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Medical Care
Section Newsletter
Summer 2004

Can Methodologists Fix the Dysfunctional “Market” For Health Care Services?

Both advocates and opponents of a “Single Payer” system for health care financing in the United States often fail to appreciate that whether or not we decide to rationally and equitably collect the money to pay for health care in this country, there is still an important second question: how do we get the best possible value when spending our health care dollars?

While it is fashionable to malign health maintenance organizations (HMOs) for stinting on care, any method of paying affects how care is given. For example, fee-for-service payments reward doctors more the more services they deliver – whether needed or not – and doing too much can be just as harmful as stinting. Another problem with fee-for-service medicine is that it provides little incentive for preventive care and no mechanism for “creative” non-medical solutions to medical problems (such as, avoiding “bad-air-day hospitalizations” for people with congestive heart failure by paying for their air conditioning). In theory, the HMO concept, pioneered as a visionary social innovation, is a particularly appropriate structure for facilitating coordinated care for people with multiple health problems and maintaining the health of populations. Also in theory, competition among HMOs should create better value for both those who pay for and those who use their services.

However, when health care purchasers pay HMOs amounts that are only adjusted for the age and sex of their enrollees, plans make the most money by discouraging enrollment from (and encouraging disenrollment of) sick people. Without payments that reflect vast differences in health needs, HMOs that “cherry-pick” the healthiest populations make unearned profits, while plans that efficiently care for sick populations may face bankruptcy.

In the early 1980s, the Medicare program began contracting with HMOs. The federal government should be commended for using research grants to incubate a new health care information industry in predictive modeling. Starting with these grants, several research teams, including my own, developed methods to enable health-based payments to HMOs. These methods are now widely used by government groups in the United States and abroad, by private insurers, and by provider groups to establish fair prices for delivering “a year’s worth of health care” to a specific group of people. Prominent intellectual offspring of this initiative include Diagnostic Cost Groups (DCGs, <>), Adjusted Clinical Groups (ACGs, <>) and the Chronic Disability Payment System (CDPS, <>). Fair payment is calculated, one person at a time, based on the expected cost next year of the medical problems for which that person has been seen during the current year. Because an HMO’s payment is the sum of the expected costs for its enrollees, the HMO loses a lot of money when a medically needy person disenrolls, and only a little when a healthy person does. The goal is to create an “efficient market” for health care delivery that protects sick people, their insurers and their providers, and leads to better care at lower cost.

Starting in the year 2000, the Center for Medicare and Medicaid Services (CMS) began, in a limited way, using formulas developed by my colleagues and myself (based on the DCG methodology cited above) to pay HMOs that enroll Medicare beneficiaries. Starting Jan. 1, 2004, Medicare is using these models to make 30 percent of its payments “health-based.” By 2007, all Medicare HMO payments will be health-based.

Health-based payments correct some important perverse incentives in previous payment methods for HMOs. Predictive modeling won’t save the world, but – irrespective of how the money used to pay for all this is collected – it is a crucial tool for identifying and rewarding better health care providers and delivery systems.

Update on Comparative Drug Effectiveness Legislation

At the November 2003 Annual Meeting, APHA’s Governing Council approved our resolution entitled “Supporting legislation for independent post marketing (Phase IV) evaluation of pharmaceuticals.” This resolution provides a rationale for greater emphasis on independent assessment of pharmaceuticals than currently exists, specifically through:

  • Clinical trial designs that fairly compare target drugs to established alternatives (comparator drug) as well as to placebo; and

  • Adequate federal funding of independent (typically, academic) investigators to conduct such studies to assure independence from pharmaceutical industry support.

Last June, U.S. Rep. Tom Allen of Maine introduced HR 2356 (The Prescription Drug Comparative Effectiveness Act), bipartisan legislation to authorize $50 million for the National Institutes of Health and $25 for the Agency for Health Care Research and Quality (AHRQ) to support comparative effectiveness research.

Section 1013 of the new Medicare law draws on that, expanding its research agenda to cover “the outcomes, comparative clinical effectiveness, and appropriateness of health care items and services (including prescription drugs); and…strategies for improving the efficiency and effectiveness of [the Medicare, Medicaid and SCHIP] programs…"

However, having been written with considerable input from the pharmaceutical industry, Section 1013 also provides for broad ongoing stakeholder consultation on the research agenda, while limiting the government's authority to set standards of practice based on the research findings. It seems fair to see this as a setback in the quest for independent evaluation envisaged in Representative Allen’s bill.

Section 1013 requires the development of an initial priority list six months after enactment of the legislation (June 2004) and completion of the initial research syntheses 18 months thereafter (December 2005). The latter is being construed to mean that a review of extant findings and pertinent research already under way is to be completed by December 2005.

