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Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

14
Economic Policy Analysis

In 1998, Medicare spent $211 billion providing medical care and related services to almost 40 million beneficiaries. Given these costs, economic analysis is essential to the proper targeting of quality health services that can have an important impact on the health and well-being of Medicare beneficiaries. Therefore, while the costs of particular services are themselves important, they also exert an important influence on the ability of Medicare to provide beneficiaries other important services. No less important, costs also can have important legislative implications, given congressional spending rules designed to balance health care expenditures with competing social needs. Therefore, it is critical that proposed changes to Medicare’s provision of nutrition services be carefully scrutinized and subjected to rigorous economic analysis.

Economic analysis addresses three separate instances of provision of nutrition services: (1) new services that will require reimbursement, (2) services that are now nominally covered which may require some modification of current reimbursement to ensure appropriate care, and (3) areas in which no changes in actual practice should occur; however if the reimbursement system changes there may be attempts to obtain additional reimbursement without cause. The purpose of this chapter is to provide cost estimates for the first of these three categories, although recommendations certainly reflect all three aspects of coverage.

With regard to new nutrition services, this category of service is not included in current Medicare coverage and thus is evaluated in this analysis as mainly Part B outpatient services for nutrition therapy. In some

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

cases, nutrition services are currently covered. However, it is unclear if the type and intensity of nutrition care is consistent with best practice recommendations as indicated by current protocols. For example, prospective payments for renal dialysis continue to include a nutrition component. However, the type and intensity of nutrition care decreased by 21.9 percent between 1982 and 1987. Data are not available to reflect changes since that time. Recently enacted coverage includes important new benefits for diabetes self-management (HCFA, 1999). However, registered dietitians and other nutrition professionals are not directly reimbursable under these new proposed regulations.

Inpatient enteral and parenteral nutrition services are included as part of the hospital prospective payment. For this reason, the committee has not analyzed the economic impact of associated recommendations. However, adherence to best-practice recommendations may create economic burdens for providers that should be considered within Medicare reimbursement and prospective payment policies. In the area of home health, prospective payment systems currently being instituted will be based on current costs. Existing research highlights several ways in which home-bound patients who would be covered under home health care are underserved, and where additional resources may be needed.

EVALUATION METHODOLOGIES

Several criteria have been proposed to evaluate the economic merits of expanded coverage for nutrition services. From a federal budgetary perspective, the simplest criterion is to compute the estimated impact of expanded coverage to overall Medicare expenditures. Congressional mandates require such calculations over a 5-year period to meet overall guidelines designed to constrain the growth of Medicare spending.

Given recent growth in Medicare costs, an analysis of likely expenditures is essential to policy analysis of coverage for nutrition therapy. However, the likely costs of such an expansion must be based on current data. Predicted Medicare expenditures for covered nutrition therapy services require uncertain forecasts of likely patient demands for nutrition services. Existing data suggest that only a small minority of Medicare patients with conditions potentially benefiting from nutrition therapy actually receive these services. The estimates presented below are therefore based on the assumption that the costs (and benefits) of nutrition therapy reflect previously observed patterns of patient service use.

The impact of nutrition services on overall Medicare expenditures is even more difficult to forecast given important interactions between nutrition therapy and other program costs. Expanded Medicare coverage for nutrition therapy is likely to avert clinically significant numbers of strokes

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

and other adverse outcomes. The ability of nutrition therapy to avert costly acute care episodes is a major benefit associated with these services. Ironically, however, such benefits can have an ambiguous impact on overall expenditures. Health promotion interventions can, in principle, increase Medicare costs by prolonging longevity which can increase future health care expenditures.

Because nutrition therapy provides tangible patient benefits, it is financially and socially prudent to provide these services if they are cost neutral or cost saving—that is if coverage for nutrition therapy does not increase overall Medicare expenditures. In part because some interventions are cost saving, policymakers and the public often evaluate preventive services based on the ability of such interventions to save public funds. In practice, however, few preventive services are cost saving by this measure (Russell, 1986). It is therefore important to emphasize that no principle of policy analysis or economic theory demands that preventive services satisfy this strict criterion. Medicare-reimbursed medical procedures are evaluated on the basis of safety, clinical efficacy, and (increasingly) cost-effectiveness (Warner and Warner, 1993). Optimal resource allocation requires comparable evaluation of proposed nutrition therapy expenditures with competing uses of the same funds. Even if nutrition services result in positive net costs to the Medicare program, these may still be justified public expenditures if they produce sufficiently improved health.

Cost–Benefit Analysis

From the standpoint of economic theory, the most exhaustive and satisfactory way to evaluate these benefits is to perform cost–benefit analysis for specific clinical settings and diagnoses in which nutrition services might be Medicare reimbursed (Drummond et al., 1997). In principle, the policy analyst should compare the net economic costs of policy with the full array of social benefits brought about by the intervention. This requires the health care analyst to assign monetary values to the range of economic, social, and health outcomes attributable to nutrition services. These valuations might be computed from the social perspective or from the perspective of Medicare payers and patients (see Drummond et al., 1997 and chapter 7 for examples and further work).

When feasible, a full cost–benefit analysis provides the most compelling justification for proposed policy intervention. The net social benefits of nutrition services could then be compared with the net social benefits of alternative uses of the same funds. In practice, however, cost–benefit analysis is often infeasible in real policy settings. Although approaches such as contingent valuation exist to assign monetized values to out-

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

comes (Johansson, 1995), such estimates are either controversial or unavailable for most outcomes pertinent to the present study. Other promising methods link self-assessed improvements in standardized health measures to pertinent economic outcomes to improve social valuation of quality-of-life improvements associated with clinical intervention (Kaplan et al., 1998).

Cost-Effectiveness and Cost-Utility Analyses

Two closely-linked alternative approaches are cost-effectiveness analysis (CEA) and cost-utility analysis (CUA) of specific services (Gold et al., 1996). CEA and CUA both seek to rank different interventions intended to improve health or extend life. CEA is most useful to rank interventions that promote similar or identical health outcomes. CUA is most helpful to compare interventions that may produce quite different improvements in health outcomes. A common application of CUA is the comparison of competing efforts to save or prolong human life. Most recently, 500 prominent public health interventions were evaluated using estimated costs per quality-adjusted life year (QALY) (Tengs et al., 1995). The median cost of $42,000 per QALY was estimated for interventions widely accepted by policymakers and the public to prolong human life.

Direct CEA or CUA of proposed nutrition services is beyond the scope of this report. Pertinent existing research is identified along with several diagnoses in which nutrition therapy appears especially efficacious and cost-effective. However, the recommendations are based on the known clinical efficacy and effectiveness of nutrition interventions, and are made in light of existing policy analyses of proposed coverage for nutrition therapy.

COST ESTIMATES

To assist policymakers and other stakeholders, and to gauge the approximate budgetary impact of its recommendations, likely Medicare reimbursement costs associated with proposed coverage for nutrition services were evaluated for the period of January 1, 2000 to December 31, 2004. While fully explained in this chapter, a summary of underlying assumptions is included in Appendix H. The committee used five steps to obtain these cost estimates:

  1. Nationally representative data were used to estimate disease prevalence in the Medicare population. These data were augmented with administrative data for specific subpopulations when necessary.

  2. Professionally accepted treatment protocols were used to deter-

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

mine what might constitute the level of covered nutrition therapy for various disease entities upon initial diagnosis and during subsequent years for follow-up nutrition therapy.

  1. Usual and customary professional charges were used to estimate unit costs.

  2. Research data from existing health care populations were used to estimate likely patient demand for covered services.

  3. Cost estimates were adjusted in accordance with Congressional Budget Office scoring procedures to estimate the gross impact of proposed expanded nutrition coverage on Medicare expenditures.

