Department  of  Health  and Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
THE  NATIONAL  MEDICAL 
EXPENDITURE  SURVEY 
FEBRUARY  1993  OFFICE OF INSPECrOR  GENH3AL 
The mission  of the  Office  of Inspector  General  (OIG),  as mandated  by Public Law 95-452, as 
amended,  is to protect  the  integrity  of the  Department  of Health  and Human  Sewices  (HHS) 
programs  as well as the  health  and welfare  of beneficiaries  sewed  by those  programs.  This 
statutory  mission  is carried  out  through  a nationwide  network  of audits,  investigations,  and 
inspections  conducted  by three  OIG  operating  components:  the  Office  of Audit  Services,  the 
Office  of Investigations,  and the  Office of Evaluation  and Inspections.  The  OIG  also informs 
the Secretary  of HHS  of program  and management  problems  and recommends  courses  to 
correct  them. 
OFFICE OF AUDIT  SERVICES 
The  OIGS Office  of Audit  Semites  (OAS)  provides  all auditing  services  for HHS,  either  by 
conducting  audits  with  its own audit  resources  or by overseeing  audit  work  done  by others. 
Audits  examine  the  performance  of HHS  programs  and/or  its grantees  and contractors  in 
carrying  out  their  respective  responsibilities  and are intended  to provide  independent 
assessments  of HHS  programs  and operations  in order  to reduce  waste,  abuse.  and 
mismanagement  and  to promote  economy  and efficiency  throughout  the  Department. 
OFFICE OF INVESTIGATIONS 
The  OIGS Office  of Investigations  (01)  conducts  criminal,  civil. and administrative 
investigations  of allegations  of wrongdoing  in HHS  programs  or to HHS  beneilciaries  and 0[ 
unjust  enrichment  by providers.  The  investigative  efforts  of 01  lead  to criminal  convictions, 
administrative  sanctions,  or civil money  penalties.  The  01  also oversees  State  iMedicaid fraud 
control  units  which  investigate  and prosecute  fraud  and patient  abuse  in the  Medicaid  program. 
OFFICE OF EVALUATION  AND  INSPECHONS 
The  OIGS Office  of Evaluation  and Inspections  (OEI)  conducts  short-term  management  and 
program  evaluations  (called  inspections)  that  focus on issues of concern  to the  Department, 
the  Congress,  and  the  public.  The  findings  and recommendations  contained  in these  inspection 
reports  generate  rapid,  accurate,  and up-to-date  information  on  the efficiency,  vulnerability, 
and effectiveness  of departmental  programs.  This report  was prepared  in the  New York 
regiona[  office  under  the direction  of Thomas  F. Tu1ly, Regional  Inspector  General  and Akin 
S. Meyer,  Deputy  Regional  Inspector  General.  Project  staffi 
REGION II  HEADQumms 
Joseph J. Cmso, Jrv Project Leader  SusaIIHardwick 
Joseph NILBenkoski 
Lucillc ~  ~p 
To obtain  a copy of this report,  call the  New York  regional  office  at (212) 264-19%  Depatiment  of  Health  and Human  Semites 
OFFICE  OF 
INSPECTOR  GENERAL 
THE  NATIONAL  MEDICAL 
EXPENDITURE  SURVEY 
OE142-n-oo350 
FEBRU~Y  1993  EXECUTIVE  SUMMARY 
PURPOSE 
TO gauge  the  responsiveness  of  the  National  Medical  Expenditure  Survey  (NMES)  to 
the  needs  of  Federal  officials  engaged  in health  care  program,  budget  and  legislative 
activities. 
BACKGROUND 
The  NMES  is a major  data  collection  and  research  program  undertaken  approximately 
every  10 years.  It provides  data  on health  care  utilization,  costs,  sources  of payment 
and  insurance  coverage  of the  Nations  population.  As of October  1992, versions  of 
16 public  use tapes  containing  data  from  the  1987 NMES-2  suwey  are  available  to  all 
public  and  private  sector  users.  Another  will be  available  in November  1992, with 
more  planned  for  release  over  the  next  several  years. 
The  NMES-3  began  in  Fiscal  Year  (FJf)  1991  with  methodological  studies  that  will  be 
conducted  through  FY  1994.  The  suney  itself  will  be  conducted  during  FYs  1996  and 
1997.  Estimated  fina~ costs  will  be  around  $80  million,  depending  on  the  extent  to 
which  historical  costs,  methodological  studies,  follow-up  analyses,  and  staff  costs  are 
included.  These  amounts  will be  reexamined  in  the  FY  1994  budget  process. 
As part  of the  NMES-3  planning  process,  the  Agency  for  Health  Care  Policy  and 
Research  (AHCPR),  in  the  Public  Health  Setice  (PHS),  organized  an 
intradepartmental  work  group,  called  the  NMISS  Work  Group,  to  assess  departmental 
user  needs.  In  addition,  several  work  groups  in HHS  are  studying  various  health  care 
utilization  and  expenditure  suweys  being  conducted.  The  largest  group  is the  Data 
Planning  and  Analysis  Group. 
This  inspection  was requested  by the  office  of the  Assistant  Secretary  for  Planning 
and  Evaluation  (ASPE)  in the  Department  of Health  and  Human  Services  (HHS). 
SCOPE  AND  METHODOLOGY 
We  analyzed  descriptions,  prepared  at our  request,  of AHCPR  procedures  for 
assessing  Federal  user  data  needs  and  priorities  for responding  to user  requests  for 
NMES-2  data.  We  interviewed  25 NMES-2  users  from  HHS  and  other  Federal 
agencies  and  Congressional  organizations,  either  in person  or by phone.  We  also 
obtained  documents  regarding  the  structure  and  operation  of the  NMES  Work  Group. 
i  FINDINGS 
RESPONDE~  ARE  GENERALLY  SATIS~D  WITH  NM=  PRODU~ 
AND  AHCPR  SERVIC= 
o  AHCPR  has  established  priorities  for sefing  Federal  users 
o  Responses  to data  requests  are  timely 
o  All respondents  consider  data  useful 
o  Respondents  rate  AHCPR  staff helpful 
NEVERTHELESS,  SOME  DATA  CONCERNS  AND  PROCEsS  PROBLEMS 
EXIST 
o	 Lack  of currency  of NMES-2  data  and  lack of institutional  expenditure 
information  are  viewed  as impediments 
o	 Questions  are  raised  about  the  NMES  Work  Groups  mission  and 
membership 
o  The  budget  process  appears  inadequate,  requiring  greater  structure 
o	 Strategic  planning  process  appears  fragmented  and  in need  of 
improvement 
RECOMNfE~ATIONS 
The  PHS  should  take  steps  to clari~  for all members  the  purpose  of the  NMES  Work 
Group  and  the  role  members  are  expected  to play. 
The  ASPE  and  the  Assistant  Secretary  for Management  and  Budget  (ASMB)  should 
undertake  a strategic  review  of medical  expenditure  data  sources. 
The  PHS,  ASPE,  and  ASMB  should  reach  agreement  on information  needed  by the 
Office  of the  Secretary  to effectively  analyze  current  and  upcoming  NMES  budget 
requests. 
The  PHS  should  identify  innovations  to speed  up  the  release  of NMES  data  as soon  as 
is technically  feasible. 
ii
 AGENCY  COMMENTS 
The  Assistant  Secretaries  for Health  and  Management  and  Budget  provided  written 
comments  on the  draft  of this  report.  The  Public  Health  Service  (PHS)  supports  the 
findings  and  recommendations  and  made  several  technical  comments;  the  report 
reflects  related  changes  where  appropriate.  The  Assistant  Secretary  for  Management 
and  Budget  (ASMB~ proposed  d;let{ng  the  recommendation  that  ASMB  and  ASPE 
