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Introduction

The Medicare program was established in 1965 under Title XVIII of the Social Security Act. The program has become the principal means of providing health insurance coverage to the American population aged 65 and older as well as covering individuals with permanent disabilities or end-stage renal failure. The program covered more than 40 million people in 2001 (Centers for Medicare and Medicaid Services, 2002). Fiscal 2001 expenditures were $238 billion, or 2.4 percent of gross domestic product (GDP). The Congressional Budget Office projects Medicare expenditures to double by 2012 (Congressional Budget Office, 2002) and constitute 5.5 percent of GDP by 2030 (Crippen, 2001).

Notwithstanding the enormous scale of the Medicare program, Congress has explicitly excluded a number of health care services. Section 1862(a)(1)(A) of Title XVIII states that the program may not pay for services that “are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.” Section 1862(a)(7) excludes routine physical examinations. These provisions have amounted to an exclusion of preventive services. In subsequent years Congress has overridden this exclusion for specific preventive services, adding them to the Medicare program.

Section 123 of the Consolidated Appropriations Act for 2001 commissioned the National Academy of Sciences, now known as the National Academies, “and as appropriate in conjunction with the United States Preventive Services Task Force, to conduct a study on the addition of coverage of routine thyroid screening using a thyroid stimulating hormone test as a preventive benefit provided to Medicare beneficiaries under Title XVIII of the Social Security Act for some or all Medicare beneficiaries” and to “consider the short-term and long-term benefits,



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1 Introduction The Medicare program was established in 1965 under Title XVIII of the Social Security Act. The program has become the principal means of providing health insurance coverage to the American population aged 65 and older as well as covering individuals with permanent disabilities or end-stage renal failure. The program covered more than 40 million people in 2001 (Centers for Medicare and Medicaid Services, 2002). Fiscal 2001 expenditures were $238 billion, or 2.4 percent of gross domestic product (GDP). The Congressional Budget Office projects Medicare expenditures to double by 2012 (Congressional Budget Office, 2002) and constitute 5.5 percent of GDP by 2030 (Crippen, 2001). Notwithstanding the enormous scale of the Medicare program, Congress has explicitly excluded a number of health care services. Section 1862(a)(1)(A) of Title XVIII states that the program may not pay for services that “are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.” Section 1862(a)(7) excludes routine physical examinations. These provisions have amounted to an exclusion of preventive services. In subsequent years Congress has overridden this exclusion for specific preventive services, adding them to the Medicare program. Section 123 of the Consolidated Appropriations Act for 2001 commissioned the National Academy of Sciences, now known as the National Academies, “and as appropriate in conjunction with the United States Preventive Services Task Force, to conduct a study on the addition of coverage of routine thyroid screening using a thyroid stimulating hormone test as a preventive benefit provided to Medicare beneficiaries under Title XVIII of the Social Security Act for some or all Medicare beneficiaries” and to “consider the short-term and long-term benefits,

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and costs to the Medicare program, of such addition.” Because the issue is framed as a question of coverage, the commission of this study required examination of both Medicare coverage policy and the clinical utility of the thyroid stimulating hormone test in the Medicare population. The serum thyroid stimulating hormone (TSH) assay is a common blood test that is already covered by the Medicare program for the diagnosis and treatment of illness. This volume, prepared by a committee appointed by the Institute of Medicine of the National Academies, is an inquiry into the additional costs and benefits of also offering this test as a preventive service. The remaining sections of this chapter summarize the evolution of the Medicare program and the processes that Medicare uses to determine what services it will cover. Subsequent chapters summarize the clinical concepts of thyroid disease, its diagnosis, and treatment; describe and execute an analytic framework for the assessment of TSH testing as a preventive measure; and discuss the specific effects of current Medicare coverage of TSH testing and implications of its expansion. THE ORIGINS OF MEDICARE The Medicare program emerged after decades of debate about whether the United States should adopt a European-style model of comprehensive universal coverage through compulsory social insurance. The results were very different from most government-sponsored health insurance programs established outside the United States; the Medicare program had much narrower goals. Instead of a program that distributed medical services to the entire population, Medicare was intended initially only to pay some of the hospital costs of pensioners receiving Social Security (Marmor and Marmor, 1973). The initial focus of the Medicare program was to provide financial relief through substantial, if partial, reimbursement for the largest expenses of serious illness, specifically hospitalization (Medicare Part A). The final legislation also included an optional program to help pay for physician services (Medicare Part B). There was strong political opposition to the idea of the government influencing the distribution of medical services. The problem of the retired was not seen as the inaccessibility of health care services, but the financial consequences of using those services (Marmor and Marmor, 1973); in principle, they could access the same services available to them before retirement. Like most private insurance plans in America at that time, the Medicare program did not cover preventive services. The primary purpose of these plans was pooling of risk to protect against large financial losses that are unpredictable as to whether or when they might occur. Medical insurance under this model assumes that illness is unpredictable (so it cannot be budgeted), and the resource requirements for treatment are well defined and out of the control of the insured