This chapter also describes the potential for economically significant adverse health outcomes that could be delayed or averted through nutrition services. These estimates are useful for policy development because they indicate the direct costs of potential coverage of nutrition services and important cost avoidance likely to flow from these health interventions. These estimates should not, however, be interpreted as explicit Medicare budget forecasts. Budget forecasts require detailed actuarial analysis of specific reimbursement structures and specific patterns of patient utilization that are beyond the scope of this report.

This analysis follows a four-step process to estimate the economic magnitude of such effects:

  1. Clinical efficacy data summarized in earlier chapters were used to estimate the linkage between improved nutrition status and reduction in adverse outcomes.

  2. Peer reviewed research or committee clinical judgments were used to evaluate the contribution of nutrition services to improved nutrition status.

  3. Published research accounts were used to link changes in intermediary variables to reduced incidence of adverse outcomes. For example, in the case of coronary heart disease (CHD) outcomes, data from the Framingham Heart Study were used to compute both underlying disease risk and the relative risk reduction likely to result from dietary intervention (Wilson et al., 1998). For patients with diabetes mellitus, cost data from an observational study (Gilmer et al., 1997) were employed because this study provided more detailed cost results with comorbid conditions.

  4. Medicare reimbursement data were used to estimate Medicare charges associated with averted adverse health events. Accurate estimates of the fiscal impact of these adverse events for the Medicare program require detailed actuarial analysis beyond the scope of this study. Therefore “net Medicare costs” that incorporate the health benefits of nutrition services were not explicitly computed.

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×
Estimation of Direct Charges for Nutrition Therapy

Several data sources were employed to estimate reimbursement costs for nutrition therapy.

Disease Prevalence

Medicare expenditures for expanded nutrition coverage depend upon the prevalence of pertinent diagnosed conditions within the Medicare population. Because almost 90 percent of Medicare recipients are over the age of 65, the bulk of the analysis focused on this patient group. As described in previous chapters, Medicare expenditures for nutrition therapy are likely to be concentrated within several prominent diagnoses in which dietary intake and individualized nutritional advice play important clinical roles: diabetes, dyslipidemia, hypertension, heart failure, and renal disease.

Data from the Third National Examination Health and Nutrition Survey (1988–1994) (NHANES III) were used to estimate the prevalence of diabetes, hypertension, dyslipidemia, and renal disease among Americans 65 years and older (NCHS, 1997). NHANES is a weighted, stratified survey of non-institutionalized respondents. A statistical analysis of these data, using standard survey methods to account for the stratified design of the NHANES survey, was performed.1 For selected conditions such as heart failure or end-stage renal disease, Medicare administrative data was used. The small but important group of individuals 65 years and over receiving home care services are implicitly included within the NHANES group.

Data are more limited regarding the important group of disabled Medicare beneficiaries under 65 years of age and for recipients at least 65 years of age who have less prevalent conditions that potentially require nutritional intervention. For example, human immunodeficiency virus-infected Medicare recipients might require nutrition therapy for specific conditions arising from that disease.

For purposes of cost estimation, the committee assumed that of the remaining Medicare beneficiaries who either do not have one of the nutrition-related diagnoses indicated or are under the age of 65, 25 percent would be eligible for one annual nutrition therapy session. Patient demand for covered services are assumed similar to the scenarios for hypertension and hyperlipidemia for purposes of cost calculations.

1  

Dr. Tate Erlinger, Johns Hopkins University, personal communication, 1999. Analysis performed as requested by the committee.

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

TABLE 14.1 Prevalence of Selected Conditions Among National Health and Nutrition Examination Survey Respondents 65 Years of Age and Older

Diagnosis

Estimated Prevalence in Population (%)

Estimated Number of Medicare Beneficiaries in 2000 (million)

Data Source

Single diagnosis

HTNa only

20.5

7.26

NHANES III

↑LDLb only

19.8

7.01

NHANES III

DMc only

1.1

0.39

NHANES III

Renal diseased

0.6

0.21

NHANES III

Heart failure

2

0.74e

Discharge data for all Medicare Patients

Combination diagnoses

HTN & ↑ LDL

37.1

13.1

NHANES III

HTN & ↑ LDL & DM

3.3

1.17

NHANES III

DM & HTN

3.0

1.06

NHANES III

DM and ↑ LDL

1.9

0.67

NHANES III

No HTN or DM or ↑LDL

13.3

4.71

NHANES III

a HTN = hypertension.

b ↑LDL = elevated plasma low-density lipoproteins >130 mg/dL.

c DM = diabetes mellitus.

d Renal disease = serum creatinine >2.5 g/dL for women and >3.0 g/dL for men.

e Annual hospital discharges.

Table 14.1 shows the prevalence of selected diagnoses among NHANES respondents who were at least 65 years old. As shown, most Medicare beneficiaries have comorbidities with substantial implications for clinical practice and Medicare costs. Eighty-six percent of individuals within this age group are estimated to have at least one diagnosed condition that potentially requires nutrition intervention. Data are less readily available regarding the 12 percent of Medicare recipients who are less than 65 years old and eligible for reasons of disability. At a minimum, Table 14.1 implies that at least 75 percent of all Medicare beneficiaries have at least one identified ailment potentially requiring nutrition intervention.

Estimated Medicare Population Changes

The estimated population of current and new Medicare beneficiaries

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

is based upon forecasts provided by the Office of the Actuary, Health Care Financing Administration. Some treatment protocols mandate relatively intense nutritional assessment, counseling, and treatment for newly-diagnosed patients, followed by less-intensive maintenance therapy for previously-diagnosed individuals. It is therefore important to distinguish the incidence and prevalence of treated conditions within the Medicare population.

For purposes of cost estimation, it is assumed that all Medicare beneficiaries would be entitled to one service bundle intended for newly diagnosed patients, with a smaller amount of nutrition therapy in subsequent years. In each subsequent year, the number of newly diagnosed patients is assumed equal to the number of new Medicare beneficiaries multiplied by observed prevalence as summarized in Table 14.1.

This calculation makes three important approximations given the lack of more precise data regarding Medicare beneficiaries. First, it presumes that the incidence and detection of selected diagnoses will change slowly over time among Medicare recipients. Second, it presumes that recipients with specific conditions requiring maintenance therapy have a similar mean lifespan to the overall Medicare population. Third, it presumes that new (or newly-diagnosed) Medicare beneficiaries will not have received comparable services in a non-Medicare health plan and will be entitled to the full initial bundle of services. This conservative methodology would overstate Medicare costs if a large proportion of new beneficiaries do not require such intense initial services. This might be the case if the new Medicare beneficiaries had received nutrition therapy from their previous health plan.

Estimation of Nutrition Services Utilization

Patients with specific conditions are likely to receive nutrition therapy given the proposed expansion in Medicare coverage. The number and type of covered visits and the accompanying costs are influenced by Medicare policies, by the pattern of services offered by qualified providers, and by patient demand for covered services.

Reimbursement Rates

The average cost of typical nutrition services was estimated using data from previous economic studies. From the Medicare budgetary perspective, the three principal components of these costs are wage and nonwage compensation for dietitians, medical supplies, equipment and operating costs, and associated expenses such as rent, utilities, and office supplies. For the purpose of cost estimates, these services are assumed to

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

be provided in an individualized setting, although in some cases the option of group sessions was explored. Forecasts are adjusted to rise with inflation at an expected rate of 3 percent per year.

Per-session costs of nutrition therapy were estimated using data published by the Health Care Financing Administration (HCFA, 1999). In the case of diabetes self-management, HCFA (1999) recently published detailed estimates in computing proposed payments. HCFA estimated an adjusted cost of $55.41 for individualized treatment by a registered nurse or registered dietitian, and $32.62 for group sessions based on an average of ten patients.

To provide conservative estimates of likely program costs, individualized counseling sessions were used as the foundation of the resulting cost estimates given here. Because the relative efficacy and cost-effectiveness of group counseling depends upon specific diagnoses and patient groups, selected provision of group sessions may allow lower program costs.

