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McAllen: A Tale of Three Counties

Daniel Gilden

Introduction

The challenge of constraining costs while maintaining or enhancing the quality of medical care is vividly brought to life by Atul Gawande in his recent widely-read New Yorker essay The anecdotal evidence presented in the article is compelling as a description of how physician practices can relate to excessive costs.  The assertion that the observations in McAllen also explain McAllen’s costliness is an inductive exercise that may go too far.  Physician ownership of imaging facilities, ownership interest in hospitals and more subtle forms of self-referral are all substantially present in large healthcare market areas across the country.  Is McAllen an extreme example of a bad physician culture or is there another explanation?  Our analysis of Medicare data from McAllen Texas demonstrates that exceptionally high rates of chronic disease and poverty explain much of the variation in cost.

According to Gawande, McAllen Texas has a physician culture that promotes high cost, low quality care. By comparison El Paso is portrayed as having a similar patient population to McAllen with lower costs of care.   Grand Junction, Colorado, however, the antithesis of McAllen according to the article, is credited with having a physician culture that promotes low costs and high quality.  Ultimately Gawande warns that by failing to change the physician culture nationally, “McAllen won’t be an outlier.  It will be our future.”  But is McAllen really an outlier, a harbinger of physician income-enhancing practices run amok?

A fair comparison between McAllen and Grand Junction would include a more precise analytic methodology than could be offered in Dr. Gawande’s article.  Such an analysis is important: the correct diagnosis of the health care cost crisis is an essential step in selecting an effective prescription.  If McAllen is not an outlier and Grand Junction is not a paragon, then the solution is not to simply tamp down variation by exporting Grand Junction values to McAllen.  If the physician practices reported by Dr. Gawande in McAllen lead to explainable patterns of costs according to current norms, then those practices are part of a national phenomenon right now, not in a nightmare future.

An analysis of the Medicare population in the three counties can place Dr. Gawande’s observations in a more complete context.  Medicare beneficiaries enjoy a standardized benefit package, and detailed data are available on the services they receive.  We can use cost data for Medicare enrollees in the three counties to test Dr. Gawande’s assertions regarding McAllen’s and Grand Junction’s comparative health care costs.  Medicare fee-for-service claims provide us with service level payment and patient health status information; Medicare monthly enrollment data details HMO affiliation, Part B premium assistance and beneficiary demographics.  The Centers for Medicare and Medicaid Service supplies researchers (including the Dartmouth Health Atlas team) with data of this type for Medicare policy analysis.

Accurate Medicare Cost Comparisons

The city of McAllen lies at the center of Hidalgo County, one of the costliest areas for Medicare.  The population is racially diverse, low income and exhibits high levels of chronic disease.  El Paso is similar to McAllen but with less poverty.  Grand Junction is the county seat of Mesa County, a largely white and relatively wealthy region.  In Exhibit 1 annualized Medicare fee-for-service payments for the counties of McAllen, El Paso and Grand Junction show wide divergence in the total Medicare spends per beneficiary.2

Exhibit 1: Annualized Payments per Medicare Beneficiary by County of Residence, 2006

County Medicare Enrollees Medicare Payments
McAllen, Texas 63,770 $12,384
El Paso, Texas 85,478 $6,163
Grand Junction, Colorado 22,887 $4,436

The payments in McAllen’s county are twice as high as in El Paso’s and nearly three times as high as in Grand Junction’s but adjustments are required to the statistics to make the comparison fair.  These adjustments should include normalization for Medicare coverage type and population health.  Relatively few McAllen area Medicare beneficiaries are enrolled in HMOs (2%) in comparison to Grand Junction (42%) and El Paso (16%).   Medicare publishes costs only for services paid on a fee-for-service basis; some services supplied by cost-based HMOs (more common in Grand Junction than in either McAllen or El Paso) are included and some are not.  As a result the cost of care for counties with high numbers of Medicare HMO enrollees is under reported.  In addition, while all eligible individuals receive hospital insurance under Part A of Medicare, beneficiaries must pay a monthly premium to receive outpatient coverage under Medicare Part B, or are enrolled by Medicaid if they are poor enough to meet the state’s income requirement.  The percent of the population in the different counties without full Part A and Part B benefits varies.  In Grand Junction almost twice as many beneficiaries do not have Parts A & B coverage compared to McAllen (4% versus 8%).  The outpatient expenses of this population are not included in Medicare expenditure reports.  In Exhibit 2 HMO enrollees and Medicare beneficiaries without full Medicare benefits are removed from the comparison.

