Health Reform Watch

Turning Up the Heat on Fraud and Abuse–Part of the Solution to Health Reform?

2009-07-30T10:26:00.000-07:00

Turning Up the Heat on Fraud and Abuse–Part of the Solution to Health Reform?

Do You Want Rats in YOUR Baby’s Crib? The RNC Poses Some Questions

2009-07-21T16:49:00.000-07:00

Do You Want Rats in YOUR Baby’s Crib? The RNC Poses Some Questions

Making the Case for the Public Plan, Part I: The Difficulty of Private Health Insurance Regulation

2009-06-08T14:43:00.001-07:00

As health reform moves to the top of the Congressional agenda, we will be hearing a lot about a possible "public option" in the plan. Earlier this Spring I began thinking about whether a public option was absolutely necessary to a successful reform. I started out hoping that it wasn't, because Republican leaders despise it, and Democrats have sometimes let the "perfect be the enemy of the good" in health reform. But I'm now convinced that a public option is necessary, and I hope to spend a few posts explaining why.

To begin with, we should get clear on exactly what insurers do. I have tried to summarize it in a one page chart, which appears here. The right column focuses on the purely positive role of insurers--how they add value to the health care system. With massive amounts of data at their disposal, they can identify best and worst providers, good and bad treatments, and even spot dangerous side effects in drugs and devices. They can invest in new technology to better process claims. To the extent that they retain long-term relationships with customers, they have an incentive to reduce costs by keeping those patients healthy.

But the structure of the US health insurance market makes it difficult for most private insurers to respond to such incentives. About 21% of insurance policyholders cancel their plans in any given year, meaning that the average customer's commitment to a plan lasts for about three years. That's just not enough time for an insurer to gain much investing in the health of its members.* There are many more profitable strategies--which lead me to the left side of the column, bad insurer practices.

Health care costs are highly concentrated among a small portion of the population. As AHRQ notes, "Half of the population spends little or nothing on health care, while 5 percent of the population spends almost half of the total amount." (The famed 80/20 rule also applies in health care expenditures.) This creates almost irresistible pressures for private insurers to "risk select;" i.e., to avoid covering those who need care most. While "pre-existing conditions" exclusions and recissions are most common in the individual insurance market, they and other tactics can undermine the idea of risk-pooling at the core of any feasible insurance scheme. Given that many private insurers began thriving by cherry picking (and lemon dropping) the healthiest (and sickest) customers, they have long resisted regulation of risk selection.

But now, as the chances for reform increase, leading private insurers are beginning to soften their approach in order to argue that a public plan is not necessary. They are promising to accept "guaranteed issue" coverage, "with no pre-existing condition exclusions." They have even promoted plans for "risk adjustment," which "spreads costs for the highest-risk individuals." Would regulation like that preclude the need for a public option?

I don't think so, because there are so many other ways for insurance companies to drive away the sickest customers. As noted in the chart, subtler selection can include refusal to respond to needs of high cost patients in order to drive them away, and attracting a disproportionate share of low‐risk individuals. For example, a plan might decide to increase coverage of gyms and cosmetic procedures (to attract fit customers) and devise complex forms to be filled out monthly in order for a patient to get oxygen or insulin (to repel customers with congestive heart failure or diabetes). These are not merely hypothetical concerns. The Netherlands is often held up as a model for US reform because of recent moves there to make their traditionally solidaristic system more market-oriented. But risk selection threatens to unravel the Dutch "middle ground:"

[After the Dutch moved in a more American direction, insurers] have more tools for managing care, which can also be used to select risks. . . . Insurers have more room to define the precise entitlements of their insured groups, which can be used to select favorable risks. Third, insurers are allowed to sell mandatory health insurance together with any other type of non–life insurance (such as supplementary health insurance, sick leave insurance, and car insurance), which prior to 2006 was not allowed.

In particular, supplementary health insurance can be an effective tool for risk selection, because insurers are allowed to reject applicants based on their health status. Fourth, insurers are free to give premium rebates to groups for the mandatory basic insurance, which prior to 2006 was not allowed. A group can have any risk composition, and the "organizer" of the group can selectively enroll preferred members only. Although the rebate for the basic insurance is at most 10 percent, insurers can give these groups any rebate on supplementary health insurance or other insurance products. . . . Given the increasing incentives and expanding tools for risk selection, further improvements of the risk-equalization method are necessary to prevent insurers from engaging in risk selection, which occurs, for example, in Switzerland.

US insurers are sure to import methods like that, and to continue along current lines of risk selection. As health policy expert Karen Pollitz has noted, all of the following tactics can be used to risk select:

--“Street” underwriting
--Selective marketing (including in competing markets)
--Renewal rating
--Closed blocks
--Benefit designs
--Payment practices
--Provider network design

Congress or HHS or state insurance commissioners could try to outlaw or restrict risk selection practices one by one. But as Pollitz has noted, as of 1997, the "US Department of Labor had resources to review each employer-sponsored group health plan under its jurisdiction once every 300 years." The Bush years probably did not significantly address that shortage. Moreover, "state insurance department staff levels declined 11% in 2007 while premium volume increased 12%." The personnel simply aren't there, and when they are, they are as likely as not to be outgunned by private sector attorneys, lobbyists, and experts-for-hire. The right way to discipline private insurers is to have competition from a public option--not to allow them to continue a risk-selection race-to-the-bottom by deflecting regulation.

I have taught health care regulation at both Seton Hall and Yale Law Schools, and my students have always been dismayed by the cat-and-mouse games that regulators and insurers play to control (and evade control of) risk selection. I have very little faith that DOL, HHS, or their state equivalents (who are also often tasked with regulating life and auto insurance and banks) can really make private insurers accountable, no matter how ingeniously the insurance exchanges are designed.

So that's a case for the public plan largely based on the problems with private insurance regulation. For a positive case, which I'll develop in my next post, I'll focus on the middle column of the chart--eternally contested insurer actions designed to ration access to providers.

*For recognition of this problem in the context of bariatric surgery, and a creative plan for solving it, see Ronen Avraham and K.A.D. Camara, The Tragedy of the Human Commons, 29 Cardozo Law Review 479 ("bariatric surgery is just one example of insurers' failure to cover prospectively efficient treatments. A similar confluence of insureds switching insurers frequently, high transaction costs of individualized contracts, and medical-industry lobbying explain insurers' failure to cover other prospectively efficient treatments.").

X-Posted: Concurring Opinions.

Greaney on the Public Plan

2009-05-13T13:41:00.000-07:00

Is genuine health reform possible? Several recent developments are promising. President Obama's big Congressional majorities (plus the Specter defection) are reminiscent of the Johnson-era milieu that led to Medicare and Medicaid. Key interest groups are less "Harry and Louise" and more "try to appease." Most importantly, the failures of managed care, consumer-directed health care, and other artifacts of the "ownership society" are now self-evident. As unemployment rises, lack of insurance spikes, compounding the misery of many of those unlucky enough to get thrown out of work.

What could derail real health reform? Most likely, fake health care reform, particularly the kind that assumes there is something near a "free market" in operation now. As health care antitrust scholar Thomas Greaney argued yesterday, markets for health care are often very concentrated or riddled with barriers to entry:

The unfortunate fact is that a majority of the country is served by a few dominant insurers. (In 16 states, one insurer accounts for more than 50 percent of private enrollment; in 36 states, three insurers have more than 65 percent of enrollment). Likewise, because of lax antitrust enforcement, most markets are characterized by dominant hospital systems and little competition among high-end physician specialists.

In these circumstances, which economists call 'bilateral monopoly," the players often reach an accommodation in which they share the monopoly profits rather than compete vigorously. A prime example is the experience in Massachusetts, where Blue Cross/Blue Shield, the dominant insurer, reached an understanding with the dominant hospital system, Partners Healthcare, that entrenched higher prices for health insurance and hospital care.

Some might hold out hope that the Obama administration's new emphasis on antitrust enforcement might solve that problem, but I would not hold my breath. After losing seven hospital merger cases in a row, the government is not exactly in a position to go storming into health care markets to demand competition. Only new antitrust laws are likely to accomplish much in that direction, and even if they were by some miracle adopted this year, I can't imagine them having much effect within any reasonable time frame.

Rather than hoping for a magical market to provide care for all, it's time to realize that only a guaranteed public option can optimally balance access, cost-control, and the type of value-based purchasing that leads to quality improvement. The public option now discussed by the Obama Administration and the Senate Finance Committee won't displace private insurance for the already insured. In fact, as Greaney notes, it may well help some private insurers by providing "a benchmark to hold up against private plans' quality and cost performance." The public option will almost certainly be one of many choices for health insurance consumers, expanding choice rather than constricting it.

By providing transparent accounts of coverage decisions, the public plan may well spearhead the types of comparative effectiveness analysis and evidence-based medicine that all health scholars agree need to be at the heart of rational health policy. As Diane Archer compellingly testified, "disclosure of insurer medical and cost data would drive accountability from the private insurers and promote better behavior." In a sector as permeated by government subsidies and regulations as health care, a public plan option offers some hope that the demand side in health care can gain some bargaining power relative to the supply side.

[X-Posted at Concurring Opinions.]

The Life Cycle of Objectionable Drug Marketing Practices

2009-03-06T10:29:00.001-08:00

[This is a guest post by Nathan Cortez, assistant professor of law at the Dedman School of Law at Southern Methodist University. Cortez has published in the peer-reviewed Food and Drug Law Journal and teaches international health, pharmaceutical and administrative law. I've learned a lot from his work, and I'm happy he's agreed to let me post this here.]

By Nathan Cortez

The pharmaceutical industry spends some serious coin on sales and marketing—anywhere between $30 billion and $57 billion per year. And this money funds much more than the ubiquitous ad campaigns to which we’ve grown accustomed (sing along if you know the “Viva Viagra” jingle). Over the years, sales and marketing departments have conjured up increasingly creative marketing practices of questionable legality. For example, drug companies have funded “research” and “educational” grants of questionable validity, sponsored continuing medical education (CME), paid ghost writers to generate favorable journal articles, provided free gifts, meals, and entertainment to prescribers, paid prescribers as speakers, consultants, or preceptors, and even hired former college cheerleaders to gain access to prescribers. Most of these practices have been condemned, and many have been prosecuted, resulting in billions in settlements for federal and state governments. The pharmaceutical industry can’t even give away free drugs without being punished.

Last Monday, the New York Times highlighted yet another objectionable drug marketing practice: targeting medical schools. As the article explains, drug companies have long had ties to medical schools and their students by funding endowed chairs, faculty prizes, research grants, capital improvements, and even volunteering employees to teach classes. Students get showered with enough free pizza and trinkets to think that they might already have prescribing privileges. More recently, the Times reports that the faculty at Harvard Medical School has come under fire for its ties to drug companies that hire faculty as speakers, consultants, or even board members. More than 200 Harvard Med students have objected, leading the school to convene a 19-member panel to reevaluate the school’s conflict-of-interest policies (meanwhile, the University of Minnesota Medical School is loosening them).

In the “Life Cycle of Objectionable Drug Marketing Practices,” we’re currently at the “media coverage and public outrage” phase. Gradually, most of the practices listed in the initial paragraph have either disappeared or have lost their allure. Media coverage and public outrage is quickly followed by government outrage (possibly even Congressional hearings) and promises of self-regulation by the drug companies to preempt more stringent regulation. Self-regulatory efforts like the PhRMA Code and the AMA Ethical Guidelines provide some bright-line standards for complying with ridiculously broad laws like the federal anti-kickback statute and its complicated safe harbors. If companies still don’t get the hint, the government simply tells drug companies what not to do.

And if none of these events ends the Life Cycle of the Objectionable Drug Marketing Practice, litigation usually does. Pretty much every major pharmaceutical company has settled a Corporate Integrity Agreement with the government for violating federal drug marketing laws—the latest being a staggering $1.4 billion settlement paid by Eli Lilly to settle claims that it illegally marketed its anti-psychotic drug Zyprexa. By settling, companies thus avoid the “death penalty”—being excluded from Medicare and Medicaid.

Although the drug companies never die, the practices usually do, precipitated by an avalanche of government investigations, whistleblower suits, shareholder suits, and even marginally-related product liability suits. Federal and state lawmakers also pile on. In the last few years, nine states have enacted (and dozens have considered) pharmaceutical marketing laws, requiring disclosures of marketing payments made by drug companies to potential prescribers, in addition to caps on payments, disclosure of sales representative activities, and other prohibitions. Indeed, the Senate Finance Committee is currently considering a federal bill that would explicity preempt state laws.

Thus, the Objectionable Drug Marketing Practice dies a violent death. It can rest in peace, but the sales and marketing departments can’t. Because they have to find new ways to drive market share.

We Have Moved to a New Website, Please Visit Us There

2009-02-15T22:05:00.000-08:00

We Have Moved to a New Website, Please Visit Us There
at

www.HEALTH REFORM WATCH.COM

New Candidates to Head HHS Emerge, Suspense Mounts

2009-02-11T11:33:00.000-08:00

Two additional candidates have emerged as possible nominees to be secretary of health and human services, reports The Washington Post. According to Democratic sources in and around the White House, those candidates are Lloyd Dean and Jack Lew.

Dean is chief executive of San Francisco-based Catholic Healthcare West and was recently named one of the top 25 minority health care executives by Modern Healthcare Magazine. Lew was involved in health care reform during the Clinton Administration and worked in the White House Office of Management and Budget, according to The Post. One small snag, reports The Post, is that Lew was recently confirmed as deputy secretary of state.

Yesterday we reported that Kansas Governor Kathleen Sebelius was at the top of Obama's list to replace former Senator Tom Daschle as the nominee for U.S. Secretary of Health & Human Services. Sebelius removed herself from consideration for a cabinet position last December, citing the need to reform Kansas' budget. However, The Wall Street Journal reports that Gov. Sebelius told Ron Pollack, president of Families USA, that she would accept the nomination for secretary of health and human services.

Sebelius, Podesta on Obama's Short List to Replace Daschle

2009-02-10T08:02:00.000-08:00

We are pleased to announce that we have moved to a new website, HealthReformWatch.com. The article below, and a host of other new links and resources, may be found there and here.

