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 OIG’S 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 OIG’S 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 OIG’S 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 

FEBRU~Y 1993 OE142-n-oo350 
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 Nation’s 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 Group’s 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 

undertake a joint strategic review of medical expenditure data sources. 

ASPE 

The ASMB notes that the interdepartmental Data Planning and Analysis Work Group 

(DPAWG) “already has activities undeway which address the report’s 

recommendation.” We acknowledge DPAWG’S 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, 

recommendation at this 

With regard to ASMB’S u 

“review/assessment of 

this suggestion in our 

time. 

request for the Office of Inspector 

we are retaining this 

General to commit to a 

the DPAWG’S efforts in approximately a year,” we w 

upcoming workplanning process. 

11consider 

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 

INTRODUCI’ION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..1 

FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...5 

TimelinessAndUsefulness OfNMES 

Products AndAHCPRSemices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...5 

Data Concern sAndProces sProblems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...6 

RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...9 

APPENDIX A 

Usefulness ofDataReceived. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Helpfulness ofAHCPRStaff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

APPENDIX B 

. . . . . A-1 

. . . . . .4-2

timments oftheAssistantSecretaries 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 nation’s 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 

(AHCPR’S 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 respondent’s 

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-1980’s 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 group’s 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 

J 1 8 Yes 5 ,I 

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 1980’s and early 1990’s, 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 Group’s 

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 don’t know, and two say they don’t 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 AHCPR’S 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 representedon 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 AHCPR’S 

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 HFIS’S data needs in the most efficient and 

effective manner possible. This effort should raise and answer fundamental questions 

about scope, accuracy, precisionand 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 

istechnically feasl%le. 

We recognize that AHCPR has taken steps in its NMES-3 

find ways to improve the release time for public use tapes. 

pursuit of additional innovative ways to collect data crucial 

policy, budget, and legislative needs of the department. 

methodological studies to 

We encourage AHCPR’S 

to meeting the health care 

9 
REPO~ENTS BY AGEN~: AHCPR ST- HELp~N_=S 

Agency No � 

Respondents 

A 1 

B 5 

c 3 

D 1 

E 1 

F 1 

G 1 

H 4 

I 2 

J 1


K 1


L 2


M 1


N 1 

KEY 

VH: Very Helpful 

SH: Somewhat Helpful 

MX: Mixed 

NVH: Not Very Helpful 

1 

Access To Data Technical 

Assistance !

!

I 

VH-1 VH-1 1 

VH-3 SH-1 MX-1 VH-4 OT-1 I 

VH-2 OT-1 VH-1 SH-1 OT-1 _ 

SH-1 VH-1 1 

VH-1 VH-1 )

i 

VH-1 VH-1 I 

VH-1 VH-1 I 

VH-4 VH-3 OT-1 I

I 

VH-2 VH-2 

I

I

!

I 

MX-1 NAH-1	 !


I


VH-1 VH-1
 ,

OT-2 VH-1 OT-1


I

OT-1 VH-1 .


VII-l VH-1


TOTALS


NAH: Not At All Helpful 

OT: other 

VH-17 VH-19


SH-2 SH-1


MX-2 MX-O


NVH-o NVH- O


NAH-O NAH- 1


OT-4 OT-4


A -2�
APPENDIX B 

COMMENTS OF THE ASSISTANT SECRETARIES 

FOR HEALTH AND MANAGEMENT AND BUDGET 

( SEE ATTACHMENT) 

B-1 
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>-g? = DEPARTMENTOF HEALTH & HUMAN SERVICES Office of the Secretary 

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JAN -71993


MEMOWDUM TO THE INSPECTOR GENE~L 

Attn: Bryan Mitchell n 

From . Arnold R. Tompkin 

Assistant Secz stzry fo 

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Subject~ 

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: OIG Draft Report: !ITh~~ational Me~#l Expenditure 

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 problems .
 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.


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Date 9JM181993 

From Assistant 

Office of Subject 

Medical Expenditure 

OF HEALTH & HU W SEIWCES 

Secretary for Health 

Inspector General (OIG) Draft 

Public HeatiSwtC8


Memorandum 

Report “The National 

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 report’s reco~endfitj~ns 

and have taken or will take actions to implment ~~~” 

included for your consideration are several techn~cal 

comments. 

A


(yh&’#4= 

ames O. Mason, M.D., Dr.P.H~ 

Attachment 

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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 

addressed to PHS. Following 

recommendations addressed to 

recommendations ~ 

are the comments 

PHS . 

three of which are 

on the 

OIG Recommendation 

1. The PHS should take 

purpose of the NMES 

expected to play. 

PHS Comment 

steps to clarify for all members the

Work Group and the role members are 

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 delay in releasing NMES data is explained by the need 

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 

Technical Comments 

o Paae 6 includes 

currency of the 

the data can be 

fact, it is far 

it more often. 

industry do the 

discussions 

NMES data. 

adjusted to 

of some 

However, 

reflect 

NMES data. 

concerns regarding the 

it should be noted that 

changes in prices and, in 

more economical to adjust data than to collect 

Only when there are ~jor changes in 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 
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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.