undertake  a joint  strategic  review  of medical  expenditure  data  sources. 
The  ASMB  notes  that  the  interdepartmental  Data  Planning  and  Analysis  Work  Group 
(DPAWG)  already  has  activities  undeway  which  address  the  reports 
recommendation.  We  acknowledge  DPAWGS  role  in the  report  and  recognize  that 
DPAWG  has  recently  made  plans  to accomplish  some  of what  we recommend. 
However,  since  these  plans  are  not yet  developed  in detail,  we are  retaining  this 
recommendation  at  this  time. 
With  regard  to  ASMBS  request  for the  Office  of Inspector  General  to commit  to a 
u 
review/assessment  of the  DPAWGS  efforts  in  approximately  a year,  we  w 11consider 
this suggestion  in our  upcoming  workplanning  process. 
The  Assistant  Secretary  for  Planning  and  Evaluation  did not  comment  in writing,  but 
verbally  concurred  with  our  findings  and  recommendations.  The  complete  comments 
of PI-IS and  ASMB  are  included  verbatim  in Appendk  B. 
.. . 
111  TABLE  OF  CONTENTS 
EXECUTIVE  SUMMARY 
INTRODUCIION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..1 
FINDINGS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...5 
TimelinessAndUsefulness  OfNMES 
Products  AndAHCPRSemices  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...5 
Data  Concern  sAndProces  sProblems  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...6 
RECOMMENDATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...9 
APPENDIX  A 
Usefulness  ofDataReceived.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  A-1 
Helpfulness  ofAHCPRStaff  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .4-2
APPENDIX  B 
timments oftheAssistanStecretaries  for Health and Management  and Budget  B-1  INTRODUCTION 
PURPOSE 
TO gauge  the  responsiveness  of the  National  Medical  Expenditure  Sumey  (NMES)  to 
the  needs  of Federal  officials  engaged  in health  care  program,  budget  and  legisl~ltive 
activities. 
BACKGROUND 
The  NMES  is a major  data  collection  and  research  program  undertaken  approximately 
every  10 years.  It provides  data  on health  care  utilization,  costs,  sources  of payment 
and  insurance  coverage  of the  nations  population.  Within  the  Department  of Health 
and  Human  Services  (HHS),  the  NMES  is the  responsibility  of the  Agency  for Health 
Care  Policy and  Research  (AHCpR)  in the  Public  Health  Smwice (PHS),  through  its 
Center  for  General  Health  Services  Intramural  Research. 
Historical devebpment  of the NMES 
The  first survey, which  covered  calendar  year  1977, was called  the  National  Medical 
Care  and  Expenditure  Survey  (NMCES,  also known  as NMES- 1).  Two agencies 
jointly  managed  it.  They  were  the  National  Center  for Health  Services  Research 
(AHCPRS  predecessor  agency)  and  the  National  Center  for Health  Statistics  (NCHS). 
which  is part  of the  Centers  for Disease  Control. 
For  NMES-l,  members  of a sample  of households  were  interviewed  si.. times  in  1977-
7S to obtain  personal  and  family health  care  use  and  expenditure  data.  Data  affectin: 
a broad  range  of issues were  collected,  including  the  number  and  characteristics  of the 
uninsured  and  the  differences  among  socioeconomic  and  demographic  groups  with 
respect  to the  use  of heahh  sew-ices. 
Description of the NMES-2 survey 
The  NCHSR  managed  the  conduct  of the  NMES  for  1987, known  as NMES-2.  It was 
expanded  over  NMES-1,  based  on the  recommendations  of the  Health  Care  Financing 
Administration  (HCFA),  the  Assistant  Secretary  for Planning  and  Evaluation  (ASPE), 
and  the  Indian  Health  Semite  (IHS).  In addition  to the  household  suwey,  a separate 
Survey  of American  Indians  and  AIaska  Natives  (SAIA.N)  and  an  Institutional 
Population  Component  (lPC)  were  performed. 
The  household  sumey  used  a national  probability  sample  of approximately  14,000 
households  and  35,000 persons  from  the  civilian,  non-institutionalized  population. 
Populations  of special  interest  to  Federal  policy makers,  including  blacks,  Hispanics, 
1  the  elderly  and  the  functionally  impaired,  were  oversampled.  Each  family  was 
intemiewed  four  times  over  16 months.  The  data  collected  include  household 
composition,  employment  and  insurance.  Also, for each  family  member,  they  contain 
information  on illnesses,  use of health  services,  and  health  expenditures  for  the  entire 
year  1987. 
Information  gathered  from  the  medical  providers,  employers  and  insurers  of the 
persons  in the  household  sample  supplemented  these  data. 
The  SAIAN  was similar  in design  to the  household  survey.  It collected  data  which  can 
be  used  to compare  the  American  Indian  and  Alaska  Native  population  with  the 
general  U.S. population  in areas  such  as health  status,  use  of health  services  and 
access  to care. 
The  IPC  collected  information  on  11,000 residents  and  new  admissions  to nursing 
homes,  personal  care  homes  and  homes  for the  mentally  retarded.  It obtained  data 
on  expenditures  and  characteristics  of facilities  as well as  sources  of  payment  for 
residents.  The  IPC  included  next-of-kin  and  obtained  data  from  the  respondents 
family  or  friends  on  the  personal  history,  financial  status  and  insurance  coverage  of the 
institutionalized  person. 
Field  work  for  the  NMES-2  surveys was conducted  by Westat,  Inc., Rockville,  lMD, as 
the  primary  AHCPR  contractor  and  by the  National  Opinion  Research  Center, 
University  of Chicago.  Additional  work  was performed  by the  Council  of Energy 
Resource  Tribes,  Denver,  CO  and  by Stephen  R. Braund  and  Associates,  Anchorage. 
AK.,  Social  and  Scientific  Systems,  Inc., Bethesda,  MD,  has  been  providing  data 
processing  serwices during  the  analysis  stage. 
Availability of NMES-2  data 
Copies  of NMES-2  preliminary  data  tapes  have  been  made  available  to  Federal 
agencies  on an  on-call  basis whenever  data  processing  has  advanced  to  the  point  that 
it is feasible  to produce  them;  final  public  use tapes  have  also been  made  available  to 
them  and  the  general  public  since  the  fall of 1987.  AS of October  9, 1992, versions  of 
16 public  use  tapes  are  available  to all public  and  private  sector  users.  Another  one 
will be  available  in early  November  1992, and  more  are  planned  for  release  over  the 
next  several  years.  The  AHCPR  has  also provided  special  analyses  and  special 
research  data  tapes  upon  requests  from  Federal  agencies.  In its technical  assistance 
role,  AHCPR  has  provided  training  and  guidance  to all users  and  prospective  users  of 
NMES-2  data.  This  has  included  conducting  seminars  around  the  country.  In 
addition,  AHCPR  staff  authored  journal  articles,  research  papers,  Research  Findincs, 
Data  Summaries  and  Methods  reports  based  on NMES-2  data. 
2
 ?%e development  of the NMES-3 survey 
The  NNIES-3  began  in Fiscal  Year  (FY)  1991 with  methodological  studies  that  will be

