The cost of treating community-acquired pneumonia

CLINICAL THERAPEUTICSVVOL. 20, NO. 4, 1998

The Cost of Treating Community-Acquired Pneumonia

Michael S. Niederman, MD,l Jeffrey S. MeCombs, PhD,2 Alan N. Unger, PhD,3 Amit Kumar, MD,3 and Robert Popoviun, MS, Pharmp 1 Winthrop-University Hospital, Mineola, New York, 2University of Southern California, Los Angeles, California, 3Science Applications International Corporation, Reston, Virginia, and 4Pfizer Inc, New York, New York

ABSTRACT

Community-acquired pneumonia (CAP) is responsible for an average of 4.5 million visits annually to physicians’ offices, emergency departments, and outpatient clinics. However, there have been few studies using national data on the costs of treating CAP. Without such data, it is dif-

ficult to assess whether new therapies and treatment strategies are needed to improve patient outcomes. We conducted a retrospective analysis based on national incidence data and paid claims data for patients treated for CAP to assess the frequency of services rendered and costs to the health-care system. Records were selected for the study based on a primary diagnosis of CAP according to the Znter- national Classification of Diseases, 9th

Revision. Incidence data were derived from the National Health and Nutrition Examination Survey III. Medicare was the primary source of data for patients aged 265 years. Data from the National Health-

care Cost and Utilization Project, the Na- tional Ambulatory Medical Care Survey, and the National Hospital Ambulatory

Medical Care Survey were used to deter- mine the cost of treating patients aged ~65 years. We arrived at a total cost of $4.8 billion for treating patients aged 265 years and $3.6 billion for treating patients aged ~65 years. These calculations were based on the following: 1.1 million hospital discharges resulting in inpatient costs of $4.4 billion (52.4% of the $8.4 billion) for the 0.6 million patients aged 265 years and $3.1 billion (36.9% of the $8.4 billion) for the 0.5 million patients aged ~65

years. The average hospital length of stay was 7.8 days with an average cost of $7166 for patients aged 265 years and 5.8 days with an average cost of $6042 for younger patients. Room and board represented the largest percentage of the average hospital bill for patients with CAP. Inpatient physician service costs were $305 million and $192 million for the 265 and <65 groups, respectively. Based on

820 0149-2918/98/$19.00

M.S. NIEDERMAN ET AL.

1.1 million outpatient office visits for

those aged 265 years and 3.3 million visits for those aged ~65, total outpatient costs were $119 million and $266 million, respectively. Given the overwhelming cost burden for CAP in the hospital setting, any new therapy that allows patients to be treated in the outpatient setting could result in significant savings, especially for patients aged 265 years. Key words: community-acquired pneumonia, economic assessment, claims database research, cost

of illness, Medicare.

INTRODUCTION

Cost-of-illness studies are necessary to provide a comprehensive estimate of a dis-

ease’s impact on the health-care system. Although such studies do not directly assess alternative treatment strategies, cost- of-illness data can be used to evaluate whether current treatment (cost) patterns are consistent with clinical expectations of the patient outcomes with high-quality care. A key factor in any assessment of cost patterns is the relative division of costs between the inpatient hospital setting and ambulatory services. If costs ac- crue primarily in the hospital setting, then improvements in patient outcomes and lower costs may be achieved by such interventions as the introduction of new medications,1-3 disease screening,4 patient monitoring (and treatment) in the outpatient setting,4 and patient education5Jj An- other key function of cost-of-illness studies is assessment of the correlation between costs and various risk factors, such as age, sex, income, and race. Once identified, such risk factors can be used to target new interventions toward patient populations having the greatest potential for improved outcomes and lower costs.

Pneumonia is the most frequent infec-

tious cause of death among patients of all

ages and the sixth leading cause of death in the United States.’ Therefore, the economic issues surrounding the costs of treating pneumonia are critically impor- tant to the national health-care system. The current study estimated the costs re-

lated to treating community-acquired pneumonia (CAP) in the US population, compared various components of direct costs (hospital care, outpatient care, and

drug therapy), and identified categories of significant expenditure. The data used came from several national databases. Be- cause it was of interest to compare elderly patients with younger patients with re- spect to costs and location of care, esti-

mates were stratified by age 265 and ~65 years. The economic costs associated with premature death, however, are not included in this analysis.