Medicare Cost Adjustment Factors

To explore federal budgetary implications, 5-year budgetary forecasts were computed to estimate gross costs—that is the direct reimbursement costs—borne by the Medicare program of proposed nutrition therapy coverage over the 5-year period from January 1, 2000 to December 31, 2004. All estimates have been adjusted to account for 20 percent patient copayments for Medicare services. For the 65 years and older population, estimates were further adjusted to reflect 25 percent associated changes in Part B Medicare premiums following standard Congressional Budget Office practice.

Several important benefits associated with expanded nutrition coverage such as reduced incidence of coronary heart disease were also explored. These data illustrate the clinical and policy importance of improved nutrition. As described below, explicit cost offsets based upon this analysis were not computed. Accurate calculation of the fiscal consequences of life-improving and life-extending nutrition therapies requires detailed actuarial analysis beyond the scope of the current study.

Practice Patterns for Nutrition Therapy

For some diagnoses such as diabetes, clinical protocols and Medicare policies distinguish between nutrition therapy for newly diagnosed patients and maintenance therapy for individuals who were previously diagnosed. In these cases, it is assumed that all Medicare beneficiaries would

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

be entitled to one bundle of services intended for newly diagnosed patients, with subsequent coverage for maintenance therapy.

Likely patterns of nutrition therapy were estimated using clinical practice guidelines proposed by the American Dietetic Association (ADA, 1998) and expert clinical judgment. These guidelines provide a pertinent Medicare model because they reflect the consensus of dietetic professionals. Moreover, these guidelines are already used by some insurers to design reimbursement policies (Blue Cross/Blue Shield of Massachusetts, TUFTS Health Plan, Blue Cross/Blue Shield of North Dakota). In specific cases, these guidelines were modified for this analysis to reflect best-practice clinical judgment or to capture prevailing practice patterns that differed from available guidelines.

An important complication arose because most Medicare recipients have comorbidities that may require different kinds of nutrition intervention. Among NHANES III respondents, 88 percent of individuals at least 65 years of age with diagnosed diabetes also experienced hypertension or hyperlipidemia. Because the appropriate therapeutic response is not clear in nonclinical survey data, and because the same nutrition therapy session may address multiple concerns, reasonable approximation was required.

After deliberation, clinicians involved with this analysis approximated these requirements by computing the number of visits associated with the most intense diagnosis and then including at least one additional annual visit for each comorbid condition. These recommendations are used solely for the purposes of cost estimation and are not intended to convey recommended care.

Patient Demand

Patient demand for nutrition therapy is perhaps the most important unknown factor in projecting the costs (and the benefits) of expanded coverage. Existing studies suggest that most Medicare beneficiaries with pertinent conditions will not utilize nutrition services, even when these services are fully reimbursed. No study has evaluated patient demand for nutrition services in a national representative population that is fully comparable to Medicare. However, the two most pertinent studies found that less than 20 percent of eligible patients received any covered nutrition services within the 45- or 60-month time period studied.

Utilization of covered nutrition services by Medicare health maintenance organization (HMO) patients in the Group Health Cooperative of Puget Sound were examined. Sheils and coworkers (1999) determined that 13.7 percent of patients with diabetes, 5.3 percent of patients with cardiovascular disease, and 15 percent of patients with renal disease were

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

seen at least once by a dietitian in a 5-year period. A replication of this study within a military population indicated that 19.7 percent of patients with diabetes, 9.7 percent of patients with cardiovascular disease, and 20.3 percent of those with renal disease were seen at least once in a nutrition clinic within a 45-month period (1.5 visits per 5 years) (ADA, 1999). In both studies, the average number of visits per patient was far below the number of visits used in this cost estimate (seven to nine visits in a 5-year period) (see Table 14.2).

Whether these patterns accurately reflect patient preferences or reflect other system barriers is not known. These data may overestimate or underestimate patient demand for nutrition services within a national, predominantly fee-for-service Medicare environment. Broad coverage may stimulate patient demand and may also stimulate more aggressive provider marketing of nutrition services. Alternatively, the overall Medicare population may be less motivated to seek nutrition services than the military or Group Health beneficiaries previously studied. Finally, epidemiological developments such as the increased prevalence of obesity (Mokdad et al., 1999) may have unexpected implications for the use of nutrition services.

Given uncertain utilization of nutrition therapy, a baseline scenario analysis based upon the best available data was augmented with a high-use and a low-use scenario designed to illustrate the range of uncertainty that underlies these results. Appendix H gives a specific example of the methodology used. Within each scenario, patients who receive nutrition therapy are assumed to receive services that match protocol guidelines for nutrition therapy. When such guidelines were unavailable, clinical judgment was applied to estimate likely patterns of service use.

The baseline scenario represents the best estimate of likely patient utilization of nutrition therapy within each diagnostic category explored. Table 14.2 indicates the assumed guidelines and patient utilization for each diagnosis. Estimated patient utilization in initial and subsequent years is chosen to be consistent with the research literature or adjusted to more closely match more recently published nutrition therapy guidelines.

The low utilization scenario describes possible expenditures if patient utilization falls below expected levels. This scenario is especially pertinent if medical care providers are slow to adjust to the new benefit or if patients perceive little incremental benefit to receipt of nutrition services.

In contrast, the high utilization scenario describes possible expenditures if utilization exceeds expected levels. Given existing pressure on Medicare finances, this scenario is most worrisome to Medicare budget analysts, and may arise due to unexpectedly strong patient preferences for nutrition services, due to unintended financial incentives for increased use, or due to other factors.

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

Table 14.2 displays utilization assumptions and associated costs for all three scenarios. The table includes both Medicare reimbursements and payments by individual patients. Non-Medicare-covered costs such as lost work time to obtain nutrition services and the cost (or savings) of food or nutrition supplements are not included in these figures. These ancillary costs to patients would be important in a broader economic analysis.

After adjusting for both copayments and premium increases, the Medicare estimated direct reimbursement cost of nutrition therapy for selected conditions is $1.069 billion for the period January 1, 2000 to December 31, 2004. This estimate is somewhat lower than those provided by Sheils and colleagues (1999) in the Group Health study. More important, the corresponding low-utilization and high-utilization scenarios indicate the uncertainty associated with these projections. The low-utilization scenario yields estimated direct Medicare expenditures of $740 million, while the high-utilization estimate yields a comparable figure of $1.97 billion.

Nutrition Therapy Reimbursement Assumptions By Diagnosis
Cardiovascular Disease

Reimbursements are based upon three initial nutrition therapy sessions for newly diagnosed patients, with one session each subsequent year. It is assumed that all Medicare recipients with hypertension and CHD are entitled to three initial sessions. Sensitivity analysis was based on the upper limit shown in the Sheils and coworkers (1999) Group Health study for persons with cardiovascular diagnoses. These authors observed 154 nutrition therapy sessions per 1,000 patients per year.

The low-utilization scenario was computed using observed patterns within the Department of Defense (DOD) sample (ADA, 1999), which included an observed utilization rate of 79 per 1,000 patients per year. (See Appendix H for explanation of utilization rate calculations.) Utilization rates among patients with hypertension were assumed to be lower than other diagnoses because hypertension is less likely to produce explicit symptoms leading individuals to seek care.