conducted  through  FY  1994.  The  survey itself will be  conducted  during  FYs  1996 and

1997.  Estimated  final  costs will be  around  $80 million,  depending  on the  extent  to

which  historical  costs,  methodological  studies,  follow-up  analyses,  and  staff  costs  are

included.  This  estimate  will be  reexamined  in the  FY  1994 budget  process.

Contractors  will be  selected  to perform  functions  similar  to  those  for  NMES-2.

As part  of the  NMES-3  planning  process,  AHCPR  organized  an intradepartmental

work  group,  called  the  NMES  Work  Group,  to assess  departmental  user  needs  related

to NMES-3.  A similar  group  had  been  formed  in the  mid-1980s  for NMES-2.  This

group  first  met  at  the  invitation  of AHCPR  in May  1992 and  again  in June  to  discuss,

among  other  issues,  the  purpose  of the  group,  its agenda,  members  roles,  and

members  opportunities  to translate  their  agencies  data  needs  into  the  NMES-3

design.  There  are  nine  members  of the  NMES  Work  Group  from  HHS  agencies

outside  AHCPR,  including  representatives  from  ASPE,  the  Substance  Abuse  and

Mental  Health  Services  Administration  (SAMHSA),  the  Office  of the  Assistant

Secretary  for  Health  (OASH),  HCF~  the  National  Center  for Health  Statistics