MATERIALS AND METHODS

Cost-of-illness studies have several limi-

tations. Typically, these studies use paid claims and survey data to estimate costs and use rates for the specific disease un-

der study. A study of claims data by Whit- tle et al8 found that agreement between clinical review and three administrative

data methods ranged from 86% to 80%. The International Classification of Dis-

eases, 9th Revision (ICD-9), was “an administrative data method.“9 The accuracy and completeness of the diagnostic coding on paid claims can always be chal- lenged, especially in the case of outpatient services, for which the recording of a diagnosis is not typically required for payment. Further, survey data are plagued by problems concerning the patients’ knowledge of the illnesses for which they

821

CLINICAL THERAPEUTICSm

were treated. Patients facing significant annual deductibles may not file claims for payment, and patient-recall errors lead to omissions in survey data. Finally, the data

systems from which cost-of-illness data are drawn may not be representative of the entire population.

Although these limitations call into

question any estimate of the aggregate cost of illness, their effect on the present analysis is less significant. We were con- cerned primarily with the estimated divi-

sion of treatment costs between inpatient and outpatient settings and the correlation between patient characteristics and costs. These variables are not necessarily af- fected by underreporting resulting from missing data, incorrect diagnostic coding, or patient-recall errors. The databases se-

lected for this study are reasonably complete (Medicare paid claims) or are drawn from national surveys carefully designed to be representative of the US population and to minimize patient-recall errors.

Data Sources and Estimation Methods

Incidence The annual incidence of CAP was esti-

mated from the National Health and Nu- trition Examination Survey III (NHANES III), conducted by the National Center of Health Statistics (NCHS) from 1988 to 1994 (Table I).‘&13 This was the seventh in a series of studies developed to collect health and nutrition information on the US population through the use of inter- views, physical examinations, and laboratory tests. The questionnaire portion of NHANES III asked respondents whether they had had pneumonia in the preceding 12 months and, if so, the number of episodes. Because the survey was admin- istered from 1988 through 1994, the inci-

dence estimates should be interpreted as averages over that time span. Use of a stratified multistage probability design and sampling weights allowed for calcu- lation of national estimates for the civil- ian noninstitutionalized population in the United States.

Inpatient and Outpatient Care, Costs, and Charges

Use of inpatient and outpatient care and estimates of the direct health-care cost of CAP for patients aged 265 years were based on 1995 Medicare claims data. These data were derived from administrative databases available from the Health

Care Financing Administration (HCFA), which administers the federal Medicare program.14 HCFA makes available for public use the Standard Analytical Files (SAFs), which contain claims information for a 5% random sample of beneficiaries aged 265 years. Multiplying the results by 20 projects the 5% sample result to the total population aged 265 years. The SAFs contain age, race, sex, and ethnicity de- mographics; date, region, diagnosis, and medical/surgical procedure information; and detailed charge data categorized by hospital revenue center. SAF-A covers all inpatient visits, and SAF-B covers all outpatient visits.

In contrast to a Medicare inpatient case in the SAF-A file, in which a single hospitalization corresponds to a single record, outpatient visits and claim records in the SAF- B file do not have a one-to-one correlation. An office visit may cover multiple services (eg, medical care, diagnostic radiology, and laboratory), with separate charges generat- ing one or several claim records. Conversely, a Medicare claim record can contain charges stemming from one or more office visits. Therefore, to accurately estimate outpatient

822

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rs

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CLINICAL THERAPEUTICS”

numbers and costs, it was fust necessary to scan claims records for each patient and as- sign all services and charges incurred on the same date to a unique visit record. The result was a new tile derived from SAF-B that had one computer record per visit consoli- dating all costs associated with that visit. Estimates from this tile were projected to the total population using statistical sampling weights.

Hospital inpatient costs for patients aged 265 years were estimated directly from charge information available in the SAF-A database, which is a 5% random sample of Medicare claims. Charges were first summed across hospital discharge

records for patients with primary diag- noses corresponding to the ICD-9 codes for pneumonia listed in Table II.9 The total inpatient and outpatient charge was then multiplied by the Medicare average cost-to-charge ratio of 0.57 to convert it

to an approximate total cost, which was then multiplied by 20. The Medicare average cost-to-charge ratio was obtained by averaging the operating cost-to-charge ratios for more than 5000 hospitals.

