HERC: Medicare and Medicaid Cost Data
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Medicare and Medicaid Cost Data

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Overview

VA patients often obtain additional care outside the VA system through Medicare, Medicaid, or other forms of insurance. This “dual use” is particularly common among Veterans eligible for Medicare. Therefore, researchers may want to include Centers for Medicare & Medicaid Services (CMS) data in their analyses to gain a more complete picture of their cohort’s health care use and costs.

VA has a data use agreement with CMS that allows VA to reuse Medicare and Medicaid data for approved research and operations projects. Information about requesting access is available in the section VA Researcher Access to Medicare/Medicaid Cost Data.

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How VA Researchers can use Medicare and Medicaid Data

There are many research questions that would benefit from the inclusion of Medicare or Medicaid data. Below, we provide a summary of the reasons VA researchers may want to include Medicare or Medicaid data in their analyses.

Technical Report 42: Including Medicare Cost Data in VA Research provides a more detailed synthesis of recent literature that combines VA and Medicare data.

1. A more comprehensive understanding of Veteran health care utilization and costs

A common reason for including Medicare or Medicaid data is to gain a more comprehensive understanding of Veteran health care utilization and costs. Because VA-paid community care is now a substantial portion of the VA budget, many researchers include both VA-provided and VA-paid community care as well as Medicare or Medicaid data.

2. Conducting economic evaluations and cost-effectiveness analyses

Health systems are often interested in understanding the value of the care they provide relative to the cost of providing that care. Such analyses are critical for informing policy decisions regarding which interventions a health system should implement, which treatment should be administered, and decisions related to whether a health system like VA should provide in-house care or reimburse Veterans for care outside VA.

Cost Effectiveness Analysis (CEA) is one method for comparing the cost and effectiveness of two or more alternatives with the goal of determining whether the value of an intervention justifies the cost. CEAs include assigning a measure of value to the outcome, typically measured as a quality-adjusted life year.

Other economic evaluation methods that compare interventions include budget impact analysis, cost-benefit analysis, or cost-consequence analysis. As value of care may be difficult to estimate in many cases, several economic evaluations may focus only on cost comparisons that can inform important health care expenditures and budget planning considerations for a health system.

A comprehensive analysis that includes costs of VA care, VA-paid care in the community, and care received from other insurers such as Medicaid/Medicare for a Veteran cohort can significantly improve the relevance and scope of these analyses.

3. Understanding where Veterans choose to receive care for different services

VA researchers can use Medicare and Medicaid data to determine where dually eligible Veterans choose to receive care: either at commercial hospitals (paid for by Medicare or Medicaid) or VA. Understanding how this choice differs by type of service and factors influencing this decision (e.g., distance or wait time) can inform quality improvement efforts. It also has implications for allocating VA resources and VA’s decision about whether to continue providing a certain service at VA hospitals or to purchase care from outside VA (i.e., make vs buy decisions).

Research using VA and Medicare or Medicaid data indicates that the Veteran’s choice of care setting differs by type of care (Yoon et al. 2019) and is affected by various factors such as wait time (Wong et al. 2018) and drive time (Vanneman et al. 2022).

4. Understanding the impact of payer on quality of care, outcomes, and costs

Comparing quality, outcomes, and costs between systems can provide insights for VA quality improvement efforts and evidence to guide VA Community Care policies. For example, Gidwani-Marszowski et al. (2018) compared the quality of care provided at the end-of-life for Veterans who received the majority of their care at VA vs those who received the majority of their care through Medicare. They found that Medicare-reliant Veterans were significantly more likely to receive overly intensive services for most metrics. Gidwani-Marszowski notes that these results highlight the importance of increased coordination efforts between VA and community care providers to ensure Veterans receive the best care possible. In another example, Trivedi et al (2012) looked at the costs of VA care provided to patients dually enrolled in Medicare Advantage, as these reflect potentially duplicative spending.

Because providers in traditional Medicare are compensated on a fee-for-service basis, while providers in VA are salaried, researchers can also use VA and Medicare data to examine how different pay structures may impact patient care.

