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State and Federal health care financial policies can affect patient treatment and outcomes

Two recent studies demonstrate that State and Federal health care financial policies have an effect on the treatments patients receive and their outcomes. The studies, which are summarized here, were supported in part by the Agency for Healthcare Research and Quality.

The first study (AHRQ grant HS08395) demonstrates that Medicare physician fees influence the type of surgery offered to older women with localized breast cancer. The second study (AHRQ grant HS09325) suggests that certain New Jersey market reforms led to an increase in the mortality rate among that State's uninsured heart attack patients.

Hadley, J., Mandelblatt, J.S., Mitchell, J.M., and others (2003, April). "Medicare breast surgery fees and treatment received by older women with localized breast cancer." Health Services Research 38(2), pp. 553-573.

These investigators analyzed 1994 Medicare claims and physician survey data to study the impact of area-level Medicare physician fees for mastectomy (MST) and breast conserving surgery (BCS) on treatment of older women with newly diagnosed localized breast cancer. Both treatments are similarly effective. In 1994, average Medicare fees for MST and BCS were $904 and $305, respectively. Holding other fees and factors constant (for example, physician experience, region, and patient demographics), a 10 percent increase in the BCS fee increased the odds of BCS with radiation therapy (BCSRT) relative to MST by 34 percent. Similarly, a 10 percent decrease in the MST fee nearly doubled the odds of BCSRT.

These results suggest that physicians are responsive to financial incentives when the alternative procedures have clinically equivalent outcomes. However, the researchers caution that this study is nearly 10 years old, and there is growing evidence that women treated by BCS have better quality of life after surgery than those treated with MST. Also, full implementation of the Medicare fee schedule and administrative changes may affect the extent to which these estimates can be applied to current practice.

Volpp, K.G., Williams, S.V., Waldfogel, J., and others (2003, April). "Market reform in New Jersey and the effect on mortality from acute myocardial infarction." Health Services Research 38(2), pp. 515-533.

The 1992 New Jersey Health Care Reform Act reduced subsidies for hospital care for the uninsured and changed hospital payment to price competition from a rate-setting system based on hospital cost. This financial policy was associated with increased mortality rates of uninsured heart attack patients in the State, according to this study.

The researchers examined patient discharge data from hospitals in New Jersey and New York from 1990 through 1996 and national data from the Healthcare Cost and Utilization Project (HCUP) Nationwide Inpatient Sample (NIS). They used these data to compare mortality and cardiac procedure rates over time between the two States for patients hospitalized for heart attack.

There were no significant differences in heart attack deaths among insured patients in New Jersey relative to New York or the national sample. However, there was a relative increase of 41 to 57 percent in heart attack deaths among uninsured patients in New Jersey after passage of New Jersey's Health Care Reform Act. The rates of expensive cardiac procedures for these patients decreased as well, which may partly explain this finding.

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