Costs were broken out for patients with and without the following comorbid conditions: neoplastic disease (ICD 140-239) liver disease (ICD 570-573) congestive heart failure (ICD 428), cerebrovascular disease (ICD 430-438), and renal disease (ICD 580-589).

The cost of hospital physicians is covered as part of inpatient charges under Medicare Part A. The costs of physician services provided by nonhospital physicians for Medicare inpatients are billed under Medicare Part B and were estimated directly from charges in the SAF-B claims file. The individual patient charges were converted to costs, summed, and projected to the population aged 265 years.

Although physician services for Medi- care inpatients are billed through Medicare Part B, the majority of the SAF-B data fo- cus on outpatient treatment. Even though the SAF-B file is also based on a 5% random sample of Medicare beneficiaries, it contains almost 30 million Part B claims records stored on more than 50 mainframe computer cartridges-far too many to fea- sibly process and analyze statistically. Therefore, we sampled the file, taking all claims records from a random sample of beneficiaries from one fourth of the cartridges. To project the aggregate costs calculated from this sample to the total for all Medicare beneficiaries, we multiplied the

sample total by two projection factors: (1) the number of claims in SAF-B divided by the number in the subsampled cartridges (a “ratio estimator” in statistical sampling theory), and (2) the number 20, to account for the fact that SAF-B is a 5% sample of beneficiaries.

Lacking Medicare data for patients aged <65 years, we used data obtained from the US Agency for Health Care Pol- icy and Research. The Nationwide Inpa- tient Sample of the Healthcare Cost and Utilization Project (HCUP), Release 3, collected data from a stratified probability sample of more than 900 community hospitals in 17 states and covered all inpatient stays for those not covered by Medicare in 1994.” Sampling probabili-

ties are proportional to the number of community hospitals in each stratum. Strata were defined based on region, location (rural or urban), teaching status, ownership status, and size by number of beds. Data included clinical and resource- use information typically available from hospital discharge abstracts.

Total CAP charges were summed and appropriately weighted to yield a national

824

M.S. NIEDERMAN ET AL,.

Table II. ICD-9 codes for community-acquired pneumonia.’

% of Hospital Discharges

Patients Aged Patients Aged

ICD-9 Type of Pneumonia 265 Years 564 Years

021.2 073.0 114.0 115.05 115.15 115.95 480.0 480.1 480.2 480.8 480.9 481 482.0 482.1 482.2 482.3 482.30 482.3 1 482.32 482.39 482.4 482.8 482.8 1 482.82 482.83 482.89 482.9 483 483.0 483.1 483.8 484.3 484.5 484.7 485 486 487.0 511.1 Others Total

Pulmonary tularemia Omithosis pneumonia Primary coccidioidomycosis Histoplasma capsulatum Histoplasma duboisii pneumonia Histoplasmosis Adenoviral Respiratory syncytial Parainfluenzal Viral pneumonia NEC Viral pneumonia NOS Pneumococcal Klebsiella pneumoniae Pseudomonal Haemophilus injluenzae Streptococcal Streptococcal pneumonia NOS Streptococcal A Streptococcal B Streptococcal pneumonia NEC Staphylococcal Bacterial pneumonia NEC Anaerobic Escherichia coli Other gram-negative pneumonia Bacterial pneumonia NEC Bacterial pneumonia NOS Organism NEC Mycoplasmal Chlamydial Other specific organism Pneumonia in whooping cough Pneumonia in anthrax Pneumonia in other systemic mycoses Bronchopneumonial organism NOS Organism NOS Influenza with pneumonia Bacterial pleurisy/effusion not tuberculosis

0.6 3.4 4.6 5.4 2.3 0.1 4.1 2.8 3.1 2.0

4.4

6.1 1.5 4.6 2.1 1.8 2.0 0.4 1.6

1.9

3.0 3.8 62.3 66.9

2.7 5.8 100.0 100.0

ICD-9 = Intemationul Classification of Diseases, 9th Revision; NEC = not elsewhere classifiable; NOS = not otherwise specified.