A top official in the Obama administration says that Kansas Governor Kathleen Sebelius is at the top of the list to replace former Senator Tom Daschle as President Obama’s nominee for Secretary of Health & Human Services, according to the AP/Kansas City Star. This comes after Daschle withdrew his nomination last week, leaving many wondering about the future of U.S. health care reform.

Sebelius has been praised by advocacy groups for the “watchdog role” that she played for eight years as insurance commissioner before she became governor. The Kansas Governor was an early supporter of Obama’s campaign for the presidency. After Obama won the election in November, she was in consideration for several cabinet posts. In early December though, she announced that she had removed herself from consideration for a Washington job, citing Kansas' budget problems that needed her attention.

Also on Obama’s short list is former White House chief of staff under President Clinton, John Podesta, and Tennessee Governor Phil Bredeson. Some advocacy groups are reportedly lining up to oppose the nomination of the Democratic governor from Tennessee. Bredeson remains under consideration but was not as likely as Sebelius to make the final cut, the senior official said.

As governor, Bredesen reduced the state's Medicaid beneficiaries by 170,000 adults in 2005 as a result of budget constraints, and reduced benefits for thousands more TennCare beneficiaries, according to the AP/Austin American-Statesman. In 1980, Bredesen founded a health maintenance organization called HealthAmerica Corp., which became the country's second-largest HMO before he sold it in 1986 for about $400 million.

Critics of Bredesen, who say he has administered the largest public health insurance cuts in U.S. history, say that the cuts illustrate why he is "the wrong person to lead an effort to expand health insurance coverage."

Others argue that Bredesen had to make difficult decisions that ultimately led to the preservation of Tennessee's struggling health care system, thereby averting disaster.

LoJacking Grandma and "Reality Mining," or "Daddy, What was Anonymity?"

2009-02-07T14:07:00.000-08:00

We have moved to another website, HealthReformWatch.com and you may find this post here.

In the Wake of Daschle's Withdrawal, Obama Signs Bill to Expand SCHIP Coverage

2009-02-05T10:33:00.000-08:00

President Obama signed the bill extending health coverage to millions of low-income children yesterday after it the House gave final approval, according to The New York Times. Many see this as a signal of the president’s clear intention to guarantee coverage for all Americans.

Since August 2007, the House has voted at least seven times for legislation to expand the popular State Children’s Health Insurance Program. In a recent blog we explained how Former-president George W. Bush twice vetoed similar legislation. Bush adamantly opposed the legislation on the ground that it would lead to “government-run health care for every American,” reports The Times.

Rep. Henry A. Waxman, a California Democrat said that the bill was “a down payment” and “an essential start” to the ultimate goal of health reform. Speaker Nancy Pelosi proclaimed the passage and signing of the bill as the result of the last fall’s historic presidential election, stating:

“This is the beginning of the change that the American people voted for in the last election, and that we will achieve with President Barack Obama.”

One of the major features of the bill is that it allows states to cover certain legal immigrants, who are currently barred from Medicaid and the State Children’s Health Insurance Program for five years after they enter the United States.

According to The Times:

“The bill requires states to verify that people covered by the children’s health program are United States citizens or legal residents. But states are given a new option. Instead of requiring people to produce documents showing citizenship, states can try to verify eligibility by matching a person’s name and Social Security number against federal records.”

In addition to allowing states to extend coverage to legal immigrants without requiring five years of residence, the bill also requires states to provide dental care and equal coverage of mental and physicial illnesses – or “mental health parity" – under the children’s health program.

Expansion of the State Children’s Health Insurance Program comes as Tom Daschle’s withdrawal from nomination for Secretary of Health & Human Services has many worried that the "overhaul" of the U.S. health care system could be seriously delayed, according to Medical News Today.

"Obama is unlikely to find someone with both the health policy experience and congressional connections of Daschle,"

reports CQ Today.

Health & Taxes

2009-02-03T11:08:00.000-08:00

Only a few short months ago, Barack Obama was elected President of the United States of America. Supporters rejoiced, “Yes we did!” Shortly after that historic event, then President-elect Obama announced his nomination of former senator Tom Daschle to be his secretary of health and human services. Advocates of universal health care reform were ecstatic.

With the release of Critical: What We Can Do About the Health-Care Crisis and his nomination for U.S. Secretary of Health and Human Services, it seemed that Tom Daschle was the solution to all of our nation's health care woes: a fragmented and inefficient patchwork of public and private payors, rising costs, too many government ties to the private sector, and a lack of uniformity on the proper spelling of “health care."

Yet it appears that that dream is over: Daschle announced today that he is withdrawing his nomination for Secretary of Health and Human Services. CNN.com reports that, in announcing his withdrawal, Daschle said:

“[I]f 30 years of exposure to the challenges inherent in our system has taught me anything, it has taught me that this work will require a leader who can operate with the full faith of Congress and the American people, and without distraction."

The president said Tuesday he accepts Daschle's decision "with sadness and regret," according to CNN.com.

Daschle’s withdrawal comes just hours after a New York Times editorial was published calling for him to step down. Citing Daschle’s “failure to pay substantial taxes that were owed and his sizable income from health-related companies while he worked in the private sector, “ The Times stated its belief that:

“Mr. Daschle ought to step aside and let the president choose a less-blemished successor.”

The Times furthered its demand, stating:

“Mr. Daschle’s financial ties to major players in the health care industry may prove to be even more troublesome as health reform efforts proceed. Like many former power players in Washington, Mr. Daschle cashed in on his political savvy and influence to earn $5 million in recent years, including more than $2 million from Alston & Bird, a law and lobbying firm; more than $2 million from the private equity firm, InterMedia Advisors, which provided the car and driver; and hundreds of thousands of dollars for speeches to interest groups, including those representing health insurance plans, medical equipment distributors and pharmacy boards.”

and

“Although Mr. Daschle was not a registered lobbyist, he offered policy advice to the UnitedHealth Group, a huge insurance conglomerate. He was also a trustee of the Mayo Clinic in Minnesota, on whose behalf he voiced opposition to a federal loan for a freight rail line near the clinic’s headquarters in Rochester, Minn.”

White House press secretary Robert Gibbs said on Tuesday that while the president is disappointed at Daschle's withdrawal, the issue of health reform is “bigger than any one person.” Gibbs stated that the Obama administration has set the bar for ethics “higher than any administration in the history of the United States.”

News of Daschle's withdrawal is sure to bring criticism to President Obama for his cabinet choices, especially in light of the recent controversy surrounding Timothy Geithner's failure to pay taxes.

HHS OIG Report Finds Part D Private Insurers Overcharged for Billions, Lack of CMS Oversight

2009-02-02T13:44:00.000-08:00

According to a recent report by the Department of Health & Human Services, Office of Inspector General, private insurance companies that operate plans under the Medicare prescription drug benefit have overcharged Medicare beneficiaries and the program by several billion dollars since the program began in 2006.

According to the report, 80% of health insurers that operate plans under the Medicare prescription drug benefit overcharged the program by about $4.4 billion in 2006 alone. In addition, The McClatchy/Raleigh News & Observer reports that the Centers for Medicare & Medicaid Services (CMS) remains unaware of the total impact of the practice because of its failure to perform required audits.

The prescription drug benefit was established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). Under the MMA, CMS contracts with private insurance companies to provide drug coverage to Medicare beneficiaries. Each insurer offers a bid, which represents the company's estimate of the average monthly revenue it would need to provide the basic prescription drug benefit to each beneficiary.

CMS is required to complete financial audits of at least a third of all the insurance companies that offer the prescription drug benefit to determine how they set their prices. For 2006, CMS was required to perform 165 audits. However, according to the report, the Inspector General found that, as of April, CMS had begun only seven, or 4 percent.

According to the report, there are 158 other audits from 2006 remaining to be done and audits for 2007 and 2008 waiting in the wings. It is estimated that problems found in the first year of the program aren't likely to be fixed before 2010.

In response to the Inspector General's findings, the News & Observer reports that Sen. Claire McCaskill, a Missouri Democrat, said:

"It shows a mind-set that could care less about wasting taxpayer money, that has no problem with padding profits of drug companies with hard-earned taxpayer dollars."

The Inspector General's report comes as Congressional Democrats last week introduced a bill that would allow Original Medicare to establish one or more plans to compete with private Medicare drug plans.

Health Care, "Common Sense" and a Global Health Blogging Experiment

2009-01-29T20:39:00.000-08:00

We have moved to another website, please find the post "Health Care, "Common Sense" and a Global Health Blogging Experiment" here.

Today, Health Reform Watch is participating in a “Global Health Blogging experiment” coordinated by Christine Gorman of Global Health Report. Health Bloggers from around the world will all be converging to discuss a topic: for today, “prevention v. treatment,” and, to some extent—the underlying realities in which this experiment in synchronized dissemination is being conducted as they relate to global health concerns. I thought I’d take a look at the “to some extent.”

Ms. Gorman proposed this idea as a means of assembling something of a critical mass to explore issues regarding “Global Health” and as a means of gauging the mass of that mass. In addition to organizing the assemblage, Ms. Gorman also asked some prescient questions about the nature of the medium and the endeavor itself. It is here that I will focus.

She asks,

Is a social network around global health news starting to emerge organically on the web? What can we do to nurture it? Do economic realities dictate that this will have to be a volunteer led endeavor, at least for a while?

Or, another way of putting that last question: Is news about global health subject to the same market failures that afflict products for global health (e.g. free-market forces alone will not lead to new tuberculosis medications and other drugs that affect mostly the poorest people in the world)?

These are good questions. And as I think about the economic forces and the affect of such upon the dissemination of information, I find myself thinking that even with the emergence of a somewhat new journalistic paradigm—the blog— the dissemination of information is still largely governed by the older rule: zero sum. And this goes for time and money—as well as focus.

In many ways the blog is merely the modern progeny of its paper ancestor—the pamphlet, a time honored medium purveyed by amateur and psuedo-professional journalists and would be statesmen with some design on shaping policy and the contours of their fellow citizens’ minds. But it is perhaps important to remember that Thomas Paine’s revolutionary Common Sense, perhaps the most famous and influential American pamphlet of all time, was sold for a price—and it sold very well (it should be noted though that Paine donated his royalties to George Washington’s Continental Army for the procurement of mittens). It did not hurt sales that the first printing appeared at a time when King George had just denounced the Colonies to Parliament. Common Sense was of the moment; "Global Health" is not.

Media has always been largely about timing. Certainly one of the reasons why Thomas Paine’s tract became so very popular is because it fomented revolution—at a time when revolution was in the air.

To the extent that the U.S. is to play a role, the timing for global health concerns doesn’t seem to be particularly auspicious.

In this country, at present, domestic health care reform is “in the air.” And as this country struggles to take hold of the many pronged beast which health reform and universal coverage is—one might imagine that the attention of many—who might otherwise be drawn to the deplorable conditions in health care experienced elsewhere, may, understandably, find themselves drawn to issues closer to home.

There are times, due to circumstances, in which one’s labor is multiplied by the zeitgeist. As it pertains to U.S. health care, this is one of those times. But the zeitgeist is also capable of division: simply put, in 1776 if Thomas Paine had written instead about the plight of the French, the Continental Army would have had cold hands.

I have no doubt that in this age of international commerce and intercontinental flight, no one is more than a few hours away from the onset of widespread disease—and I am well familiar with John Donne’s imperative; I know that the bell doth toll for me. But I also know that this country has functioned for years without a comprehensive health care system—and that now seems to be the time to remedy that.

As such, one might imagine that members of the field, living in the U.S., who may have written and focused on both domestic and international health care in the past, may well find reason to devote their attention more fully to matters domestic at this internally critical time. I would suggest that as America seeks to resolve its own health care issues, this may be a determinate factor for the attention (or lack thereof) to global health issues. Zero sum.

But all is not lost. After American Independence, Paine got around to helping the French. In 1791 Thomas Paine wrote the very popular Rights of Man which defended the French Revolution against Edmund Burke’s attack in Reflections on the Revolution in France (1790). In 1792, despite not speaking French, Paine was elected to the French National Convention.

New Bill to Create Prescription Drug Benefit Through Original Medicare Comes As CMS Expansion of Off-Label Drugs for Cancer Treatment Draws Criticism

2009-01-28T11:05:00.000-08:00

Yesterday, Congressional Democrats introduced legislation (HR 684, S 330) that would allow Original Medicare to establish one or more plans to compete with private plans under the Part D prescription drug benefit, according to CQ HealthBeat. The legislation would also require the Secretary of Health and Human Services to negotiate directly with pharmaceutical companies for the prices of medications under Part D.

Additionally, it would strengthen the ability of Medicare beneficiaries to appeal denials of coverage for medically necessary medications under all Medicare Part D plans.

The bill was sponsored by Senate Majority Whip Richard Durbin (D-Ill.) and Reps. Marion Berry (D-Ark.) and Jan Schakowsky (D-Ill.). According to Berry, the plans established by Medicare would have the ability to obtain discounts on medications that private plans could not match.

Rep. Schakowsky claimed:

"Under our bill, seniors and people with disabilities would finally be able to select a Medicare-operated drug plan that provides a guaranteed benefit without having to worry that their premiums will drastically increase or their access to needed drugs will drastically decrease each year."

Pharmaceutical Research and Manufacturers of America Senior Vice President Ken Johnson said that the group had begun to review the legislation and pledged to work with sponsors to help Medicare beneficiaries obtain medically necessary medications. Johnson added that:

"It's important to note, however, that the competitive market approach of the Medicare drug benefit is working well for patients and taxpayers."

Supporters of the bill disagree with this statement, including Medicare Rights Center, which has long advocated for the addition of a drug coverage option to Original Medicare. The organization claims, in its report The Best Medicine, that private prescription drug plans create higher costs, gaps in coverage, instability, and the danger of consumer confusion and marketing fraud.

Rep. Berry added that:

"If this works as we think it will, most of the private plans would drop out [of the Medicare prescription drug benefit]."

This comes as a Centers for Medicare and Medicaid ruling last fall allowing the coverage of drugs for off-label uses to treat cancer patients has begun to draw controversy. The New York Times reports that the new ruling changed the authority of drug compendiums.

