In depth analysis of Medicaid study – Opinion

Avik Roy, Contributor

The Apothecary is a blog about health-care and entitlement reform

8/01/2012 @ 2:38AM |960 views

Economists Claim Medicaid’s Health Outcomes are Great. Or Do They?

Harvard Medical School (Photo credit: See-Ming Lee)

The big news last week in the health policy world was a study published by three Harvard economists, arguing that Medicaid expansions were “significantly associated with reduced mortality.” Their paper comes in the wake of dozens of clinical studies showing that Medicaid beneficiaries suffer from very poor health outcomes relative to those with private insurance, and in some cases fare worse than those with no insurance at all. Now, some media outlets are using the Harvard paper to browbeat states into expanding their Medicaid programs. But the Harvard paper, while interesting, has many flaws, flaws that call its expansive conclusions into question.

First, let’s talk about the good things in the Harvard paper, which appeared in last week’s issue of the New England Journal of Medicine. It was authored by three credentialed economists at the Harvard School of Public Health: Ben Sommers, Kate Baicker, and Arnold Epstein. (Sommers has taken leave from Harvard to work for the Obama administration.)

I respect them all, and have cited their work in the past. Sommers and Epstein, for example, have done some solid research on the Medicaid woodwork problem that poses hidden costs to states under Obamacare. And their latest examination of Medicaid’s performance is a useful contribution to the literature.

“Our results offer new evidence that the expansion of Medicaid coverage may reduce mortality among adults,” the authors conclude. “Policymakers should be aware that major changes in Medicaid—either expansions or reductions in coverage—may have significant effects on the health of vulnerable populations.”

An accompanying editorial from two liberal law professors is less subtle: “The question of whether the states will expand Medicaid, therefore, is not just a question of politics; it is a question of life, health, and death.” The New York Times went even further, declaring it a “canard” that people question Medicaid’s health outcomes.

The Harvard authors are clearly aware that their work has policy implications, and welcome its use to advance the expansion of Medicaid. So, let’s examine how well their analysis backs that up.

Medicaid mortality increased in one state and decreased in two states

The authors looked at three states that expanded their Medicaid programs to childless adults—Maine, Arizona, and New York—and compared them to four neighboring states that did not—New Hampsire, Nevada and New Mexico, and Pennsylvania, over the years 1997 to 2007.

The authors found that Maine’s mortality rate increased relative to New Hampshire’s (by 13.4 deaths per 100,000); Arizona’s decreased relative to Nevada and New Mexico (by 10.2/100,000); and New York’s mortality rate declined relative to Pennsylvania (by 22.2/100,000).

In other words, the authors found that Medicaid was associated with an increase in mortality in Maine, but a decrease in mortality in Arizona and New York. Indeed, according to the authors, “single-state analyses showed [statistically] significant effects only in the largest state, New York.” Based on these three conflicting results, we are supposed to declare the debate over, and definitively conclude that Medicaid improves health outcomes?

Comparing New York to Pennsylvania suffers from many confounding factors

Also, it must be noted that no two states are alike. In particular, New York—the state that appeared to show the largest benefit from expanding Medicaid—was compared to Pennsylvania, a neighboring state with a substantially different population and health-care system. Pennsylvania’s poverty rate of 11.5 percent is meaningfully lower than New York’s 14.1 percent.

Most notably, New York has a much larger immigrant population. In 2000, 38 percent of New Yorkers were from ethnic or racial minorities, compared to only 16 percent of Pennsylvanians. Hispanics and Asians comprised 21 percent of the New York population, compared to 5 percent of Pennsylvanians. This last bit is especially relevant, because recent immigrants and non-citizens are far more likely to be uninsured than U.S. citizens of any race. According to the U.S. Census, 45 percent of non-citizens are uninsured, compared to 20 percent of foreign-born naturalized citizens, and 14 percent of native-born residents.

Why are immigrants far more likely to be uninsured than native-born Americans, to a degree far greater than would be expected by differences in income? It may be that first-generation immigrants are less accustomed to Western, insurance-based health care systems.

Indeed, the Harvard authors found a profound difference between Medicaid’s performance in white and non-white populations. Based on their methodology, Medicaid improved mortality in the white population by 14 deaths per 100,000, compared to 41 per 100,000 in the non-white population.

In other words, if the authors had been able to find a more comparable state to New York, they might not have seen a significant improvement in mortality in New York relative to the comparator. And if that had been true, the study may have shown no significant effect of Medicaid on mortality rates.

But there was no suitable comparator to New York. Connecticut, New Jersey, and Vermont all had poverty rates in the 8 to 9 percent range, far lower than New York’s 14 percent. New York’s neighbors all have smaller minority populations than New York does.

