The American Physical Therapy Association (APTA) and American Occupational Therapy Association (AOTA) have published summary materials of the Dobson DaVanzo & Associates Therapy Outcomes in Post-Acute Care Settings (TOPS) study. This study examined the relationship of physical and occupational therapy to measured changes in reported functional independence and readmissions. Overall, we found that therapy intensity is directly and positively related to improvements in functional ability and post-discharge readmission rates.
The TOPS study used Medicare claims and post-acute care assessment data (OASIS, IRF-PAI and MDS) to assess the amount of therapy received during a stay and functional impairment of core activities of daily living and mobility at admission and discharge. This allowed us to measure functional improvement while controlling for important beneficiary health and service use factors. Post-acute care (PAC) settings studied – Inpatient Rehabilitation Facilities, Skilled Nursing Facilities, and Home Health Agencies – differed substantially in their approaches to care provision as well as measurement of key functional status items. While we were able to compensate for this in the study, these differences precluded direct comparison across studies, with strong implications for the future of a unified PAC payment system.
Summary TOPS study materials are available from APTA: https://www.apta.org/article/2021/04/05/apta-aota-joint-statement.
In 2020, 5.8 million Americans aged 65 and older (11% of the total population in this age group as of 2019) were diagnosed with Alzheimer’s Disease (AD) . To determine Medicare and Medicaid expenditures for beneficiaries and total societal expenditures associated with the clinical introduction of a potential AD treatment for Medicare beneficiaries, we used the 2020-2021 total AD population over 65 as a baseline. Using a step-down approach and factoring in a take-up rate, we determined the target population that would benefit from the potential AD treatment to be 80,248, or approximately 1.4% of the initial population, gradually increasing each year to 205,153 by 2031. In addition, the analysis focuses on a 10-year time frame (2022-2031) and, specifically, on the Medicare population over 65. Our estimated 10-year cost savings assume the introduction of a novel AD medication that delays disease progression by six months for year 1 (2022), twelve months for year 2 (2023), eighteen months for year 3 (2024), and twenty-four months for all following years until 2031. A delay of this length represents a dramatic roll back in the progression of the disease where the costs are significantly higher than in the earlier stages of the disease. We assumed an aggressive take-up rate of the novel AD medication, starting at 25% in 2022 and gradually increasing to 50% in 2031. This analysis estimates our total 10-Year Savings as: $1.24 billion for Medicare (including beneficiary copayments), $26.42 billion for Medicaid and Non-Medicaid Nursing Home Costs, and $11.86 billion for Informal Care and Support Costs for a total of $39.52 billion. You can read an executive summary of the analysis and download the full report here.
Potential Medicare savings are limited because the study only focuses on those costs associated with Medicare spending that are directly associated with AD or ~11% of the total Medicare expenditures for AD patients . For Medicaid savings, the analysis specifically focuses on costs and savings generated from Nursing Home (NH) Care for Medicare beneficiaries. It is estimated that close to two thirds of nursing home residents in the US have some type of cognitive impairment like AD . The informal caregiving cost estimates account for both a population that enrolls in nursing home care and a population that never enrolls in nursing homes. Greater savings are achieved through reductions in broader societal expenditure burden like formal Medicaid long-term care expenditures and informal caregiving and support expenditures than from Medicare and Medicare Copayments.
A drug that would delay AD disease progression by up to two years would increase quality of life by preserving and extending patients’ independence for a longer time, thus transforming the AD drug space. A drug that delays AD disease progression by two years also promises significant social returns relative to costly drugs that extend life for much shorter time frames. The most important benefit of the potential AD treatment is likely not monetary, but rather quality of life due to a delay in the debilitating neurodegenerative sequelae of AD. Biogen, Inc. commissioned Dobson DaVanzo & Associates, LLC, a health economics and policy consulting firm, to conduct this study.
 Alzheimer’s Association. (2020), 2020 Alzheimer's disease facts and figures. Alzheimer's Dement., 16: 391-460. https://doi.org/10.1002/alz.12068
 Pyenson, B., Sawhney, T. G., Steffens, C., Rotter, D., Peschin, S., Scott, J., & Jenkins, E. (2019). The real-world medicare costs of alzheimer disease: considerations for policy and care. Journal of managed care & specialty pharmacy, 25(7), 800-809.
 Gaugler, J. E., Yu, F., Davila, H. W., & Shippee, T. (2014). Alzheimer’s disease and nursing homes. Health Affairs, 33(4), 650-657.
Dobson | DaVanzo routinely assists clients who wish to submit their studies to peer reviewed journals. Our analysts and data scientists help to develop the “story line,” and tailor the content and format to the requirements of the selected journal. Our studies range from econometric analyses of legislation or Medicare regulation to more clinically oriented retrospective longitudinal cohort studies of patient outcomes using Medicare claims. Recent examples are "Economic Value of Orthotic and Prosthetic Services Among Medicare Beneficiaries: A Claims-Based Retrospective Cohort Study, 2011–2014", appearing in the Journal of NeuroEngineering and Rehabilitation in 2018 and "An Economic Evaluation of the Impact, Cost, and Medicare Policy Implications of Chronic, Nonhealing Wounds", appearing in Value in Health in 2018. Other studies have been published in a wide variety of journals such as Health Economics, Health Affairs, The Milbank Quarterly, Surgical Technology International, Military Medicine, and Journal of Vascular Access. We are currently preparing three manuscripts for clients based on our analysis of the 100 percent Medicare files.