Previously, Medicare representatives were supposed to consult compendiums and use their own discretion to interpret recommendations in determining coverage. Under the new ruling, the decision now is based only on the compendiums, "even when there is little clinical evidence behind a particular recommendation," according to The Times.

The problem with the new ruling, says The Times, is that there are possible conflicts of interest because "some of these new compendiums have close financial ties to the drug industry." Additionally, The Times reports that "it is hard to predict how much" Medicare spending on cancer drugs could increase as a result of the new rules because Medicare officials canceled a cost analysis of the changes.

It added:

"[The changes] seem almost certain to raise the federal drug bill," which could make it "more difficult for the new administration to rein in spending on unproven medical treatments."

CMS Ruling May Pose Serious Problems for New York Seniors

2009-01-26T18:20:00.000-08:00

Federal law protects married couples from having to choose between divorcing and becoming impoverished when one spouse needs expensive nursing home care. For 20 years, this law allowed the healthier spouse to retain income and assets while the sicker spouse is covered by Medicaid.

In New York State, the same benefit has been extended to people with illnesses like Alzheimer's disease or cancer who receive care at home, which is both less expensive and less disruptive to relationships.

That benefit may no longer be available to the spouses of those patients receiving care at home, according to The New York Times. Last fall, the Centers for Medicare and Medicaid Services sent a letter to New York health officials outlining a legal ruling declaring that couples in which both partners live at home are not entitled to the same protection as those couples where one spouse is in a nursing home.

According to the article,

"The change was originally supposed to go into effect in December, but the Paterson administration and the New York Congressional delegation have won a delay until March 1, and are hoping that President Obama will reverse the Bush administration’s ruling."

Federal Medicaid officials say that:

"[W]hen Congress gave the states the option to extend the so-called spousal impoverishment protections to home health care, it intended to protect only the neediest people, and that New York State is protecting people with too much retirement income."

So far, the ruling has been subject to several vocal opponents, including Senator Charles E. Schumer, a New York Democrat, who said:

“[The New York] policy makes imminent sense to ensure that seniors and the spouses who care for them do not fall in to poverty."

and

"The Bush administration is trying to pull the rug out from under thousands of seniors in New York who depend on this critical program year in and year out just to survive.”

The state Health Department estimates that 3,000 couples will be affected by this change, while advocates for the elderly say the number is closer to 4,000.

Several thousand couples may be faced with a difficult choice this March. If the federal protection ceases to apply to those patients who receive care at home, the inevitable choice for many couples will be to forego keeping their current home care with a Medicaid "spend-down" for the long-term care option protected by federal law.

Clearly, the shift of 4,000 patients to long-term care would increase overall cost; a burden that would have to be shouldered by the Medicaid program. Moreover, it raises concerns about the quality of care those patients going from home-based care to long-term care will receive.

Prolegomena to Prononymity: What's the Worst that Can Happen?

2009-01-25T18:11:00.000-08:00

America needs electronic medical records (EMR). There are plenty of reasons why we are so far behind other nations in consolidating medical data: lack of strong central leadership on the issue, unwarranted faith in markets to produce solutions, and overwhelmed medical professionals who have little if any slack time to put a new system into place. Even as President Obama pushes for investment in EMR, privacy concerns are also slowing down progress:

Lawmakers, caught in a crossfire of lobbying by the health care industry and consumer groups, have been unable to agree on privacy safeguards that would allow patients to control the use of their medical records. . . . The data in medical records has great potential commercial value. Several companies, for example, buy and sell huge amounts of data on the prescribing habits of doctors, and the information has proved invaluable to pharmaceutical sales representatives.

“Health I.T. without privacy is an excellent way for companies to establish a gold mine of information that can be used to increase profits, promote expensive drugs, cherry-pick patients who are cheaper to insure and market directly to consumers,” said Dr. Deborah C. Peel, coordinator of the Coalition for Patient Privacy, which includes the American Civil Liberties Union among its members.

Health IT turns out to be one many areas where a drive for prononymity--that is, the de-anonymizing of records of on- and off-line life--is running up against a wall of wary citizens and consumers. In the health field, I think that resistance is only going to end if we have a robust "backstop" of health care in place so that citizens don't have to worry about losing all coverage if a digital dossier presents them as a bad risk. (Medicaid as presently constituted does not count.) Far from overwhelming the health care system with pent-up demand, universal health coverage may be a prerequisite for generating support for the type of EMR that will provide us all with far better care.

A trend to prononymity in general should be matched with greater commitment to assuring that it won't result in particularly harsh results. For example, people should not be denied a job for being identifiable as a Democrat in a blog post, whatever Monica Goodling thinks. Nor should doctor's notes about a patient's dark thoughts come back to haunt the patient when she or he applies for medical insurance. And if they do, there should be a genuine insurer of last resort available--not the patchwork of Medicaid and charity care that presently leave so many uninsured people falling through the cracks.

That's one reason why I advocate the development of a Fair Reputation Reporting Act, which would allow individuals to know the documentary basis of certain key adverse decisions. I summarize the proposal here:

Reputation regulation has become essential because traditional restrictions on data flows inadequately constrain decisionmakers and important intermediaries (including search engines and bulletin boards). . . . Persistent and searchable databases now feed unprecedented amounts of poorly vetted information into vital decisions about employment, credit, and insurance. Rumors about a person's sexual orientation (or experiences), health status, incompetence, or nastiness can percolate in blogs and message boards.

Even if the First Amendment and anonymity protect the authors of such rumors, affected individuals deserve to know whether certain important decisionmakers rely on them. In limited cases, the intermediary source of the information should also provide the target of a derogatory posting with the opportunity to annotate it. A Fair Reputation Reporting Act would empower individuals to know the basis of adverse employment, credit, and insurance decisions—and to go to their source (and the source of their salience) to demand some relief from digital scarlet letters.

In summary, privacy concerns are only likely to die down if individuals know either 1) that the consequences of a privacy breach are not likely to be severe or 2) that they can find out instances of the improper use of data. In the health care context in the US, neither qualifier holds: the individual insurance market routinely denies care to individuals on the basis of pre-existing conditions, and individuals have little sense of exactly how such determinations are made. Prononymity needs to work both ways: if our health conditions are to be the subject of increasing availability, so too must the decision-making processes that could use that data to our detriment become more transparent.

PS: Market mavens may promote a "Google Health Search" as the optimal solution here. If this 800 pound gorilla can get all the publishers in line to settle their copyright claims, perhaps it has some chance at bringing the medical industry to heel; however, the political power of doctors and insurers dwarfs that of publishers. The concentration of that much data in one company should also provoke some worries.

Bill Would Require Transparency of Physician Relationships with Pharma, Medical Device Companies

2009-01-23T19:51:00.000-08:00

Yesterday Sens. Chuck Grassley (R-Iowa) and Herb Kohl (D-Wis.) announced a bill (S 301) that would require pharmaceutical and medical device companies to publicly disclose any gifts and payments to physicians valued at $100 or more per calendar year, according to CQ Healthbeat.

The bill introduced yesterday requires companies to report such gifts and payments to the U.S. Department of Health & Human Services once per year. Similar legislation introduced last year would have required quarterly disclosure of gifts or payments over $25 per year.

Additionally, if passed, the legislation would pre-empt state laws that require disclosure of gifts and payments to physicians.

So far, the bill has gathered support from various sectors. Proponents of the bill argue that it will allow patients to “fully trust the relationship they have with their doctor.”

Representatives of the pharmaceutical and medical device industry have expressed support for a “uniform national standard . . . [as opposed to] a patchwork approach by all 50 states.”

It seems that the only group unlikely to support the proposed legislation is physicians. However, the bill allows for physicians to contest the reports made by pharmaceutical and medical device companies, which would be reviewed by Health & Human Services.

More Prescriptions Go Unfilled, is Uncle Sam “Penny Wise?”

2009-01-23T00:40:00.000-08:00

The New York Times reports that “One in seven Americans under age 65 went without prescribed medicines in 2007” and that “that figure is up substantially since 2003, when one in 10 people under 65 went without a prescription drug because they couldn’t afford it, according to the Center for Studying Health System Change in Washington, D.C.”

The Times also reported that Laurie E. Felland, a senior health researcher at the center and lead author of the study, noted that because these numbers are from 2007, they may well be higher now due to the recession.

“The people who were least able to afford medicine were often those who needed it most, Ms. Felland said: uninsured, working-age adults suffering from at least one chronic medical condition. Almost two-thirds of them in the survey said they had gone without filling a prescription.”

The affect among those with chronic conditions is particularly disturbing in light of the data on the relative expense of treating chronic conditions, and the additional expense that neglect in treatment can cause. The Department of Health and Human Services (HHS) has reported that

Chronic Conditions Contribute to Higher Health Care Costs

Twenty-five percent of the U.S. community population were reported to have one or more of five major chronic conditions: ·
Mood disorders
Diabetes
Heart disease
Asthma
Hypertension

Spending to treat these five conditions alone amounted to $62.3 billion in 1996. Moreover, people with chronic conditions tend to have other conditions and illnesses.

When the other illnesses are added in, total expenses for people with these five major chronic conditions rise to $270 billion, or 49 percent of total health care costs, according to 1996 MEPS data. On an individual level, treatment for the average patient with asthma was $663 per year in 1996, but when the full cost of care for asthma and other coexistent illnesses is taken into account, the average cost was $2,779.

Expenses for people with one chronic condition were twice as great as for those without any chronic conditions. Spending for those with five or more chronic conditions was about 14 times greater than spending for those without any chronic conditions. Persons with five or more conditions also have high hospital expenditures. In New York State during 2002, of the 1.3 million different persons admitted to the hospital, the 27 percent with five or more chronic conditions accounted for 47 percent of all inpatient costs. (emphasis added, footnotes omitted).

Perhaps as we consider the large number of persons with chronic conditions who are not taking prescribed medications, we should also consider a recent five-year retrospective study of almost 5 million California residents which found that “People who have spotty Medicaid coverage are more than three times likelier than those who maintain continuous coverage to be hospitalized for an illness that could have been managed outside the hospital with doctors’ visits and medication.”

Hospitalization is expensive.

Also, as we noted in a recent post, the Kaiser Foundation has shown that many seniors , who account for a great deal of the health expense in this country (but are not included in the the Center for Studying Health System Change report), also cease or diminish the use of their medications as a result of “the donut hole” in Medicare prescription drug coverage—a gap in coverage which leaves many seniors “on their own” for payments of thousands of dollars per year.

Health Care Jobs Up, & Expected to Stay That Way

2009-01-21T20:41:00.000-08:00

The sickness of one is the work of the other. The Wall Street Journal reports that “Health care saw a net gain of 419,000 jobs in 2008 and its growth outlook continues to be strong through 2016, according to the Bureau of Labor Statistics.”

According to WSJ, Dennis Damp, “the Pittsburgh, Pa.-based author of ‘Healthcare Job Explosion’ and editor of Healthcarejobs.org, a free recruiting Web site,” said that “about half of the BLS' 30 fastest-growing occupations through 2016 are health-related.”

An examination of the latest BLS report (p. 25) shows that employment numbers were up in every category of health care jobs tracked. WSJ reports that “among specific occupations, the number of registered nurses grew the most, adding 168,000 jobs through November as hospitals and agencies tried to address a nationwide nursing shortage.”

The Journal also reports that “The number of home care aides grew by 64,000 in 2008, the BLS said. Office and administrative support workers such as medical-records clerks accounted for 14% of the overall increase in health-care jobs year over year.” That 14% increase would be equivalent to approximately 59,000 jobs.

John Challenger, chief executive of outplacement consulting firm Challenger, Gray & Christmas in Chicago is reported by WSJ to have said that in health care, "Long-term forces are outweighing the short-term recessionary forces." Mr. Challenger cited “the aging of the baby boomers, rapid product development in biotechnology and increased momentum for comprehensive national health-care reform” as being “likely to drive job growth this year.”

Mr. Challenger also noted that "There's strong demand for geriatricians, physical therapists and nurses of all kinds….noting support work is hot as well, especially as the incoming Obama administration takes up health reform. 'A commitment to a new kind of more universal health-care system is going to create a new structure and consequently new jobs."

Read the full WSJ article here.

Health Care and Productivity, a National Cost

2009-01-21T00:15:00.000-08:00

Having just returned from my family physician (who stayed open past hours to see me), perhaps you will forgive me if, not feeling well myself, I dwell for a moment upon the cost of illness and inefficiency. Not as a matter of out of pocket cost, per se, but as a matter of macroeconomic cost—a roughshod (I am sick) calculus based upon diminished productivity and national opportunity cost: simply put, if I am busy being sick, I may well have to forego the productivity of work—or I may perform that work at a lesser level ( I suppose this post will tell).

In addition, if my family physician and his staff of two are grudgingly forced to devote numerous hours to a maddening array of paperwork and phone calls (“it gets worse every year”) in an attempt to navigate the various streams of insurance authorizations and payments (“some of it seems designed solely to frustrate and slow or prevent payment”) —he will not be seeing patients. Tomorrow, he will not be seeing patients; he will be trying to catch up on paperwork—as will his staff.

Perhaps then, when we consider that Health Care costs amount to 16% of the GDP, we might also consider that this number does not take into account the difficult to guage loss of national productivity. And although the sickness of one can be the work of another, the exchange does not seem to be an even one as it relates to national production: the doctor functioning, in a sense, as a support and enabler to the productivity of others. Having said that, if that doctor is unavailable (through lack of insurance or remoteness) to remedy the ills of the now unproductive (or the less productive) the nation suffers for it. If the doctor is needlessly enmeshed in tasks, inefficient and ancillary to patient treatment, the nation suffers for it.

One of the first national health lessons this country received came on the heels of World War I.

With the United States' entry into the battle, hundreds of thousands of military personnel were drafted and trained for combat. After the war was fought and won, statistics were released from the draft with disturbing data regarding fitness levels. It was found that one out of every three drafted individuals was unfit for combat and many of those drafted were highly unfit prior to military training. Government legislation was passed that ordered the improvement of physical education programs within the public schools.