Exhibit 2: Comparative Annualized Payments per Medicare Beneficiary by County after Managed Care and Medicare Part A&B Adjustments, 2006

County Medicare Enrollees Medicare Payments
McAllen, Texas 59,665 $13,150
El Paso, Texas 67,133 $7,656
Grand Junction, Colorado 12,355 $5,579

When the analysis is restricted to cost and enrollment data only for Medicare fee-for-service beneficiaries covered by both Part A and Part B, Grand Junction’s beneficiary annual costs rise by almost 25%.  The difference between McAllen and Grand Junction beneficiary costs falls, but McAllen Medicare costs, now for populations with the same coverage, are still well over twice those for Grand Junction.

County Socio-Demographic Characteristics

The dissimilarities between the McAllen and Grand Junction county populations are extensive.  The socio-demographic characteristics of a population affect its access to care, ability to pay out of pocket for uncovered care and rates of disease associated with diet and life history.  The costs of Medicare co-pays and deductibles can be substantial barriers to access, and history of health care coverage and access to preventive care vary substantially based on socio-demographic variables.  Low-income individuals often reach Medicare enrollment age with a lifetime history of access and cost barriers, a potent mixture.  Barriers to access to care can lead to expensive hospital care for conditions normally treated on an outpatient basis.

Grand Junction Medicare enrollees are 98% white and only 11% require assistance in paying for their Medicare Part B premium (a proxy for low income status).  In contrast McAllen and El Paso are both 26% Hispanic, and a higher proportion of Medicare beneficiaries rely on Medicaid to pay for Part B — 36% in El Paso and 48% in McAllen. To assess how socio-demographic factors affect Medicare costs, Exhibit 3 compares costs for beneficiaries with and without Part B premium assistance.

Exhibit 3: Comparative Annualized Payments by County and Need for Premium Assistance, 2006

County Premium Assistance-No(not low income) Premium Assistance-Yes(low income)
McAllen, Texas $10,012 $16,518
El Paso, Texas $6,709 $9,374
Grand Junction, Colorado $4,853 $11,425

Expenditures are consistently higher for low income beneficiaries, but McAllen is still more expensive than Grand Junction for both income groups — more than 45% more expensive for low-income beneficiaries and more than twice as expensive for those not receiving premium assistance.  However, the Grand Junction advantage is not as great for the low-income population as for higher income beneficiaries.  Could it be that a good part of the McAllen “excess” is simply due to its larger proportion of low-income Medicare beneficiaries compared to Grand Junction?

But socio-economic differences in themselves cannot explain cost differences. What makes the low income population so much more expensive to care for? And why is El Paso, which also has a large low-income Medicare population, so much less costly to Medicare than McAllen?

Population Health

Exhibit 4 uses estimates of population rates of disease derived from Medicare hospital and physician claims to reveal that the prevalence of chronic disease is substantially higher in the McAllen Medicare beneficiary population than in Grand Junction or El Paso; and that the proportion of the McAllen Medicare population with more than two of these conditions is a whopping 52%, in comparison to 23% in the Grand Junction area and 34% in El Paso.

Exhibit 4: Disease Prevalence by County, 2006

McAllen El Paso Grand Junction
Single Selected Condition Rates per 1,000
Diabetes 422 330 145
Ischemic Heart Disease 443 252 211
Heart Failure 168 107 74
Cerebro-Vascular Disease 202 93 56
Chronic  Respiratory Disease 266 190 169
Arthritis 405 290 239
Dementia 107 57 51
Parkinson’s 20 15 12
Multiple Conditions Population Percentage
None of the Selected Conditions 23% 36% 46%
One Condition Only 22% 27% 30%
Multiple Conditions 55% 37% 24%

Many of the disease rates for the McAllen population are more than double those for Grand Junction.  If the Medicare population in McAllen is truly that much sicker wouldn’t we expect the payments to be greater?  A comparison of expenditures for Medicare enrollees without a diagnosis of diabetes or heart disease in the last year shows that costs for these standard populations are statistically very close (Exhibit 5).

