the diabetes example from above, the low utilization cost estimate used 12 percent as the assumed utilization rate.

High Utilization Scenario

Utilization in initial year and subsequent years is projected to be higher that any previous studies to account for possible financial incentives in new benefit and potential impact of new practice protocols that were not being consistently followed during time of data collection of previous studies. For example, the research leading to the recommended number of diabetic visits was published in 1995 and the current protocols were published in 1998. In addition, some nutrition is assumed to be included in the new diabetes self management benefit, so the full initial nutrition therapy may not be warranted for persons using this benefit. For example, the high utilization scenario used 30 percent as the assumed utilization rate.

COST ESTIMATE ASSUMPTIONS

  • Conservative cost estimates (highest reasonable cost) were used.

  • Dollars are expressed in nominal terms and not discounted.

  • Medicare costs were provided by The Lewin Group, Inc. based on 1998 data from Office of the Actuary, Health Care Financing Administration.

  • Both Medicare costs and projected Medicare projected reimbursement rates were assumed to grow at the rate of 3 percent per year.

  • Reimbursement rates for nutrition therapy were assumed to be for individual sessions using rates established for diabetes care ($55.41 per session).

  • Estimated Medicare reimbursement costs were computed by estimating total direct costs and subtracting 20 percent cost sharing.

  • Future premium increases were estimated to be 25 percent of projected Medicare reimbursements.

  • Even though some Medicare-eligible would have other insurance, these cost estimates assumed that Medicare would be the payor for all nutrition therapy sessions received by beneficiaries.

  • Maximum number of nutrition therapy sessions were based on expert opinion and accepted protocols. They assume more sessions in year of initial diagnosis/referral than in subsequent years for most diagnoses. Even though most protocols are written for single diagnosis, patients usually present with combinations of diagnoses. Initial year treatments were estimated using highest number of sessions with an additional one visit per additional nutrition-related diagnoses.



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