(NCHS),  and  IHS. 
Strategic planning for health cure utilization and expenditure swwys 
Currently,  several  work  groups  in HHS  are  studying  various  health  care  utilization  and 
expenditure  surveys  being  conducted  within  the  department.  The  largest  group  is the 
Data  Planning  and  Analysis  Group  (DPAWG),  established  in  1990.  It  addresses 
concerns  about  major  gaps  in  HHS  data  systems,  potential  duplication  and  barriers  to 
sharing  of information  across  the  department.  The  DPAWG  has  members  from 
ASPE,  HCF~  OASH,  SAMHSA,  NCHS,  the  Assistant  Secretary  for Management 
and  Budget  (ASMB),  the  Social  Security  Administration  (SSA)  and  AHCPR.  Several 
members  of this group  are  also  members  of the  NMES  Work  Group. 
DPAWG  has  begun  the  preparation  of a strategic  plan  for  the  department  (outlined  in 
a statement  of purpose  dated  March  1992) which  calls for: 
identi@ing  current  and  future  data  requirements:  evaluating  whether  and 
how well current  data  systems  meet  these  requirements,  including 
examination  of existing  data  sharing  and  access  policies;  and  making 
recommendations  for  changes  that  ensure  departmental  data  systems  are 
of maximum  Department-wide  utility.  Priorities  shall  be  established  for 
meeting  departmental  needs  which  are  consistent  with  current  resource 
availability. 
This  inspection  was requested  by ASPE. 
3  SCOPE  AND  METHODOLOGY 
We  analyzed  descriptions,  prepared  at our  request,  of AHCPR  procedures  for 
assessing  Federal  user  data  needs  and  priorities  for responding  to  user  requests  for 
NMES-2  data. 
We  interviewed  25  NMES-2  users  from  HHS  and  other  Federal  agencies  and 
Congressional  organizations,  either  in person  or by phone,  to gather  views and  other 
information  on  their  experiences  with  NMES-2,  their  experiences  in dealing  with 
AHCPR  and  their  thoughts  about  NMES-3.  Within  HHS,  we talked  to 
representatives  from  ASPE,  HCF~  NCHS,  IHS  and  ASMB.  Outside  of HHS,  we 
talked  to contacts  within  the  Office  of Management  and  Budget  (OMB),  the 
Congressional  Budget  Office  (CBO),  the  Joint  Congressional  Committee  on Taxation. 
the  Congressional  Research  sex-vice, the  Department  of the  Treasury  and  the 
Department  of Labor. 
To  select  our  initial  pool  of respondents,  we conducted  preliminary  interviews  with 
persons  identified  by ASPE  and  AHCPR  as those  in Federal  agencies  having  some 
experience  with  the  NMES.  We  talked  to those  individuals  and,  through  them, 
identified  others,  in and  outside  the  Federal  government,  with  similar  experiences  - 52 
altogether.  Of the  52, we chose  the  final  sample  of 25 individuals  who  have  had 
extensive  hands-on  experience  working  with preliminary  data  files, special  analyses, 
and  public  use  tapes  provided  by AHCpR  and  who  interact  with  AHCPR  staff  in the 
process.  These  study  respondents  work  for HCF~  ASPE,  OMB,  IHS  and  CBO. 
These  agencies  sometimes  also  use contractors  to work  with  the  data  files.  The 
agencies  rely on  these  respondents  to request,  receive,  and  utilize  all kinds  of NMES 
data  in the  development  of health  care  policy, budgetary  and/or  legislative  initiatives. 
We  did not  include  in the  study  occasional  requesters  and  users  of the  data  from  other 
Federal  agencies  and  commissions  and  Congressional  committees.  Only  some  of these 
users  utilize  NMES  data  in the  development  of health  care  policy,  budgetary  and 
legislative  initiatives. 
We  also  obtained  documents  regarding  the  structure  and  operation  of  the  NMES 
Work  Group  and  interviewed  nine  of its members.  We  interviewed  these  nine 
members  after  the  groups  second  meeting.  Most  of these  respondents  were  also 
interviewed  as users  of NMES-2  data. 
We  also  intetiewed  a small  number  of senior  Departmental  officials  regarding  the  use 
of NMES  data  in policy  deliberations  and  about  Departmental  data  and  statistical 
planning. 
4  FINDINGS 
-PO~ENTS  ARE  GENERALLY  SATISFIED  WITH  NMES  PRODU~ 
AND  AHCPR  SERVICES 
AHCPR  has established ptities  for sewing Fexkral users 
In setting  priorities,  AHCPR  reported  to us that  it tries  to respond  to all requests  for 
information.  However: 
... when  there  are  conflicts  with respect  to the  availability  of 
programming  support,  staff  time,  or funds,  users  are  accommodated  in 
the  following  order  of priority  (highest  to lowest):  Executive  Branch, 
Legislative  Branch,  State  and  Local  Government,  private  research 
organizations,  and  individuals. 
... In general,  research  projects  are  the  first displaced  by a priority 
request.  Public  use  tapes  development  is next.  Congressional  responses 
are  last  to be  displaced  by a DHHS  or an OMB  request. 
Because  of concerns  about  timeliness  problems  experienced  with  the  release  of 
NMES- 1 data,  AHCPR  has  developed  a system  for releasing  preliminary  data  to 
Federal  users  from  NMES-2  before  public  use  tapes  are  available.  The  preliminary 
data  tapes  are  provided  by AHCPR  with warnings  about  reliability,  since  weights  may 
not  have  been  developed  and  the  data  may  have  not been  fully cleaned.  As noted 
below. AHCPR  has  res~onded  to  168 requests  for NMES-2  data  from  our  25 Federal 
, 
respondents.  Of these, 118 consisted  of preliminary  data,  including  early  versions  of 
public  use  tapes,  special  analyses  and  tabulations.  The  other  fifty responses  were  for 
public  use  tapes. 
Response  to dizta reqwts  are timely 
Respondents  confirm  receiving  a total  of 168 responses  from  AHCPR.  These  users 
report  receiving  160 (95 percent)  of 168 responses  soon  enough  to make  good  use of 
them.  In only eight  instances  were  data  reportedly  not  received  soon  enough.  In six 