There has yet to be any funding for Section 1013, but implementation is proceeding at the level of planning. This is detailed at <>.

There we learn that, “Because the statute requires annual appropriations for funding the research and other activities authorized by this Section, the [HHS] Department will link the timetable for the priority-setting process for FY 2006 and subsequent years to its process for development of the Department's budget..."

“To meet the requirement for ongoing consultation with other stakeholders, the Department will issue a specific solicitation for research recommendations every year, will permit stakeholders to submit research recommendations throughout the year, and will host a series of listening sessions with different sectors of the health care community to provide additional opportunities for submitting recommendations.”

However, “...the initial priority list should be directed toward evaluating existing evidence regarding the comparative clinical effectiveness of prescription drugs in anticipation of the Medicare prescription drug benefit. Therefore, the Department requests that recommendations for the initial priority list focus on prescription drugs, although all recommendations will be considered.”

The first call for research-priority recommendations had a May 7, 2004 deadline. Submissions are being posted on the Web, at docket no. 2004S-0170, on <>. The docket was last updated on April 20, 2003 and showed only two submissions. One submission proposed looking at the problem of physician access in underserved areas. The other cited the need to guarantee lifetime immunosuppressant coverage for kidney transplant patients.

HHS hosted a town hall meeting on Friday, May 21, 2004, to solicit input on research priorities under Section 1013. Participants were expected to discuss the implications of Section 1013.

Section 1013, notwithstanding its broader topical scope, represents a significant setback in the effort to institute a process for independent comparative evaluation of pharmaceuticals. However, there are several actions that the Medical Care Section and other advocates might take to assure continuing movement toward eventual realization of Representative Allen’s initiative. These include:

  • Advocate for education and debate on this issue among health professional training programs because our current and future researchers come from their ranks.

  • Call your representative and senators to share information on our resolution and verify or ask for their support for continuing action.

  • Help build a coalition of advocates among professional associations and consumer groups to make independent assessment of drug effectiveness and safety issues a major priority.

Jail and Prison Goes to the UK

Three members of the Jail and Prison Health Committee will be spending a week during mid-May in the United Kingdom to present the new APHA Standards for Health Services in Correctional Institutions (2003) to our European colleagues. Corey Weinstein, Nancy Stoller and Pat Kelly will be meeting with the U.K.’s Director of Prison Health and the head of the World Health Organization's Health in Prison Project (HIPP) and touring British penal facilities. HIPP is formed by more than 30 countries, but not the United States. We will be meeting with HIPP as an NGO from the United States, and hope to build working relationships with HIPP members. With the support of Carol Allen of the International Human Rights Committee, Dr. Georges Benjamin, our Executive Director, has approved our delegation’s request to represent APHA at this meeting. We will bring back a full report to the Annual Meeting this fall at the Section's Business Meetings. We look forward to seeing the more rehabilitation focused prisons in the U.K. and talking with penal managers and staff who share our public health values and practices.

Rural Public Health

I’ve had two extraordinary opportunities in the last year to attend events that have the potential to improve rural public health. The first was scheduled on my birthday in September. I left my husband, cat, and promise of a wonderful meal and who knows what else to attend a Rural Public Health Research Agenda Setting Conference sponsored by the University of Pittsburgh School of Public Health and the Center for Rural Health Practice. The Federal Office of Rural Health Policy, in the Health Resources and Services Administration, provided funding for the event, in part. IT WAS WORTH IT! Approximately 50 of us participated in an extraordinary 1.5-day effort learning, considering, and discussing research needs in six areas of rural public health:

• Rural Public Health Infrastructure;
• Workforce Development and Competency Enhancement;
• Rural Health Disparities;
• Access to Care/Safety Net Support;
• Rural Public Health Preparedness; and
• Environmental Health Issues.

The report on the proceedings, Bridging the Health Divide: The Rural Public Health Research Agenda, was recently released and is available at <>. The Agenda is being shared with the various funding sources throughout the U.S. Departmant of Health and Human Services as part of the Secretary’s Initiative on Rural Communities. Adoption of the agenda could make funds available.

Even better than reading the document, the Rural Committee of the Medical Care Section is hoping to sponsor a session on the Research Agenda at this year’s Annual Meeting. Look for it. Whether your interest is in environment, access to care, workforce, etc., you will come away with ideas and possible directions for future research activity.