In other words, the comparison that drove the authors’ key statistical finding, New York, was the one with the least suitable comparator state, and the most confounding problems.


A more scientific approach would have been to eliminate the New York results entirely, and focus only on Maine and Arizona. But if the Harvard authors had done that, they would have ended up with a completely different result: that Medicaid had no impact on mortality, compared to having no insurance at all. And that wouldn’t have been as satisfying.

There are other important differences between states

There are other confounding factors that could explain why the authors found differences between the states’ Medicaid programs. Were there differences in the baseline health statuses of the populations of the various states? How different were their crime rates? What about other changes to Medicaid unrelated to eligibility (such as cost-sharing and reimbursement)? Did certain hospitals in certain states improve their clinical practices in substantial ways? None of these questions appear to have been raised by the Harvard authors.

There is another Medicaid outcomes study being conducted in Oregon that addresses some of these inter-state issues. I will have more to say about that study in a future post.

Economists look at county-level data, not individual patients

One thing that’s remarkable about the health outcome studies done by economists is that they almost never look at the outcomes of actual individual patients. The Harvard study used county-level data from the Centers for Disease Control, “totaling 68,012 observations specific to an age group, race, sex, year, and county.”

Contrast this approach to that of the landmark Medicaid outcomes study from the University of Virginia, which examined 893,658 individual surgical cases from the Nationwide Inpatient Sample database, and found that Medicaid’s health outcomes were worse than those of the uninsured. Which of these datasets would you consider to be more credible?

The study doesn’t compare Medicaid to private insurance

Most importantly of all, the Harvard study doesn’t answer the real policy question that divides conservatives and liberals: should we shove the poor into government-run health care programs, or instead give them access to high-quality private insurance? John McCain, you’ll recall, proposed universal private health insurance in 2008, and was criticized for doing so by Barack Obama.

Whatever you believe about the relative benefits of Medicaid to having no insurance at all, there is no serious debate about the superiority of private insurance to Medicaid. “For certain populations and particularly in certain states, [Medicaid] is unambiguously inferior to private insurance and to Medicare,” wrote Jonathan Cohn, one of Obamacare’s most influential advocates, in the New Republic in 2011.

Given the fact that private insurance’s superiority in health outcomes is undisputed, and given that the debate in Washington is about whether or not Medicaid should be government-run or privatized, you’d think that academic economists would be racing to do studies comparing Medicaid to private plans. I’m not sure why, but such studies have been few and far between. Indeed, the Harvard study makes no mention of a significant problem with Medicaid expansions: how they crowd out private insurers who previously covered the poor.

Interesting but flawed papers, like last week’s, are a useful contribution to the debate. But even if we ignore those flaws, and grant the Harvard authors the benefit of the doubt—that Medicaid provides, at great taxpayer cost, a marginal benefit—we ought not to rest until the poorest Americans have access to the same, high-quality private insurance that the rest of us enjoy.

Obamacare doesn’t give Medicaid enrollees access to high-quality, private insurance. Instead, the law doubles down on the existing, broken system, aiming to add 17 million more Americans to Medicaid’s ragged rolls. We can do better.

Follow Avik on Twitter at @aviksaroy.

Dual-Eligible Demonstrations Push Forward After Court Ruling


BY: | August 1, 2012

While they haven’t attracted the amount of press, or federal dollars, as the Medicaid expansion or state health insurance exchanges, the dual-eligible demonstration projects under the Affordable Care Act (ACA) also hung in the balance while the law’s constitutionality remained uncertain. So with the Supreme Court’s decision to uphold the federal health care reform law—and a pending deadline in September—states that have gotten a head start on the projects know that a year-plus of planning will not go to waste.

At the beginning of 2011, the U.S. Department of Health and Human Services (HHS) awarded $1 million planning grants to 15 states. The money was intended to help states develop ideas on how they can better manage dual-eligibles: the poor elderly who qualify for both Medicare and Medicaid. The goal is to both provide better care by improving coordination between Medicare (which is federal-run) and Medicaid (which is state-run) and, by doing so, cut costs.

How big is the dual-eligible issue? According to federal estimates, dual-eligibles comprise 15 percent of Medicaid enrollment, but account for 39 percent of its spending. They also make up a disproportionate amount of Medicare spending. The problem is that, because the programs are run separately by the federal government and the states, there isn’t always communication between the two, even though they’re together covering one individual.