Dobson | DaVanzo is pleased to announce its continued partnership over the next five years with Booz Allen Hamilton's (BAH) Independent Evaluation Center to evaluate hospital and clinician focused improvement initiatives related to large scale interventions in the fields of Behavioral Health, Chronic Disease Management, Patient Safety, Quality of Care Transitions, Long Term Care and response to the COVID-19 emergency and preparedness. As subcontractor to BAH, Dobson | DaVanzo will collaborate on technical aspects of the development and implementation of formative and impact evaluations as well as on innovative techniques to estimate a Return on Investment to CMS. This work is a continuation of Dobson | DaVanzo’s past subcontracting work for BAH, in which impact evaluation and ROI estimates were produced for CMS related to the Quality Innovation Network-Quality Improvement Organizations (QIN-QIOs) 11th Statement of Work.
Dobson | DaVanzo has been helping manufacturers and service providers of focused ultrasound (FUS) devices in understanding how CMS sets Ambulatory Payment Classification (APC) payment amounts in the outpatient setting. The project entails tracking how providers bill Medicare for a code in relationship to the cost of delivering the service. The key is that the provider bills Medicare “charges.” Medicare then steps these charges down to costs using the hospital’s cost-to-charge ratio (CCR x charges = costs) and sets payments at these estimated costs. Through workshops and webinars, Dobson | DaVanzo has been able to discuss with a number of academic medical centers and their various financial departments how the decisions on Revenue Center selection, setting, and charge levels influence eventual CMS APC payments.
Dobson | DaVanzo was commissioned by the Independence Through Enhancement of Medicare and Medicaid (“ITEM”) Coalition to model the likely impact of establishing coverage for two accessories of complex rehabilitative power wheelchairs on Medicare spending over 10 years (2021-2030). In their findings, they provided cost estimates which will be incurred by Medicare in the event of coverage implementation of these wheelchairs.
Dobson | DaVanzo analyzed preliminary 2020 Medicare Home Health claims and found that agencies may be underpaid on a case basis in 2020 due to the dual pressures of payment system reform and the ongoing COVID-19 public health emergency (PHE). Home health agencies concurrently experienced a decline in home health episode and visit volume, primarily due to the COVID-19 pandemic, but also due to issues stemming from the transition to the new home health reimbursement system—Patient Driven Groupings Model (PDGM). Under PDGM, a provider gets penalized if they deliver fewer visits to a patient than the threshold set by CMS. Prior to the pandemic-related state actions (in January and February), there were many more cases penalized for having too few visits within an episode than CMS targeted in its rulemaking; this is likely the result of PDGM but was subsequently exacerbated by the PHE.
This work, sponsored by the Partnership for Quality Home Healthcare, was submitted during the CY2021 HH PPS proposed rule public comment period and will be made available in the federal register. In it, we examine the extent to which home health agencies have conformed to behavioral assumptions, the basis of prospective CMS rate reductions in 2020. Ultimately, we found evidence that the system has a base payment rate which leads to payments that are 6% lower in implementation than expected in prior rulemaking. CMS reduced rates for 2020 by 4.36% on the basis of assumed provider behavioral responses to the new payment system.
Regardless of the cause (CMS rate reductions, implementation of the new payment system, PHE, hurricanes, and so on), average home health case payments are below the budget neutral level specified as the target spending level in the Bipartisan Budget Act of 2018. PDGM implementation and the COVID-19 PHE are entangled, making it difficult to firmly attribute the observed payment rate to one or another factor. Realistically, all healthcare providers have been affected by the PHE to some extent and it is unclear how long it will take or the extent to which it will to return to pre-pandemic activity levels.
In July, CMS exercised Option Period 2 to extend Dobson | DaVanzo’s contract to assist with Part D Formulary and Benefits Assessment. Under this contract, Dobson | DaVanzo and its sub-contractor, Acumen, LLC, will continue to monitor the prescription drug benefits program as offered through the Medicare Prescription Drug, Improvement, and Modernization act of 2003 (MMA). We will continue to analyze and summarize contract/plan benefit and formulary offerings, enrollment data and prescription drug event (claims) data, as well as the relationship between drug utilization and health status or other characteristics of the beneficiary or plan. These results may influence future Part D formulary and/or benefits requirements.
Dobson | DaVanzo provided expert consulting and testimony concerning hospital taxes and Medicaid rates for the Connecticut Hospital Association (CHA) over a period of several years. The CHA just received a “final” settlement. The settlement was complex involving approval by the State legislature, CMS approval of numerous plan amendments, and approval by the Connecticut (CT) Superior Court. Hospitals in CT will receive a one-time payment and various rate increases. It was an “amazing” journey with an outcome acceptable to both hospitals and the State. This settlement is an example of how complex payment issues can be resolved in a way that ultimately assures continued quality care for CT residents.