of them,  respondents  did  not  feel  it was so important  to have  obtained  the  data 
sooner.  of  the  remaining  two, one  respondent  considered  it critically  important  and 
another  rated  it quite  important  to have  received  the  data  sooner.  (See  Appendix) 
All respondents consider dala useful 
All respondents  rate  the  data  received  very  (87 percent)  or somewhat  (13 percent) 
useful  in meeting  their  needs.  Using  the  data,  some  calculated  health  insurance  rates 
and  cost  estimates  for  OMB;  others  analyzed  expenditures  by age groups  and 
5  APPENDIX  A 
NNQNENE  BY AGENCY AND NUMBER OF DATA ~m 
DATA  RECEIVED  IN TIME  TO  BE USE~ 
I 
1  I 
Agency  No.  #  Data  In  Time  For  Use:  #  ~ 
Respondents  Requ ests  II 
I 
A  1  30  Yes  30  :1 
II 
B  5  28  Yes  27 
No  1  ;1 
;~ 
c  3  17  Yes  17 
~ 
D  1  21  Yes  20  [
No  1 
I 
E  1  9  Yes  9  ! 
,
:1
F  1  2  Yes  2 
i~ 
G  1  4  Yes  4 
I 
H  4  26  Yes  26  ,!~ 
I 
I  2  15  Yes  15  I 
,I 
J  1  8  Yes  5 
No  3 
II 
K  1  3  No  3 
L  2  0  Yes  o  ~ 
M  1  4  Yes  4 
N  1  1  Yes  1 
TOTALS :  25  168  Yes  160  ~ 
No  8, 
A  -1  estimated  the  cost  of tax credits  for  the  Administration.  Some  employed  the  data  in 
developing  other  health  policy models.  Most  report  that  NMES-2  data  are  used  to 
verify  and  increase  the  confidence  level  of estimates  they  make.  A third  of the 
respondents  consider  NMES-2  the  only source  of data  to  meet  their  particular  needs. 
Many  of the  25 respondents  used  NMES-2  data  in more  than  one  of the  following 
functions:  policy  (18), budget  (13)  and  legislative  (6).  In responding  to how necessary 
NMES  data  are  in fulfilling  each  of these  37 roles,  the  respondents  reported  that  the 
data  are  very  (27)  or somewhat  (8) necessary. 
According  to respondents,  the  debate  over  health  care  reform  will continue  into  the 
next  Administration  and will intensify.  They  believe  that  pressure  will build  for  new 
NMES  data  to apply  to proposed  models  for the  end  of the  decade  and  into  the  next 
century.  Respondents  from  HCFA  expect  to use NMES-3  to help  gauge  the  impact  of 
major  health  care  delivery  and  policy  changes  of the  late  1980s and  early  1990s, such 
as managed  care  and  Physician  Payment  Reform,  which  are  beyond  the  scope  of 
NMES-2. 
Respondents mte AHCPR  staff helpfhl 
Of 21 respondents  who  rated  AHCPR  staffs  helpfulness  in providing  timely  access  to 
NMES-2  data,  19 rate  the  staff  either  very helpful  (17)  or somewhat  helpful  (2).  Two 
respondents  said  the  help  was mixed  over  time. 
Similarly,  of 22 respondents  who  rated  AHCPR  staffs  helpfulness  in providing 
technical  assistance  in using  the  data,  20 respondents  said  the  staff  was very  helpful 
(19)  or somewhat  helpful  (l).  One  respondent  said AHCPR  staff  was not  at  all 
helpful  in providing  technical  assistance. 
With  regard  to each  type  of helpfulness,  four  of the  25 respondents  did  not  rate 
AHCPR  staff.  They  explained  that  they  did not  need  help  from  AHCPR  staff  or  thev. 
did  not  have  a sufficient  basis  on which  to rate  their  help.  (See  Appendix). 
NEVERTHELESS,  SOME  DATA  CONCERNS  AND  PROCESS  PROBLEMS 
EXIST 
Luck  of cumency of NMES-2 data and lack of institutiomlexpenditureinformation 
vinwi  as impediments 
Despite  the  generally  high level  of AHCPR  responsiveness  to Federal  users  needs. 
some  concerns  exist about  the  age  of NMES-2  data  in released  public  use  tapes.  Halt 
the  respondents  expressed  general  concern  about  the  currency  of NMES-2  data. 
While  most  have  been  able  to make  good  use of released  data,  they  note  that  it is now 
nearly  five years  old  and  aging. 
6  We  are  unable  to  assess  the  significance  of  this  concern.  The  aging  of data  in large~ 
complicated  sumeys  is a common  problem.  AHCPR  staff  provided  information  about 
other  large  sumeys  showing  comparable  elapsed  times  between  the  end  of data 
collection  and  the  availability  of public  use  tapes. 
A particular  concern  of one  user  is the  lack of expenditure  data  related  to the 
mentally  retarded  and  developmentally  disabled  population  sumeyed  in the 
institutional  component.  Some  of these  data  are  scheduled  for release  later  this year. 
This  user  (a member  of the  NMES  Work  Group)  points  out  that  improving  similar 
data  collection  in NMES-3  is very difficult  without  having  first  assessed  the  related 
NMES-2  data. 
The  AHCPR  has  advised  us, in response  to concerns  about  release  of the  Institutional 
Population  Component  (IPC)  of NMES-2,  that  The  primaxy  factors  controlling  the 
release  of these  data  are  technical,  involving to a large  extent  issues  that  were  not 
foreseen  at  the  outset  of the  process.  The  agency  explained  that: 
It was the  panel  nature  of the  IPC,  the  need  for  repeated 
contacts,  and  the  information  to estimate  use  and  expenditures 
for  the  full year  that  introduced  the  complexities  and  determined 
the  time  of Public  Use  data  tape  distribution. 
The  AHCPR  also  pointed  out  that  all data  tape  production  was stalled  during  1990 
and  1991, while  the  agency  responded  to requests  related  to  health  care  reform. 
Que40ns  raked  aboui  the NMES  Work Gmup3  misswn and membe~hip 
No  charter  or similar  document  exists which  specifies  the  NMES  Work  Groups 
purpose  or defines  the  roles  of AHCPR  and  group  members. 
.The  majority  of members  of the  Work  Group  do not  feel  that  short-term  (six of nine) 
and  long-term  (eight  of nine)  agendas  have  been  established  for addressing  primary 
user  interests  in, and  concerns  with, NMES-3.  Responses  were  inked  as to whether 
the  group  represents  an  effective  forum  for  users  to provide  input  to the  development 
of NMES-3.  Of six clear  responses,  three  say yes and  three  say no, and  only those 