825


estimate. Total inpatient charges were es- For office-based visits, only those drug timated from the HCUP survey, converted mentions made in visits where the physi- to costs, and inflated by 5% to convert cian reported not seeing the patient for CAP 1994 dollars to 1995 dollars. Costs of before were counted. In computing average physician services for inpatients were drug costs, generic drugs were weighted to computed by multiplying the total num- reflect 75% of the volume, slightly higher ber of hospital days for this group by the than their overall average share in 1995, as average Medicare cost per hospital day. reported by PMSI Scott-Levin Inc.15

Outpatient visits were estimated from the National Ambulatory Medical Care Survey (NAMCS)12 and the National Hospital Ambulatory Medical Care Sur-

vey (NHAMCS).13 The NAMCS and NHAMCS are national probability sample surveys conducted by the NCHS of the Centers for Disease Control and Pre-

vention. A national sample of office-based physicians and emergency department and outpatient clinic physicians provides data on patients’ visits.

RESULTS

Incidence

Since no nationally representative survey of outpatient costs is available for patients aged ~65 years, we estimated costs by multiplying CAP visits to physicians for this group by the average cost per visit, estimated from the Medicare SAF-B data. The number of annual visits to office-based, emergency, and outpatient clinic physicians was estimated from the NAMCS and NHAMCS surveys. To increase sample size, the NAMCS survey data for the years 1993, 1994, and 1995 were combined, and an annual average was computed.

As can be seen from Figure 1, 2.3% of the US population, or 5.6 million persons, suffered from pneumonia in the 12 months prior to the survey. The incidence of CAP was highest in the groups aged 265 years (2.4%) and ~17 years (2.6%). This U- shaped distribution of incidence by age was also true of multiple occurrences. Among persons with at least one episode of CAP during the preceding year, multiple occurrences were reported by 14.0% of the oldest and 11.6% of the youngest groups and by 9.5% of the middle group.

Medicare does not cover prescription medications, and drug cost data were lim- ited in HCUP. To fill the gap, antibiotic drug use was estimated from drug mentions in the NAMCS and NHAMCS surveys. The number of mentions of each class of antibiotic drug was multiplied by the average cost of treatment (average whole- sale price per dose X dose/day X number of days) for a representative sample of generic and nongeneric drugs in the class.

Table III shows the incidence of CAP

by region of the country and age group. The incidence by region followed a U- shaped pattern with age except for the western United States, where the estimated incidence in persons aged 265 years was the lowest for any age group in any region. This may be merely a statistical fluke or the impact of managed care, although the finding is consistent with Medicare SAF-A data, which show that the western United States has one of the lowest hospitalization rates for CAP (1 .3%).r4

Inpatient Costs

Total hospital inpatient costs were $4.717 billion for those aged 265 years,

826

MS. NIEDERMAN ET AL.

265 years

1.6 \

17-64 year

cl 7 years

Figure 1. Breakdown by age of self-reported pneumonia episodes in millions (percentage of persons in age group) in the previous 12 months. Data from the Third National Health and Nutrition Examination Survey, 1988-1994. lo

Table III. Incidence of community-acquired pneumonia in previous year by age and region.

% of Population Reporting Pneumonia

Age Group (Y) Midwest Northeast south West

<17 3.9 2.5 2.2 2.0 17-64 2.2 1.9 1.7 2.9 265 2.7 2.3 3.2 1.3

Data from the Third National Health and Nutrition Examination Survey, 1988-1994.‘O

compared with $3.331 billion for those aged <65 (Table IV). The average hospital length of stay (LOS) for patients aged 265 years was 7.8 days, with an average cost of $7166. For patients aged ~65 years, the average LOS was 5.8 days, with an average cost of $6042.

Room and board represented the largest percentage of hospital charges (26.3%),

followed by pharmacy (19.9%), laboratory (13.2%), respiratory services (10.6%), and medical/surgical supplies (9.0%). Because cost-to-charge ratios for individual departments were not necessarily equal, a share of total costs for a department was not equal to its share of total charges. In particular, because the pharmacy cost-to-charge ratio was less

827


Table IV. Inpatient and physician services costs.