5. Understanding prescription drug use across systems

Medicare-eligible Veterans often receive prescription drugs from both VA and Medicare. Therefore, combining these data can provide a more complete picture of prescription drug use, increase awareness of overlaps in prescribing, and highlight any prescription safety risks (Thorpe et al, 2019).

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Structure of Medicare Cost Data

Cost data in VA and Medicare aren’t directly comparable due to differences in how costs are defined, and the elements included in the calculations of costs.

  • Defining costs: Medicare data reflect average reimbursements for care provided, while VA cost data are estimates using activity-based cost accounting or resource-based relative value units.
  • Calculating costs: In Medicare data, the facility and physician cost components are separate, while in VA they are combined. Medicare data users will need to sum the institutional claim costs (MedPAR, inpatient, outpatient, etc) with the non-institutional claim costs (Carrier file) to get the total health system cost of an encounter. 

Before comparing costs between VA and Medicare data, researchers should take steps to make the data more comparable and understand that even after doing so, there will be limitations with these comparisons. Additional information on the differences between VA and Medicare data are available on the page Comparing VA vs. Non-VA Costs.

Two examples of researchers conducting VA and Medicare cost comparisons are Gidwani et al. (2021) which compared cost trajectories and Pickering et al. (2022) which used HERC average cost data to estimate costs across systems.

Other key considerations for VA researchers working with Medicare cost data:

  • Medicare data include patient-level datasets (e.g., Master Beneficiary Summary File Cost & Utilization segment), encounter-level datasets (e.g., MedPAR), and claims level datasets (e.g., Inpatient, Outpatient, SNF). Cost data can be found in all datasets with different levels of aggregation.
  • Claims-level datasets (e.g., Inpatient, Outpatient, Carrier) contain 2 parts: a base file (i.e., core information about the claim such as claim from date and through date) and a revenue center or line file (i.e., detailed information such as diagnosis codes and HCPCS). The cost from all revenue center or line file payments related to a claim will equal the total in the base file claim.[i]
  • One health care encounter will contain multiple claims. In particular, the Carrier file will contain separate claims for each provider a patient sees during an encounter. Therefore, data users will need to roll up claims to get the total cost of an encounter for a patient.

Additional information about the structure and components of Medicare cost data are available in the Chronic Conditions Warehouse Technical Guidance: Getting Started with CMS Medicare Administrative Research Files.

[i] Getting Started with CMS Medicare Administrative Research Files. Chronic Conditions Warehouse Technical Guidance. Chronic Conditions Warehouse. September 2022. Available at https://www2.ccwdata.org/web/guest/technical-guidance-documentation.

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VA Researcher Access to Medicare and Medicaid Cost Data

Medicare and Medicaid data are available to VA data users through VIReC for research projects or the Medicare and Medicaid Analysis Center (MAC) for operations projects.

Information about requesting these data is available on the VA intranet (vaww).

  • Operations data users: visit the MAC Data Request Process page (https://vaww.va.gov/MEDICAREANALYSIS/mac_data_requesting_process.asp)
  • Research data users: Visit the VIReC VA/CMS Data Request Overview page (https://vaww.virec.research.va.gov/VACMS/Requests/Overview.htm)

An overview of the data content, and process for requesting data access is available on the VHA Data Portal (VA intranet only: https://vaww.vhadataportal.med.va.gov/Data-Sources/VA-CMS-Data).

Data users interested in evaluating care for aging and frail Veterans, can request access to the GECDAC core files, which combine VA-provided and VA-purchased care data with Medicare data. See Lei et al (2021) for an example of using the GECDAC core files in research.