members  who  said yes believe  that  AHCPR  is open  to making  suggested  changes. 
Four  others  say they  dont  know,  and  two  say  they  dont  believe  AHCPR  is open  to 
changes. 
Although  contracts  were  let  to conduct  methodological  studies  needed  to plan  and 
operate  NMES-3,  none  of the  agencies  represented  by these  members  were  asked  for 
input  to AHCPRS  formulation  of the  scope  of work  for contractors. 
With one  exception,  these members  agree that the composition  of the  work  group 
does  represent  users  with  the  greatest  need  for the  data.  However,  it should  be  noted 
that  two of the  heaviest  users  of NMES-2  data  have  been  OMB  and  CBO,  both  of 
7  which  are  outside  HHS  and  not  representeodn the  work  group.  h addition, 
discussions  with other  department  off~cials revea]  that  the  work  group  composition 
does  not  successfully  represent  senior  policy staff  interests  and  concerns  for  current 
and  anticipated  data  needs.  (See  following  section  on strategic  planning  process). 
The budget process ap~ars  *-MW  r+g  greater stmcture 
The  AHCPR  requested  $10 million  for Fiscal  Year  (FY)  1994 to help  accelerate  data 
collection  for NMES-3.  This  came  as a surprise  to  departmental  agencies  concerned 
about  its cost, who  had  expected  this kind  of funding  to be  one  year  later,  for  FY 
1995.  This  is not  to imply  that  the  acceleration  was inappropriate.  However,  the  time 
period  for reviewing  the  request  was short.  This  request  was based  on AHCPRS 
analysis  of procurement  schedules  necessary  to prepare  for field  work  to  be 
accomplished  according  to the  original  schedule. 
We  also  found  that  key documents  needed  by ASPE  and  ASMB  were  not  available  to 
them.  The  documents  -- schedules  and  descriptions  of major  NMES  survey 
components  -- had,  in fact,  been  prepared,  but  had  not  been  submitted  with  the 
budget  request.  Subsequent  to our  noting  this problem,  and  bringing  it to  the 
attention  of both  AHCPR  and  the  Office  of the  Secretary,  these  documents  were 
submitted  and  have  been  reviewed.  However,  the  event  illustrates  the  fact  that  PHS 
and  Office  of the  Secretary  staff had  not  established  a budget  review  process  adequate 
to deal  with  this large  project. 
Strat~c planning process  ap~an  jkagmented and in need of improvement 
Based  on our  review  of the  decision-making  processes,  we identified  weaknesses  in 
processes  needed  to develop  a strategic  plan  for evaluating  current  and  future  health 
care  utilization  and  expenditure  suneys.  Several  senior  officials  we interviewed  agreed 
with  this  obsemation.  We  noted  that  technical  experts  rather  than  senior  policy 
decision  makers  were  engaged  in the  developmental  process.  Several  respondents 
expressed  some  resemation  about  spending  $80 million  or  more  for NMES-3,  by !% 
the  costliest  health  care  utilization  and  expenditure  sumey  in the  Department.  More 
broadly,  the  respondents  viewed  the  collection  of such  data  within  HHS  as a 
fragmented  process,  with  possible  duplication  of effort  and  excessive  overall  cost  a 
likely consequence. 
8  RECOMMENDATIONS 
The  PHS should  tie  steps to chri&  for all members  the purpose  of the NMES  Work 
Group  and the role  members  are expected  to play. 
In particular,  short- and  long-term  agendas  should  be  drawn  up  and  shared.  Attention 
should  be given  to  addressing  member  concerns  about  opportunities  to have  NMES-3 
reflect  user  needs.  A decision  should  be  made  as to whether  this group  should  consist 
primarily  of technical  experts  or more  senior  policy officials,  or both.  In any event,  a 
mechanism  is needed  to more  explicitly  obtain  the  review  and  input  of senior  policy 
officials.  Such  planning  might  consider  representation  of other  Federal  agencies, 
including  OMB  and  CBO,  which  have  a large  stake  in NMES  data. 
The  ASPE  and ASMB  should undertake  a strategic review of medical  expenditure 
data sources. 
This  could  be  done  under  the  auspices  of the  DPAWG  or other  group.  It should 
involve  all affected  HI+IS components,  including  pHS  and  HCFA.  There  should  be 
more  direct  coordination  between  the  NMES  Work  Group  and  the  DPAWG  in the 
development  of a strategic  plan  to meet  HFISS  data  needs  in the  most  efficient  and 
effective  manner  possible.  This  effort  should  raise  and  answer  fundamental  questions 
about  scope,  accuracy,  precisioannd confidence  ]evels, as well as levels  of funding  for 
sumeys.  It should  consider  the  availability  of medical  expenditure  data  from  the 
NMES  as well as other  sumeys  and  studies.  Senior  poIicy officials  should  be  involved 
in the  decision-making  process. 
The  PHS, ASP~  and ASMB  should reach agreement  on information  needed  by the 
Office  of the Secretaxy to effectively  analyze current and upcoming  NMES  budget 
requests. 
With  a project  as expensive,  prolonged  and  complex  as NMES,  it is likely that 
revisions  to the  budget  and  schedules  will be  needed  periodically. 
The  PHS shouId identifj  innovations  to speed  up the release  of  NIVfES data as soon  as 
istechnicalfleyasl%le. 
We  recognize  that  AHCPR  has  taken  steps  in its NMES-3  methodological  studies  to 
find ways to improve  the  release  time  for public  use tapes.  We  encourage  AHCPRS 
pursuit  of additional  innovative  ways to collect  data  crucial  to meeting  the  health  care 
policy,  budget,  and  legislative  needs  of the  department. 
9  REPO~ENTS  BY  AGEN~:  AHCPR  ST- HELp~N_=S 
1 
Agency  No  Access To  Data  Technical 
  Assistance  !
Respondents  !
I 
VH-1  1 
A 1  VH-1 
B 5  VH-3  SH-1  MX-1  VH-4  OT-1  I 
VH-1  SH-1  OT-1  _ 
c 3  VH-2  OT-1 
VH-1  1 
D 1  SH-1 
VH-1 
E 1  VH-1  )i 
VH-1  I 
F 1  VH-1 
I 
VH-1 
G 1  VH-1 
I
VH-3  OT-1  I 
H 4  VH-4 
I
I
I 2  VH-2  VH-2  !I 
NAH-1	 !