Age Group

Number of

Discharges

Average Length of Stay

Average Total Cost Total Cost of cost of Stay MD Costs Stay + MD

of Stay (in billions) (in billions) (in billions)

265 615,780 7.8 $7166 $4.412 $0.305 $4.717 164 5 19,573 5.8 $6042 $3.139 $0.192 $3.331 All ages 1,135,353 6.9 $6652 $7.552 $0.497 $8.049

Data from Medicare Standard Analytical File Part A and the Healthcare Cost and Utilization Project, 1988-1994.”

Table V. Drug costs as fraction of total hospital costs for Medicare patients (265 years) with community-acquired pneumonia.

Department Average Charge Average Cost % of cost

Drugs All others Total

$2424 $873* 12.2 $10,148 $6293+ 87.8 $12,572 $7166 100.0

Data from Medicare Standard Analytical File Part A total charges and drug charges.

*Deflated by drug department cost-to-charge ratio.

+Deflated by overall hospital average cost-to-charge ratio.

than the overall hospital average of 0.57, its share of costs was probably signifi-

cantly less than 19.9%. The Medicare average cost-to-charge ra-

tio of 0.57 was used to convert the $12,572 in charges to the cost of $7166 for patients 265 years. Because inpatient drug charges were included in the hospital charge, we examined their impact on total hospital costs for Medicare patients. The Medicare average drug-specific cost-to-charge ratio of 0.36 (Prospective Payment Assessment Commission) was used to adjust the $2424 in average drug charges, for an average cost of $873. This cost represented 12.2% of the $7166 total inpatient costs for patients aged 265 years (Table V).

Figure 2 shows the total number of hospital discharges of CAP patients with and

without comorbidities. Hospitalized persons aged <65 years were significantly less likely to have comorbid conditions (13% of discharges) than persons aged 265 years (43% of discharges). Figure 3 shows the discharge status for Medicare CAP patients. After accounting for an approximate 10.0% mortality rate, persons discharged were either discharged to their homes (50.8%) or to a skilled nursing facility (SNF) or organized home-care service (29.4%); the remaining 9.8% were discharged to an unspecified location. The economic costs associated with the premature deaths were not estimated.

Discharges of CAP patients in the four geographic regions of the United States amounted to slightly less than 100% of all CAP discharges, because US territories

828


Figure 2.

800,000 0 With comorbidities

700,000 m Without comorbidities

$ F 600,000

z

.- 0”

500,000

‘Ei 400,000

zo 300,000

0 265 ~65

Age Group (Y)

Hospital discharges of patients treated for community-acquired pneumonia. Data from Medicare Standard Analytical File Part A and the Healthcare Cost and Utilization Project, 1988-1994.”

(eg, Puerto Rico) were not included. In all regions, rates of discharge were highest in the first quarter of the year, about one third of the total (Table VI).

Outpatient Costs

The total of 4.487 million average annual visits to office-based physicians and emergency and outpatient departments for treatment of CAP was derived primarily from the NAMCS and NHAMCS survey data for the years 1993 through 1995 (Table VII). The data showed that patients aged 164 years were most likely to be seen in physicians’ offices (7 1.9%), emergency departments (23.5%), and outpatient departments (4.6%). Corresponding

percentages for patients aged 265 were 53.8%, 41.8%, and 4.4%. The estimates covered visits for patients who received a primary diagnosis of one of the ICD-9 codes for CAP The NHANES estimate of CAP episodes may have been inflated as a result of the nonspecific definition of CAP used in the survey, as well as because of possible respondent recall bias.

NAMCS was the only source from which to estimate the number of annual outpatient visits across all age groups, but Medicare data provided a second source in the case of the elderly. The NAMCS survey covered visits to physicians’ offices, emergency departments, and outpatient clinics, but not to nursing homes. The Medicare data were more compre-

829

CLINICAL THERAPEUTICS’

Other

Dead A

Home health service

Ski illed nursing \ facility

Home

Figure 3. Discharge status of Medicare patients with community-acquired pneumonia. Data from Medicare Standard Analytical File Part A.

Table VI. Community-acquired pneumonia (CAP) Medicare discharges by calendar quarter and region.