Broadly speaking, Medicare covers acute incidents (such as a trip to the emergency room) while Medicaid covers long-term care (such as nursing home residency). But, in action, the lines aren’t so clearly drawn. Reports have circled for years about the offices bickering over which would pay for which services for an individual. The Wall Street Journal last year recounted the story of a quadriplegic who was forced to stay in a rehabilitation facility for six months while the two programs argued over which would be responsible for covering his home-based care.

“It’s a national shame that we are subjecting the poorest and sickest among us to this fragmented care,” said Matt Salo, executive director of the National Association of Medicaid Directors, at a Health Affairs conference last month.

The ACA aimed to address the dual-eligible problem through two offices created by the law: the Federal Coordinated Health Care Office (colloquially called the Duals office) and the Center for Medicare and Medicaid Innovation, which would together oversee the state demonstrations. The Duals office authorized the 15 $1 million planning grants, and a total of 26 states have stated their intention to undertake demonstration projects. Strategies for improvement include moving dual-eligibles into managed-care systems or focusing on specific populations (such as nursing home residents) who commonly have issues in coordinating care.

States that want to begin their demonstrations in 2013 must finalized their plans by Sept. 20, according to an April presentation by the Medicare Payment Advisory Commision (MedPac). About half are expected to do so; the remainder will launch their demonstrations in 2014. To prepare for that deadline, MedPac projected that states would have to submit their initial proposals and seek public comment in the spring, then meet with health-care providers in June to get their input.

The initial constitutional challenge to the ACA was filed the day after President Barack Obama signed it into law—which means almost most all duals demonstration planning so far took place under the air of uncertainty that ended on June 28, when the Court issued its decision to, in effect, uphold the entire law.

While overturning the ACA would have invalidated the Duals offices and their funding, the dual-eligible issue would still have needed to be addressed, as spending for Medicaid and Medicare is projected to crescendo in the coming decades. The only option, state officials say, was to push forward despite the lack of assurance about the law’s fate. 

“The issue isn’t going to go away. It’s only going to increase in terms of the pressure it puts on the health-care system,” says Patti Killingsworth, assistant commissioner at TennCare, Tennessee’s Medicaid office, who oversees long-term care services and her state’s demonstration project. “So, what we said in our planning process is: we are going to find a way to improve the coordination of care for dual-eligibles regardless of the authority that we use.”

Given the amount of work that states had done over the last year, some would likely have pushed on with their plans regardless of the Court’s ruling. But knowing that they’ll have the full resources outlined in the ACA is reassuring, state officials say. For starters, the Duals office is expected to facilitate data sharing across the two programs, a key component to improvement that has been missing in the past.

“We were committed to serving this population regardless. What this enables us to do is to do it better and smarter,” says Denise Levis at Community Care of North Carolina, which is overseeing that state’s demonstration project. “Everyone’s agreed that things need to change. But we were a little anxious, so it was a relief.”


This article was printed from:

Medicare fraud busters unveil command center

Medicare fraud busters unveil command center


BALTIMORE (AP) — Medicare’s war on fraud is going high-tech with the opening of a $3.6 million command center that features a giant screen and the latest computer and communications gear. That’s raising expectations, as well as some misgivings.

The carpeting stills smells new at the facility, which went live a week ago in a nondescript commercial office park on Baltimore’s outskirts. A couple dozen computer workstations are arrayed in concentric semicircles in front of a giant screen that can display data and photos, and also enable face-to-face communication with investigators around the country.

Medicare fraud is estimated to cost more than $60 billion annually, and for years the government has been losing a game of “pay and chase,” trying to recoup losses after scam artists have already cashed in.

Fraud czar Peter Budetti told reporters on a tour this week that the command center could be a turning point. It brings together in real time the geeks running Medicare’s new computerized fraud detection system with gumshoes deployed around the country. Imagine a kind of NCIS-Medicare, except Budetti says it’s not make-believe.

“This is not an ivory-tower exercise,” Budetti said. “It is very much a real-world one.”

But two Republican senators say they already smell boondoggle.

Utah’s Orrin Hatch and Oklahoma’s Tom Coburn say Medicare’s new computerized fraud detection system, a $77-million investment that went into operation last year, is not working all that well. In a letter to HHS Secretary Kathleen Sebelius, they questioned spending millions more on a command center, at least until the bugs get worked out.

“Institutionalizing relationships through establishing a (command) center may be useful, but if huge sums of money have indeed been spent on a video screen while other common-sense recommendations may have not been implemented due to ‘resource concerns,’ this seems to be a case of misplaced priorities,” wrote Hatch and Coburn. Insiders are telling them the screen alone cost several hundred thousand dollars, the senators say.

The two Republicans may have more than congressional oversight in mind. In an election year, Medicare fraud is an issue with older voters because it speaks to the Obama administration’s stewardship of the program.

