REPORTS & PAPERS

This report from the Kaiser Family Foundation analyzes two measures of poverty: the traditional Census Bureau “official” measure (created in the 1960s) and the supplemental poverty measure (created by the Census Bureau in 2011 in response to concerns that the first measure did not accurately reflect individuals’ incomes or financial resources). Using polled data from the 2009 to 2011 Current Population Surveys, the analysis found that the share of seniors living in poverty is higher in every state under the supplemental measure than under the official measure and at least twice as high in twelve states. The share of seniors living in poverty under the supplemental measure is 26 percent in Washington, DC; 20 percent in California; 19 percent in Hawaii, Louisiana and Nevada; and 18 percent in Georgia and New York. Additionally, 48 percent of all seniors have incomes below 200 percent of the poverty threshold under the supplemental measure as compared to 34 percent under the official measure, and the share with incomes below 200 percent of poverty is higher in every state using the supplemental measure.   

The supplemental poverty measure bases thresholds on more recent patterns of expenditures on basic necessities and then adjusts them to reflect homeownership and regional differences in housing prices. Among other differences to the official measure, it adds tax credits and in-kind government benefits such as food stamps to income and deducts job-related expenses, taxes, and out-of-pocket expenses of health care from incomes. The supplemental measure was created based on recommendations of a 1995 National Academy of Sciences Panel. Proponents of the measure argue that it is more up-to-date, takes in regional variations, and more accurately conveys available income. Detractors note that medical spending may be discretionary and thus overstated. A broader criticism of both measures is that neither takes into account family assets, the risk of unaffordable medical expenses or the level of an individual’s insurance.

The authors of this JAMA Internal Medicine article examined the role of low income Medicare beneficiaries’ cognitive abilities as a possible explanation of why eligible individuals do not utilize the low-income subsidy despite the no-cost drug coverage it offers and Medicare outreach efforts.  Utilizing survey data from the nationally representative Health and Retirement Study from 2006, 2008 and 2010, they looked at how cognitive abilities were associated with self-reported Part D enrollment, and awareness of and application for the low-income subsidy. They also compared out-of-pocket spending on drugs and premium costs between low-income subsidy eligible beneficiaries who did and did not report receiving the subsidy. The authors concluded that poorer cognition and numeracy were associated with lower rates of Part D enrollment and that “current educational and outreach efforts encouraging low-income subsidy applications may not be sufficient for beneficiaries with limited abilities to process and respond to information.”

This report from the HHS Office of Inspector General examined whether hospice general inpatient care (GIP) was used appropriately in 2011.  Hospice general inpatient care is intended to be short term and is the second most expensive level of hospice care.  It may be provided in a Medicare-certified hospice inpatient unit, a hospital or a skilled nursing facility (SNF). CMS has expressed concern about possible misuse, such as billing for services not provided, unnecessary care and billing for general inpatient care when lower rate services, such as routine home care, were provided.  The study found that Medicare paid $1.1 billion for general inpatient care in 2011, mostly in hospice inpatient units as opposed to hospitals or SNFs. Twenty-three percent of hospice beneficiaries received general inpatient care, and one third of stays exceeded 5 days with 11 percent lasting more than 10 days.  Hospices that used inpatient units provided general inpatient care to more beneficiaries and for longer periods than those that used other settings. The report recommended further review to ensure that general inpatient care is used as intended and providing the appropriate level of care. OIG said it anticipated making recommendations in a separate report after completing a medical record review.

Beginning in the early 2000s, growth in U.S. health care spending slowed. In this article for Health Affairs, the authors explore the implications if the trend continues. They found that the 2007–2009 recession accounted for 37 percent of the slowdown between 2003 and 2012, while a decline in private insurance coverage and cuts to some Medicare rates accounted for another 8 percent. They cite additional fundamental changes, including slower development of imaging technology and of new pharmaceuticals, increased patient cost sharing and greater provider efficiency as responsible for an additional 55 percent of the slowdown. If these trends continue for the period of 2013 to 2022, the authors suggest that public sector health care spending could be as much as $770 billion less than predicted.

The authors of this Health Affairs article explore bundled payments, which is paying a single price for all services delivered as part of an episode of care for a specific condition. Yet, they say, implementing and realizing cost containment from episode-based models is challenging, in particular how to update rates to reflect changes in costs over time. They note that adoption of a fee-for-service type structure of uniform update rates would not work because spending growth is skewed across episodes. Their analysis of U.S. commercial claims data between 2003 and 2007 showed that 10 percent of the episodes accounted for 82.5 percent of spending growth, and within-episode spending growth ranged from a decline of 75 percent to an increase of 323 percent. They also note that episode reimbursement rates do not control either the number of episodes or clinical appropriateness. The authors call for further discussion of bundled payment models and exploration of ways to address variations in spending growth.

In this Health Affairs article, the author explores the potential, over the next several years, for reforming provider payments to gradually decrease the role of fee-for-service reimbursement. He notes that Medicare has the potential to be an important catalyst for provider payment reforms that encourage care coordination, quality and efficiency. He notes though that meaningful cost containment from payment reform can only be achieved when Medicare and Medicaid establish stronger incentives for providers to contract this way. He adds that there is a need to engage beneficiaries in the effort, perhaps through incentives to enroll in Accountable Care Organizations.

In this Health Affairs article, the authors use micro-simulations to examine three possible scenarios to curb growth in Medicare spending: (1) the imposition of a means-tested premium for Part A; (2) introducing a premium support credit to purchase health insurance; and (3) increasing the Medicare eligibility age to 67. The authors found that all the scenarios can lead to Medicare spending reductions between 2012 and 2036, of 2.4 to 24 percent. The scenarios would also, however, lead to additional out-of-pocket spending for beneficiaries and, in some cases, cause millions of seniors to be left without health insurance coverage because they could not enroll in the program. In particular, they found that scenarios with premium-support credits indexed to gross domestic product growth or with more modest Part A premiums had less extreme consequences. However, since they were also less effective at reducing costs, these scenarios would have to be combined with other options. Possibilities include combining Parts A and B into a single policy with a uniform deductible and the Medicare Payment Advisory Commission’s to cap out-of-pocket expenditures.