% of Total Medicare CAP Discharges

Calendar Quarter in 1995 Midwest Northeast south West All Regions*

January-March 8.4 6.8 13.4 4.6 33.2 April-June 6.7 5.0 9.1 3.8 24.6 July-September 4.8 3.4 6.5 2.4 17.1 October-December 6.1 4.5 9.3 4.0 23.9 Total year 26.0 19.7 38.3 14.8 98.8

Data from Medicare Standard Analytical File Part A.

*Excluding US territories.

hensive, covering these locations as well as nursing homes. Where these sources overlapped (ie. offices, emergency departments, and outpatient clinics), they produced similar total visit estimates: 1,095,OOO from NAMCS (see Table VII) compared with 1,060,OOO from Medicare data (Table VIII). Therefore, we combined

information from both sources, using NAMCS to estimate the number of visits in offices, emergency departments, and outpatient clinics and Medicare data to estimate visits at nursing homes.

The numbers and aggregate charges by visit type are summarized in Table VIII and show that for noninstitutionalized pa-

830


Table VII. Annual number of physician visits for patients with community-acquired pneumonia (CAP).

Average Annual No. of CAP Visits 1993-1995 (in millions)

Age Croup (Y)

Physicians’ Offices

Emergency Departments

Outpatient Departments Total

265 0.589 0.458 0.048 1.095 164 2.438 0.798 0.156 3.392 All ages 3.027 1.256 0.204 4.487

Data from Medicare Standard Analytical File Part B, National Ambulatory Medical Care Survey,‘* and National

Hospital Ambulatory Medical Care Survey.13

Table VIII. Medicare outpatient visits and allowable costs for patients with community-

acquired pneumonia.

Visit Site

No. of Total Allowable Average Allowable Visits (in Charges (in thousands Medicare Charge

Thousands) of dollars) per Visit ($)

Office Emergency department Outpatient clinic

Subtotal or average Other (skilled or other nursing

facility, nursing home, etc) Total or average

690 43,464 63 333 35,084 105

37 7670 207 1060 86,218 78

255 32,502 127 1315 118,720 90

Data from Medicare Standard Analytical File Part B.

tients, the physician’s office had the lowest total CAP outpatient costs were $384.468 allowable Medicare charge of $63 per visit, million in 4.4 million patients. The aggre- compared with $105 for an emergency de- gate cost for Medicare patients was divided partment and $207 for an outpatient clinic. by the number of visits estimated from Patients cared for in an intermediate-care NAMCS, and the average cost per visit facility (eg, skilled nursing facility or nurs- was then applied to the total number of

ing home) averaged $127 per visit. Outpa- visits for the non-Medicare group. The tient Medicare costs of $118.719 million findings indicated that the average CAP are detailed in Figure 4, with medical care outpatient costs per visit, including diag- (63.8%), diagnostic radiology (22.5%), and nostic radiology, were $74, $76, and $159 diagnostic laboratory costs (6.8%) the for physicians’ offices, emergency depart- largest components. Table IX shows that ments, and outpatient departments, respec-

831


Consultation

Other

Medical care / 75.707

(63.8%)

Figure 4. Outpatient costs for Medicare patients with community-acquired pneumonia by type of service. Allowable charges in millions of dollars (percentage of total). Data from Medicare Standard Analytical File Part B.

Table IX. Total outpatient costs for patients with community-acquired pneumonia.

Total Outpatient Costs, Excluding Drug Costs (in millions of dollars)

Visit Site 265 y 164 y Total Average Cost Per Visit ($)

Office 43.464 179.796 223.260 74 Emergency department 35.084 61.059 96.143 76 Outpatient clinic 7.670 24.893 32.563 159 Other (skilled nursing facility,

nursing home, etc) 32.502 NA 32.502 NA Total 118.720 265.748 384.468

NA = not applicable. Data from Medicare Standard Analytical File Part B allowable charges; average cost per National Ambulatory Medical Care Sur~ey’~ visit for patients ~65 years of age.

tively. Because Medicare generally does not cover outpatient drugs, the outpatient costs in Table IX do not include drug costs.

Table X shows that antibiotic drugs represented the largest percentage of costs

fices and other facilities such as SNFs and nursing homes.

STUDY LIMITATIONS

(21.5%) in emergency departments, followed by 11.8% in both physicians’ of-

As a retrospective database analysis, the data did not allow examination of the im-

832


Table X. Antibiotic drug costs as percentage of total outpatient costs.

