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



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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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-

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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: 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. Professionally accepted treatment protocols were used to deter-

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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. Usual and customary professional charges were used to estimate unit costs. Research data from existing health care populations were used to estimate likely patient demand for covered services. 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: Clinical efficacy data summarized in earlier chapters were used to estimate the linkage between improved nutrition status and reduction in adverse outcomes. Peer reviewed research or committee clinical judgments were used to evaluate the contribution of nutrition services to improved nutrition status. 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. 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.

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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.

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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.

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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  

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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.

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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).

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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.

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The Role of Nutrition in Maintaining Health in the Nation’s Elderly: Evaluating Coverage of Nutrition Services for the Medicare Population 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. REFERENCES ADA (American Dietetic Associaiton). 1998. Medical Nutrition Therapy Across the Continuum of Care: Client Protocols, 2nd ed. Chicago Ill.: American Dietetic Association and Morrison Health Care. ADA (American Dietetic Association). 1999. Defense Department study confirms the value of medical nutrition therapy. ADA Courier 38:5. Bendich A, Leader S, Muhuri P. 1999. Supplemental calcium for the prevention of hip fracture: Potential health-economic benefits. Clin Ther 21:1058–1072. CDC (Centers for Disease Control and Prevention). 1998. National Diabetes Fact Sheet: National Estimates and General Information on Diabetes in the United States. Revised Edition. Atlanta, Ga.: CDC. Chapuy MC, Arlot ME, Duboeuf F, Brun J, Crouzet B, Arnaud S, Delmas PD, Meunier PJ. 1992. Vitamin D3 and calcium to prevent hip fractures in the elderly women. N Engl J Med 327:1637–1642. Collins RW, Anderson J. 1995. Medication cost savings associated with weight loss for obese non-insulin-dependent diabetic men and women. Prev Med 24:369–374. Cummings SR, Nevitt MC, Browner WS, Stone K, Fox KM, Ensrud KE, Cauley J, Black D, Vogt TM. 1995. Risk factors for hip fracture in white women. Study of Osteoporotic Fractures Research Group. N Engl J Med 332:767–773. Currie J. 1995. Welfare and the Well-Being of Children. Newark, NJ: Harwood Academic Publishers. Cutler DM, McLellan. 1996. The Determinants of Technological Change in Heart Attack Treatment. Cambridge, Mass.: National Bureau of Economic Research. Dawson-Hughes B, Harris SS, Krall EA, Dallal GE. 1997. Effect of calcium and vitamin D supplementation on bone density in men and women 65 years of age or older. N Engl J Med 337:670–676. DCCT (The Diabetes Control and Complications Trial) Research Group. 1995. Resource utilization and costs of care in the diabetes control and complications trial. Diabetes Care 18:1468–1478.

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