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Resources for VA Researchers

Below are resources to help guide researchers working with identifiable data available through the VA/CMS request process:

  • VIReC’s VA/CMS page provides information about requesting data and resources specific to CMS data for VA researchers (VA intranet only: https://vaww.virec.research.va.gov/Index-VACMS.htm)
  • ResDAC provides detailed guidance for working with CMS data, including videos on conducting economic evaluations.
  • The Chronic Conditions Data Warehouse provides user guides, data dictionaries, and other documentation to help researchers working with CMS data.
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Brief Overview of Medicaid Cost Data in VA Studies

Most studies cited on this page focus on Medicare data. Historically, VA researchers shied away from including Medicaid data as access was difficult, and the data required a large amount of cleaning. Additionally, fewer physicians accept Medicaid.[i]

However, some researchers, especially those studying younger populations, may want to include Medicaid data in their analysis. In FY2018, 4% of VA enrollees were dually enrolled in VA and Medicaid, and 4% were enrolled in VA, Medicare, and Medicaid.[ii] Studies looking at VA enrollee’s utilization patterns after Medicaid expansion have found shifts in some types care away from VA (Yoon 2019, O’Mahen 2022, Hanchate 2018, Liaou 2022).

Higher quality Medicaid data is now available, creating new opportunities for researchers. While there are currently few studies evaluating VA and Medicaid cost data, recent studies have used VA and Medicaid data to look at the impact of Medicaid expansion on health care use and location of care. These studies include Yoon et al. (2018), Yoon et al. (2019), Vanneman et al. (2018), Liaou et al., (2022), O’Mahen et al. (2020), and O’Mahen et al. (2022).

[i] Physician Acceptance of New Medicaid Patients: Findings from the National Electronic Health Records Survey. Medicaid and CHIP Payment and Access Commission. June 2021. Available at https://www.macpac.gov/wp-content/uploads/2021/06/Physician-Acceptance-of-New-Medicaid-Patients-Findings-from-the-National-Electronic-Health-Records-Survey.pdf.

[ii] de Groot K, Kan D, Rowneki M. VA/CMS Data Snapshot: Veterans’ Enrollment in VHA, Medicare, and Medicaid during FY2018. Hines, IL: U.S. Dept. of Veterans Affairs, Health Services Research and Development Service, VA Information Resource Center. September 2021. Available at https://vaww.virec.research.va.gov/VACMS/Summary-Statistics/DataSnapshot-VHA-CMS-Enrollment-FY18.pdf (VA intranet only).

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Public Access to Medicare Cost Data

If your project does not require patient identifiable information, there are multiple sources of publicly available health care cost data. Researchers should note that CMS and insurance companies pay facilities separately from providers. These look up tools reflect the facility payment, but they don't reflect the provider payment. If researchers only use the facility payment, the cost estimate will be biased.

  • Public Use Files: CMS creates Public Use Files (PUFs) with non-identifiable claim-specific information from CMS data. These files have no information that can be used to link the data to patients. They are available as free downloads. Data files and documentation are available on the CMS website.
  • Provider Cost Report Public Use Files: These reports contain data from hospital and skilled nursing facility annual cost reports from CMS’s Healthcare Provider Cost Reporting Information System (HCRIS).
  • Physician Fee Schedule Lookup Tool: Medicare payment information by procedure code, including pricing, associated RVUs, and payment policies.
  • Researchers can estimate Medicare payments for an inpatient hospital stay using DRG and the hospital Medicare identifier number. Visit the page Estimating Medicare Payments to learn more.
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Public Access to Other Health Care Cost Data

Medicare and Medicaid are not the only sources of data on Veterans’ health care use and costs outside of VA.

Below is a list of other publicly available data researchers may wish to consider for comprehensive examination of Veterans’ care patterns:

Adjusting Charges from Private Hospital Data

Some cost data, such as that from HCUP, may only provide charges instead of costs. Since health care charges rarely equal costs, researchers using charges will need to adjust the data.

The cost to charge ratio (CCR) is one way of making this adjustment.[i] The CCR is available in CMS’s annual Impact file. Different departments within a hospital will often have different cost to charge ratios. We strongly recommend against using department-specific CCRs; these department-specific CCRs are subject to considerable interpretation and error within a hospital.

Interested in learning more?

Todd Wagner’s presentation on cost estimation provides an overview of defining costs, where to get cost data, and what to do if no cost information is available.

[i] Shwartz M, Young DW, Siegrist R, 1995. The ratio of costs to charges: how good a basis for estimating costs? Inquiry. 1995;32: 476–81.

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References

Last updated:  September 7, 2023