Outpatient Costs (in millions of dollars)

Visit Site Excluding Antibiotic

Drug Costs Drug Costs Total costs

Antibiotic Drug Costs as Percentage of Total

Office 223.260 29.814 253.074 11.8

Emergency department 96.143 26.338 122.481 21.5

Outpatient clinic 32.563 3.577 36.140 9.9

Other (skilled nursing

facility, nursing home, etc) 32.502 4.340* 36.842 11.8

Total 384.468 64.069 448.537 14.3

Data from National Ambulatory Medical Care Survey’* and National Hospital Ambulatory Medical Care Sur-

vey13; drug visits times average drug costs.

*Since direct estimates of drug usage and costs were not available for this category, drug costs were assumed

to constitute the same share of total costs as for office visits.

pact of drug utilization patterns, formu- lary restrictions, and prior authorization on patient utilization. Furthermore, reduced access to broad-spectrum antibiotics may allow treatment failures requiring hospitalization. It is not likely that someone would be admitted to a hospital without an outpatient visit; as a result, our number of physician visits may be overstated.

We were unable to obtain any information from HCFA on the inclusion of data from Medicare health maintenance orga-

nizations (HMOs), which had an enrollment equal to 9.1%, or 3.5 million Medicare beneficiaries,16 and enrolled

77% of employees in 1996.i7 Because these HMOs are usually reimbursed on a per-capita basis, it is doubtful that claims for the treatment of their patients are included in the Medicare files. As a result, our estimates for the population aged 265 are likely to be understated. This may af-

fect states such as California, where there is a large enrollment of patients in the HMO Medicare Risk program.

More research is needed to examine the factors that cause or affect hospitalization. Some patients, such as those with a history of noncompliance or those who are elderly, suffer cognitive impairment, or lack a social support network, may be hospitalized to better manage the risk or

may be hospitalized prematurely. Patients who delay therapy may also

contribute to a higher hospitalization rate. Patients might delay seeking treatment from a physician because they prefer treatment at home, have poor access to primary care physicians, or are not aware of the health risks posed by delay (especially in high-risk patients). Furthermore, lack of prescription drug coverage may delay therapy in outpatients, especially elderly patients, since Medicare does not cover outpatient prescriptions.

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Table XI. Average visits by age and type.

Age group (Y) Outpatient (in millions) Inpatient (in millions)

265 1.1 0.6 <64 3.4 0.5

Data from National Ambulatory Medical Care Survey, ‘* National Hospital Ambulatory Medical Care Survey,13

Medicare Standard Analytical File Part A, and the Healthcare Cost and Utilization Project, 1988-1994.”

DISCUSSION

Despite a higher incidence of total CAP visits in the group aged ~65 years, a greater percentage of elderly patients (those aged 265 years) received inpatient care, as can be seen from Table XI. The difference be-

tween the percentages of the two groups hospitalized for treatment (12.8% vs

35.3%) was statistically significant. Many of our estimates for patients aged

265 years were consistent with other reported information. For instance, we estimated that there were 615,780 discharges, with an average LOS of 7.8 days, at an average cost of $7166 for 1995; HCFA estimated 667,465 discharges, an average LOS of 7.9, and an average cost of $8353 for 1995.‘O Our estimates placed the mortality rate at lo%, HCFA reported 10.7%,l” and Meehan et al estimated 10.3%.18 Meehan also calculated that 58.2% of all patients admitted had a comorbid illness, which is comparable to our estimate of 56.7%.”

Our analysis found that 57.3% of the total costs for the treatment of CAP oc- curred in the group aged 265 years (Table XII); these patients were almost twice as likely as younger patients to be seen in the emergency department. When they were admitted, they were more than three times as likely to have a comorbidity

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(based on discharge data), compared with persons aged ~64 years (43.2% vs 13.1%). Variations in the rates of hospital admission for respiratory disease and the pre-

dominance of hospital costs as a percentage of the total costs may reflect a failure for patients to receive adequate care in the outpatient setting early in the course of the disease.