Exhibit 5: Medicare Monthly Payments per Patient without a Diagnosis in the Year for Diabetes or Heart Disease, 2006

Row Labels Medicare Enrollees Monthly Per Person Payments
McAllen, Texas 28,680 $3,147
El Paso, Texas 47,960 $2,564
Grand Junction, Colorado 11,160 $3,307

By eliminating diabetes, ischemic heart disease or heart failure from the population payment measures the Grand Junction advantage is completely removed.  Grand Junction is just as costly as McAllen for populations without one of these conditions.

Even though diabetes and heart disease are both costly and highly prevalent in McAllen, beneficiaries experience a wide range of costly illnesses, and patients with multiple conditions are difficult to treat.  We used a more sophisticated risk adjustment method to take into account an array of concurrent conditions.3 Beneficiaries in the top risk scores, the sickest patients, make up 27% of the McAllen, 16% of the El Paso and only 12% of the Grand Junction populations. Average Medicare payments were then computed for each risk group in each county (Exhibit 6). The effect on costs of accounting for this measure of illness burden is dramatic.

Exhibit 6: Annual Medicare Payments by Risk Level

Graphic for Daniel G post

Taking into account the disease combinations eliminates the apparent low cost difference across the full range of disease risk scores. If the disease levels in the McAllen population were magically made to match the Grand Junction disease distribution, but experienced McAllen-level costs, annualized Medicare payments would fall from $13,150 to $6,145.  The morbidity-adjusted per beneficiary payment rate for McAllen is 10% higher than the $5,579 Medicare per beneficiary annualized payments observed in Grand Junction, substantially less than the observed 300% payment differential seen in the unadjusted data.

Discussion and Implications

McAllen is different from many areas of the United States: it is sicker and poorer.  The observed differences in the rates of chronic disease are highest for those conditions rampant in low income American populations: diabetes and heart disease. Further, Medicare beneficiaries in McAllen have significantly higher rates of co-occurring chronic conditions. As a result the costs of caring for McAllen Medicare population appears high in comparison to other areas but not abnormally so.  McAllen suffers from a tremendous burden, but it not caused by its physicians: the care they provide leads to costs that are substantially comparable to the other counties in the article once adjustments are made for the magnitude of the health problems they face.  The disturbing pattern of physician practices uncovered by Dr. Gawande sounds a warning not because it foretells a McAllen-like future but because it portrays the on-going crisis that affects both McAllen and Grand Junction and it is national in scope.  Physician culture is only part of the McAllen story.

Patients with chronic disease, especially those with multiple conditions, are extremely costly to treat.  Cost savings will not be realized by denouncing and penalizing medical systems because they treat patient populations with high rates of disease.  Instead health care reform must develop policies that support streamlining and coordinating care for beneficiaries with multiple chronic conditions, wherever they reside. Policies that support lifetime continuity of coverage, disease prevention and early treatment, could reduce healthcare costs for populations who now reach Medicare eligibility with a history of under-service.  Physician culture has a role to play: Accountable Care Entities are intended to reduce barriers to access by facilitating care coordination. The high costs of care in places like McAllen will not be dramatically reduced by transforming physician ethics and organization if the roots of the crisis are in the interaction between class, demographics and chronic disease.


Notes:

1)  The payment amounts and beneficiary counts are from CMS claims and enrollment data that includes a 5% sample of the Medicare population.  The data is hosted by JEN Associates Incorporated of Cambridge Massachusetts, a CMS MRAD contractor.

2)  A risk score ranging from 1 to 13 was computed for each beneficiary using diagnoses found on Medicare physician and hospital claims.  Beneficiaries with scores greater than 9 are not observed in the Grand Junction 5% data in numbers sufficient for analysis.  The grouping and scoring system was developed by JEN Associates Inc. of Cambridge Massachusetts for Medicare and Medicaid program planning and evaluation applications.  Diagnoses are selected based on correlation with future hospitalization, nursing home entry and death and grouped according to a disease’s functional impact.

Daniel Gilden is a health services researcher with 20 years of hard core quant experience.He’s the President of JEN Associates which provides highly specialized analysis of Medicare and Medicaid data. He contacted THCB regarding the fuss about the  McAllen, TX “overuse” story. In his calculations the data suggests something very different from the “practice variation” theory–the patients really are sicker. As this goes counter to decades worth of work by Wennberg et al, we invited Daniel to share his data and methodology with THCB. And we invite those of you who like this kind of research but may disagree with Daniel’s analysis to respond. Finally it’s worth noting that if his conclusions are true this has huge implications for overall health care policy…Matthew Holt

Thomas Kuhn, Health Care Reform and Vascular Disease

The puzzle of improving care and reducing costs in American medicine and in vascular conditions (that is, diseases associated with blood vessel metabolism) in particular – these are responsible for 60 percent of all cost – has been in part due to the nature of medicine itself.  Physicians are at their core scientists. Our undergraduate degrees are in the scientific disciplines of biology, chemistry, physics. We have been educated in the culture of science and that is the environment in which we practice.