J 1
 MX-1  I

VH-1

K 1
 VH-1  ,

VH-1  OT-1

L 2
 OT-2  I

VH-1  .

M 1
 OT-1 
VH-1

N 1  VII-l 
TOTALS

KEY 
VH-19

VH-17 
VH:  Very  Helpful 
SH-1

SH-2 
SH:  Somewhat  Helpful 
MX-O

MX-2 
MX:  Mixed 
NVH-O

NVH-o 
NVH:  Not  Very  Helpful 
NAH-1

NAH-O 
NAH:  Not  At  All  Helpful 
OT-4

OT-4 
OT:  other 
A  -2 APPENDIX  B 
COMMENTS  OF THE ASSISTANT SECRETARIES 
FOR  HEALTH  AND  MANAGEMENT  AND  BUDGET 
( SEE  ATTACHMENT) 
B-1  g?
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lt  1,  , 
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DEPARTMENTOF  HEALTH & HUMAN  SERVICES  Office  of the Secretary 
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~7%U.W,,~ 4  Washington,  D.C.  20201
JAN -71993

MEMOWDUM  TO THE INSPECTOR  GENE~L 
Attn:  Bryan  Mitchell  n 
&
From  .  Arnold  R. Tompkin 
Assistant  Seczstzry fo 
/ 
!ITh~~ational  Me~#l  Expenditure 
Subject~  :  OIG Draft Report: 
Suney  -- COMMENTS  - b

We  have reviewed  the OIG draft report:  ~TheNational  Medical 
Expenditure  Suney  and agree to clear the report wltYL the 
following  modifications.

we  propose  a  modification  to  the  second  report  recommendation 
reflected  on  page  ii  of  the  Executive  Summary  and  on  page  g  of 
the  full  report.  The  Data  Planning  and  Analysis  Work  Group 
(DpAwG)  has  lead  responsibility  for  the  strategic  review  of 
medical  expenditure  data  sources,  i.s  reviewing  Department-wide 
data  efforts,  and  DPAWG already  has  activities  underway  which 
address  the  reportts  recommendation.  We  suggest  that  the  report 
drop  the  recommendation  for  a  joint  ASPE/ASMB  effort,  recognize 
the  activities  of  the  DPAWG,  and  commit  the  OIG to a follow-on 
reviewiassessment  of  the  DPAWGIS  efforts  in  approximately  a year. 
Also  ,  since the report  focuses primarily  on NMES II experience, 
we would propose  that the OIG report  on how the NMES  III planning 
process  has accounted  for, and improved  ont p.
roblems  identified

with ms  II.  AHCPR,  the NMES work group,  and the DPAW: are

working  towards  developing  a survey and database  which  1s more

timely  and which  better  supports  health  care policy decision-

makers.

. 
.. 
IG  -

.. 
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*F*  .+..+  HeatSiwtC8

.r.
-.  DEPART~NT OF HEALTH & HU W  SEIWCES  Public 
:

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vd,a Memorandum 
9JM181993 
Date 
Assistant  Secretary  for Health 
From 
Office  of Inspector  General  (OIG)  Draft  Report  The  National 
Subject 
Medical  Expenditure  Sumey,  oEI-02-92-00350 
To  Acting  Inspector  General,  OS 
Attached  are  the  Public  Health  Service  comments  on  the  Stiject 
OIG  draft  report.  We  concur with the reports  reco~endfitj~ns 
and  have  taken  or  will  take  actions  to  implment  ~~~ 
are several  techn~cal 
included  for your  consideration 
comments. 
A