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(or his agent, the physician). This was thought to be true for major illnesses that required hospitalization; the patient could manage the expense of minor illnesses by himself. The insurer does not obtain or provide services; it provides financial reimbursement to the patient after the fact. There is no need for direct contact between the insurer and the health care provider (e.g., doctor, hospital); the insurer takes no responsibility for the quality of services provided. Plans limited their costs by excluding discretionary expenses and sharing costs with subscribers through limits on total outlays and specific payments for individual services, copayments, and deductibles (Starr, 1982). The original Medicare legislation excluded preventive services and routine physical examinations because they did not involve the diagnosis and treatment of an existing condition. Their expense was foreseeable and not substantial. Their use did not follow the unpredictable dictates of illness; they were performed at the discretion of patients and doctors. MEDICARE AND HEALTH INSURANCE TODAY In the nearly 40 years since the establishment of the Medicare program, health insurance in America has undergone dramatic changes. This has come about as a result of changes in the understanding of how the demand for medical care arises and in consumer expectations for care. One of the most significant changes in the practice of medicine since the establishment of Medicare has been in the recognition, prevalence, and treatment of chronic disease. Patients with grave illnesses such as heart and kidney failure, cancer, emphysema, AIDS, and severe atherosclerosis that previously resulted in rapid death now live much longer; much of their treatment occurs on a steady basis outside the hospital. Diseases with less immediate consequences such as hypertension and diabetes are more widely recognized and aggressively treated. Longer life expectancies resulting from better treatments, health-related behaviors, and preventive measures have allowed degenerative conditions such as arthritis and dementia to affect more of the population for greater periods of time. The care of chronic illness does not fit the original insurance model. The treatment requirements for chronic disease are neither unusual nor episodic; they involve large numbers of small expenditures on a continuing basis. This concept of proactive health maintenance also resulted in greater recognition of the potential value of preventive measures for adults. The second reason for change has been the recognition that the evidence base for clinical practice was far more limited than previously thought (IOM, 2000). There was little objective basis for determining the resource requirements for care. Studies of resource use among populations that should have had similar burdens of illness revealed wide differences in resource use. The widespread lack of valid clinical guidelines for determining the resource needs for health care

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meant that many of the costs of treatment were under the control of doctors and hospitals whose financial incentives created a severe problem of moral hazard (Starr, 1982). The last reason for change has been the resistance of the insured to cost sharing. The common expectation of today’s consumers has been to pay little or nothing for health care services. There has been a consistent trend for employers to provide more generous insurance coverage to their workers. Because health insurance premiums and benefits are free of taxation, employees have often found it more valuable to have their employers purchase more comprehensive health care coverage with pretax dollars than provide the same amount to them in taxable wages. Many of the improvements in coverage have included coverage for preventive and other relatively inexpensive services and substantial reductions in deductibles and copayments. This expectation has spread to the Medicare program, where about 80 percent of beneficiaries have supplemental coverage that helps pay for excluded services, deductibles, and copayments (IOM, 2000). Today most insurance plans make direct payments to health care providers that usually constitute payment in full. These plans generally require providers to agree to participate in the plan. To limit costs, plans may set or negotiate fees and limits on the use of services and monitor the charges and behavior of providers, excluding from participation those who appear to abuse the plan or provide poor quality. This greater means of control over expenditures allows plans to offer not only payment in full but also fewer limitations on services covered, including preventive services (Starr, 1982). Changes in the Medicare program have reflected this evolution. Instead of enrolling in Parts A and B, Medicare beneficiaries may enroll under Part C in comprehensive prepayment plans such as health maintenance organizations. Medicare Parts A and B today have most of the characteristics of other insurance plans. Nearly all providers who see Medicare patients do so under terms of participation. Payment amounts are regulated through fee schedules and prospective payment systems. Medicare has created Peer Review Organizations to monitor the utilization and quality of services (IOM, 1989). Cost sharing has been reduced—directly through elimination of copayments in areas such as laboratory services and indirectly through the proliferation of supplemental coverage. The transformation of Medicare Parts A and B is also suggested by the extension of coverage to additional services, but these changes have occurred without a clear set of principles as to why and how extensions of coverage should be made. These issues were addressed in a previous IOM report, Extending Medicare Coverage for Preventive and Other Services (IOM, 2000). The section of that report that describes and analyzes Medicare coverage decisions is summarized in the next section, with particular attention to preventive services.