During the period from September 1917 through November 1918, records show that 2,801,635 men were inducted into the Army. Out of the approximately 10,000,000 registered men, roughly 2,510,000 were examined by local draft boards. During the first 4 months of mobilization, roughly one in three men were rejected on physical grounds, but the rejection rate dropped to one in four during the following 8 months. (p. 149)

Having put forth the effort to remedy such, we were better physically prepared when it came time to fight World War II. We will be fortunate if some cataclysmic event does not lead us now to some statistical reckoning of our “unfit” and “extremely unfit” as regards our national productivity.

I do not point this out as a means of suggesting that we need to actively prepare ourselves for some form of larger global military conflict. But perhaps in some ways the “event” has already occurred, and only the reckoning remains. In his inaugural address President Barack Obama entreated us:

"Let it be told to the future world ... that in the depth of winter, when nothing but hope and virtue could survive...that the city and the country, alarmed at one common danger, came forth to meet (it)."

America, in the face of our common dangers, in this winter of our hardship, let us remember these timeless words. With hope and virtue, let us brave once more the icy currents, and endure what storms may come. Let it be said by our children's children that when we were tested we refused to let this journey end, that we did not turn back nor did we falter; and with eyes fixed on the horizon and God's grace upon us, we carried forth that great gift of freedom and delivered it safely to future generations.

He’s right. We must "come forth to meet it." We cannot turn back and we cannot falter as we struggle to deliver this hard won gift of freedom to future generations. And it would be best if as we brave these icy currents in this winter of our hardship-- we were not sick. And if we were sick, that we all had doctors. And if we all had doctors, that they were not too busy filling out paperwork designed to frustrate them. As we learned through World War I, as a nation, we simply cannot afford to squander our physical and intellectual capital.

Dr. David Brailer and Electronic Medical Records: Perhaps the Chairman Doth Protest Too Much

2009-01-18T23:30:00.000-08:00

Dr. David J. Brailer, appointed by President Bush in 2004 as the first National Coordinator for Health Information Technology, has written an article for Health Affairs worth reading. Dr. Brailer notes that President-elect Obama “has pledged $50 billion to bring health information tools into widespread use (which is $49,950,000 more than President Bush gave me to spend).” (Note: as the present budget for the office of National Coordinator is a little more than $66 million, I believe Dr. Brailer meant to say that the budget during his tenure was roughly $50 million, which would make Obama’s $50 billion $49,950,000,000 more. Apparently, I’m not the only one confused by billions).

Having said that, Dr. Brailer has some suggestions worth noting, not the least of which is that ensuring structural compatibility and integration of data systems are paramount necessities which will require more than just “hiring the geek squad.” He states

Setting up an electronic health record is a complex task, requiring data integration, clinical algorithms and complex software customization. Likewise, helping physicians and other health care workers learn to work with electronic tools is more than point-and-click training. Electronic health records change the very nature of health care work – clinical decision-making, communications, documentation and learning. Our national transition to digital medicine requires a large supply of specialists – upwards of 50,000 people, including physicians, nurses and pharmacists – who understand both clinical medicine and information technology. It takes years to train these people, and they are already in short supply, so now is the time to start.

I have no contention with the assertion that “setting up an electronic health record is a complex task,” and surely, at the end of a $50 billion investment no one wants to look up to see a Med e-record Tower of Babel. But Dr. Brailer’s assertion that “helping physicians and other health care workers learn to work with electronic tools is more than point-and-click training” is somewhat at odds with recent articles in The NY Times, one of which shows what an electronic medical record looks like and explains how pertinent and potentially life saving information “is just a few clicks away.”

Dr. Brailer also states that we need to address what he characterizes as

the growing chasm between the physicians and hospitals that have electronic records and those that do not. Most large and urban hospitals as well as larger physician practices are far along in using electronic health records. Rural hospitals, nursing homes and small physician practices lag far behind. They face many barriers, but foremost among them is the lack of capital to purchase and implement information tools.

Dr. Brailer states that “Sales pipelines and hospital and physician budgets show that electronic health record purchases have slowed, indicating that the market wave has gone as far as it can. Now is the time for government incentives to help along those who do not have these systems.”

But Brailer wants to incentivize the “use” of electronic medical records much in the way that Congress has done so regarding “electronic prescribing.” He states: “Medicare pays physicians a 2% bonus for using eprescribing on appropriate patients starting in 2009, and this incentive converts to a 3% penalty for those who do not eprescribe in 2013.”

Of course, Brailer is right to make the distinction between "purchase" and "use." No one wants to subsidize a high tech, dust gathering coat rack. He makes the point that “We should not incent physicians and hospitals simply to purchase electronic records. We get no benefit when a physician or hospital buys an electronic record. What we should do is reward the use of these tools as part of a patient’s care.”

What he fails to address, however, in this incremental ROI “pay for use” approach is what he characterizes as the “foremost barrier” to those “Rural hospitals, nursing homes and small physician practices” on the other side of e-med record chasm: initial capital outlay.

Considering the financial difficulties of many hospitals—and the chilled credit markets— it is somewhat difficult to envision how the gradual return on investment through “pay for use” will offer great affect for those medical service providers who, at present, have a “lack of capital to purchase and implement information tools.” It is not, however, hard to envision how such a continuous “pay for use” incentive would benefit those larger providers who have already implemented electronic medical record systems.

Additional payments each time they used what they have already invested in would, no doubt, provide an additional dividend which these typically larger providers would greatly appreciate. It is not at all clear, however, that such a program, requiring significant investments of capital—which may well not be available at this time—will lessen the “chasm” by any great measure.

The New York Times has reported that

For most doctors, who work in small practices, an investment in electronic health records looks simply like a cost for which they will not be reimbursed. That is why policy experts say any government financial incentives to use electronic records — matching grants or other subsidies — should be focused on practices with 10 or fewer doctors, which still account for three-fourths of all doctors in this country. Only about 17 percent of the nation’s physicians are using computerized patient records, according to a government-sponsored survey published in The New England Journal Of Medicine.

The Times also reports that those who are presently using electronic medical records tend to be part of larger health care organizations.

No longer the National Coordinator for Health Information Technology, Dr. Brailer is now the Chairman of Health Evolution Partners; it is a health care investment fund:

“Health Evolution Partners invests in the world’s leading health care companies. We seek out companies that are driving critical shifts in how health care is financed, organized and delivered.”

….We use these assets to help our portfolio companies:

Build strategies with unusually high potential
Navigate and mitigate business, policy and regulatory risks
Develop and shape the market for their products and services
Enhance the growth and returns for their shareholders

A “B” Here, a “B” There… How Much is That?

2009-01-17T00:45:00.000-08:00

“House Democrats Announce $825B Economic Stimulus Package With $157B for Health Care”

That is the title of a well written and informative article from Kaiser (1/16). The title is, for the most part, self explanatory— and the funding breakdown, especially as it regards health care, is explained well enough within the article itself—at least for today. It is a two year $825 billion "stimulus package."

The breakdown alone could be the subject of at least ten posts, and will ultimately amount to what I’m sure will be countless discussions and debates in the months to come. As well it should. For the moment, however, it may be sufficient to merely read the article. And maybe attempt some perspective.

I hate to admit this, but I really don't know how much a billion is. I can grasp millions (I can just multiply the value of my house—though the multiplier has grown considerably over the last few years) but billions escape me (considering TARP, that last phrase may be more apt than I am comfortable with). But…

A billion is a thousand million. It is written 1,000,000,000.

I do not find that particularly helpful, but it’s a start.

Years ago, the United States produced $1000 bills; Grover Cleveland graces the front of them and there are said to be a number of them still in existence. It is also said that if you tightly stacked 1 billion dollars in clean crisp thousand dollar bills and piled them—they would rise 63 miles into the air. If you did the same for $825 billion the stack would rise 51,975 miles into the air. Commercial jets generally fly at around 7.7 miles in the air. The circumference of the earth at the equator is roughly 24,901 miles—that’s twice around and then some. And remember, these are thousand dollar bills.

It is estimated that to count from one to a billion would take you 95 years. To count to 825 billion would take you at least 78,375 years. It will not take us nearly as long to spend it.

And by the way, 825 billion is just 175 billion short of a trillion. A trillion is a thousand billion, or a million million, and is written 1,000,000,000,000.

And yes, I find this even less helpful. But my guess is, before the two years are up, we'll have to figure out what "a trillion" is as well.

Is the Medicare Advantage Program Really Advantageous?

2009-01-15T09:43:00.000-08:00

CQ Politics reports that President-elect Obama is committed to the elimination of Medicare Advantage plans. Obama told ABC's "This Week" that Medicare Advantage plans are an example of cost-cutting government initiatives that do not work.

This is especially interesting in light of the Centers for Medicare and Medicaid Services ordering WellPoint to temporarily suspend enrollment and marketing efforts for its Medicare plans on Monday. The Los Angeles Times reports that the sanctions followed a "sharp" increase in complaints. Reportedly, some customers of WellPoint were unable to receive their prescription drugs while others were overcharged because of computer mistakes.

Along with President-elect Obama, Senate Majority Leader Harry Reid (Nev.) has signaled his intent to "scale back" the Medicare Advantage Program, according to The Hill. Medicare Advantage plans offer health insurance to more than 10 million of the 45 million Medicare benficiaries. However, the Medicare Payment Advisory Committee reports that Medicare Advantage plans cost the government 13% more per beneficiary on average than Original Medicare in 2008.

Democrats say that $15 billion of the annual $94 billion in subsidies granted to Medicare Advantage plans are the result of "overpayments."

Surely, any attempt to eliminate Medicare Advantage plans from the Medicare program will be met with fierce opposition from private insurance companies. In response to the threat of elimination, America's Health Insurance Companies said that the so-called "overpayments" are used to help purchase prescription drug coverage, vision care, and chiropractic services for which Original Medicare does not pay.

There may be some merit to this argument as Original Medicare is lacking in many crucial coverage areas, including dental services which left untreated can be fatal. Thus, it is quite possible that the elimination of Medicare Advantage plans could result in many seniors facing

reduced benefits, limited health care choices and higher out-of-pocket costs,

according to America's Health Insurance Companies.

Surgical Checklist Said to Save Lives & Money

2009-01-14T21:32:00.000-08:00

The use of a basic checklist was shown to be associated with a substantial decrease in surgical deaths and complications. In what the A.P. referred to as a “a large international study of how to avoid blatant operating room mistakes,” researchers found a 47 per cent decrease in death and a more than one third decrease in complications—from 11% to 7%-- concomitant with the use of a 19 point checklist designed by the World Health Organization.

A.P reports that regarding the elements on the list (many of which concern matters such as verifying the patient’s identification, marking the area to be incised with a magic marker, discussing patient allergies and surgical team member responsibilities, and accounting for all needles, sponges and instruments after the surgery)

U.S. hospitals have been required since 2004 to take some of these precautions. But the 19-item checklist used in the study was far more detailed than what is required or what many institutions do.

The researchers estimated that implementing the longer checklist in all U.S. operating rooms would save at least $15 billion a year.

The study, which was conducted in both “wealthy” and “poor” nations in eight city hospitals across the world (including Seattle, Washington), was published in the New England Journal of Medicine; its results were said to have “startled the researchers.”

Bill Before Congress Would Extend Health Insurance to Children of Legal Immigrants Sooner

2009-01-13T15:22:00.000-08:00

The New York Times reports that Congress will likely pass a bill to provide health insurance to millions of low-income children. Similar legislation was twice vetoed by President Bush in 2007.

Under the proposed legislation, states would have the option to restore health insurance benefits to legal immigrants under 21 as well as pregnant women. Currently, legal immigrants are barred from Medicaid and the State Children's Health Insurance Program for the first five years after they enter the United States.

It is estimated that 400,000 to 600,000 immigrant children are affected by the restriction currently in place. The Times notes that:

Among children, legal immigrants are less likely to
receive immunizations and routine dental care.

and

[A]mong women, legal immigrants are less likely to receive
prenatal care.

Opponents of the bill argue that the original purpose of program—to serve the children of the working poor—has not been fulfilled, raising concerns about extending it to legal immigrants and others groups not originally contemplated.

Others argue that the expected costs of the bill would be too great. The program currently covers about 6.6 million children and costs the federal government $5 billion a year. The Times estimates that the passage of the bill could double the annual expense of the program. The expanded program proposed by the new bill would be financed by tobacco taxes.

President-elect Obama has already expressed his support for allowing states to offer health insurance to legal immigrant children before the five-year waiting period is met.

Generally, the bill is garnering significant support from various sectors. Many people feel that all children should have health insurance. There is great support for this proposition as well. By extending health insurance to more children including legal immigrants, not only will children in need of care be provided for, but by providing greater access to preventive care, states will reduce overall health care costs .

FDA Scientists Say FDA is “Fundamentally [More] Broken”

2009-01-12T22:08:00.000-08:00

Just this last week we posted that a group of nine FDA scientists from the Center for Devices and Radiological Health-- which is responsible for medical devices ranging from stents and breast implants to MRIs and other imaging machinery—authored a letter which asserted that “The FDA is "fundamentally broken" and requires reforms.”

We wrote:

With what A.P refers to as an “unusually blunt letter,” the group of federal scientists contacted "John Podesta, head of the transition team, as well as former Senate Majority Leader and HHS Secretary-designate Tom Daschle (D-S.D.); Baltimore Health Commissioner Joshua Sharfstein, who has led a team assembled by Obama to assess FDA; Senate Health, Education, Labor and Pensions Committee Chair Edward Kennedy (D-Mass.); and eight other lawmakers," according to Kaiser.

In that post, we also called attention to the contention of the scientists that “Managers with incompatible, discordant and irrelevant scientific and clinical expertise in devices...have ignored serious safety and effectiveness concerns of FDA experts.”

Noting that

To say that these managers had “incompatible” and “discordant” scientific and clinical expertise in devices is one thing. One expects a certain degree of disagreement within the scientific community—and to some extent, one reasonably relies upon the crucible of such “discordant” viewpoints in scientific debate to provide tested answers to real problems. But the scientists who wrote this letter added one more word: “irrelevant.” And in this context, that leaves us uncomfortably with the knowledge that in the estimation of these nine scientists, the determining force in these particular scientific inquiries—the managers—lack relevant scientific expertise in the pertinent subject matter—medical devices.

Apparently, the “expertise” at issue in the approval of a breast cancer imaging device is alleged to go somewhat beyond the scientific.