In June, CMS exercised Option Period 2 to extend Dobson | DaVanzo’s contract to assist with Monitoring and Data Validation of Parts C & D Reporting Requirement. Under this contract, Dobson | DaVanzo and its sub-contractor Acumen, LLC, will continue to monitor data submissions by Medicare Advantage Organizations (MAOs) and Part D Sponsors, prepare and analyze submitted data, create Public Use Files (PUF) and updates, and/or create Data Validation (DV) Standards. Dobson | DaVanzo will analyze the reporting requirements data reported by Sponsors to calculate overall Part C and Part D program summary statistics and produce performance measures for public reporting. The outcomes from this project will ensure that Medicare beneficiaries have access to information about their health and drug plans, and to ensure that beneficiaries are provided with care that is of high quality and is safe, effective, and timely.
Dobson | DaVanzo welcomed Sarah Rappazzo, a health policy enthusiast, for a virtual summer internship with the firm. Sarah is an undergraduate student at Cornell University with a major in Biology and Society and minor in Health Policy and Nutrition, Health and Society. Among other activities, she will be supporting the firm in its contract with CMS to monitor the Medicare Disproportionate Share Hospital-related comments during the Inpatient Prospective Payment System (IPPS) rulemaking.
In a competitive bid, Dobson | DaVanzo was awarded a $2 million task order with the Center for Medicare and Medicaid Services (CMS) for Medicare Part D Drug Discount Program Data Support. For this project, Dobson | DaVanzo will be supporting CMS through data analyses and monitoring in ensuring that plans offer appropriate drug coverage and benefits for Part D beneficiaries and that beneficiaries are utilizing drugs in a safe and appropriate manner.
Dobson | DaVanzo is pleased to welcome Ada Cheng to our team of Data Associates. Ada brings more than ten years of experience performing business and statistical analyses in the healthcare sector. She holds a Master in Applied Science and Information Technology from Johns Hopkins University and her repertoire of data sets includes working with the Defense Medical Surveillance System, and data sets including Medicare, Medicaid, and Managed Care systems.
Dobson DaVanzo under commission and in collaboration with Adventist HealthCare (Montgomery County, MD) developed a conceptual model of healthcare financial relationships to relieve a myriad of concerns about today’s healthcare billing system, including surprise balance billing. This conceptual piece called “Consumer Protection Realignment: Shifting Consumer Billing from Providers to Health Plans” was published in the Health Affairs Blog dated May 1, 2020.
The Consumer Protection Realignment (CPR) model is a novel approach that refocuses attention on the financial interaction of patients, providers and health plans. Today’s healthcare billing system frustrates consumers and it is nearly impossible for consumers to anticipate and understand out-of-pocket medical costs, even when receiving simple procedures. Healthcare providers struggle to recoup and manage the complexity of a health insurance market that is facing market pressures that have led to higher out-of-pockets costs in order to control healthcare expenses and premiums. This dynamic has produced a system that is unfavorable to consumers, as they bear the brunt of unaffordable costs, an increased presence of surprise balance billing, a lack of price transparency and a multitude of often complex and unexpected bills.
To solve this issue, the CPR model realigns the billing and collection of deductibles, coinsurance and copayments from health care providers to health insurance plans via proposed federal legislation requiring all providers, whether in- or out-of- network, to bill patient out-of-pocket costs through the insurer. While CPR is an overarching reform approach, the system uses operational mechanisms currently in place. Health plans would still negotiate rates with providers, but would take on the added responsibility and risk of billing patients. In turn, providers would be required to return the resulting savings to plans in the form of reduced charges for services. In so doing, CPR creates a system where consumers enjoy increased price transparency, protection from surprise balance billing, consolidated and simpler billing, and, in the long-term, more progressive and integrated healthcare delivery mechanisms. To read more about CPR visit the Health Affairs blog.
In their March 2020 Report to the Congress: Medicare Payment Policy, MedPAC addressed the question of whether 340B drug discounts create incentives for hospitals to choose more expensive products. As part of their analysis, MedPAC cited Dobson | DaVanzo’s 2017 report entitled Financial Challenges Faced by 340B Disproportionate Share Hospitals In Treating Low-Income Patients, written by Al Dobson, Kennan Murray and Joan DaVanzo. MedPAC wrote that “Dobson and colleagues found that 340B DSH hospitals incur higher drug spending compared to non-340B hospitals due to the type of patients they treat and the characteristics of the facilities they operate. Accounting for differing patient and facility characteristics using propensity score matching (that matched 340B hospitals to non-340B hospitals based on patients’ and hospitals’ characteristics), Part B spending per beneficiary in 2013 was 15 percent greater at 340B DSH hospitals than at non-340B hospitals ($3,204 versus $2,794). However, because 58 percent of the 340B DSH hospitals that could not be matched to non-340B hospitals were therefore excluded from the analysis, a limitation of this study is that it may not be generalized to all 340B DSH hospitals.”