Diabetes

For purposes of cost estimation, it is assumed that patients receive three initial nutrition therapy sessions per year for newly diagnosed diabetes, with one additional annual session per year beyond what would otherwise be covered as part of the new diabetes self-management benefit, which includes a nutrition component conducted by a registered

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

TABLE 14.2 Estimated Direct Medicare Costs of Nutrition Therapy Treatment for Selected Conditions for 2000 to 2004

 

Assumed Guideline for Proposed Nutrition Therapy Visits per Yeara

Assumed Utilization in Low-Cost Scenario (%)

Estimated Medicare Nutrition Therapy Reimbursement Costs in Low-Cost Scenariob ($ million)

Diagnosis or Condition

In Year of Diagnosis

Subsequent Years

Single Diagnosis

↑LDLc only

3

1

5

124

HTNd only

3

1

5

138

Heart failure

3

1

10

28

DMe only

3

1

12

18

Renal diseasef

3

1

7

10

Combination

Diagnoses

HTN & ↑ LDL

4

1

5

269

DM & HTN

5

1

12

63

DM & ↑ LDL

5

1

12

40

HTN & ↑ LDL

& DM

6

1

12

78

Eligible patients with none of the above conditionsg

1

1

5

106

Medicare portion of estimated chargesh

 

 

 

$873 million

Adjusted Medicare portion after corresponding premium increasei

 

 

 

$740 million

a Based on Medical Nutrition Therapy Across the Continuum of Care protocols (ADA, 1998) and expert clinical judgment.

b Based on 35.4 million beneficiaries, estimated cost per nutrition session is $55.41 (HCFA, 1999).

c ↑LDL = low-density lipoprotein >130 mg/dL.

d HTN = hypertension.

e DM = diabetes mellitus

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

Assumed Utilization in Baseline Scenario (%)

Estimated Medicare Nutrition Therapy Reimbursement Costs in Baseline Scenario ($ million)

Assumed Utilization in High Scenario (%)

Estimated Medicare Nutrition Therapy Reimbursement Costs in High-Cost Scenario ($ million)

8

198

16

396

8

221

16

442

15

42

20

56

21

31

30

45

12

17

30

36

8

431

16

861

21

111

30

158

21

70

30

100

21

136

30

194

8

169

16

338

 

$1.43 billion

 

$2.63 billion

 

$1.07 billion

 

$1.97 billion

f Renal disease = serum creatinine >2.5 g/dL for women and >3.0 g/dL for men.

g Includes disabled under 65 years-of-age patients. See text.

h Assumed 20% Medicare copayment for nutrition therapy.

i Assuming that Medicare Part B premiums will increase to recover 25% of associated increase in Medicare costs.

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

dietitian (HCFA, 1999). Patient utilization in the baseline scenario is modeled using observed data from two recent studies. A rate of 464 sessions per 1,000 eligible patient-years were reported within the Group Health population (Sheils et al., 1999) and a rate of 193 per 1,000 patient-years was observed among military recipients (ADA, 1999). These rates were used to calibrate the baseline range. A range of plausible values for the high-utilization and low-utilization scenarios were chosen that, in the committee’s clinical judgment, captured the reasonable range of patient use of nutrition services.

Renal Disease

Reimbursements for nutrition therapy for pre-end-stage renal disease are estimated based on three initial nutrition therapy sessions, with one additional annual session per year. The baseline scenario is based upon the two available studies, which yielded 519 sessions per 1,000 patient-years for the Group Health population (Sheils et al., 1999) and 197 sessions per 1,000 in the military population studied (ADA, 1999). As with diabetes, a range of plausible values for the high-utilization and low-utilization scenarios were chosen that, in the committee’s clinical judgment, captured the reasonable range of patient use of nutrition services.

Osteoporosis

A nutrition visit is not warranted at the present time for a diagnosis of osteoporosis. However, in some patients with special needs or food practices (e.g., cultural and religious factors, vegetarian diets or food allergies), it may be warranted when referred by a physician. There is strong evidence regarding the cost-effectiveness, and potential cost savings, of treating individuals diagnosed with osteoporosis with calcium and vitamin D supplements.

Comorbidities

The presence of multiple conditions and diagnoses must somehow be considered in the analysis because many Medicare recipients have comorbidities requiring specific nutrition intervention. Within the NHANES III data set, more than 90 percent of those individuals 65 years and over with diabetes also experienced hypertension or hyperlipidemia. Because the appropriate therapeutic response is unclear in nonmedical survey data, and because the same nutrition intervention may address multiple concerns, a reasonable approximation was used to address comorbidity concerns. In particular, patients are assumed to need the maximum rec-

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

ommended number of visits for the most nutrition-intensive diagnosis. Patients are then assumed to have one additional annual visit for each listed comorbid condition. As above, these estimates are used solely for the purpose of cost estimation and are not intended to convey a standard of recommended care.

Provider Incentives

Another source of cost uncertainty stems from the specific design of Medicare coverage of nutrition services. The level and detailed implementation of coverage and provider payment are likely to influence provider supply and patient demand for these services. Reimbursement policies create complex incentives for bundling or unbundling of existing services, incentives that can have a great impact on resulting expenditure. For example, if physicians alter billing by submitting claims for nutrition therapy based on the assumption that basic in-office nutrition education qualifies as nutrition therapy, then the expanded coverage for nutrition services might generate unexpected costs (as is discussed in chapter 1, Table 1.1). These basic education components of standard medical care should not receive additional reimbursement under expanded coverage.

Because of such complexities, the content of reimbursable nutrition services and the required qualifications of providers will greatly influence subsequent costs. For the same reasons, administrative oversight of nutrition services in general outpatient settings, renal dialysis centers, and other settings is important to the proper targeting of services.

ECONOMICALLY SIGNIFICANT AVERTED COSTS

Direct reimbursements provide the simplest estimate of Medicare costs. However, these estimates do not capture the full budgetary implications of coverage for nutrition services because they neglect important cost savings and also expenditures likely to result from improved nutritional status. Reasonable clinical evidence has been discussed in previous chapters to demonstrate that nutrition therapy can reduce the complications of diabetes, hip fracture, renal failure, and other adverse events that would otherwise require costly acute services. Nutrition therapy may also allow hypertensive patients to reduce utilization of prescription drugs. Improved coverage for nutrition therapy may also result in some offsetting reduction in outpatient physician use. All of these possibilities suggest that estimated direct charges likely overstate the net impact on Medicare costs.

Given the role of nutrition therapy in the prevention and management of chronic diseases and conditions, some researchers and policy-

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

makers suggest that expanded nutrition services for Medicare beneficiaries will generate significant offsetting cost reductions and that such services may even be cost saving to the Medicare program (Sheils et al., 1999). Although nutrition services may generate offsetting cost savings by these means, experiences of other medical interventions such as home health care, medical devices, and renal dialysis suggest the inherent difficulty of forecasting the budget impact of policy innovations. For example, nutrition therapy may increase lifespan, which has an ambiguous impact on resulting Medicare costs. Although many preventive services improve health status, primary and secondary preventive services are rarely cost saving. In specific settings, vaccination and some other primary interventions have reduced medical costs (Russell, 1994).

For most diagnoses, limited reliable data exist to estimate the overall economic effect of nutrition intervention. Given evidence of treatment effectiveness for highly prevalent conditions in the Medicare population, it is believed that expanded eligibility will improve population health. Such improved health status is likely to produce important economic benefits for the Medicare program, although existing data do not permit reliable estimates of these effects. Previous experience highlights the inherent difficulty of projecting Medicare costs, as well as the potential perils associated with over-optimistic estimated cost savings associated with new services (Weissert, 1985).

Experience also highlights several problems in extrapolating promising results from specific populations into convincing evidence for broader patient groups. Nutrition therapy is generally provided within a multidisciplinary and multimodality treatment plan. Identifying the specific contribution of nutrition therapy to improved health outcomes is therefore difficult. Best-practice clinical trials on selected patients can overstate the range of plausible program benefits because these efforts are difficult to replicate in large-scale practices serving the full patient population (Rossi and Freeman, 1995). Moreover, benefits that are valuable from a social perspective may have paradoxical effects for specific budgets. Life-extending interventions may have strong net social benefits and may be extremely cost-effective by standard criteria while increasing Medicare program costs. Finally, it is inappropriate to assume additive averted costs or social benefits within a population of individuals who typically have multiple diagnoses and comorbidities.

