SOLICITATION NOTICE
B -- Intertemporal General Equilibrium Health Care Model
- Notice Date
- 6/18/2003
- Notice Type
- Solicitation Notice
- Contracting Office
- Department of Health and Human Services, Centers for Medicare & Medicaid Services, formerly known as the Health Care Financing Administration, Acquisition and Grants Group, 7500 Security Blvd. C2-21-15, Central Building, Baltimore, MD, 21244-1850
- ZIP Code
- 21244-1850
- Solicitation Number
- Reference-Number-31007
- Response Due
- 8/4/2003
- Archive Date
- 8/19/2003
- Point of Contact
- Andy Mummert, Contracting Officer, Phone 410-786-0403, Fax 410-786-9088,
- E-Mail Address
-
AMummert@cms.hhs.gov
- Description
- The Centers for Medicare and Medicaid Services (CMS) intend to contract on a sole source basis with Capital Research Associates for the development of a long-term, dynamic general equilibrium interindustry model with a detailed description of the health sector. This is not a solicitation. This is a notice of intent to contract with Capital Research Associates. CMS is using the exception to full and open competition described in FAR 6.302-1 to procure this model. This model will greatly expand the analytical capabilities of the Office of the Actuary (OACT) in producing annual projections of the National Health Accounts, in evaluating and projecting the effects of proposed legislation, and in the 75-year projections of Medicare expenditures produced annually by OACT for the Medicare Trustees Report. The proposed model will be an enhanced and augmented model that updates and builds on two existing models. The model will incorporate an updated version of the detailed health sector model of the Macroeconomic-Demographic Model of Health Care and Consumer Expenditures (MDM). This model was originally developed by Joseph Anderson, Dale Jorgenson, John Moeller, and Daniel Sleznick for the National Institute on Aging and provides a detailed representation of health care demand based on linked cross-sectional time-series data. The health sector specification from the MDM Model will be estimated within a much more complex general equilibrium model of production based on the Intertemporal General Equilibrium Model (IGEM) originally developed by Dale Jorgenson and others at Harvard University, and with the addition of a separate production model for the health sector. The proposed model will give the Office of the Actuary (OACT) at the Centers for Medicare & Medicaid Services (CMS, formerly HCFA) a greatly enhanced ability to analyze trends in Medicare, Medicaid, and the entire health sector within the context of the economic system. This is critical for both relatively short-term projections required for policy analysis, as well as the 75-year projections required for the Medicare Trustees Report. This model has three broad applications: 1) The production of comprehensive projections of the National Health Accounts (NHA) that address implications of relevant public and private sector developments in the health sector, 2) The analysis and projection of the outcome of alternative policy options for Medicare, Medicaid, and for the regulation of markets for private health care, 3) The evaluation of implications of demographic and economic assumptions for annual 75-year projections of Medicare incorporated in the Medicare Trustees Report. In each case, the proposed model would expand both the range of issues that could be evaluated by OACT, and greatly increase the detail and depth of the analysis that would be possible. This model is also intended to replace the current NHSG National Health Expenditures 10-Year Projections Model, which is currently estimated on a partial equilibrium basis using highly aggregated data. The current model does not adequately allow for the analysis of purchases of medical care across cohorts with differing health status, income, demographic, geographic characteristics, and differing health coverage. This capability is essential for the evaluation of critical developments (e.g. the rise in the uninsured population, the effect of changes in the structure of coverage for different populations, demographic and distributional implications of policy alternatives). The critical capabilities to be developed in the proposed model can be grouped in two broad areas: First, development of detailed representation of inter-industry flows within the context of a general equilibrium model. The Jorgenson IGEM model is an endogenous growth model which is econometrically estimated based on a recently updated (2002) database of inputs to production across 37 industry sectors. The adaptation of this model will involve the estimation of the model with a separate health sector (currently included in a much larger ?Other Services? industry category), the aggregation of industry detail where not required, and the incorporation of the more detailed model of consumer demand for health care from the MDM. This will require the development of time-series data for inputs to health care production on a basis comparable to the existing data, and the re-estimation of the model on the basis of the revised specification. For this expansion of the model to include a separate health sector, a careful evaluation of the effects of known flaws in available data for medical price inflation and capital