The New York Times reports that it has obtained various FDA emails and internal documents which underlie the scientists’ complaint and are the present subject of both an FDA internal inquiry and a congressional investigation. The emails and documents are said to provide details of the investigations which had not previously been made public.

The New York Times reports that

An official at the Food and Drug Administration overruled front-line agency scientists and approved the sale of an imaging device for breast cancer after receiving a phone call from a Connecticut congressman, according to internal agency documents.

The congressman is Republican Chris Shay, who lost re-election in November. A component of the imaging device was produced by a Fujifilm Medical Systems, which “is based in Stamford, Conn., the heart of Mr. Shays’s former district,” according to the NY Times.

The article also states that

The legislator’s call and its effect on what is supposed to be a science-based approval process is only one of many of accusations in a trove of documents regarding disputes within the agency’s office of device evaluation.

Seton Hall Law Professor William E. Garland, 64

2009-01-12T13:53:00.000-08:00

Seton Hall University School of Law mourns the passing of one of its most beloved professors, William E. Garland. Dean Patrick E. Hobbs said, “Professor Garland was a phenomenal teacher of future attorneys. He knew the law, but more important, he knew how to inculcate professionalism and an ethical sense in his students. He was also extraordinarily patient, demanding from his students the precision necessary to be a good lawyer. His loss affects the entire legal and academic communities, as he was also very involved in law reform efforts, as well as public service. Even with his vast accomplishments, Bill was nothing less than a great man whose company you always enjoyed.”

Born in 1944, Professor Garland earned his Juris Doctor from Seton Hall University in 1969. He joined Seton Hall Law as an adjunct professor in 1970 and became a full professor in 1976. He served as associate dean from 1983 to 1984. Prior to joining Seton Hall Law, Professor Garland was a partner in Stanziale and Garland, a law firm in Newark. He served as the long-time representative of Seton Hall University to the New Jersey Law Revision Commission. The American Bar Association's Central and Eastern European Law Institute called upon Professor Garland's expertise in property law and commissioned him to prepare a commentary for Romanian legislators regarding that country's expropriation law. He was a member of Academics for the Second Amendment and the Foundation for Individual Rights in Education.

Over the years, Professor Garland taught many classes, but was most noted for teaching property and bankruptcy courses. He was also instrumental in the formation and multi-decade success of Seton Hall Law’s Legal Education Opportunity (LEO) program, tailored to provide gifted law school aspirants from economically and educationally challenged backgrounds with the opportunity to demonstrate their ability to succeed in the study of law. Professor Garland often referred to his participation in the LEO program as one of the highlights of his legal career.

The qualities of Professor Garland were best expressed by his former law school classmate and colleague, Dean-Emeritus Ronald Riccio, who said, “Bill Garland loved Seton Hall Law and had a heart of gold. No one was better at attention to detail. He was a superb lawyer, teacher, and good friend. He loved coming to work. His enthusiasm for the law, debate, and genuine affection for people, will be missed deeply.”

Professor Garland is survived by his sister, Sister Barbara Garland, SC, Councilor of the Sisters of Charity at the Convent of St. Elizabeth in Convent Station, NJ.

COBRA Costs Prohibitive for Many Unemployed

2009-01-11T18:32:00.000-08:00

The Los Angeles Times has run a noteworthy AP article regarding the often prohibitive cost of COBRA coverage. COBRA is the program which enables unemployed Americans to continue their health insurance by purchasing it through their former employers. The national unemployment rate reached 7.2% in December. As noted here just yesterday, the Kaiser Foundation has devised a "metric on unemployment: an increase of 1% unemployment leads to 1.1 million uninsured, and 1 million more people added to Medicaid." That metric, however, is thought by some to be somewhat understated for a current analysis as it does not take into account the various state cuts to Medicaid already enacted since the metric was designed-- nor does it take into account those further cuts which are anticipated for the new year.

Individuals
The L.A. Times, based upon a recently released report by Families USA, reports that “Newly unemployed Americans would have to spend an average of about 30% of their jobless benefits to pay for health insurance through their former employer.”

That number, however, seems to have been somewhat skewed by the reporting of one state, as the article goes on to say that “In all those states except South Carolina workers would have to spend more than 40% of their unemployment insurance on COBRA premiums for individual coverage.”

Families
The LA Times also reports that if individuals “want coverage for their families, the report by Families USA says, it will take more than 80% of their unemployment check.”

Investors Business Daily reports that the Families USA study found:

“The average monthly Cobra premium for family coverage, $1,069, consumes 84% of the average monthly unemployment check, which is $1,287”

and that

In nine states -- Alabama, Alaska, Arizona, Delaware, Florida, Louisiana, Mississippi, South Carolina, and West Virginia -- average premiums for family coverage under Cobra equal or exceed total income from unemployment insurance….

Conclusions
The Health Law Prof Blog, which quoted from a similar article in the Washington Post, reported that Ron Pollack, executive director of Families USA, stated that "COBRA health coverage is great in theory and lousy in reality,"

and that

Pollack and House Speaker Nancy Pelosi (D-Calif.) said the new report highlights the need to include health insurance subsidies in the economic recovery package being crafted this month. "Without that," Pelosi spokesman Brendan Daly said, "they [the unemployed] simply cannot afford to pay for temporary continuation of their health insurance."

But Nina Owcharenko, a health policy analyst at the conservative Heritage Foundation, said it would be wiser to offer unemployed Americans a broad range of health insurance options, including high-deductible private policies or new state-based programs. Given how expensive COBRA is, she said, alternatives would "save the individual money and save taxpayer money."

Unemployment, Uninsured & Medicaid Rolls Up

2009-01-11T01:10:00.000-08:00

The New York Times reports that
“The nation lost 524,000 jobs in December…. The unemployment rate, meanwhile, jumped to a 16-year-high of 7.2 percent, the Bureau of Labor Statistics reported on Friday.”

This is up from 6.7% in November, 2008; up from 4.7% in November 2007.

Last week, in a post about prognostications for health care in 2009 (“Ringing in a New Year in Health Care, For Whom the Bell Tolls?”), we quoted the following from Jane Sarosahn Kahn in The Health Care Blog:

Keep in mind the Kaiser Family Foundation's metric on unemployment: an increase of 1% unemployment leads to 1.1 million uninsured, and 1 million more people added to Medicaid. This was the math that worked in 2007-8. The metric will probably change in 2009 as Governors struggle to balance budgets while providing medical services, education, and safe streets to citizens. The National Governors Association, and the individual state heads, have all warned that Governors will inevitably cut services in 2009 and into 2010 if tax receipts continue to decline.

In response, we stated:

According the U.S. Bureau of Labor Statistics, in November of 2007 the unemployment rate was 4.7%. For November of 2008 it was 6.7%. Regardless of the metric, the consequent health insurance math is less than reassuring.

Regardless of its lack of reassurance, perhaps the math should be done.

Using the Kaiser metric, understated as it may be for 2008-9, the half per cent increase in unemployment in December (7.2% from 6.7% in November) is equal to:

550,000 more people without health insurance
500,000 more people on Medicaid

This is in addition to a two per cent raise in unemployment from November 2007 (4.7%) to November 2008 (6.7%).
That 2% equals:

2,200,000 more people without health insurance
2,000,000 more people on Medicaid

Total from November 2007 (4.7% unemployment) to December 2008 (7.2% unemployment) equals:

2,750,000 more people without health insurance
2,500,000 more people on Medicaid

The Glasses Half Full

2009-01-09T23:14:00.000-08:00

This story is not about health policy, but maybe in the end, in a way, it is. Maybe it’s about the essence of what health policy should be. What international policy should be. What academia, and even patent law, look like in their finest hours.

For the most part, I will just allow this Washington Post story to speak for itself.

Joshua Silver, an Oxford atomic physicist who also teaches optics, designed a set of self-adjusting eyeglasses. He has spent the last two decades perfecting the “ugly” eyewear. The glasses are manufactured in China, and he is now in the process of distributing them to those who are unable to afford to partake in “the current business model for the industry that involves optometrists, opticians and labs making custom lenses and frames.” Thus far Mr. Silver has distributed his glasses with the help of the U.S. Dept. of Defense, the World Bank, and the British Government.

Though offered “a substantial amount of money" by a vision company for his patented technology, the inventor “declined because he had no assurance that it would be used to bring low-cost glasses to the poor.”

The Washington Post reports that Mr. Silver, “has attached plastic syringes filled with silicone oil on each bow of the glasses; the wearer adds or subtracts the clear liquid with a little dial on the pump until the focus is right. After that adjustment, the syringes are removed and the ‘adaptive glasses’ are ready to go…. The more liquid pumped into a thin sac in the plastic lenses, the stronger the correction.”

Currently, Silver said, a pair costs about $19, but his hope is to cut that to a few dollars.

Silver said he wants to provide eyeglasses to more than a billion people with poor eyesight. For starters, he hopes to distribute a million pairs in India over the next year or so.

He has distributed about 30,000 spectacles. The U.S. Department of Defense bought 20,000 pairs to give away to poor people in Africa and Eastern Europe. Those glasses have a small U.S. flag and "From the American People" engraved in small print on one side of the frames. The World Bank and the British government have also helped fund his work.

In the United States, Britain and other wealthy nations, 60 to 70 percent of people wear corrective glasses, Silver said. But in many developing countries, only about 5 percent have glasses because so many people, especially those in rural areas, have little or no access to eye-care professionals.

Even if they could visit an eye doctor, the cost of glasses can be more than a month's wages. This means that many schoolchildren cannot see the blackboard, bus drivers can't see clearly and others can no longer fish, teach or do other jobs because of failing vision.

"It's about education, economics and quality of life," Silver said.

One could certainly say the same thing about health and health care; and at a basic level, the health and health care proposition in human terms is simply sine qua non--"without which, not."

Having said that, one might hope that the Nobel Committee can see its way clear to Oxford.

FDA Scientists Say that FDA is "Fundamentally Broken"

2009-01-08T20:05:00.000-08:00

“The FDA is "fundamentally broken" and requires reforms, according to a letter sent to the transition team of President-elect Barack Obama by nine agency scientists, Dow Jones reports." (Kaiser.org 1/8/08).

With what A.P refers to as an “unusually blunt letter,” the group of federal scientists contacted "John Podesta, head of the transition team, as well as former Senate Majority Leader and HHS Secretary-designate Tom Daschle (D-S.D.); Baltimore Health Commissioner Joshua Sharfstein, who has led a team assembled by Obama to assess FDA; Senate Health, Education, Labor and Pensions Committee Chair Edward Kennedy (D-Mass.); and eight other lawmakers," according to Kaiser.

A.P reports that the letter was written on FDA Center for Devices and Radiological Health letterhead; “the center is responsible for medical devices ranging from stents and breast implants to MRIs and other imaging machinery.”

The letter reads in part as follows:

The purpose of this letter is to inform you that the scientific review process for medical devices at the FDA has been corrupted and distorted by current FDA managers, thereby placing the American people at risk. Managers with incompatible, discordant and irrelevant scientific and clinical expertise in devices...have ignored serious safety and effectiveness concerns of FDA experts. Managers have ordered, intimidated and coerced FDA experts to modify scientific evaluations, conclusions and recommendations in violation of the laws, rules and regulations, and to accept clinical and technical data that is not scientifically valid. (emphasis added)

To say that these managers had “incompatible” and “discordant” scientific and clinical expertise in devices is one thing. One expects a certain degree of disagreement within the scientific community—and to some extent, one reasonably relies upon the crucible of such “discordant” viewpoints in scientific debate to provide tested answers to real problems. But the scientists who wrote this letter added one more word: “irrelevant.” And in this context, that leaves us uncomfortably with the knowledge that in the estimation of these nine scientists, the determining force in these particular scientific inquiries—the managers—lack relevant scientific expertise in the pertinent subject matter—medical devices.

The Wall Street Journal Health Blog reports that earlier today, HHS Secretary-designate Tom Daschle appeared at “a friendly hearing before the Senate’s Health, Education, Labor and Pensions Committee.” Daschle, who was one of the recipients of the FDA scientists’ letter, did not mention it in his prepared speech. Daschle did, however, state the following:

Unfortunately, there is growing concern that the FDA may have lost the confidence of the public and Congress — much to our detriment. When Americans are nervous about eating spinach or tomatoes or cantaloupes, that’s not good for our health and it is terrible for our farmers. When nearly two-thirds of Americans do not trust the FDA’s ability to ensure the safety and effectiveness of pharmaceuticals, the result is Americans may hesitate to take important medications that protect their health. This is unacceptable.

Is Ideology-Free Health Reform Possible?

2009-01-08T13:59:00.001-08:00

Apparently the message of Tom Daschle's confirmation hearing today was standard anti-partisan fare: "'We will be guided by evidence and effectiveness, not by ideology,' Mr. Daschle told the Senate Committee on Health, Education, Labor and Pensions." I have no doubt that this is the correct rhetorical posture to adopt. But after listening to podcasts from an excellent Princeton/Woodrow Wilson School conference on health care reform, I think anti-ideologism has its limits.

At the conference, Len Nichols, Director of the Health Policy Program of the New America Foundation, gave the paradigmatically postpartisan perspective on health care. According to Nichols' vision, both Democrats and Republican need to be far more open to ideas from one another's best thinkers. He held out the Massachusetts plan for universal coverage as a model for melding Democratic emphasis on universal coverage with Republican commitments to personal responsibility, private insurers, and markets.

Yet I found the most compelling talks to be Uwe Reinhardt's and Maggie Mahar's. Far from preaching "middle of the road"-ism, both found fault with the incrementalism it usually results in. Mahar noted that the Massachusetts plan does not have a compelling model of controlling costs--and that without cost control it is virtually impossible to accomplish sustainable reform. Reinhardt underscored the degree to which policy elites in other countries consider the risk of bankruptcy due to medical bills in the US "obscene"--a value commitment hard to square with much rhetoric of personal responsibility.

I think it's time for us to follow Jack Balkin's groundbreaking work on ideology, and to realize that the goal is not to be ideology-free, but to recognize and correct for the inevitable biases that ideology can generate. As Balkin says of the cognate concept "cultural software," ideology is "simultaneously empowering, useful, and adaptive on the one hand, and disempowering, distorting, and maladaptive on the other." But it is inevitable, and the faster we can get clear on its role in health debates, the more substantive health care reform is likely to be.