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MEDICARE COVERAGE POLICY AND PREVENTIVE SERVICES Medicare coverage decisions range from very broad-based decisions about whole categories of services to decisions about the general circumstances under which a specific service will be covered to very narrow decisions about whether a specific service will be covered for a specific individual. The entities that make these decisions have been, respectively, Congress, making broad decisions about categories of coverage and coverage exclusions; The Centers for Medicare and Medicaid Services (CMS), deciding whether a service qualifies for coverage under one of the approved categories and the circumstances under which that service will be covered; and Private contractors that administer Medicare claims for the government, deciding whether specific services billed for a specific beneficiary are covered and establishing policies for services and circumstances for which CMS has no policy. This delegation of responsibilities is a logical one. Congress must have the responsibility for determining the form and scope of the Medicare program and securing the financial resources to match those determinations. The operational policy required to implement congressional design is the responsibility of the executive agency, CMS. Contractors provide the actual services mandated by the program, the processing and payment of claims. Congress has given CMS the responsibility to make specific determinations of what services are or are not covered within the broad coverage categories established in law. In carrying out this responsibility, CMS follows the provision of the law that authorizes payment for services only if they are “reasonable and necessary.” At a minimum, it must be established that, in order to be covered, a service is safe and effective in achieving its purpose. All coverage decisions that CMS makes must follow federal rulemaking procedures and requirements. The decision-making process involves consultation with a Medicare Coverage Advisory Committee and takes advantage of the growth of the clinical evaluative sciences by obtaining systematic reviews of scientific evidence provided by sources such as the Food and Drug Administration, the National Institutes of Health, and the Evidence Based Practice Centers supported by the Agency for Healthcare Research and Quality. The expansion of Medicare coverage to preventive services has been an exception to this established structure. Congress could have authorized the expansion of Medicare coverage to preventive services as a class and allowed the Health Care Financing Administration (the predecessor to CMS) or CMS to determine which preventive services were reasonable and necessary and, therefore, covered. The scientific tools and methods used to evaluate preventive services differ little from those used to evaluate diagnostic and treatment services. Instead of a systematic approach, individual services have been added on an ad

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hoc basis through specific acts of Congress. This has resulted in an assortment of preventive services covered by Medicare that is substantially different from the group of services recognized as effective by the United States Preventive Services Task Force. The lack of a systematic approach also makes it difficult to make optimal decisions when services may be complementary, redundant, or obsolete. It may favor services for high-profile conditions and technologies that have strong lobbying groups but not necessarily a strong evidence base. METHODS AND APPROACH To develop this report, the Institute of Medicine of the National Academies created a nine-member committee with expertise in thyroidology, epidemiology, preventive medicine, primary care, clinical chemistry, economics, statistics, and health services research. The Committee on Medicare Coverage of Routine Thyroid Screening met three times between July 2002 and January 2003. In addition to the Committee’s own knowledge and expertise, the Committee relied on three additional sources of information: (1) a systematic evidence review of the medical literature that was commissioned in conjunction with the United States Preventive Services Task Force; (2) a workshop with expert speakers invited to provide additional information in areas of interest and to participate in a roundtable discussion; and (3) an analysis of Medicare claims data to provide information on how TSH testing is currently used in the Medicare population and which beneficiaries potentially would be affected by coverage of a TSH screening benefit. Chapter 2 turns the report from the general issue of Medicare and preventive services to the specific question of TSH testing. It is an orientation to thyroid disease, reviewing the physiology of the thyroid gland, the clinical approach to thyroid disease, and the role and efficacy of TSH testing in diagnosis and treatment. Chapter 3 looks at the epidemiology and consequences of thyroid dysfunction. This chapter provides estimates of the population that screening could potentially identify and the burden of suffering that treatment could potentially relieve. Chapter 4 assesses the scientific evidence for the benefits and harms of screening for thyroid disease using the TSH test. It introduces an analytic framework for the questions necessary to reach a conclusion and looks at how well the evidence answers those questions. Chapter 5 looks at the financial implications of coverage. It examines the factors that may affect the use of TSH testing if coverage is provided, estimates the number of beneficiaries who would be candidates for screening, and calculates the costs and savings in the use of resources that would be affected by screening. Chapter 6 provides the Committee’s conclusions and recommendations.

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REFERENCES Centers for Medicare & Medicaid Services. Medicare Enrollment—All Beneficiaries as of July 2001. [Online]. Available: http://cms.hhs.gov/statistics/enrollment/st01all.asp [accessed December 6, 2002]. Congressional Budget Office. 2002. The Budget and Economic Outlook: An Update. [Online]. Available: http://www.cbo.gov/showdoc.cfm?index=3735&sequence=0 [accessed December 6, 2002]. Crippen DL, Congressional Budget Office. 2001. Medicare Solvency. Statement at the March 20, 2001 hearing of the Committee on Ways and Means. U.S. House of Representatives. IOM (Institute of Medicine). 1989. Controlling Costs and Changing Patient Care? The Role of Utilization Management. Washington, DC: National Academy Press. IOM. 2000. Extending Medicare Coverage for Preventive and Other Services. Washington, DC: National Academy Press. Marmor TR, Marmor JS. 1973. The Politics of Medicare. Chicago: Aldine. Starr P. 1982. The Social Transformation of American Medicine. New York: Basic Books.