Cost Savings Documented in the Group Health Study

In part because of the significant methodological concerns mentioned above, little evidence was available to evaluate the cost savings associated with a population-wide provision of nutrition services. The most perti-

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

nent study uses data from the Group Health Cooperative of Puget Sound to explore the likely cost of nutrition services for the full Medicare population (Sheils et al., 1999). Because Group Health covers dietitian services as a supplemental Medicare benefit, this patient group provides useful data to examine the likely impact of expanded eligibility throughout the Medicare population.

Sheils and colleagues (1999) found that the receipt of dietitian services was associated with reduced inpatient admissions and physician office visits for patients with diabetes and cardiovascular diagnoses. In particular, these authors found that dietitian services were associated with a 9.5 percent reduction in hospital admissions for patients with diabetes and an 8.6 percent reduction in hospital admissions for patients with cardiovascular disease. Estimated reductions in physician visits were even greater for these diagnoses, from 16.9 percent to 23.5 percent. Because of the large savings associated with these diagnoses, Sheils and colleagues estimated that coverage of either dietitian services for diabetes alone, or coverage for diabetes and cardiovascular disease, would be cost saving from the perspective of the Medicare program as a whole (see Table 14.3).

Although dietitian coverage for diabetes and cardiovascular disease for all Medicare recipients was estimated (Sheils et al., 1999) to cost $2.308 billion over the 7 year period, the same services were estimated to yield an estimated $2.363 in cost savings, producing negative estimates of net costs. The majority of estimated cost savings would accrue to Medicare Part A due to reduced inpatient hospitalization costs. Coverage for all

TABLE 14.3 Estimated Gross and Net Costs of Nutrition Therapy Coverage Based on Data from Group Health Cooperative of Puget Sound

1998–2004 Projected Costs

Dietitian Coverage for all Medicare Beneficiaries ($ billion)

Dietitian Coverage for Diabetes Only ($ billion)

Dietitian Coverage for Diabetes and Cardiovascular Disease ($ billion)

Benefit cost

2.732

1.371

2.308

Savings

2.363

1.578

2.363

Net costs

0.370

–0.208

–0.055

Part A

–1.248

–0.720

–1.248

Part B

1.617

0.512

1.193

 

SOURCE: Sheils et al. (1999).

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

Medicare beneficiaries was estimated to have a gross cost of $2.73 billion, and a positive net cost of $370 million.

These results suggest the promise of nutrition therapy in producing significant reductions in costs. However, three features of this study suggest caution in applying these findings to the full Medicare population.

First, Group Health patients and providers may be unrepresentative of the broader population of Medicare patients and providers. Group Health may include higher-quality providers or more health-conscious consumers than are typical in the broader Medicare population, although a similar study of usage by active duty military, their families, retired members of the military, and their families shows similar results (ADA, 1999). As a staff-model HMO, the impact of dietitian services in Group Health may be difficult to replicate in more decentralized systems of reimbursement and care. Across a wide range of social policy and health arenas, best-practice interventions in unusual settings prove difficult to replicate on a broader scale (Currie, 1995). The generalizability of these results is therefore unclear.

Second, the underlying data reflect a strong process of patient self-selection into the receipt of nutrition care. Multiple linear regression and individual fixed-effects models are used to minimize potential biases that might arise from unobserved individual factors. For both clinical and econometric reasons, however, this specification is vulnerable to unobserved heterogeneity in the data. The underlying data include limited controls for individual variation in health status, preferences, and resources that influence subsequent health outcomes, adherence, and utilization.

Even controlling for diagnosis and other observable patient characteristics, recipients of nutrition therapy are likely to be more highly motivated than comparable patients who have the same diagnoses but do not receive nutrition therapy. Although some self-selection will occur in the Medicare population, it is not clear how this selection process will be influenced if prevailing reimbursement systems provide financial incentives for referral.

Given the resulting difficulty in estimating net impact on the overall Medicare budget associated with coverage of nutrition therapy, specific diagnoses for which nutrition therapy is likely to be especially cost-effective or even cost saving were examined. Clinicians and policy analysts involved identified several diagnostic categories for which well-implemented nutrition therapy would bring important and beneficial economic effects. Estimates for several diagnostic categories are discussed below.

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×
Diabetes Mellitus

In 1997, the estimated direct costs attributed to diabetes in the United States amounted to $44 billion. Costs due to work loss, disability, and premature death are estimated to be even higher (CDC, 1998).

Diabetes provides perhaps the best-documented example of potential benefits associated with nutrition therapy. Per capita Medicare expenditures are 50 percent higher among patients with diabetes than among the overall Medicare patient group (Krop et al., 1998). Per-capita Medicare expenditure also varies greatly across the diabetic population. The most expensive 10 percent of patients with diabetes account for 56 percent of Medicare expenditures for diabetes care. The least expensive 50 percent of Medicare patients with diabetes account for only 4 percent of the same expenditures (Krop et al., 1998).

Many of the above mentioned charges are associated with complications of diabetes whose incidence has been reduced in randomized trials of intensive self-management that included nutrition therapy (Collins and Anderson, 1995; DCCT, 1995, 1996; Franz et al., 1995; Herman et al., 1997). Chapter 6 summarized pertinent clinical results. Evidence is suggestive, but less conclusive, regarding the specific contribution of registered dietitians to improved outcomes. Studies have indicated that more intensive interaction with nutrition professionals improves glycemic control compared to less intensive care (Franz et al., 1995; Sheils et al., 1999). However, the relative contributions of specific professionals within multidisciplinary health care settings is difficult to discern.

The study by Franz and collaborators (1995) provides the most informative analysis of this question. These authors compared the impact of “usual” nutrition care of one nutrition therapy visit to the impact of three visits, as recommended by practice guidelines. Both modalities resulted in improved glycemic control when compared to a control group without nutrition counseling. However, the practice guidelines (three visits) proved more cost-effective than usual care (one visit) in reducing blood glucose levels. Few prospective studies compare the efficacy and cost-effectiveness of competing nutrition therapy modalities, however studies have indicated that group-based modalities can be effective as part of intensive self-management (Heller et al., 1988).

From an economic perspective, the United Kingdom Prospective Diabetes Study (UKPDS) which involved 6,000 patients with type 2 diabetes in a randomized control trial, best demonstrates potential cost savings from intensive diabetes self-management. The study compared the benefits of intensive blood glucose control to the benefits of standard care (UKPDS Group, 1998). In this study, both the treatment group and control group received dietary advice from a dietitian. After 10 years, hemoglo-

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

bin A1c (HbA1c) levels were 0.9 percentage points lower in the treatment group than in a control group receiving usual care (HbA1c of 7.0 percent versus 7.9 percent). The treatment group experienced clinically significant reductions in the incidence of many diabetes complications, including a 10 percent reduced incidence of diabetes-related deaths and a 25 percent reduction in microvascular end points. Such findings highlight the large potential savings to medical payers and patients associated with improved glycemic control.

Another study provides further evidence of cost-effective diabetes treatment. Comprehensive treatment of type 2 diabetes to maintain HbA1cat 7.2 percent reduced the cumulative incidence of blindness, end-stage renal disease, and lower-extremity amputation by 76 percent, 88 percent, and 67 percent respectively, with a life expectancy gain of 1.4 years (Herman et al., 1997). The associated estimated cost of approximately $20,000 per quality-adjusted life-year was far below standard thresholds used to evaluate life-prolonging interventions (Heller et al., 1988; Tengs et al., 1995).

The magnitude of such economic benefits is directly explored in several analyses. Most recently, Gilmer and colleagues (1997) examined the cost to health plans of poor glycemic control. Using 1993 to 1995 expenditure data, these authors employed gamma regression analysis to estimate the short-term relationship between glycemic control and medical charges for 3,017 adults (mean age 59.7 years) in a large HMO.

This analysis is noteworthy for its use of explicit controls for gender effects and for prevalent diabetes comorbidities such as hypertension. It should also be noted that Gilmer and coworkers do not include patients who died over the study period. These exclusions may understate the value of nutrition services given UKPDS data which suggest that the incidence of heart attacks and sudden death may be reduced through more intensive intervention.