Responded Budetti: “Our expectation is that this center will pay for itself many times over.”

Conducting what amounted to her first formal inspection on Tuesday, HHS Secretary Sebelius set the bar high for the command center, nothing less than the end of “pay and chase.”

“Preventing fraud and abuse is what this effort is about,” she said.

The government’s new antifraud computer system aims to adapt tools used by credit card companies to stop theft from Medicare and Medicaid. It was launched with great fanfare last summer. But by Christmas, it had stopped just one suspicious payment from going out, for $7,591. Administration officials say that shouldn’t be the only yardstick, and the system has made other valuable contributions.

Sebelius spoke with three groups of staffers during her visit Tuesday. One group was responsible for developing computer models to query billing data for suspicious patterns; another in charge of investigating data generated by the computer models, looking for mistakes as well as real fraud; and a third handling coordination with law enforcement around the country. The staffers said they expect the coordination to cut the time it takes to investigate suspected fraud schemes from months to days and weeks.

Hatch’s office says development of the computer models has lagged. Command center staffers told Sebelius the first-year goal is to have 40 such computerized anti-fraud queries to sift through millions of incoming claims.

The administration must report to Congress on the antifraud computer system later this year, an assessment that will first be independently reviewed by the Health and Human Services inspector general’s office.

Hatch and Coburn say they have repeatedly pushed the administration for details and “the responses have been polite, but vague.”

Medicare scams have grown into sophisticated networks where crooks file millions of dollars in bogus claims and take off with the money. Sometimes they even manage to flee abroad to countries where the feds can’t touch them.

Gov’t report: No clear way for IRS to block Medicaid payments to providers who cheat on taxes


By Associated Press, Updated: Thursday, August 2, 3:10 AM

WASHINGTON — Thousands of Medicaid health care service providers still got paid by the government even though they owed hundreds of millions of dollars in federal taxes, congressional investigators say. A legal technicality is making it harder for the IRS to collect.

In a report being released Thursday, the Government Accountability Office says Medicaid payments to doctors, hospitals and other providers aren’t technically considered federal funds, since they’re funneled through state health care programs.

Because of that glitch, the IRS can’t just shut off the payment spigot to collect tax debts. Investigators only looked at three states, so the full extent of the losses is even greater.

One dentist who received more than $100,000 from Medicaid while owing back income taxes was spending money on fine dining, trips, spas, shopping and wine, the report said.

In another case, a medical transport company received more than $1 million from Medicaid while owing millions in unpaid payroll taxes for its employees. Not paying the payroll taxes is a violation of federal law.

Medicaid, a federal-state program that mainly serves low-income people, is the companion to Medicare, which primarily serves seniors.

While the IRS can block Medicare payments to scofflaw providers using something called a “continuous levy,” it is precluded by law from using the same strategy to go after Medicaid payments — even though the federal government pays about 60 percent of the costs of Medicaid.

GAO investigators recommended that the IRS immediately reassess its policies to find more efficient ways of collecting back taxes from Medicaid service providers. Part of the problem seems to be coordination with states.

In a formal response to the report, the IRS said it agrees action is needed. Congress has an opportunity to close the loophole during budget deliberations after the elections.

Republican Sen. Tom Coburn of Oklahoma said piles of unpaid taxes ought to raise a red flag about anybody doing business with the government.

“People who cheat on their taxes show a clear disregard for the law, so they might be more likely to defraud Medicaid, or even harm patients,” Coburn said in a statement. “GAO’s findings raise serious questions about steps that need to be taken to improve the integrity of the Medicaid program.”

Unpaid taxes are a persistent problem for the government, a so-called tax gap of about $350 billion a year. Much of the money is considered uncollectable.

GAO investigators scrutinized Medicaid providers, from doctors to hospitals to medical transport companies, in three large states: Texas, New York and Florida.

During 2009, about 7,000 Medicaid providers who were paid a total of $6.6 billion by the program also owed $791 million in unpaid taxes.

They represented nearly 6 percent of all the Medicaid providers reimbursed by the three states, a fairly large proportion to be found delinquent considering that they were receiving income from a major government program.

Advocates for the poor may complain that a tax crackdown will only drive legitimate providers away from Medicaid. The program already pays much less than Medicare or private insurance. But the GAO said that concern doesn’t justify continuing to tolerate the problem.

“Even though Medicaid providers are relied on to deliver significant medical services to those most in need, payment of billions of federal dollars to those who do not pay their fair share of federal taxes raises questions about the integrity and fairness of the tax system,” the report said.

“Given that we found over $6 billion of payments made to tax delinquent Medicaid providers in just three states, a more rigorous review … is warranted,” investigators concluded.