Anyone familiar with my health law archives on this blog probably knows my convictions here: The US health care system wastes huge amounts of money, inflicts financial and physical distress on many vulnerable people, and has been excessively commercialized. Profits are too often put ahead of patients. We can learn from other countries that spend less, and have as good or better health care outcomes.

An ideological framework like that (or its mirror image on the right) is proabably necessary to motivate real action on the health reform front.

As Geertz says in his great essay Ideology as a Cultural System:

The differentiae of science and ideology as cultural systems are to be sought in the sorts of symbolic strategy for encompassing situations that they respectively represent. Science names the structure of situations in such a way that the attitude contained toward them is one of disinterestedness. Its style is restrained, spare, resolutely analytic: by shunning the semantic devices that most effectively formulate moral sentiment, it seeks to maximize intellectual clarity. But ideology names the structure of situations in such a way that the attitude contained toward them IS one of commitment. Its style is ornate, vivid, deliberately suggestive: by objectifying moral sentiment through the same devices that science shuns, it seeks to motivate action. Both are concerned with the definition of a problematic situation and are responses to a felt lack of needed information.

Ideologies do make empirical claims about the condition and direction of society, which it is the business of science (and, where scientific knowledge is lacking, common sense) to assess. The social function of science vis-a-vis ideologies is first to understand them--what they are, how they work, what gives rise to them--and second to criticize them, to force them to come to terms with (but not necessarily to surrender to) reality. . . .

Before we aspire to do away with the "ornate, vivid, deliberately suggestive" methods of ideology, we should remember commitment's place in the world of health care reform. For me, that means universality--a strong commitment to a robust baseline of care for all--should be at the top of reformers' agenda. Cost-containment is important, too, but its achievement needs to hinge as much on values of compassion and equality as on the number-crunching of technocrats. If bipartisanship becomes too technocratic, partisanship may not be such a dirty word after all.

Donut Holes: How Much is that Prescription in the Window?

2009-01-07T23:26:00.000-08:00

The Wall Street Journal reports that the Center for Medicare and Medicaid Services (CMS) has “finalized a rule meant to curb an industry practice that has inflated drug costs for some patients with Medicare drug coverage.”

The new rule regards the way that one calculates the cost basis for Medicare prescription drug benefits for the purposes of reaching the initial cap on coverage. This initial cap on prescription benefit coverage can result in what CMS refers to as “the coverage gap” or what is often referred to as the Medicare Part D “doughnut hole.”

The Dallas Morning News has offered this explanation of “the doughnut hole”

Seniors with Medicare's standard drug benefit for 2008 pay the full price once their total drug expenses – both Medicare's costs and their own out-of-pocket deductibles and co-payments – reach $2,510.

They are then on their own for the next $3,216, until their total drug spending exceeds $5,726. At that point, catastrophic coverage kicks in, and Medicare pays 95 percent of their drug costs.
Some seniors are able to avoid the doughnut hole because they qualify for extra government help or buy extra insurance. But everyone else has to mind the gap, which lawmakers included in Medicare's drug benefit to hold the line on federal costs.

The WSJ Health Blog reports that in 2009, “The coverage gap will open up after beneficiaries and their drug plans have spent a total of $2,700 on medications…. Seniors are then on the hook for the next $4,350.”

In response to that expense, the Kaiser Foundation has shown that many seniors cease or diminish the use of their medications.

The new rule, which will go into effect on January 1, 2010, alters the price basis for how the initial cap amount is met (in 2007 the initial cap was $2,400, in 2008, $2510, in 2009 it will be $2,700, and in 2010, presumably, it will be somewhat higher than that).

WSJ explains that at present the cost of a Medicare beneficiary’s prescriptions for initial cap purposes are not calculated as the amount that was paid to the pharmacy which dispenses the drugs, but by the amount which insurers paid to pharmacy benefit managers (PBMs) who function as administrators of prescription plans and middlemen between insurers and pharmacies.

PBMs may “lock in” a drug price with insurers, and then often negotiate with pharmacies for a lower price. The PBMs then keep the brokered difference. According to WSJ, “the size of that difference is typically secret.” At present, the higher amount the insurers pay to the PBM is the amount that is used to calculate a Medicare beneficiary’s cap calculation. As such, the higher rate can get beneficiaries to the cap—and the subsequent coverage gap— quicker.

WSJ reports that "Under the new rule, plans can still use the lock-in approach. But the amount paid to the pharmacy -- not the higher price paid by the insurer -- will have to be what is used to determine patients' pace to the doughnut hole."

The New York Times reports that “President-elect Barack Obama said Wednesday that overhauling Social Security and Medicare would be “a central part” of his administration’s efforts to contain federal spending….”

At present, Medicare is itself unable to negotiate drug pricing. In Obama’s campaign health plan, he stated that he would

Allow Medicare to negotiate for cheaper drug pricing. The 2003 Medicare Prescription Drug Improvement and Modernization Act bans the government from negotiating down the prices of prescription drugs, even though the Department of Veterans Affairs' negotiation of prescription drug prices with drug companies has garnered significant savings for taxpayers. Barack Obama and Joe Biden will repeal the ban on direct negotiation with drug companies and use the resulting savings, which could be as high as $30 billion, to further invest in improving health care coverage and quality (footnotes omitted).

Dr. Sanjay Gupta, Surgeon General?

2009-01-06T20:07:00.000-08:00

CNN reports that Dr. Sanjay Gupta, Neuro-surgeon, Medical Correspondent and Blogger, has been “approached” by the Obama transition team and “asked to take the very high profile job of Surgeon General of the United States.” CNN reports that its sources say that Dr Gupta “is inclined to accept the position very soon” and has “approached both CNN and CBS management about getting out of his journalistic contracts.”

Dr. Gupta is chief medical correspondent for CNN and a medical reporter for CBS. He also heads CNN’s medical blog, at www.pagingdrgupta.blogs.cnn.com/. He has won an Emmy award, authored a New York Times Bestseller--Chasing Life-- and writes a column for TIME magazine.

In addition to his copious media credits, “Dr. Gupta is a member of the staff and faculty of the Department of Neurosurgery at Emory University School of Medicine in Atlanta, Georgia. He regularly performs surgery at Emory University Hospital and at Grady Memorial Hospital, where he serves as associate chief of neurosurgery.”

CNN reports that a transition source said that “The transition team is impressed with the combination of Gupta's past government experience, as a White House fellow in 1997 and a special adviser to then-first lady Hillary Clinton, along with his medical career as a neurosurgeon and his communication skills.”

It is said to be expected that with health reform as "a top priority" for the Obama administration, that Dr. Gupta would help to “explain the arcane nature of health care policy” to the American public, as well as play a role in its formation. Accepting the position is said to entail “a huge pay-cut” for Dr. Gupta.

Read full story here
Watch video here

California Foundations Advocate for Health Care Reform

2009-01-05T19:52:00.000-08:00

The Los Angeles Times reports that “Nonprofits have dropped their usual detachment to crusade for healthcare reform in California, opening Sacramento offices staffed by former aides to lawmakers.” Apparently not satisfied with the results garnered through “years of financing studies and demonstration projects,” “California philanthropic foundations and think tanks are shedding their traditionally detached stances to crusade for healthcare reform in the state Capitol and in Congress.”

To lead this crusade, a number of foundations have hired high profile figures to advocate their ideas to policy makers, and, in some instances, foundations have promoted those ideas to the wider public as well. In defense of the practices, the LA Times reports that “Foundation leaders emphasize they have no interest in direct lobbying and that they promote ideas that are based in evidence, not ideology.”

Paul Brest, “president of the William and Flora Hewlett Foundation in Menlo Park and author of a book on philanthropic strategies” is quoted as saying: "What I've seen is foundations moving from thinking all we needed to do is support good research in the field and the rest will happen to realizing that unless we are going to support organizations to take the research and try to turn it into policy, then the research is going to sit in the bottom of a pile somewhere."

Beware the IRS
The article also points out, however, that “Advocacy is risky for foundations, since most are categorized by the IRS as 501(c) nonprofits, which restricts them from direct lobbying or participation in partisan politics.” The experts of “The New America Foundation, a Washington, D.C.-based think tank underwritten by foundations,” are said to have “so much contact with lawmakers that the foundation requires them to keep track of their hours to ensure they do not exceed lobbying limits set on nonprofits.”

Despite the risks, the LA Times reports that “With billions of dollars at their disposal, the foundations are seeking to become bigger players.” Read full story here.

CMS Physician Quality Reporting Initiative, Experience

2009-01-04T16:40:00.000-08:00

The American Association of Family Physicians (AAFP) has authored a somewhat disturbing article on the recent Center for Medicare and Medicaid Services (CMS) report “that examines participation data from its 2007 Physicians Quality Reporting Initiative, or PQRI, and also addresses physicians' frustrations with the program.”

According to the CMS report, Physician Quality Reporting Initiative, 2007 Reporting Experience

The Centers for Medicare & Medicaid Services (CMS) is working to transform the Medicare program from a passive payer into an active purchaser of high-quality care by linking payment to the value of care provided. Initially, CMS developed a voluntary quality reporting program in 2005, the Physician Voluntary Reporting Program (PVRP), to encourage physicians to report information on the quality of care they were delivering. As authorized by Congress, the PQRI builds on the PVRP by linking payments to reporting quality information. The PQRI is an important first step toward establishing a value-based purchasing program for physicians.

The Tax Relief and Health Care Act of 2006 (TRHCA), enacted on December 20, 2006, required the Secretary to implement less than seven months later by the start of the first reporting period on July 1, 2007, a system for the reporting of data on quality measures. CMS termed this system “PQRI.” This implementation schedule required rapid finalization of the detailed specifications for 74 clinical quality measures (covering hundreds of procedure and diagnosis codes), the development of an expanded infrastructure to support the reporting system and extensive outreach to more than 700,000 professionals about the requirements they needed to follow to submit data on quality measures.

Physicians who successfully submitted the quality information were eligible for an incentive payment capped at 1.5% “of total allowed charges for covered Medicare Physician Fee Schedule services.”

Not quite 16% of eligible physicians participated; of those who did participate, “Of the more than 14 million quality data codes submitted, 51.6 percent were submitted correctly; 48.4 percent of submissions were invalid.”

AAFP offers this summary of the Submission Data

· According to the new CMS report, the agency paid eligible providers slightly more than $36 million in incentive payments for the 2007 PQRI reporting period. The average bonus paid to individual providers was $635. The average bonus paid to practice groups was $4,700.
· Of the more than 14 million quality data codes submitted, 51.6 percent were submitted correctly; 48.4 percent of submissions were invalid.
· CMS says that nearly 16 percent of all eligible providers and groups submitted at least one quality data code during the 2007 PQRI reporting period. Of those 109,359 providers or groups,
· 92.5 percent submitted at least one quality data code that was valid;
· 64 percent correctly reported quality data on 80 percent of eligible cases for at least one measure;
· 52 percent earned an incentive payment by successfully reporting data on one to three applicable measures for 80 percent of applicable cases; and
· 1 percent were subject to the PQRI incentive cap.

In the report's executive summary, CMS says it is "committed to a successful PQRI program," and promises to "reduce or eliminate" the issues identified in the report. As such, among other modifications, CMS warrants to revise the analytics, redesign the physician feedback report system-- registration to which was "both cumbersome and time consuming," and increase educational outreach. In addition, “CMS has established new reporting options making it easier for EPs to participate in PQRI for 2008.”

AAFP reports that “Earlier this month AAFP Board Chair Jim King, M.D., of Selmer, Tenn., blasted CMS for its bungling of the distribution of PQRI bonus payments and told CMS Acting Administrator Kerry Weems that if problems weren't addressed, physicians might refuse to participate in the program.”

Read the full AAFP article here.

Partners in Power

2009-01-03T20:17:00.000-08:00

Harvard Business School Professor Regina Herzlinger has long fought for "consumer-directed health care." She states: "People can choose from 240 models and makes of cars pretty intelligently . . . .Why do we assume they can't do the same when it comes to their health?"

A recent Boston Globe series on hospitals in her own backyard answers that question.

The Globe's fascinating series on the rise of Partners Health in Massachusetts tells a story of market forces inexorably driving up the cost of health care, without commensurate quality improvements. Threatened by declining insurer reimbursements in the 1990's, Mass General Hospital and the Brigham & Women's Hospital united to anchor Partners. Now they're in the driver's seat, demanding reimbursements up to 30% over what other hospitals receive for identical procedures. Their market share has steadily increased as well, allowing them to stockpile the resources necessary to enter into new markets and threaten the viability of cheaper community hospitals.

Some of those quoted in the series contend that Partners' anchor hospitals are terrific places to go if one has a rare illness--they pride themselves on cutting edge medicine. But in procedures including coronary bypass, CT-scan of the chest, MRI of the brain, and ultrasound, they appear to offer no quality edge--just far higher prices.

On a simple, market-based model, this should not be happening. Patients should be investigating quality, getting value for their money, and opting for cheaper hospitals when, all things considered, these are bargains. But here's one account of patient decisionmaking from the article:

[A 31-year old named Dahl] lives less than 2 miles from Mount Auburn Hospital in Cambridge, but when she became pregnant with her first baby last year, she decided to go to a Boston teaching hospital to deliver. "I talked to women in the area who had babies in Boston," said Dahl, a self-described nervous patient who gave birth to son Henry by Cesarean section at the Brigham last November. "I also looked at the US News rankings for female care. The Brigham was rated very high."

State health officials have tried to encourage women like Dahl to reconsider their flight to Boston, pointing out in a 2003 study that community hospitals are generally just as reliable as teaching hospitals for normal births. In fact, they had a slightly lower complication rate - and they're a lot cheaper. Dahl's care cost $8,282.14 at the Brigham, while the cost at Mount Auburn would have been about $5,700, according to state insurance data.