services inputs will be required. A dynamic general equilibrium interindustry model will allow the simulation of change in the health sector within the context of the economy as a whole: how shifting resources of capital and labor affects productivity growth in health and non-health sectors, how relative growth in productivity affects relative prices and aggregate growth in output and income, and how these changes can be expected to feed back into the consumer decision-making process. Second, development of the proposed model of consumer demand for health care that will be a detailed representation of consumer demand for health care based on household survey data. The model will be estimated on the basis of a micro-level database including detailed information on individual household purchases of medical care within the context of effective price paid by consumers, demographic and socioeconomic characteristics price, age, gender, family size, health status, income, geographic location, and characteristics of insurance coverage (private employer based, non-employer based, indemnity, managed care, Medicare, Medicaid). Based on this data, the existing MDM model provides a detailed representation of complex process involved in purchasing medical care. The model of health demand structure represents consumer demand as a three-stage decision-making process that results ultimately in realized demand for health care. First, consumers select an insurance status (on the basis of price and expected outlays with and without insurance, health status, and other demographic and socioeconomic characteristics. Second, consumers allocate income across health and non-health goods, conditional on insurance status. Lastly, consumers allocate health care purchases by type (hospital, physician, drugs, etc.) The estimation of the model of health care demand based on data for individual households will create the capability to evaluate a range of key issues where critical details are masked by aggregation. Such issues includes the determination of the share of the population with medical insurance, the impact of institutional change (e.g. managed care in the private or public sector), the response of consumers to changes in the structure of insurance coverage (e.g. changes in the structure of copayments and deductibles), and the distributional impact of changes in regulation and policy across households of different demographic and socioeconomic characteristics and by nature of insurance coverage. It is imperative that the OACT have access to a model with the capability to estimate the effect of such developments. As with the macroeconomic model, the estimation of the model of health demand based on the original work completed for the MDM will imply great efficiencies in the design and estimation of the model. Two sorts of modifications are intended. First, the original MDM model database incorporated a single cross-sectional household survey (the 1980 National Medical Care Utilization and Expenditure Survey) adjusted for consistency and linked to time-series data from the National Health Accounts. Data should be pooled across several survey databases, adjusting each for consistency with the others and with the National Health Accounts. These databases include the 1977 National Medical Care Expenditure Survey (NMCES), the 1987 National Medical Expenditures Survey (NMES), and the Medical Expenditures Panel Survey (MEPS) for 1996 and later years. Using cross-section and panel data collected ten years apart will permit estimation of trends in insurance and payment institutions and aggregate income and price effects. Second, the theoretical design of the original MDM model will be expanded and adjusted. The insurance options to allow a choice of type of insurance coverage as well as insured/uninsured will be expanded. An expanded and augmented insurance/payment choice model will facilitate the modeling of institutional change. Time trend parameters could be estimated and adjusted to depict alternative trends in third party payment and health care decision institutions. Exogenous adjustment in the allocation equations could be made to simulate alternative institutional changes. Both the probability (proportion) of households in various insurance coverage/managed care categories, and the out-of-pocket prices they face, given insurance coverage type, may be modified to simulate alternative institutional change scenarios. It may be possible to use auxiliary data bases with cross-section and time series data on managed care trends and trends in participation in various payment arrangements to estimate equations capturing trends in institutional arrangements. This expansion will enable the evaluation of the effects of the expansion of institutional change (particularly where associated with managed care relative to traditional fee-for-service coverage). The link between insurance coverage and employment will also be explored. The model of health/non-health allocation will also be modified. Insurance coverage and third party payment equations will be estimated using specifications that capture the role of aggregate income and lagged income effects and aggregate health care price and lagged price effects. The model will be estimated using pooled data from the 1987 National Medical