Alternatively, differences in admission criteria among hospitals and regions may contribute to the variations observed.19 Overall, the elderly were admitted more frequently, indicating a possible trend toward overhospitalization or lack of prescription drug coverage. Because this

growing segment of the population is covered under Medicare, we expect costs to continue to grow unless new treatments are introduced to offset these costs.

Our analysis found that the total direct treatment costs of CAP are largely due to the cost of hospitalizations and that the elderly account for a disproportionate share of costs. Based on our data, one of every five outpatient visits results in a hospitalization. Therefore, any new therapy that can allow patients, especially elderly patients, to be managed on an outpatient basis is likely to generate significant savings. This speculation is consistent with the findings of other studies. For example, initiation of antibiotic therapy


Table XII. Total costs for patients with community-acquired pneumonia.

Age Group (Y)

Outpatient Costs Inpatient Costs (in millions (in millions

of dollars) of dollars)

Costs of Inpatient Physician Services

(in millions

of dollars)

Total (in millions

of dollars)

265 119 4412 305 4836 $64 266 3139 192 3597 All ages 384 7552 497 8433

Data from Medicare Standard Analytical File Part A and Part B; the Healthcare Cost and Utilization Project, 1988-1994”; National Ambulatory Medical Care Survey’*; and National Hospital Ambulatory Medical Care Survey.‘”

within 8 hours of arrival at the hospital was associated with a 15% lower risk of 30-day mortality. I8 It follows that initiat- ing the appropriate antibiotic therapy in the outpatient setting has an even greater potential to reduce treatment costs and lower the risk of mortality.

Fine et al suggested that improving practitioners’ identification of low-risk patients with CAP could decrease the hospitalization of such patients.4v20 Because we did not have access to complete data for these patients, we needed to identify a measure within our database. Specifically,

to estimate the number of inpatients who might have been candidates for treatment as outpatients, we needed to identify a measure of disease severity other than age 265 years. A possible proxy for severity is use of respiratory services, as determined by the presence or absence of a claim for these services in the hospital record. As shown in Table XIII, patients not requiring respiratory services had a shorter LOS and lower death rate than those who did, regardless of comorbid conditions. The number of patients whose disease was least severe, having no comorbidities and

Table XIII. Respiratory services use among Medicare patients with community-acquired pneumonia.

Group

No Respiratory Services

Mean Percentage LOS in Discharged

Discharges Days Dead

Respiratory Services

Mean Percentage LOS in Discharged

Discharges Days Dead

No comorbid conditions 65,620 6.1 5.6 284,060 7.3 7.5 Comorbid conditions 45,920 7.4 9.6 220,180 9.0 14.5 Total 111,540 6.6 7.2 504,240 8.0 10.6

LOS = length of stay. Data from Medicare Standard Analytical File Part A.

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requiring no respiratory services, was 65,620 and accounted for 10.7% of the total Medicare CAP discharges for patients aged 265 years. Despite requiring fewer services and having no comorbidities, this group had a 5.6% mortality rate. The economic costs associated with this rate of mortality were not estimated.

Using the research of Fine et al4 as a

basis, we examined the impact of lower- ing the Medicare admissions for patients with the least severe disease. Based on our average cost per Medicare inpatient of $7166 (from Table IV), the 10.7% re- duction in admissions would reduce inpatient hospitalization costs by $470.2 million for patients aged 265 years. Some of these savings would be offset by increased outpatient costs and the costs associated with the increased mortality. Fine et al4 found that hospital admissions could be reduced by nearly 40% if patients with mild CAP were treated as outpatients

rather than being hospitalized. A study by Coley et alzl reported that most patients at low risk for mortality from CAP prefer outpatient treatment. In addition, research by Minogue et a122 found that only 7.5% of the patients initially treated in the outpatient setting were subsequently hospitalized. Given patient preferences for outpatient treatment as well as the lower costs and effectiveness of such treatment, con-

tinued efforts should be made to manage CAP patients in the outpatient setting.

ACKNOWLEDGMENT

Funding for this research was provided by a grant from Pfizer Inc, New York, New York.

Address correspondence to: Michael S. Niederman, MD, Pulmonary and Critical

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CLINICAL THERAPEUTICS@

Care Medicine, Winthrop-University Hospital, 222 Station Plaza North, Suite

400, Mineola, NY 11501.

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The cost of treating community-acquired pneumonia

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