(yh&#4= 
ames  O.  Mason,  M.D.,  Dr.P.H~ 
Attachment 
.  .  .,. 
~:..  .. -
.**. 
L 
. 
.,- . 
-. ,-
----
.,---
.  . 
P~L1c  HEALTH  SERVICE  [P~S)  COMMENTSON THE  OFFICE  OF  INSPECTOR 
GENERAL  (OIG) DRAFT REPORT  THE NATIONAL  MEDICAIJ EXPENDIT~E 
SURVEY,  0EI-02-92-O0350,  ISSUED  NOVEMBER  1992 
The  OIG  report  contains  four  recommendations ~ three  of which  are 
addressed  to  PHS.  Following  are the comments  on the 
recommendations  addressed  to  PHS . 
OIG Recommendation 
1.  The  PHS  should  take steps  to clarify  for all members  the
purpose  of the NMES Work  Group and the role members  are 
expected  to play. 
PHS  Comment 
We concur.  The  Agency  for Health  Care policy  and Research 
(=CPR)  will  take necessary  actions  to ensure  that  the objective 
of this  recommendation  is met  by addressing  Departmental  concerns 
regarding  the purpose  and role  of the WS  Working  Group.  Both 
technical  and policy  input  is needed  in order  to ensure  that all 
Departmental  concerns  are met.  It may be necessaq  to form a 
second  group  of  senior  Departmental  officials  to fully  address 
policy  needs  and  concerns.  Accordingly,  AHCM?  will  explore  this 
and other  options  with  PHS and Departmental  officials  and will, 
within  four months,  establish  an appropriate  mechanism  for 
addressing  policy  needs  and issues  in NMES  planning. 
OIG Recommendation 
2.  The PHS, Office  of the Assistant  Secretary  for Planning  and 
Evaluation  (ASPE), and Office  of the Assistant  Secretary  for 
Management  and Budget  (ASMB) should  reach  an agreement  on 
information  needed  by the Office of the Secretary  (OS) to 
effectively  analyze  current  and upcoming  NMES  budget 
requests. 
PHS Comment 
We concur.  AHCPR  will,  in concert  with  the PHS and the OS, take 
necessary  actions  to continue  to ensure  that  documentation  needed 
in the NMES budget  review  process  is prepared  in accordance  with 
Departmental  needs  and submitted  to OS components  in a timely 
manner.  AHCPR  presented  a schedule  of deliverables  for NMES-3  to 
the Data  Planning  and Analysis  Work Group.  The Work  Group 
approved  this schedule  of deliverables  and transmitted  its 
recommendation  to ASPE  and ASMB. 
OIG Recommendation 
3.  The  PHS  should  identify  innovations  to speed  the release  of 
NMES  data as soon as technically  feasible.  2 
PHS Comment 
We concur.  The timely  release  of public  use data  remains  an 
important  aspect  of the NMES project.  As the OIG report 
acknowledges,  AHCPR  has taken  steps in the NMES-3  methodological 
studies  to improve  the release  t~e  for p~lic  use tapes.  AHCPR 
will  ensure  that appropriate  efforts continue  to be made  in this 
regard. 
Much  of the  explained  by the need 
delay  in  releasing  NMES  data  is 
to contact  the medical  providers,  employers,  and insurers  of the 
households  in the sample  in order to obtain  accurate  and complete 
data on health  expenditures,  health insurance  premiums,  and 
health  plan  provisions.  In the NMES-3 methodological  studies 
AHCPR  is testing  several  procedures  to expedite  the fielding  of 
these  follow-up  su~eys,  including  the feasibility  of mounting 
the follow-up  surveys  while  the  household  Sumey  is  still  in  the 
field. 
In addition,  su=ey  methodologists  at AHCPR are analyzing  NMES-2 
data  to identify  changes,  in questionnaire  design  and estimation 
procedures,  that would  shorten  the time from data  collection  to 
estimation.  For example,  problematic  sections  of the NMES-2 
~esti-onnaires  have  been  identified  and  are  being  re-designed  to 
eliminate  the  rleeci  for  extensive  editing  and  imputation.  Simpler 
procedures  for imputing  missing  expenditure  items  are being 
evaluated  for their  effects  on data quality. 
The AHCPR  is investigating  the efficiencies  that might  be 
realized  from greater  reliance  on computer-assisted  inte~iewing 
in NMES-3.  AHCPR  is also re-examining  the requirements  of the 
data  collection  contractor  with  respect  to data  editing  and 
cleaning,  and exploring  other  ways that could  be used  by 
contractors  to expedite  the release  of NMES data. 
Technical  Comments 
o  Paae  6 includes  discussions  of some concerns  regarding  the 
currency  of the NMES data.  However,  it should  be noted  that 
the data  can be adjusted  to reflect  changes  in prices  and, in 
fact,  it is far more  economical  to  adjust  data  than  to collect 
it more  often.  Only when  there  are ~jor  changes  in the 
industry  do the data become  less useful  for policy  studies. 
Currently,  NMES-2  data  are being used by virtually  all 
researchers  involved  in studies  of health  care reform. 
o  Paae  8  includes  a  statement  that  the  proposed  costs  of  -S-3 
are  between  $88  and  $100  million.  In fact,  the  proposed 
budget  for  NMES-3  is  $80  million.  This figure  has been 
presented  to the OS and the Office  of Management  and Budget  on 
numerous  occasions.  For planning  purposes,  it is Departmental  -. 
3 
practice  not to include  the costs of staff and other 
relatively  fixed  costs  in estimates  for such projects. 
Further,  it is not appropriate  to include  the estimated  costs

of providing  technical  assistance  to the Executive  Branch  as

part  of the data  collection  costs.

Mso,  please  note that page  s of the report  states  that the 
estimated  cost of NM.ES-3  &  be~e=n  $88  and  $131  million  and 
includes  follow-up  analyses  and  staff  costs. 
o	 Pa~e  8  i.rlcludes  disctlssion  of  concerns  r=garciing  the  lack of a 
strategic  planning  process  for  evaluating  c~rexlt  and  future 
health  care utilization  and  expenditure  surveys.  This 
statement  is  supported  by  anecdotal  evidence  provided  in 
inte=iews  with  several  senior  officials  who   . ..agreed  with 
this  obsemation.  For a more balanced  perspective,  the 
report  should  note  that plans  for NMES-2  were  reviewed  and 
considered  at the highest  levels within  the Department.  In 
addition,  the Data Planning  and Analysis  Working  Group  has

completed  a review  of data needs and issues  in health  care use

and expenditures  and has developed  a number  of strategic 
planning  recommendations. 
o  Paae  8  includes  discussion  of concerns  regarding  the 
appearance  of inadequacy  in the budget  process.  For balance, 
we  suggest  that  the report  note that all budget  data  requested

by the ASMB  were  presented  in tie preliminary  budget  submitted

to the Department.  After  submission  of the budget  document,

ASMB  made  an ad hoc request  for additional  data, which  PHS

provided  to them in a timely manner.