Expenditure Survey (NMES) and the 1996 and later Medical Expenditure Panel Survey (MEPS). Using cross-section and panel data collected ten years apart may permit estimation of trends in insurance and payment institutions and aggregate income and price effects. A key function of OACT?s National Health Statistics Group (NHSG) is to compile data, develop models, and conduct studies to estimate, project, and analyze the National Health Expenditures (NHE). These estimates are used by a wide variety of analysts, public officials, and regulators, both in the public and private sectors. It is imperative in the development of these models that the NHSG collaborate with modeling experts to ensure correct model specifications. In addition to its applications in the projection of the NHE, this enhanced ability to produce detailed projections for the NHE is critical for the evaluation of near-term policy proposals, and longterm projections of Medicare. As part of its mission, OACT is required to produce spending projections associated with a wide range of specific policy proposals from the administration and legislators and others. These analyses are used for determining policy, analyzing trends, responding to inquiries and proposals from regulators and public officials, and general economic research. In order to adequately perform this analysis, OACT must have the ability to model consumption and production of health care at a detailed level, and to evaluate the interactions between the health sector and other sectors in the economy. The capabilities of this model will also be critical for the analysis of long-term projections of the entire health sector and for public programs in this context. OACT is required annually to produce the Medicare Trustees Reports, projecting the 75-year future of Medicare revenues and costs. The comprehensive evaluation, both of projections of the effects of policy proposals over a five to ten year horizon, and the analysis of the dynamics of growth in Medicare spending within the context of the health sector as a whole, requires a model that offers a more detailed representation of health sector decision-making than current OACT models allow. A micro-level database with additional years of survey data will improve our ability to estimate the effects of major changes in Federal and state legislation introduced over the period since 1977. These include, for example, the introduction of Medicare?s inpatient Prospective Payment System (PPS) in 1983. This capability is particularly critical for the evaluation of Medicare Projections for the Medicare Trustees Report. These projections must be produced on a ?current-law? basis. This requires that we estimate the impact of historical changes in legislation. The ability to evaluate the impact of such changes on patterns of household spending over time will provide a much enhanced basis for such ?current-law? projections of Medicare spending. The growing size of the Medicare, and of the health sector relative to the economy implies that feedback effects between health sector and macroeconomic trends are of increasing importance. A comprehensive projection requires that health within the framework of a general equilibrium model. This is particularly critical for infinite horizon projections, where the health sector may (under some assumptions) dominate the entire economy. An evaluation of such feedback effects is important for the projection of Medicare revenues and costs in the annual Trustees Reports. These projections are based on short-term and long-term economic and demographic assumptions developed by the Board of Trustees. In order for OACT to produce timely, impartial, and authoritative estimates in the report, the Office must have a comprehensive understanding of the impact of these assumptions on the health sector. This level of analysis requires a detailed micro-based health sector model, within a general equilibrium interindustry macroeconomic model. Under this contract, the contractor shall perform the following tasks: I. Model Development: Modify the theoretical foundations of the MDM and the IGEM to meet CMS needs. The estimation of the IGEHM will involve the integration of the modified MDM with the modified IGEM. Therefore the Tasks under A and B below must be performed on a parallel track. The contractor will hold primary responsibility for theoretical modifications, and will work with OACT to ensure consistency with our objectives. A. Modifications to the IGEM Modifications/issues to the Jorgenson IGEM to meet the following objectives: 1. Split out the health sector from ?Other Services? 2. Substantial aggregation of the 37 industry sectors that are broken out in the existing model. 3. Incorporation of the detailed health sector demand model based on the MDM 4. Address capabilities in current model to evaluate impacts of changes in government policy and different forms of financing and adjust/augment model where necessary to allow for Medicare ?current-law? simulation 5. Review the assumption for sustainable growth: that productivity growth converges to a constant across all industry groups in the long term. 6. Address the implications of bias in medical price inflation measures for model estimation and projections Task: Based on 1-6 (above), modify theoretical specification of IGEM B. Modifications to the MDM Modify the original MDM to meet the following objectives: 1. Allow for the impact of pooled preferences on allocation across health/non-health 2. Include levers to simulate institutional change through expanded insurance choice 3. Allow for estimation of ?current law? simulations based on historical estimation of the impact of changes in government policy. 