In other words

brand power has a lot more to do with choices here than objective assessment of outcomes. Admittedly, insured individuals may be so insulated from health care costs that they have little reason to sniff out the best deals. The private health insurance market is supposed to help here, acting as proxy and agent for the insured, but consider how Tufts was treated by its customers when it tried to bargain with Partners:

Partners' dominance became clear in 2000, when executives of Tufts Health Plan had the temerity to refuse Partners' demand for a substantial rate increase. Partners countered by declaring it would no longer accept Tufts insurance at its hospitals. Within days, as thousands of Tufts customers threatened to change insurance rather than lose the right to treatment at the two famous hospitals, Tufts gave in to Partners' demands. Since then, Partners has negotiated one big pay increase after another from insurance companies fearful of a similar humiliation.

Those reimbursement rate increases are not simply windfalls to Partners' highest-paid employees and shareholders. They are also serve as a warchests for Partners' expansion into the lucrative niches that now keep many community hospitals afloat. As Marc Roberts, a professor of political economy at the Harvard School of Public Health, says in one Globe piece, "By paying Partners more, you build up their war chest and then they build more and more and then they drive other people out of business . . . . This is a huge slow-motion train wreck for the Massachusetts healthcare system." I've explored the dynamics of specialty hospitals elsewhere; suffice it to say, it's now become evident that certain procedures in hospitals serve to cross-subsidize other, less-profitable ones. A former chief of a hospital likely to be adversely affected by Partners' expansion puts it this way:

During an interview earlier this year at Caritas Norwood, Chessare passionately decried Partners' move into his neighborhood, arguing that the healthcare giant was triggering a medical arms race in which the rich get richer and the poor face extinction. Community hospitals are already doing much of the same work that Partners is offering and doing it more cheaply and, for the most part, just as well, he said. "It's cherry picking," Chessare said. "What are they going to do there? They're going to do high-end imaging. Why? Because you make money at it. And they're going to do ambulatory surgery. Why? Because you make money."

Chessare is complaining that the new Partners' facilities will be competing for "high-margin" services, which smaller community hospitals like his use to cross-subsidize things like 24-hour ER's, care for the uninsured, and other community services. According to one study I saw (admittedly from 1991), about a quarter of community hospitals have levels of uncompensated care above 8%, and a quarter have levels below 1%, with the rest in between those figures. If Chessare's hospital is at the high end, it's not hard to draw a connection between the relevant Partners' satellite's success and decreasing ER services for the area and health care for the the uninsured generally.

This brings me to a final point brought up by the article--a darker narrative about quality assessment than we are used to. High US News & World Report rankings are one anchor for public perceptions of Partners' quality. For fans of market-driven health care, rankings are a key heuristic for harried consumers used to treating health care as a credence good. But the USNWR rankings appear to have a salience far greater than more granular measures of quality--which in turn are challenged by one of Partners' own doctors:

Partners officials said some of the ratings are based on untrustworthy data that should not be used for scoring. In general, they said, the statistical methods used to adjust for the sickness of the patients at different hospitals are not sophisticated enough to recognize how much more vulnerable their patients are. They also noted that even as governments are making more data public, many of the existing measures are controversial and often fairly crude.

"I think a consumer that relies on the cross-section of information that's out there and available to them, it's akin to being a cork floating in the ocean," said Dr. David F. Torchiana, head of the Massachusetts General Physicians Organization. "You'll be driven in random directions by the randomness of the information that you will obtain."

I've also

questioned the utility of many "best doctors" survey and other data. Certainly we can do more to improve data collection and interpretation. But we also have to worry about rankings becoming a self-fulfilling prophecy, increasing the distance between top and bottom that they are meant merely to report. As the Globe notes, "the pay gap undermines less powerful hospitals, whose officials say that they steadily lose doctors to those that can pay more. . . . Partners' 6,000 physicians are paid 15 percent to 40 percent more than most other Massachusetts doctors, based on Blue Cross rates, while the company's community hospitals earn at least 10 percent more than their peers." Small initial differences can become self-reinforcing. What began as a difference largely rooted in perception may become one rooted in reality, if we can assume that the highest-paying entity can purchase the services of the most competent providers. In the worst case scenario, rankings may serve to route the poorest patients to the poorest hospitals, while unleashing an arms race of image management by the rest.

Joe Biden's Chief Economist,

Jared Bernstein, has pointed out something fundamental about pricing in a market economy: it can be driven by power as much as by productivity. The story of Partners casts doubt on the efficacy of market-driven initiatives in health care. Consumers appear bewitched by marquee brands which insurers are powerless to bargain with. Only state action in Massachusetts appears to be an effective check here, leading the Boston Globe to call for more equity in reimbursement generally:

One alternative is to shift from the private dealing between insurers and hospitals to a more transparent system of performance-based reimbursements. These would have to account for complicated medical procedures. Or the state could set an allowable range for the cost of each procedure.

Ideally, rate-setting would move toward a single payment system: a gallbladder removal would be reimbursed at the same rate by a private insurer, Medicaid, or Medicare. Currently, Medicare pays somewhat less than actual cost, Medicaid much less, and the insurers subsidize both programs. Ending this disparity would benefit the hospitals with disproportionate shares of Medicaid and Medicare patients. A saner rate-setting system would also pay more for primary care and less for the interventions by specialists that inflate overall costs and lure medical students away from basic care.

If this system could be implemented in a way that preserved incentives for innovation, it could be a vast improvement on the current high-stakes atmosphere of hospital-doctor-insurer brinksmanship.

Posted by Frank Pasquale

Ringing in a New Year in Health Care, For Whom the Bell Tolls?

2009-01-03T00:05:00.000-08:00

Jane Sarasohn Kahn of The Health Care Blog has offered up some interesting, if not dismal, prognostications for 2009. Although issuing the caveat that “there are too many uncertainties that preclude us from doing a straight-line forecast for 2009, especially in health and health care,” she offers some insights based upon the present macroeconomic backdrop. They are worth noting, and a few may be found here below.

She asks us to take heed of the following:

Keep in mind the Kaiser Family Foundation's metric on unemployment: an increase of 1% unemployment leads to 1.1 million uninsured, and 1 million more people added to Medicaid. This was the math that worked in 2007-8. The metric will probably change in 2009 as Governors struggle to balance budgets while providing medical services, education, and safe streets to citizens. The National Governors Association, and the individual state heads, have all warned that Governors will inevitably cut services in 2009 and into 2010 if tax receipts continue to decline.

According the U.S. Bureau of Labor Statistics, in November of 2007 the unemployment rate was 4.7%. For November of 2008 it was 6.7%. Regardless of the metric, the consequent health insurance math is less than reassuring.

As noted by Professor Frank Pasquale on this blog last week, the “Governors' struggle” has already commenced. The Washington Post having reported that regarding Medicaid

Already, 19 states -- including Maryland and Virginia -- and the District of Columbia have lowered payments to hospitals and nursing homes, eliminated coverage for some treatments, and forced some recipients out of the insurance program completely.

As such, this line of forecast may be a bit “straighter” than others. The cuts and further prospective cuts in state funding are, as Frank Pasquale noted, “one more sad example of the procyclical nature of federalism here--states have less tax revenue during recessions, when need is greatest. No one should be surprised if more and more of the jobless uninsured, denied even basic dental care due to such cuts, fall into a "death spiral" of unemployment, disfiguring ailments, and a tendency to be underemployed due to such ailments.”

Ms. Sarosahn Kahn also makes a very important point about medical infrastructure:

Hospitals' credit woes will continue to constrain providers' operations. Reports from all of the major credit rating agencies, including Standard & Poors, Fitch, Best and Moody's, have all negatively opined about the state of hospital finance for 2009. Fitch and Moody's downgraded the nonprofit hospital sector to negative. The American Hospital Association's survey in November 2008 found that 1 in 2 hospitals was considering or actually postponing capital expenditures. This would include renovations, increasing capacity, and other capital programs. The cost of borrowing money has made it nigh impossible to find hospital financing for improvements.

This too would seem to qualify for “straight line” prognostication. Hospitals are closing, layoffs have ensued, and as we and A.P. noted earlier this week, industry consultants predict “More closings and mergers are on the way.”

The A.P further noted that

Hospitals, which employ 5 million people, are reporting that donations and investment returns are down, patient visits are flat and profitable diagnostic procedures and elective surgeries are declining as people with inadequate insurance delay care. But those patients are turning up later at ERs, seriously ill...

Ms. Kahn also points out that among the ill, prescriptions are not being filled.

Manhattan Research found that 40 million Americans didn't fill prescriptions due to cost constraints by the fourth quarter of 2008. This number could increase in 2009, leading to worsening health outcomes. In particular, scripts for mental health conditions weren't filled as frequently as Rx's for other types of conditions.

All in all, the equation itself would seem to not require Daniel; if left unchecked, only the particulars of the miserable sum remain unknown.

There are a few bright spots in this analysis, however, Ms. Kahn points out that

Clinical effectiveness is becoming part of the larger analysis for spending scarce resources. There's no better time than a recession to bring this concept into play on a mass scale.

She's right, when times are tough, people have a tendency to want specifics when they get the bill-- and to know that what they paid for worked.

And there is this larger point,

Policymakers and influentials have come to understand that health is integrated into the larger macroeconomy. It is a welcome sign that those who will be at the helm of the new economy on Team Obama recognize the intimate relationship between health and the American economy. Peter Orszag, just out of the Congressional Budget Office and soon to lead the Office of Management and Budget, has spoken publicly about health care costs and the GDP over the past eighteen months. His sober and smart observations give me comfort insofar as he will be playing a key role in reshaping the broken U.S. Economy.

As we ring in the New Year and begin to contemplate the inter-relatedness of the macro-economy and commence what may well be the “fall into a 'death spiral' of unemployment, disfiguring ailments, and a tendency to be underemployed due to such ailments,” it might be worth a moment to consider the often sudden and unexpected nature of both job loss and catastrophic illness-- and John Donne.

The bell which John Donne refers to in his most famous quote is "the passing bell," tolled by the Church for those who are dying. As Donne lay very ill in his bed and heard this bell being tolled, he wondered if he were, in fact, sicker than he thought. And that perhaps that bell was being rung for him personally. He came to realize, however, that whether that was the case or not was largely irrelevant because

"No man is an island, entire of itself; every man is a piece of the continent, a part of the main. If a clod be washed away by the sea, Europe is the less, as well as if a promontory were, as well as if a manor of thy friend’s or of thine own were. Any man’s death diminishes me, because I am involved in mankind; and therefore never send to know for whom the bell tolls; it tolls for thee."

A Shortage of General Surgeons, Rural Hospitals Must Compete

2009-01-01T19:22:00.000-08:00

The Washington Post ran a story today, "Shortage of General Surgeons Endangers Rural Americans," which, as the title suggests, reported on the shortage of general surgeons. The story describes the sort “jack of all (surgical) trades” existence of a general surgeon and reports that “In 1980, 945 newly trained general surgeons were certified in the United States. In 2008, the number was essentially the same -- 972 -- even though the population has increased by 79 million. In 1994, there were 7.1 general surgeons per 100,000 people. Today there are five per 100,000.”

WaPo reports

For the one-quarter of Americans who live outside metropolitan areas, general surgeons are the essential ingredient that keeps full-service medical care within reach. Without general surgeons as backup, family practitioners can't deliver babies, emergency rooms can't take trauma cases, and most internists won't do complicated procedures such as colonoscopies. But various forces -- educational, medical and sociological -- are making them an endangered species.

Many young physicians are opting for non-surgical specialties, such as radiology or cardiology, in which they can earn as much money as a surgeon with less grueling and unpredictable hours. Many young surgeons, in turn, choose to concentrate in fields such as transplant surgery or plastic surgery, in which they can make more money and don't have to face (usually alone) the wide range of problems a generalist faces.

Importantly, the article discusses efforts to recruit new general surgeons and relative compensation incentives; it recounts how 57 year old Bob Kuhl, who has spent his entire career as a general surgeon in Creston Iowa, threatened to quit 18 months ago because “When the hospital hired Kuhl's younger partner, it guaranteed him a salary greater than the $185,000 the older man had been making.” The hospital, however, is said to have made arrangements to assure Kuhl “a higher income, too.”

It is perhaps important to note that the recruitment of general surgeons is said to compete with such lucrative non-surgical specialties such as radiology. As posted recently, the median compensation for a not neural, non-interventionist radiologist is $420,858. As noted in another recent post, this level of radiologist compensation has been ably attributed on Ezra Klein's blog to advances in technology and antiquated fee for service structures:

Now because of the explosion of imaging, and practice efficiency, these guys are reading 3x the images they did 15 years, and making three times as much.

The post on Mr. Klein's blog assures us that “Eventually, payors and Medicare figures things out and start putting pressures on rates. But it takes a while.” Unfortunately, it seems that as hospitals and other medical providers must compete against such "not yet figured out" largesse for the services of newly minted physicians, the damage has been done-- and a benchmark has been set.

Genes, Drugs & Tests

2008-12-31T11:36:00.000-08:00

Merril Goozner of Gooznews has written an excellent summary and commentary on what he refers to as the NY Times' “'mostly excellent' story on 'personalized' drug therapy.” The “mostly excellent” story appeared on the front page of the Times yesterday. Goozner offers this summation

1. Most drugs only work on a subset of patients who take them.

2. Gene variations may determine some of that variable response.

3. DNA tests to determine those variations are poorly regulated by the Food and Drug Administration; many may be inaccurate.

4. Using knowledge about varying drug responses based on genetic differences will undermine the drug industry's profit model, which usually depends on selling to everyone who has a particular disease.

Goozner also offers “two minor complaints” about the Times story. Both Goozner's commentary and the NY Times story itself are well worth a read. Links below.

Gooznews, DNA-Driven Medicine
NY Times, Patient's DNA May Be Signal to Tailor Medication

Model Wanted

2008-12-30T14:00:00.000-08:00

The NY Times reports that according to Dr. Atul Gawande, a surgeon at Brigham and Women’s Hospital in Boston and an associate professor at the Harvard School of Public Health, “there's a drastic decline in the number of geriatricians — and just 300 new ones are being trained each year — yet the number of people over 65 will double in the next 20 years. Those who work in geriatric care are among the worst paid in the health care system.”

That last statement, as shown in a recent post regarding physician compensation, is backed up by numbers. According to the American Group Medical Association (AMGA) the median compensation for a geriatrician is $179,344. The median compensation for a podiatrist is $180,080. These AMGA numbers have been approved by the Center for Medicare and Medicaid Services (CMS) for use in CMS related calculations.