The second event was a workshop sponsored by the Institute of Medicine’s Committee on the Future of Rural Health Care. Quality was the focus of the workshop. The purpose of the workshop was to provide Committee members with more in-depth information on issues. The public was invited to listen and to also ask questions and provide input to the committee. For information about the workshop, including presentations given, go to <>. The release of the final committee report is scheduled for Fall 2004 and should coincide with APHA’s November Meeting in Washington, D.C. The Medical Care Section will be sponsoring a session on the IOM Report on the Future of Rural Health at the Meeting. Invited speakers include: Mary Wakefield, RN, PhD, Chair of the Committee; Janet Corrigan, IoM Staff; and Forest Calico, MD, MPH, Federal Office of Rural Health Policy, USDHHS, HRSA.

These are only two, although two major, rural-focused activities that have occurred over the last year. Other opportunities that have recently passed, but hopefully not gone away (pending continued funding), include the AHRQ grant: Transforming Healthcare Quality through Information Technology. This grant program represents an initial foray by AHRQ into the non-research, planning and implementation world. Millions of dollars were set-aide for rural planning and rural implementation proposals. These grants provide an extraordinary opportunity for rural public health to plan and implement much needed disease surveillance systems, as well as to monitor health outcomes within populations. Hopefully, we will hear about the results of these planning efforts and some preliminary reports on implementation at our Annual Meeting in 2005.

What more can I say? Rural public health is on the nation’s radar screen. Tell your colleagues that the place to be for rural public health is in the Medical Care Section at APHA. See you in D.C.!!!!

Midyear Meeting 2004 Tidbit

APHA has for many years had a policy statement calling for a national health plan covering all Americans, but not much has actually happened as the organization was unclear about the best course of action toward achievement of that goal. Proposals have included joining with one or more other organizations to work toward Congressional action; one such suggestion would have APHA affiliate with the National Coalition on Health Care. When this was broached at the Midyear Meeting, the cost of such an affiliation was raised and the question became, "Would this be the best use APHA could make of those resources toward that end?" So, it was suggested, in the presence of Dr. Benjamin, that all possible affiliations be placed on the table for comparative consideration. When this happens, it will finally move us toward action and represent yet another example of the MC Section's leadership.

Member Updates

CONGRATULATIONS to our Section members who have recently reached their 40th anniversary as APHA members.

Martin Hirsch
Richard K. C. Hsieh
Sally Hull Jones
Arnold I. Kisch
Alex Krems
Elliot A. Segal
Victor W. Sidel
Hope H. Snider
Eugene Vayda

David Rosner Update

David Rosner continues to write on environmental and occupational health issues, particularly childhood lead poisoning. His most recent book, Deceit and Denial: The Deadly Politics of Industrial Pollution (UCal Press and co-authored with Gerald Markowitz) was republished in paper this past year. He has written articles on the Bush administration’s attempt to reshape the CDC’s Lead Advisory Committee (see: ”The Politicizing of Science,”Journal of Public Health Policy), and a number of chapters for new books that are now appearing. He is now the History editor for Public Health Reports and contributing editor for the Journal of Public Health Policy. Also, he and Markowitz recently won a Robert Wood Johnson Independent Investigator Award and are working on a new book. The Milbank Fund recently published two major reports on 9/11 and public health by Rosner and Markowitz which are available on the Milbank Fund’s Web site.

NEW! E-ssentialLearning

Expanded Access to Annual Meeting Sessions 
APHA is expanding the educational experience of both presenters and attendees at the APHA Annual Meeting by investing in LCD projectors, computers and new Web-based technology for all scientific sessions. This new technology will enable voice and PowerPoint presentations to be recorded and uploaded to the APHA Web site following the meeting, thus extending the life of the meeting and providing access to hundreds of actual scientific session presentations that Annual Meeting registrants may have missed while attending other sessions.

Annual Meeting attendees can receive full access to these expanded sessions by registering for E-ssentialLearning on the Annual Meeting registration form. Special introductory discounted fees are $25 for Annual Meeting session presenters, $50 for APHA members (who are not session presenters), and $100 for non-members, and are in effect for anyone registering for the full APHA Annual Meeting by the Oct. 1 pre-registration deadline. These fees will increase substantially for anyone registering on-site at the Annual Meeting in Washington.

Log-in information and password access to these E-ssentialLearning sessions will be provided to registrants immediately following the Annual Meeting.

NEW! Presenters Able to Upload PowerPoint Presentations in Advance

LCD projectors and computers are now included as part of the standard audiovisual package in each session room. This new technology will enable presenters to upload their PowerPoint presentations in advance of the meeting and have them pre-loaded on the APHA session computers. Individual presentations then begin with a click of the mouse. The cost and inconvenience of bringing a computer to the Annual Meeting has been eliminated for presenters, allowing them to take advantage of new technologies and be a part of the E-ssentialLearning experience.