado Health Sciences Center. The study was
jointly supported by the Health Care Financing Administration
(HCFA) and the Agency for Health Care Policy and Research
For example, with home health care 56.5 percent of FFS patients
improved in their ability to perform activities of daily living
(ADLs), such as eating, bathing, and toileting, compared with
43.4 percent of HMO patients. The overall pattern—based on
many outcome measures—suggests that HMOs may provide too
few home health care visits, assert the researchers.
The researchers attribute this difference in care in part to the
capitation payments (a set fee per person) provided to HMOs by
Medicare. Any expenses beyond this set fee must be absorbed by
the HMO, thus providing a strong incentive for HMOs to constrain
overall home health care use and costs.
The researchers examined the patient-level outcomes and costs for
a national sample of 1,260 Medicare patients receiving home
health care from 38 home health agencies over a period of 12
weeks. The Medicare-covered home health services studied were
skilled nursing care; physical, speech, and occupational therapy;
medically related social services; and home health aide services.
More details are in "Patient-level cost of home health care under
capitated and fee-for-service payment," by Robert E. Schlenker,
Ph.D., Dr. Shaughnessy, and David F. Hittle, Ph.D., which was
published in the Fall 1995 issue of Inquiry 32, pp.
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