Table 14.4 presents the estimated annual costs of poor glycemic control as determined by elevated HbA1c concentration in hypothetical 65-year-old patients with accompanying comorbidities. As shown, the incremental costs associated with poor glycemic control increase with higher HbA1c levels. Incremental costs are also elevated in the presence of comorbidities such as hypertension. Incremental costs of poor glycemic control appear to decline with age in this population and appeared to vary continuously, thus allowing estimates of incremental responses.

These point estimates provide one means to examine the magnitude of Medicare “cost offsets” associated with nutrition therapy for patients with diabetes. As discussed above, these numbers should not be interpreted as budget forecasts, which require detailed actuarial calculations beyond the scope of this committee report.

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

TABLE 14.4 Estimated Annual Costs of Poor Glycemic Control in a Health Maintenance Organization Population (in dollars)

 

HbA1c Level

Condition

7–8%

8–9%

9–10%

65-Year-old-man

Diabetes only

192.03

235.51

286.38

Diabetes and hyperlipidemia

159.76

195.94

238.26

Diabetes and hypertension

289.93

355.58

432.39

Diabetes and hyperlipidemia and hypertension

241.21

295.83

359.73

65-Year-old-woman

Diabetes only

181.22

222.25

270.26

Diabetes and hyperlipidemia

177.51

217.71

264.74

Diabetes and hypertension

303.36

372.06

452.42

Diabetes and hyperlipidemia and hypertension

297.16

364.46

443.17

 

SOURCE: Computed from Gilmer et al. (1997).

Using the HbA1c range of 7 to 8 percent, one can estimate potential short-term savings to Medicare and patients attributable to nutrition therapy. Given that patients with diabetes have access to other self-management services in addition to nutrition therapy, it is unlikely that coverage of nutrition therapy would produce the full improvements observed in controlled trials that compare high-quality nutrition therapies to minimal standard services. Averted costs estimated here are based on the assumption that coverage of nutrition therapy would lead to an additional 0.25 percentage point reduction in HbA1c. This appears conservative in light of clinical reports of best-practice nutrition therapy services. Table 14.4 indicates that a 1 percentage point reduction of HbA1c is associated with a corresponding reduction of 18 percent in costs.

Using the same coefficients as above, averted costs for Medicare beneficiaries with diabetes that can be reasonably associated with nutrition therapy can be estimated (Table 14.5). These assumptions imply large short-term benefits associated with nutrition therapy. Although nutrition therapy is not cost saving, direct medical charges are substantially offset by savings associated with the prevention of adverse health events. Within the baseline scenario, the cost of averted adverse events is estimated to be $231 million. The comparable analysis in the low-utilization and high-utilization scenarios yield analogous figures of $132 million and $330 million.

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

TABLE 14.5 Estimated Cost of Nutrition Therapy and Costs of Averted Adverse Outcomes in Baseline Scenario (Savings to Both Medicare and Private Patients)

Condition

Total Charges for Nutrition Therapy within Baseline Scenarioa ($ million)

Estimated Total Cost of Averted Outcomes Attributable to Nutrition Therapyb ($ million)

Diabetes only

31

20

Diabetes and hyperlipidemia

70

32

Diabetes and hypertension

111

89

Diabetes and hyperlipidemia and hypertension

136

90

a This column shows estimated charges from the baseline scenario of Table 14.2. For comparability, total charges (including copayments) are shown.

b This column indicates the estimated cost of averted outcomes based upon the coefficients computed by Gilmer et al. (1997).

The long-term implications for Medicare program costs are less clear from these data. Gilmer and coworkers (1997) examined expenditures over a 3-year period and therefore did not examine important future costs, including future Medicare expenditures for marginal survivors who experience increased lifespan due to the intervention.

Osteoporosis

An estimated 10 million Americans suffer from osteoporosis, including more than 25 percent of non-Hispanic white women 65 years and over. Osteoporosis may also have significant prevalence among older men (Ebeling, 1998).

Many studies document that calcium and vitamin D supplements can slow bone loss in older adults (Bendich et al., 1999; Chapuy et al. 1992; Cummings et al. 1995; Jönsson et al., 1995). (See chapter 8 for further discussion.) From an economic perspective, this is especially important because improved or maintained bone density has been linked with reduced incidence of hip fracture in randomized trials involving older adults. For example, a group of women treated with calcium and vitamin D supplementation experienced cumulative hip fractures of 6 percent versus 13 percent in a comparable control group (Dawson-Hughes et al., 1997).

Medicare diagnosis-related group (DRG) reimbursements—a measure which includes many important medical and social costs—average

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

$3,900 for fractures of the femur. Preventive measures to improve calcium and vitamin D intake are therefore likely to be cost-effective among women at least 65 years old who are the principal osteoporosis patient group.

It has been estimated that osteoporosis prevention costs $30,000 per QALY (Tosteson et al., 1997). These estimates compare favorable to widely accepted public health interventions and to widely prescribed treatments to control hypertension. Nutrition supplements for osteoporosis management appear to be more cost-effective than widely cited statin drugs for control of CHD (Bendich et al., 1999; Chapuy et al., 1992; Cummings et al., 1995; Jönsson et al., 1995; Tengs et al., 1995).

Cardiovascular Diseases

Chapter 5 reviewed existing clinical evidence regarding dyslipidemia, hypertension, and heart failure. Diet plays a central role in the primary, secondary, and tertiary prevention of each form of cardiovascular disease.

Hypertension

There is extensive literature to support the cost-effectiveness of interventions for hypertension. Existing literature provides mixed support for the cost-effectiveness of nonpharmaceutical interventions in the 65 years and older population. Because older persons face competing mortality and morbidity risks, interventions for this population sometimes appear less cost-effective than preventive measures targeting younger populations (Garber et al., 1991; Johannesson, 1994; Johannesson et al., 1997). Research in Sweden by Johannesson and colleagues indicates that nonpharmaceutical interventions alone can be less cost-effective than available drug therapy (Johannesson and Fagerberg, 1992; Johannesson and Le Lorier, 1996; Johannesson et al., 1991, 1995).

Despite these limitations, nutrition therapy is associated with several economically significant improvements in hypertension management. Alone and in combination with drug therapy, reduced salt intake is associated with reduced diastolic blood pressure in older persons (see chapter 5). Evidence is more limited regarding the linkage between reduced blood pressure and reduced incidence of CHD and stroke. However, the causal linkage between improved diet and improved health outcomes is strongly supported in clinical research. Chapter 5 reviews the Trials of Nonpharmacologic Interventions in the Elderly in which registered dietitians assisted adults 65 years and older to reduce salt intake and to significantly reduce the reliance of patients upon antihypertensive medications.

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

Results cited in Hebert et al. (1992) suggest that reductions in diastolic blood pressure of 5 to 6 mm Hg would prevent 42 percent of strokes and 14 percent of CHD events. The effects of drug and diet appear additive; so nutrition therapy has the potential to reduce mortality, morbidity, and health care utilization even when hypertension is also addressed through drug treatment.

Table 14.6 indicates the economic implications of these patterns for the baseline scenario of 8 percent assumed utilization. It examines the short-term implications of a 1.25 mm Hg reduction in diastolic blood pressure attributable to nutrition intervention among patients with CHD who actually received nutrition therapy. This program effect is approximately one-fourth of that observed in clinical trials of intense dietary interventions (see chapter 5 section on hypertension). To allow for the possibility of lagged effects, these calculations presume a 2-year period between coverage of nutrition therapy and resulting health gains.