Thomas Kuhn’s The Structure of Scientific Revolutions perfectly describes a central problem in cardiovascular diseases.  A scientific community cannot practice without a set of core beliefs. These central constructs are, in Kuhn’s terms, the foundation of the “educational initiation that prepares and licenses the student for professional practice.” The student’s instruction is “rigorous and rigid,” with the purpose of ensuring that these beliefs are firmly fixed in the student’s mind.

Scientists go to great lengths to defend the idea that they know what the world is like. It should come as no surprise then that “normal science,” – that is, the framework to explain the world used by the scientists who lead the current paradigm – will often suppress novelties that undermine its foundations.

So research often is not about discovering the unknown, but rather “a strenuous and devoted attempt to force nature into the conceptual boxes supplied by professional education.” A generally-accepted paradigm, essential to effective scientific investigation, requires “some implicit body of intertwined theoretical and methodological belief that permits selection, evaluation and criticism.” That paradigm, in turn, forms the basis of a new profession or specialty, like Interventional Cardiology, and from this follows the establishment of journals, societies, and a special place in the medical academic structure.  The articles in those journals are intended for professional colleagues who share the the field’s knowledge and who are the only ones capable of fully understanding them.

A shift in the accepted scientific construct occurs when research aimed at further developing that formulation of the evidence runs into an anomaly — a fact that does not fit the paradigm and cannot be explained away. When anomalies pop up, they typically are not welcome and may be ignored. The current paradigm’s scientists may make little or no effort to formulate a new theory to explain the phenomenon. They are also likely to be intolerant of practitioners who try to do so.

All the same, the discovery of anomaly is the stimulus that leads to a new paradigm. The failure of  existing beliefs and rules is the necessary but insufficient platform for the development of new scientific and practice structure.

The leaders of an entrenched paradigm strongly resist alternate systems of science and practice. Only in  crisis can that resistance be overcome. No better example of this can be found than the current situation in the treatment of cardiovascular and arterial disease.

*****

The fixed blockage is the dominant paradigm today for both the science and practice of cardiovascular and arterial disease management. In other words, it is viewed as a plumbing problem. This paradigm has persisted because it made so much sense.

Angina is a historical diagnosis – particularly in a man.  Just talk to the patient and you can make the diagnosis. If a man walks and gets chest pain that is relieved by rest, he has angina. Almost all of those men have a blockage of 70% or greater.

If the cardiologist does a catheterization he will demonstrate the blockage.  If he opens the blockage with a stent the pain will go away.  But many men with angina go on to have heart attacks – it is high risk.  So it is no surprise that blockage became the dominant scientific paradigm. To this day, virtually the entirety of the science, practice, and financing are organized around this idea: Heart attacks are caused by a progressive blockage. If we open that blockage before it becomes complete, we will save the patient.

Now the anomaly. In 1988, WC Little and his colleagues at Wake Forest performed a study “to help determine if coronary angiography can predict the site of a future coronary occlusion.” If the plumbing model were correct and a progressive blockage of the artery caused myocardial infarction, the findings on coronary angiography should predict the site of heart attack. It did not.

Little and his colleagues studied 42 consecutive patient records of patients who had had coronary angiography before and up to a month after having a heart attack. In 19 of 29 (66%) patients, the artery that occluded subsequently had less than a 50% occlusion on the first angiogram. In 28 of 29 (97%) the stenosis (or narrowing of the vessel) was less than 70%, even though it takes a stenosis of 70% or greater to justify angioplasty with stenting.