4. Address implications of insurance coverage link to employment choice 5. Address issues involved in integration of MDM with modified IGEM Task: Based on 1-5 (above) modify theoretical specification of MDM C. Documentation of model theory: 1. Literature Review 2. Theoretical structure of integrated Intertemporal General Equilibrium Health Care Model (IGEHM) with discussion of model properties II. Database development. Expand and update aggregate and micro-level databases as required for model estimation. Conractor involvement in this task will be largely advisory. The work involved in compiling this database will be performed primarily by CMS/OACT staff. A. Household database: concurrent with parallel track for development of consumer demand model 1. Assist OACT in review of existing documentation for existing databases based on a similar objective. a) Original NIA MDM model database (mapping of 1980 NMCUES to NHA), b) OACT?s Special Policy Analysis Model (SPAM) database which was based on a mapping of 1987 NMES to the NHA), and c) AHRQ comparative studies on survey databases. 2. Based on review of documentation existing databases and concurrent progress on model structure, assist OACT in the identification of appropriate survey databases to include in our pooled model database. 3. Assist OACT in developing a mapping of concepts across cross-sectional survey databases, and between each database and the National Health Accounts. Identify inconsistencies in coverage and concepts, and define the database so as to make best use of the data in all of the databases while minimizing the need for adjustment. In this process, draw on existing analysis of databases to the greatest extent possible to minimize effort. B. Aggregate database: 1. Assist OACT in developing a database for the health sector including all concepts required for estimation of IGEM model, definitionally consistent with the IGEM database. This will include input shares based on input-output tables and other sources, capital services concepts, labor hours and human capital indices, and series for all intermediate to health production where required. 2. Aggregate database for non-health industry sectors in IGEM based on determination of appropriate industry sector detail. C. Create linked macro-micro database: Based on mapping of survey databases to macro-level concepts, create combined cross-sectional/time-series database. 1. Assist OACT in identification of optimal software platform for database and model estimation to allow for CMS maintenance and application. 2. Assist OACT in programming required to obtain, adjust, and compile data from each relevant database based on mapping developed in Task A. D. Documentation of model database. 1. Description of raw data sources. 2. Mapping of survey database concepts for selected databases (1977 NMCES or 1980 NMCUES, 1987 NMES, 1996 (and later) MEPS. 3. Adjustments required for consistency with National Health Accounts. III. Model Estimation: Estimate integrated intertemporal general equilibrium health model (IGEHM) based on modifications to MDM and IGEM (above) A. Identify optimal software platform for model estimation B. Model programming. Based on modified theoretical model from Task I (above), complete programming required for the estimation of the theoretical model based on expanded and updated database from Task II (above). C. Review and revisions. Evaluate results of model estimation, evaluate and make necessary adjustments, reestimate as required. E. Documentation 1. Document results of model estimation 2. Document results of model projections IV. Model Simulation: Simulate Projections of IGEHM model based on alternative assumptions A. Model Projections Based on results of historical model estimation, produce short and long-term projections 1. Determine baseline and alternative exogenous model assumptions 2. Solve model based on exogenous inputs for alternative scenarios B. Documentation 1. Document results of model estimation 2. Document results of model projections The proposed contract type is Firm Fixed Price. A Justification for Other than Full and Open Competition citing the authority provided by FAR 6.302-1 will be prepared and approved. Interested parties must submit complete cost and technical information by the response date established above. Email or fax responses are not acceptable. A determination by the Government not to compete this proposed contract based upon responses to this notice is solely within the discretion of the Government. Information received will be reviewed solely for the purposes of determining whether to conduct a competitive procurement. See Note 22. Direct questions to Andy Mummert at 410/786-0403.
- Record
- SN00350351-W 20030620/030618213314 (fbodaily.com)
- Source
-
FedBizOpps.gov Link to This Notice
(may not be valid after Archive Date)
| FSG Index | This Issue's Index | Today's FBO Daily Index Page |