While nutrition therapy does not appear to be cost saving for hypertension, as it had appeared in the case of diabetes, such treatment does yield important clinical and policy effects. Although the precise magnitude of these effects is unclear given current data, Table 14.6 presents approximate estimates of potential averted strokes and CHD events among patients with simple hypertension in the baseline scenario. Assuming a 2-year time-lag in program benefits, a conservative approach is to consider only the first 3 years of clinical effects. With a direct program cost of $221 million in the baseline scenario (Table 14.2), nutrition therapy is estimated to prevent approximately 9,000 stroke hospitalizations and 7,000 hospitalizations due to CHD events (Table 14.6).

If policymakers value the direct and indirect consequences of stroke prevention at more than $25,000 per case, or if they value the direct and indirect consequences of CHD hospitalization at more than $32,000 per case, the coverage of nutrition therapy appears cost-effective compared with other life-extending interventions. Moreover, these calculations may understate the value of nutrition intervention because they do not include the impact on other health risks. It is important to note that these estimates are based only on direct DRG charges, which in all probability may substantially understate averted costs because they fail to consider accompanying outpatient care and other services funded by Medicare and by the beneficiary.

Dyslipidemia

Interventions to reduce excessive blood lipids have received extensive clinical and policy attention. The development of cholesterol-lowering medications such as pravastatin have allowed substantial reductions

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

in low-density lipoprotein (LDL) cholesterol and have been associated with substantially reduced mortality and morbidity from cardiovascular causes (Hunninghake et al., 1993; Knopp, 1999; Shepherd et al., 1995).

Given the availability of powerful (and costly) cholesterol-reducing medication, diet is not often used alone as initial therapy for elevated cholesterol, but rather is used in combination with medication. Data suggest that diet and medication operate independently to reduce disease risk (Hunninghake et al., 1993); nutrition therapy can have a substantial impact on mortality and morbidity despite the presence of effective cholesterol-reducing drugs (McGehee et al., 1995).

The impact of cholesterol reduction on mortality and morbidity in older persons has been disputed (Garber et al., 1991; Goldman et al., 1992; Kronmal et al., 1993; Larson, 1995). However, data from the 4S and pravastatin studies demonstrate reduced cardiovascular mortality and reduced incidence of CHD events (Shepherd et al., 1995). Data reviewed in chapter 5 indicate that every 1 percent reduction in cholesterol is associated with a corresponding 2 percent reduction in the incidence of CHD.

Reduced CHD incidence is especially significant since CVD accounts for almost 50 percent of all deaths in the United States (Knopp, 1999), and heart disease accounts for approximately 17 percent of all medical spending in the United States (Cutler and McLellan, 1996; McGehee et al., 1995). Acute myocardial infarction (AMI) is the most costly and fatal aspect of heart disease. Medicare reimbursements in 1991 for AMI-related episodes averaged $14,772 (in 1991 dollars). Real expenditures for AMI-related Medicare services are estimated to have increased by 4 percent annually (all figures from Cutler and McLellan, 1996).

To gauge the potential impact of nutrition therapy coverage on the incidence of coronary heart disease, epidemiological findings from the Framingham study were used to estimate baseline risks and the approximate relative risk reduction associated with nutrition intervention (Kronmal et al., 1993; Wilson et al., 1998). The efficacy of nutrition therapy in reducing LDL levels was modeled as the principal mechanism of reduced CHD risk for patients with hypertension, diabetes mellitus, and dyslipidemia (Wilson et al., 1998). Because data are unavailable on many biological risk factors within the Medicare population, this analysis was useful to gauge the approximate health impact of coverage for nutrition therapy. A more extensive epidemiological study (ideally informed by randomized clinical trials among Medicare beneficiaries) would provide superior estimates.

Existing studies suggest that best-practice nutrition therapy can achieve a 6 percent reduction in LDL levels beyond the levels controlled by accompanying medication (see chapter 5 for a summary of this research). Broadly deployed nutrition therapy may be less effective than is

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

TABLE 14.6 Averted Acute-Care Episodes Associated with Nutrition Therapy Treatment for Patients with Hypertension for Baseline Scenarioa

Estimate for Cost Offset

2000

2001

2002

2003

2004

5-Year Total

Medicare discharges due to stroke (n)

389,169

391,504

393,853

397,003

400,179

 

Potential stroke patients with simple hypertension who utilize nutrition therapy assuming 8 percent utilization among covered patients (n)

31,133

31,320

31,508

31,760

32,014

 

Potential strokes averted due to 1.25 mm Hg blood pressure reduction attributable to nutrition therapy (n)

2,958

2,975

2,993

3,917

3,041

 

DRGb payment per patient for stroke (Assuming 3% increase in DRG rate per year)

$5,145

$5,299

$5,458

$5,622

$5,791

 

DRG payments for stroke avoided attributable to nutrition therapyc

Assumed 2 year time lag

Assumed 2 year time lag

$16,144,003

$16,728,093

$17,333,315

 

Discharges due to coronary heart disease (CHD) (n)

726,901

731,262

735,650

740,064

744,504

 

Potential CHD patients with simple hypertension who utilize nutrition therapy assuming 8% utilization among covered patients (n)

58,152

58,501

58,852

59,205

59,560

 

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

Potential CHD events reduced due to 1.25 mm blood pressure reduction attributable to nutrition therapy (n)

2,326

2,340

2,354

2,368

2,382

 

Estimated average DRG payment per patient for coronary heart disease

$4,392

$4,524

$4,659

$4,799

$4,943

 

DRG payments for CHD avoided due to nutrition therapyc

Assumed 2 year time lag

Assumed 2 year time lag

$10,838,322

$11,230,453

$11,636,770

 

Averted costs for both stroke and CHD eventsc

Assumed 2 year time lag

Assumed 2 year time lag

$26,982,325

$27,958,545

$28,970,086

$83,910,956d

Medicare reimbursement charges for nutrition therapy services to hypertensive patients

$62,140,763e

$26,204,130

$27,114,393

$28,119,655

$29,160,815

$172,739,756d

a Baseline scenario assumes 8% utilization and a reduction in diastolic blood pressure of 1.25 mm Hg.

b DRG = diagnostic related group.

c A 3% annual increase in DRG payment rates is assumed within these calculations. Cost data were obtained by The Lewin Group, Inc. for the committee.

d Low Utilization Scenario of 5% is: High Cost Utilization Scenario of 16% is: $52,444,347 averted costs $167,821,912 averted costs $107,962,345 Medicare reimbursement charges $345,479,505 Medicare reimbursement charges

e Assumes all current beneficiaries with existing diagnoses receive initial nutrition therapy in first year.

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

TABLE 14.7 Estimated Impact of Nutrition Therapy Aimed at Reducing Elevated Low-density Lipoprotein (LDL) Cholesterol on 5-Year Incidence of Coronary Heart Disease (CHD) among Medicare Beneficiaries

 

Low Utilization Scenarioa (percent)

Estimated Reduction in CHD Events Given 3% Reduction in LDLb

Cardiovascular risk diagnoses

↑LDLc only

5

1,690

HTNd only

5

1,750

DMe only

12

180

Combination diagnoses

HTN &↑LDL

5

4,857

DM & HTN

12

763

DM & ↑LDL

12

483

HTN & DM & ↑LDL

12

1,252

 

 

_____

Potential CHD events averted due to nutrition therapy

 

10,975

Estimated costs associated with averted CHD eventsf

 

$54,249,425

a See text for discussion of utilization scenarios.

b The estimated number of averted CHD episodes is computed using regression coefficients reported by Wilson et al. (1998) using data from the Framingham study. Predicted probabilities are age-adjusted, and include an additional risk score of 1.0 to account for mean tobacco prevalence and other risk factors.

observed in best-practice clinical trial interventions. For illustrative purposes, it is therefore assumed that nutrition therapy patients achieve an average 3 percent reduction in LDL.

