Hand on head

Study Names Mental Health as Most Expensive Sector

According to research conducted by the Center for Sustainable Health Spending, mental healthcare utilizes the most healthcare spending. Mental healthcare accounts for $201 billion in spending every year, more than any other sector, including cancer, pulmonary disease, and heart disease. This is due largely to the presence of institutionalized patients in mental healthcare. When institutionalized patients are not included in spending calculations, mental healthcare falls below other sectors. However, excluding them altogether may inaccurately represent the field because the population is aging and will likely require institutionalization more. While healthcare spending for all categories has grown by 5.9% in the past 20 years, mental health spending alone has increased 5.6%, resulting in excess spending of around $38 billion. This study suggests mental health spending would continue to increase at a faster rate than other healthcare sectors in the future.

Patient Doctor

In Effort to Cut Costs, Medicare Experiments With House Calls

Medicare has been testing its new “Independence at Home” program, which targets the extremely ill senior population. These patients tend to be complex and expensive to care for, as many have chronic health issues and disabilities. The program holds promise for better treatment of these patients because it allows them to receive care in the home, eliminating some of the risks of hospitalization. The pilot program included 9 practices and saved Medicare a total of $25 million, $12 million of which the practices received back in bonuses. Oregon’s Housecall Providers was operating at a loss when it joined the program, but was able to save Medicare $13,600 per patient. MedStar Washington Hospital’s house call practice was able to cut $12,000 per patient, allowing it to pocket some of the savings.

Practices can join the program if they conduct a minimum of 200 house calls to traditional Medicare patients with the following criteria: difficulty with at least 2 daily living activities, and have been hospitalized and received rehabilitation or home healthcare in the past year. Providers must be available 24/7, and must conduct house calls at least once a month. These visits tend to be more complex than a traditional office visit and take longer. Thus, providers can see only 5-7 patients per day, and reimbursement is nearly the same as for an office visit, so travel time is not covered. Medicare pays providers for the house call, and pays a bonus if the patient has at least 5% lower-than-expected Medicare costs and if the provider meets 3 of 6 performance goals.

IV

Medicare Part B Rule Won’t Be Finalized Until 2019

According to the regulatory agenda recently released by the Obama administration, the contentious Medicare Part B drug demonstration rule—aimed at cutting costs—will not be finalized until 2019, 3 years later than expected. The Centers for Medicare & Medicaid Services (CMS) denies this is the case, commenting the timeline for finalization has not changed. The measure in question is a drug demonstration model with 2 phases, the first of which is slated to begin at year-end. The first phase would modify the payment formula for drugs administered in a physician’s office, currently set at ASP + 6%, changing it to ASP + 2.5%, plus a $16.80 flat fee per-drug–per-day. This change would encourage providers to prescribe less expensive drugs. Phase two would incorporate strategies used in the commercial insurance market into Medicare Part B coverage and is slated to take effect in 2017. The pharmaceutical industry has combined efforts with a bipartisan contingency in Congress to demand withdrawal of the proposed model, while some Democrats have joined unions, insurers, and consumer advocacy groups to voice their support for the model.

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