Little concluded

“Because it was difficult to predict the site of subsequent occlusion in our patients from the initial coronary angiogram, coronary bypass surgery or angioplasty appropriately directed only at the angiographically significant lesions initially present in almost all of our patients would not have been effective in preventing the majority of infarctions…instead effective therapy to prevent myocardial infarction may need to be directed at the entire coronary tree…”

And, in keeping with Kuhn’s description of the scientific revolution, the best arterial disease scientists quickly developed a new paradigm that provides a much better explanation of the mechanism of heart attack and other vascular events. Within 7 years of the first anomaly, Erling Falk, Prediman K Shah and Valentin Fuster, leading academic cardiologists, summarized four studies that came to the same conclusion as Little. Only 14% of heart attacks occur in an artery that was 70% blocked on the previous catheterization. Only 14% of heart attacks occurred in an artery with enough obstruction to cause angina and justify bypass surgery or stenting.  Falk and his colleagues described the new paradigm very simply:

“plaque disruption with superimposed thrombosis (obstructive clot) is the main cause of the acute coronary syndromes of unstable angina, myocardial infarction, and sudden death.”

Peter Libby is Chief of Cardiology at Boston’s Brigham and Women’s Hospital, one of Harvard’s teaching hospitals. One of the world’s foremost authorities on the science of heart attack and plaque rupture, he quite literally “wrote the book” on the topic. In the volume of Harrison’s Principles of Internal Medicine, the standard reference text for the discipline, that sits on my desk, Peter Libby wrote the chapter entitled The Pathogenesis of Atherosclerosis.

In 1995, the same year as the Falk article, Libby wrote a piece called “The Molecular Basis of the Acute Coronary Syndromes.”

“Bypass surgery or transluminal angioplasty (dilation of the artery and then, propping it open with stents) provide rational and often effective therapies for these fixed, high-grade stenoses (blockages).  However, these treatments do not address the non-stenotic but vulnerable plaque (which may rupture and suddenly block the artery with clot).  It is of interest in this regard that despite the well-accepted benefit of coronary bypass surgery on anginal symptoms, this treatment aimed at severe stenoses does not prevent myocardial infarction. To reduce the risk of acute myocardial infarction, one must stabilize lesions to prevent this disruptions, particularly the less stenotic plaque.”

In other words, heart attack is not caused by a gradual narrowing of the artery, but rather is the result of sudden cholesterol plaque rupture with subsequent clot formation, which blocks off the artery and cuts off blood flow.

Today, 14 years later, we can dramatically stabilize plaque and reduce plaque progression by smoking cessation and reduction of cholesterol, triglycerides, blood pressure, and blood glucose.  We can prevent clot formation with aspirin and other medications.

The scientific revolution in vascular disease is 20 years old and the new paradigm firmly in place and supported by the very best vascular scientists. Still, the practice paradigm persists as if the science never changed.

Just last year, I heard a brilliant talk by Valentin Fuster, one of the co-authors on the Falk article. Afterward I asked him what it would take to move the practice paradigm forward. He responded that it would take the time required to replace current practitioners wi
th the next generation.

Can we afford to wait for that?  Several years ago, I heard Dr Libby speak at a national meeting of the American Society of Hypertension. I later asked him, “Dr Libby, I read your article from 1995, saying that bypass and stenting do not prevent heart attack, do you still hold that view.”  He became very animated and enthusiastic and said he was convinced that the new science was valid and required action to move it forward.

The science has become irrefutable.  Yet the defenders of the old science still carry the day.  I fear that medical scientists will not move this forward and it will require changes in payment and support for research coming from outside the professional community to bring the latest science to patients.

We have to recognize the suppression of anomalies and new paradigms in medicine. Only then can we develop mechanisms that can bring the latest evidence-based science to patients.

Bill Bestermann is Medical Director, Integrated Health Services at Holston Medical Group in Kingsport, TN.

Op-Ed: Health care reform is within reach

-1In recent weeks, President Obama has gotten flack for insisting that, despite the nation’s urgent economic  problems, “health care reform
cannot wait.”

On this point, though, he’s absolutely right. But that doesn’t mean we
need more government programs. What we need is a focus on chronic
disease.

Chronic diseases are among the most serious public health threats
facing the American people today. These conditions, which include
diabetes, chronic kidney disease, cardiovascular disease and cancer,
often last for years, requiring frequent treatment throughout a
person’s life. The toll they exact on American patients is appalling,
accounting for 70 percent of all deaths in the United States.

America’s exorbitant health care spending is also linked to these
destructive illnesses. In fact, 75 percent of the more than $2 trillion
spent on health care in the United States goes toward caring for those
with chronic conditions. Heart disease and strokes alone cost the
American people $448 billion in 2008.

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