Table 14.7 shows the resulting estimated reduction in CHD events associated with coverage for nutrition therapy which reduces LDL levels across CHD related diagnoses (diabetes mellitus, hypertension, and dyslipidemia) for the period 2000 to 2004. As above, these calculations presume a 2-year lag between coverage and resulting health gains. Within the baseline utilization scenario, coverage for nutrition therapy is estimated to delay or avert approximately 18,000 cases of coronary heart disease over the period 2000 to 2004. Within the low-utilization scenario, coverage of nutrition therapy is estimated to delay or avert almost 11,000

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

Baseline Utilization Scenarioa (percent)

Estimated Reduction in CHD Events Given 3% Reduction in LDLb

High Utilization Scenarioa (percent)

Estimated Reduction in CHD Events Given 3% Reduction in LDLb

8

2,704

16

5,408

8

2,799

16

5,599

21

315

30

450

8

7,771

16

15,542

21

1,336

30

1,908

21

846

30

1,209

21

2,191

30

3,130

 

_____

 

_____

 

17,962

 

33,246

 

$88,786,166

 

$164,349,078

c ↑LDL = low-density lipoprotein >130.

d HTN = hypertension.

e DM = diabetes mellitus.

f Estimated at 2004 payment rate, assumed that 3% annual increase in diagnostic-related group payments between calendar year 2000 and calendar year 2004.

CHD cases, whereas within the high-utilization scenario, it is estimated to delay or avert approximately 33,000 CHD cases.

These results provide some basis for policymakers to evaluate the economic trade-offs associated with coverage for nutrition therapy. Within the baseline scenario, excluding patient coinsurance payments, Medicare’s estimated reimbursement cost for expanded coverage of nutrition therapy is $1.43 billion over the same period. The accompanying estimated Medicare cost per averted CHD event is therefore approximately $80,000.2

2  

In several respects, this calculation also understates the benefits associated with coverage of nutrition therapy. For example, reductions in dyslipidemia and CHD will also reduce the incidence of stroke (Fine-Edelstein et al., 1994).

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

At this level of treatment effectiveness, independent of any other benefit associated with nutrition therapy, expanded coverage for nutrition therapy would be justified if policymakers value the social and medical costs of CHD at more than $80,000. Using this measure, Medicare coverage of nutrition therapy appears comparable in cost-effectiveness to population-wide education campaigns and other approaches to cholesterol reduction (Pharoah and Hollingworth, 1996; Tosteson et al., 1997).

Further evidence of the potential economic benefits associated with nutrition therapy is also provided in Table 14.7. Given reasonable assumptions regarding treatment efficacy and service use, initial estimates indicate that within the baseline scenario, the cost of averted CHD events is estimated to be $89 million. The comparable analysis in the low-utilization and high utilization scenarios yields analogous figures of $54 million and $164 million.

Heart Failure

As the most frequent cause of hospitalization among older individuals, heart failure accounts for more than 1 million hospitalizations annually. In fiscal year 1998, heart failure was the most costly single category of Medicare short-stay inpatient services. Covered charges for this DRG exceeded $7 billion (HCFA, 1998). Nutrition therapy, which includes sodium restriction and other measures, is an important component of standard care for heart failure patients. As summarized in chapter 5, non-adherence to diet or medication is associated with risk of rehospitalization. Randomized control trials document that multidisciplinary interventions that include nutrition therapy reduce rehospitalization and may even be cost saving (Rich and Nease, 1999; Rich et al., 1995). Data was unavailable to approximate contributions of nutrition therapy.

From an economic perspective, expanded coverage of nutrition therapy for patients with heart failure is especially attractive because these services are targeted to a discrete patient group that faces large and immediate health risks intimately linked with dietary factors. Given the low cost of nutrition intervention, and the high economic and social costs associated with dietary non-adherence in this patient group, expanded coverage of nutrition therapy for patients with heart failure is likely to be highly cost-effective. However, economic benefit estimates could not be prepared following the framework used in this study.

SUMMARY

  • The Medicare portion of estimated charges for coverage of nutrition therapy during the 5-year period 2000 to 2004, is $1.069 billion for the

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×

baseline utilization scenario after adjusting for copayment and potential increase in premiums. The range of estimates are from $740 million for the low-utilization scenario to $1.97 billion for the high-utilization scenario. Net adjustments to overall Medicare budget estimates for offsets due to costs of averted care require more detailed actuarial calculation beyond the scope of this report. Current data are insufficient to accurately forecast the overall impact of nutrition therapy on general Medicare expenditures.

  • Provider supply and patient demand for nutrition therapy are difficult to estimate. Specific features of Medicare coverage and reimbursement rates may have a strong impact on likely utilization. Current data are insufficient to predict reliably the utilization rates for a new nutrition therapy benefit.

  • Few data exist to distinguish competing delivery strategies for nutrition therapy. Clinical trials to compare individual and group sessions will be helpful in improving policy knowledge in this area. All cost estimates were based on the cost of individual nutrition therapy sessions. Substantial cost savings may be possible for some services and diagnoses in which group nutrition therapy is found to be clinically effective.

  • The clinical literature contains evidence that nutrition therapy reduces mortality and morbidity through reduced complications of diabetes and reduced incidence of heart failure and cardiovascular disease. Given data limitations, it is difficult to reliably estimate the budgetary implications of such averted costs for the Medicare program. However, economic benefits to the Medicare program and to its beneficiaries are likely to be significant. Given reasonable assumptions regarding treatment efficacy and service use, initial estimates indicate that averted costs due to a reduced incidence of coronary heart disease could range from $52 million to $167 million for patients with hypertension, $132 million to $330 million for patients with diabetes, or $54 million to $164 million for patients with dyslipidemia. It is not appropriate to add these estimates together since beneficiaries have overlapping diagnoses. Given the strong link between improved nutrition and critical health outcomes and the low average costs of nutrition interventions, expanded Medicare coverage for outpatient nutrition therapy is likely to be cost-effective when compared with other Medicare expenditures for patient care.

  • Estimates were not made for the 5.62 million beneficiaries likely to receive nutrition therapy for other diagnosis such as chronic renal insufficiency and heart failure. Expanded coverage may be cost saving in some of these patient groups, although data are inadequate to reliably establish these patterns. Depending on implementation features, nutrition therapy may be cost saving in larger patient groups though existing data do not allow definitive analysis of these patterns.

Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
×
  • Some physicians and office staff are already providing basic nutrition education or advice incidental to routine office visits. These existing services should not receive additional reimbursement. It is assumed that general nutrition education and reinforcement of nutrition will be necessary as part of normal medical care as specified in the U.S. Preventive Services Task Force recommendations (USPSTF, 1995).

  • Existing oversight and reimbursement systems must be scrutinized to assure adequate provision of nutrition services in acute care, dialysis centers, home care, and skilled nursing and long-term care facilities where nutrition is believed to be included in prospective payment systems. Where existing Medicare policies already provide coverage for nutrition services within overall reimbursement systems, administrative oversight is essential to ensure that high-quality nutrition services are actually delivered. In some cases, reimbursement rates may require adjustment to ensure that providers have adequate resources to deliver required services.

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Suggested Citation:"14 Economic Policy Analysis." Institute of Medicine. 2000. The Role of Nutrition in Maintaining Health in the Nation's Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population. Washington, DC: The National Academies Press. doi: 10.17226/9741.
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Malnutrition and obesity are both common among Americans over age 65. There are also a host of other medical conditions from which older people and other Medicare beneficiaries suffer that could be improved with appropriate nutritional intervention. Despite that, access to a nutrition professional is very limited.

  • Do nutrition services benefit older people in terms of morbidity, mortality, or quality of life?
  • Which health professionals are best qualified to provide such services?
  • What would be the cost to Medicare of such services? Would the cost be offset by reduced illness in this population?

This book addresses these questions, provides recommendations for nutrition services for the elderly, and considers how the coverage policy should be approached and practiced. The book discusses the role of nutrition therapy in the management of a number of diseases. It also examines what the elderly receive in the way of nutrition services along the continuum of care settings and addresses the areas of expertise needed by health professionals to provide appropriate nutrition services and therapy.

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