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CBO Underestimates Health Reform Savings, Researcher Finds
Over the last 30 years, the Congressional Budget Office (CBO), which assesses the costs of proposed legislation and is widely respected for its competence and integrity, has underestimated the amount of savings and overestimated the costs that major changes in the health care system would bring, according to Jon Gabel in a recent op-ed published in the New York Times.

Drawing on Commonwealth Fund-supported research, Gabel, a senior fellow at the University of Chicago's National Opinion Research Center, analyzed the CBO's forecasts of three major changes in the Medicare program relative to their ultimate outcomes.

He found that in the early 1980s, the CBO underestimated savings from reforms Congress made in the way Medicare paid hospitals by $11 billion. Gabel also found that savings from the Balanced Budget Act of 1997, which changed the way skilled nursing facilities and home health services were reimbursed under Medicare, turned out to be 50 percent greater in 1998 and 113 percent greater in 1999 than the budget office had forecast. And, the even though the CBO predicted that drug prices would rise following the Medicare Modernization Act of 2003, which added prescription drug benefits to Medicare, by estimating that spending on the drug benefit would be $206 billion, actual spending was nearly 40 percent less than that, Gabel found.

When the CBO analyzes initiatives aimed at reducing costs, it uses evidence from similar previous policy changes that have saved money. When there is a lack of historical examples, the "unknown" variable often becomes zero.

Gabel observes that underestimating savings that can come from cost-control initiatives in Medicare and throughout the health system could undermine efforts to pass health reform legislation. "As Congress now works on its greatest push for health care reform in generations, the budget office needs to revise the methods it uses to make predictions about costs," he says.

Hospital Group Resists Improvement Targets for Stimulus Payments
In late August, the Federation of American Hospitals sent a letter asking federal officials to drop proposals that would require providers to meet quality improvement targets to qualify for federal incentive payments related to electronic health records.

Under the economic stimulus package, hospitals and physicians demonstrating "meaningful use" of electronic health records will qualify for Medicare and Medicaid incentive payments. While the rules for "meaningful use" are still being debated, the Health IT Policy Committee recently recommended that provider payments be linked to fulfillment of certain quality improvement targets.

The Federation of American Hospitals, a trade association for for-profit hospitals, argues that this recommendation goes beyond the scope of the stimulus legislation. The group maintains that the law requires providers to report quality measures—not to meet certain targets. In addition, the group warns that tying incentive payments to outcome measures could hinder health IT adoption.

Leaving Hospital Against Medical Advice Contributes to Readmissions, Study Finds
The number of hospital stays that ended with patients leaving against medical advice increased 39 percent between 1997 and 2007, according to a study by the Agency for Healthcare Research and Quality published in August. Patients choosing to be discharged against medical advice had higher rates of adverse health outcomes and substantially higher readmission rates than those who followed medical advice.

The study, which draws on data from the Healthcare Cost and Utilization Project 2007 Nationwide Inpatient Sample, found that nearly half of patients leaving the hospital against medical advice in 2007 were Medicaid beneficiaries or the uninsured. Hospital stays in which the patient left against medical advice were 1.6 times more common among men than among women, and 2.7 times more common among patients living in the poorest communities than in the wealthiest communities.

Understanding the reasons why patients leave the hospital—such as behavioral problems, fear of incurring high costs, or family or work responsibilities—can help hospital providers to design strategies that promote patient adherence to medical advice. These, in turn, could help avoid adverse outcomes and readmissions, the study concludes.

Premier P4P Demo Reduced Infections, Mortality Rates
Results from the fourth year of the nation's largest value-based purchasing demonstration program suggest that the program has helped prevent infections in pneumonia patients and cut death rates in heart attack patients. Members of Congress have looked to the demonstration as a model to control health care spending and improve the quality of care.

Between 2003 and 2007, hospitals participating in the Centers for Medicare and Medicaid Services/Premier Hospital Quality Incentive Demonstration were evaluated on their performance on 30 measures of the quality of care. Over the four-year period, improvements in the quality of care at participating hospitals saved the lives of an estimated 4,700 heart attack patients. In addition, 92.6 percent of patients with pneumonia received recommended treatments, such as antibiotics, to prevent infection transmission, an increase from 69.3 percent of patients in 2003.

CMS will award more than $12 million in bonus payments to 225 top-performing hospitals in the program. Three poor performers will be penalized.

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