Quality-constant “prices” for the ongoing treatment of schizophrenia: an exploratory study

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Abstract

Health care expenditures have been increasing sharply in the last 10 years, with spending on mental health disorders being particularly prominent. Over the same time period, a number of new antipsychotic medications have been added to the armamentarium for treatment of persons diagnosed with schizophrenia. Due in part to the sharply increased expenditures by Medicaid on mental health disorders such as schizophrenia, controversies have arisen as to the use of these more costly innovative medications, particularly their impact on the annualized cost of treating patients.

Using Medicaid data on 12,864 person-years from two counties in Florida over the 1994–1995 to 1999–2000 time period, in this study we address three issues: (i) On a per person-year basis, what is happening over time to the mental health-related costs of treating schizophrenia? (ii) How is the composition and quality of care changing over time? and (iii) Holding quality of care constant, on a per person-year basis, by how much are the costs for the ongoing treatment of schizophrenia changing?

We find that unadjusted for changes in quality of care over time, the annualized costs for the ongoing treatment of schizophrenia per person have increased about 0.5% per year. The composition of treatments for schizophrenia has changed substantially over this six-year time period, toward more intensive use of atypical antipsychotics, and away from psychosocial treatments. Holding treatment quality type and patient characteristics constant over time, mean treatment costs have fallen about 5.5% per year between 1994–1995 and 1999–2000.

Introduction

Healthcare expenditures have been increasing sharply in the last 10 years, with spending on mental health disorders being particularly prominent.1 A disproportionate share of mental health spending is for people with severe and persistent mental illnesses such as schizophrenia.2 During the 1990s significant innovations have occurred in the treatment technologies available to clinicians caring for people with schizophrenia. In addition, based on a generation’s worth of clinical studies, a great deal of effort has been expended in disseminating recommendations for “best practice” in treatment of schizophrenia.3 Together these changes in technology, coupled with quality improvement efforts, might be expected to substantially alter patterns of treatment for schizophrenia, resulting in both cost and quality of care changes.

Here we assess how the level of spending required to achieve particular levels of quality of care in the treatment of schizophrenia has changed during the 1990s. Our empirical analysis focuses on constructing price indexes for the ongoing treatment of schizophrenia. Through the creation of a price index that takes account of the quality of care, we provide a key building block in assessing aggregate productivity of spending in the mental health sector. To the best of our knowledge, to date there has been no study on price indexes for the ongoing treatment of schizophrenia.4

Schizophrenia is a chronic and disabling illness. Although no cure has been found for schizophrenia, its symptoms and manifestations are amenable to treatment. In the last decade, a number of new antipsychotic medications have been added to the treatment armamentarium; these innovative pharmaceuticals are generally known as atypical antipsychotics. Because of the disabling consequences of schizophrenia, the vast majority of treatment for schizophrenia in the U.S. is financed from public sector sources, such as Medicaid. It is estimated that in the U.S., approximately 70% of all prescriptions for antipsychotic medications are paid for by Medicaid.5 Due in part to the sharply increased expenditures by Medicaid on mental health disorders such as schizophrenia, controversies have arisen as to the use of these more costly innovative medications, particularly their impact on the annualized cost of treating patients.6

Using Medicaid data on 12,864 person-years from two counties in Florida over the 1994–1995 to 1999–2000 time period, in this study we address three specific issues: (i) On a per person-year basis, what is happening over time to the mental health-related spending on treating schizophrenia? (ii) How is the composition and quality of care changing over time? And (iii), holding quality of care constant, on a per person-year basis, by how much is the spending for the ongoing treatment of schizophrenia changing over time? We pursue these issues by constructing producer price indexes for treatment of schizophrenia. We base these price indexes and our quality adjustments on annual episodes of care. This allows us to make use of results from clinical research to control for quality, which would not be possible using more traditional price indexes based directly on input prices (Berndt, Cutler, Frank, Newhouse, & Triplett, 2000).

Section snippets

Schizophrenia: the illness, its prevalence and treatments

Schizophrenia is a profound mental disorder characterized by psychosis (i.e., loss of contact with reality, hallucinations, delusions [false beliefs] and abnormal thinking) and disrupted work and social functioning.7 The prevalence of schizophrenia worldwide appears to be about 1%, although pockets of higher or lower prevalence have been identified. In the U.S. about 2.5 million

The Patient Outcomes Research Team (PORT) treatment recommendations

In 1992 the Agency for Health Care Policy and Research and the National Institute of Mental Health launched the schizophrenia Patient Outcomes Research Team (PORT) project (Lehman et al., 1998a). PORT treatment recommendations were published in January 1998. PORT placed a strong emphasis on the evidentiary basis for its treatment recommendations, particularly in the context of fiscal constraints: “Evidence-based medicine reflects a commitment to providing medical treatments supported by

The Florida Medicaid data

Our data encompass Medicaid retrospective administrative medical claims data for individuals diagnosed with and treated for schizophrenia in two counties in Florida, those containing Jacksonville and Orlando, for the six fiscal years between 1994–1995 and 1999–2000. The medical claims data include inpatient and outpatient procedure codes (both CPT and Florida Medicaid-specific), pharmacy data, mental health-related diagnoses, and the timing of any services. Enrollees in these Medicaid programs

Inferring treatment quality with administrative claims data

We employed the PORT schizophrenia recommendations as a framework for classifying quality of care received by enrollees diagnosed with schizophrenia. More specifically, at the person-fiscal year level, we constructed a variety of PORT-based process measures, characterized as dichotomous indicator variables. Quality indicators include treatment types that are evidence-supported (e.g., various pharmacotherapy–psychosocial treatment combinations), treatment types for which evidence is equivocal

Econometric framework

We specify multivariate regression equations with the natural logarithm of annual mental health-related direct medical costs as the dependent variable. Regressors include patient-specific demographic measures (age, gender, race, county), enrollment history (months at risk, ever SSI), medical history (ever substance use disorder), and indicator variables for eight of the nine solo and combination treatment bundles (the omitted case is the all other, miscellaneous category). Estimation is by

Results: quality of care, and mental health costs by treatment type

Table 2 presents use of various treatment types, by fiscal year. Recall that these quality measures reflect whether there was any utilization of a particular treatment type, and that no account is taken of whether the treatment was of adequate dose or duration (while doing so would augment our precision in defining quality, it would clearly be endogenous and thereby introduce econometric complications). Also, note that since the various treatment types can be used alone or in combination with

Results: econometric findings, and implicit price indexes

Using the person-year as the unit of observation (n = 12,864), we estimate parameters in yearly multivariate regressions with log mental health care costs as the dependent variable, and include as regressors demographic variables, a substance use disorder indicator variable, and indicator variables for various solo, double and triple combination treatment types. We then pool across fiscal years as permitted by results of hypothesis tests for parameter stability over the six-year 1994–1995

Limitations and concluding remarks

The data that form the empirical foundation for this study come from two counties in Florida, covering the 1994–2000 time period. Medicaid mental health services in these two counties are managed only very slightly, and in particular, these data do not capture effects of carve-outs to managed behavioral health care organizations.

Medicaid is the central funder of health care for people with schizophrenia in the U.S. About 70% of people with schizophrenia have their care paid for by Medicaid (

Acknowledgements

National Institute of Mental Health funding from grants R01MH62028 and R01MH59254 is gratefully acknowledged, as is additional funding to Dr. Busch by the Dr. Ralph and Marian Falk Medical Research Trust. An earlier version of this paper was presented at the International Health Economics Association meetings in San Francisco, CA, June, 2003, and at the Summer Institute meetings of the National Bureau of Economic Research in Cambridge, MA, July 2003.

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