Dr. Gawande “and others see a pressing need for new approaches to keep aging patients as healthy as possible and living independently as long as possible.” The Times reports that “Dr. Chad Boult, a geriatrician at Johns Hopkins School of Public Health in Baltimore, says the goal should be care that is well coordinated, and patients and families who are involved in and educated about the care plan.”

To that end, Dr. Boult is participating in the testing of a “team approach” which is somewhat reminiscent of the subject of a recent post, Alaska's Southcentral Foundation's “medical home” approach. Southcentral's “comprehensive” health care strategy has shown some promising results. The Times reports that

Dr. Boult is involved in testing a team approach, in which nurses trained in geriatrics are helping physicians in the Baltimore-Washington area provide coordinated care for 50 or 60 of their highest-risk older patients. The nurses go to patients’ homes, develop comprehensive care plans, help the patients in self-monitoring, help them overcome obstacles to self-care and connect patients and their families to community agencies.

According to geriatrics experts, social workers trained in the problems of the elderly can also participate by performing home assessments, for example, to prevent falls and costly, disabling fractures. They can help overcome barriers to good nutrition, and they can help make the community connections for assistance with the activities of daily living, like shopping.

Dr. Boult said that “The Baltimore team project has already demonstrated an improvement in the quality of care that ailing elderly patients receive, and by keeping patients out of the hospital, he expects it will save money for insurers like Medicare.

The NYTimes also reports, however, that the current fee for services compensation scheme has not yet been structured so as to provide monetary incentives for such prophylactic care. The Times states: “While current insurance systems pay many thousands of dollars for hospital-based care, they cover only a fraction of the far less expensive care delivered by doctors and nurses that can keep patients out of the hospital,” and that experts say “a new model of care is needed.”
Read full article here.

Electronic Medical Records, What They Look Like, What They Can Do

2008-12-28T20:19:00.000-08:00

The Obama administration has stated that the institution of electronic medical records will play a role in its forthcoming efforts to reform health care in the United States. According to the NY Times, “During the campaign, Mr. Obama vowed to spend $50 billion over five years to spur the adoption of electronic health records and said recently that a program to accelerate their use would be part of his stimulus package." Max Baucus, Senate Finance Committee Chairman, has stated that the stimulus package will likely include grants and tax breaks for doctors and hospitals to invest in health IT. The Washington Post has reported that its sources "cited $10 billion as a potential figure for health IT in the stimulus package." In addition, CMS has modified its Medicaid and Medicare reimbursement payments to include a 2% incentive to encourage hospitals to upgrade their records systems with health IT and a 2% penalty within two years for hospitals that do not adopt health IT.

The NY Times has run an article featuring the use, efficacy, and potential of electronic medical records. The article also features an example of what an electronic medical record looks like.

For a number of reasons, the article is well worth a read. Find it here.

Hospitals Face Losses, Some Close

2008-12-28T13:16:00.000-08:00

The Associated Press reports that hospitals are beginning to buckle under the weight of “tight credit, higher borrowing costs, investment losses and a jump in patients - many recently unemployed or otherwise underinsured - not paying their bills.” In response, there have been “more hospital closings...as well as layoffs, other cost-cutting and scrapping or delaying building projects.”

Tha A.P notes that “In November, Moody's Investors Service changed its 12- to 18-month outlook from 'stable' to 'negative' for nonprofit and for-profit hospitals, citing 'prospects of a protracted recession,' bad debt and the credit crunch.”

The article also notes that “many cash-strapped states already have begun cutting payments for poor people covered by Medicaid.” Tim Goldfarb, CEO of Gainesville-based Shands Healthcare--which just announced that it would be closing a hospital--said that “Florida started cutting Medicaid reimbursements two years ago, when its economy started to slow,” and that “he fears another huge cut next year.” Mr. Golfarb also reported that “his system, Florida's second-largest provider of charity care, this year has seen bad debt jump 20 percent from patients with no insurance.” Read full story here.

WaPo on Medicaid Cutbacks

2008-12-26T14:27:00.000-08:00

Three years ago our own John Jacobi warned of "Dangerous Times for Medicaid." At the time the main threats were ideologically driven; now state budget cuts are doing the damage. As Amy Goldstein notes in the WaPo, the situation is critical:

With revenue falling at the same time that more people are losing their jobs and private health coverage, states already have pared their programs and many are looking at deeper cuts for the coming year. Already, 19 states -- including Maryland and Virginia -- and the District of Columbia have lowered payments to hospitals and nursing homes, eliminated coverage for some treatments, and forced some recipients out of the insurance program completely.

It's one more sad example of the procyclical nature of federalism here--states have less tax revenue during recessions, when need is greatest. No one should be surprised if more and more of the jobless uninsured, denied even basic dental care due to such cuts, fall into a "death spiral" of unemployment, disfiguring ailments, and a tendency to be underemployed due to such ailments.

PS: The WaPo has a nice Medicaid aggregation page.

Clinic Expansion Under Bush Thought Likely to Continue Under Obama

2008-12-26T13:23:00.000-08:00

The NY Times reports that “President Bush leaves office with a health care legacy in bricks and mortar: he has doubled federal financing for community health centers, enabling the creation or expansion of 1,297 clinics in medically underserved areas.”

The article notes that:

“As a crucial component of the health safety net, they [community health centers] are lauded as a cost-effective alternative to hospital emergency rooms, where the uninsured and underinsured often seek care,” and that “Studies have generally shown that the health centers — which must be governed by patient-dominated boards — are effective at reducing racial and ethnic disparities in medical treatment and save substantial sums by keeping patients out of hospitals. Their trade association estimates that they save the health care system $17.6 billion a year, and that an equivalent amount could be saved if avoidable emergency room visits were diverted to clinics.”

As an example, the Times article cited Nashville's United Neighborhood Health Services, a recipient of increased funding which has expanded more than two-fold in the last 8 years. The Times notes that “One of the group’s recent grants helped open the Southside Family Clinic, which moved last year from a pair of public housing apartments to a gleaming new building on a once derelict corner.” A 68 year old patient of that clinic who had just received breathing treatments, “said she would have sought care for her bronchitis in a hospital emergency room were it not for the new clinic. Instead, she took a short drive, waited 15 minutes without an appointment and left without paying a dime; the clinic would bill her later for her Medicare co-payment of $18.88.”

The article also states that “Despite the clinics’ unprecedented growth, wide swaths of the country remain without access to affordable primary care. The recession has only magnified the need as hundreds of thousands of Americans have lost their employer-sponsored health insurance along with their jobs.”

Widespread Support for Community Health Centers
The Times notes that “In response, Democrats on Capitol Hill are proposing even more significant increases, making the centers a likely feature of any health care deal struck by Congress and the Obama administration.”

In August, President-elect Obama sponsored a bill in the Senate “that would quadruple federal spending on the program — to $8 billion from $2.1 billion — and increase incentives for medical students to choose primary care. His wife, Michelle, worked closely with health centers in Chicago as vice president for community and external relations at the University of Chicago Medical Center.”

In his recent book on health care reform, HHS secretary Tom Daschle referred to the health centers as “godsends.” The Times article also notes that the federal program “was first championed by Senator Edward M. Kennedy” and “has earned considerable bipartisan support.”

Physician Compensation, Subsidies and Service Requirements
The article notes that with United Neighborhood Health Services starting pay for doctors is $120,000. “Because of a nationwide shortage of primary care physicians, the clinics rely on federal programs like the National Health Service Corps that entice medical students with grants and loan write-offs in exchange for agreements to practice as generalists in underserved areas. Of the 16 doctors working for United Neighborhood, seven are current or former participants.”

Follow-up Care Lacking
Although widely lauded as a viable solution to Primary Care medical delivery, the article notes that follow-up for more serious conditions can be problematic.

“A deeper frustration for health centers concerns their difficulty in securing follow-up appointments with specialists for patients who are uninsured or have Medicaid. All too often, said Ms. Bufwack [Chief Executive, United Neighborhood Health Services], medical care ends at the clinic door, reinforcing the need to expand both primary care and health insurance coverage. 'That’s when our doctors feel they’re practicing third world medicine,' she said. 'You will die if you have cancer or a heart condition or bad asthma or horrible diabetes. If you need a specialist and specialty tests and specialty meds and specialty surgery, those things are totally out of your reach.'”

Read full NYT article here. Read WSJ Health Blog report here.

Chairman Of the House Ways and Means Committee's Health Panel Refers to Medical Insurers as “The General Motors of Medical Care Delivery”

2008-12-24T08:05:00.000-08:00

In an interview with the Wall St. Journal, Rep. Pete Stark (D-Ca), Chairman of the House Ways and Means Committee's Health Panel, referred to medical insurers as “the General Motors of medical care delivery,” saying that he would not negotiate with insurance companies on health-care overhaul, and that the industry has “been trying to destroy Medicare for the last eight or ten years.” Read full article here. Read WSJ Health Blog commentary here.

Physician Compensation II

2008-12-23T23:27:00.000-08:00

Yesterday’s post displayed recent Bureau of Labor Statistic figures concerning physician compensation, and offered a link to recent median physician compensation data approved for use by Centers for Medicare and Medicaid Services (CMS) for calculations regarding direct graduate medical education under 42 CFR 413.78(f). The producer of this data, AMGA, also offers an interactive physician compensation survey which shows “average” and “starting” compensation for various specialties. A click on the arrow underneath “average” will sort from lowest to highest.

Here below is a list of a few of the CMS approved median physician compensation figures for a number of different specialties. The numbers are taken from the 2008 report.

The median compensation for a practitioner:

Pediatric & Adolescent, Internal 161,444
Pediatric & Adolescent, Infect. Disease 174,154
Family Medicine, w/out Obstetrics 176,280
Family Med., w/out Obst., Branch* 190,182
Geriatrics 179,344
Podiatry: 180,080
Transplant Surgery, Kidney 368,750
Dermatology, Branch* 301,111
Dermatology, Mohs 423,848
Not neural, Non-Interventionist, Radiology 420,858
Mammography 540,028
Orthopedic Surgery, Spine 611,670

*Branch is defined by AMGA as: These specialties have the same basic definition as the main specialty. These physicians located in small satellite or branch offices at least five miles from the main campus. The branch office practices primarily as its own separate entity, and often has different compensation and/or performance expectations than its main campus colleagues, there would be no teaching responsibilities at these locations.

With these numbers, over the course of ten career years, if calculated at a constant rate without regard to future increases in compensation, the median paid “Family Doctor, Branch” will have earned $1,900,182. During those same static ten years, a “Mammographer” will have earned $5,400,280. If the Family Doctor were to consult with the Mammographer at the end of those ten years, she would be doing so with someone who had made $3,500,098 more than she—nearly 3 times as much. If that same Family Doctor were to then consult with someone from the lowest paid of the three categories of Radiologist, Not neural, Non-Interventionist, she would be doing so with someone who had made $4,208,580 during that time—which would be $2,308,398 more than she--or more than twice as much.

Perhaps by way of consolation for the PCP, the Geriatrics specialist and the Pediatric Infectious Disease specialist would have fared worse, and even the Kidney transplant specialist who consults with the radiologist would be speaking with someone who had made a half of a million dollars more than he did.

But perhaps it is not consolation enough; the AMA has reported that the nation faces a shortage of 35,000 to 40,000 Primary Care Physicians.

Physician Compensation

2008-12-22T22:53:00.000-08:00

The Bureau of Labor Statistics, U.S Department of Labor, Occupational Outlook Handbook, 2008-09 Edition, publishes the data shown immediately below regarding physician compensation. The BLS report lists Primary Care Physicians under “Family practice.” The Handbook states:

.
Total compensation for physicians reflects the amount reported as direct compensation for tax purposes, plus all voluntary salary reductions. Salary, bonus and incentive payments, research stipends, honoraria, and distribution of profits were included in total compensation.

Specialty	Less than two years in specialty	Over one year in specialty
Anesthesiology	$259,948	$321,686
Surgery: General	228,839	282,504
Obstetrics/gynecology: General	203,270	247,348
Psychiatry: General	173,922	180,000
Internal medicine: General	141,912	166,420
Pediatrics: General	132,953	161,331
Family practice (without obstetrics)	137,119	156,010
Footnotes: (NOTE) Source: Medical Group Management Association, Physician Compensation and Production Report, 2005.

Footnotes:
(NOTE) Source: Medical Group Management Association, Physician Compensation and Production Report, 2005.
Self-employed physicians—those who own or are part owners of their medical practice—generally have higher median incomes than salaried physicians. Earnings vary according to number of years in practice, geographic region, hours worked, skill, personality, and professional reputation. Self-employed physicians and surgeons must provide for their own health insurance and retirement.

The American Medical Group Association (AMGA) offers a 2008 Physician Compensation Survey which is more comprehensive than the BLS data and has been approved for use in conjunction with the Centers for Medicare and Medicaid (CMS) regulations at 42 CFR 413.78(f) pertaining to calculations of physician pay (median) in reference to Graduate Medical Education. It features a wide range of specialist compensation data.

Will Specialist Pay Be a Target of Health Care Reform?

2008-12-22T14:11:00.000-08:00

Health policymakers are well aware of the pay differential between primary care and specialist physicians. Given this disparity, it's important to recognize how the divergence arose. To the extent that training programs are limited for each specialty, that's a natural barrier to entry that is hard to remedy without a great deal of investment in specialist education--or broadening of medical education generally. However, Ezra Klein quotes a comment on his blog which suggests a more artificial basis for specialist prosperity:

Specialist salaries aren't just determined-- they are based on volume of procedures and payment rates for their procedures. The "best" specialties are fluid, as are the best salaries (with exceptions, like Neurosurgery) primarily because physician payment reform is not keeping up with the changing practice of medicine.

Specialties typically have a couple of bread-and-butter procedures that change based on changes in technology, diagnosis and clinical practice. Typically, these bread-and-butter procedures start small, are paid well per procedure, and physician groups figure out out they do a ton of those procedures to drive salary.

Opthamologists used to make a lot more money than they do now. Why? Because cataract surge[ons] used to get paid a lot more [two to five times more per case than they is paid presently]. These docs figured out how to be more efficient so they could do more cases per day, and it takes a while for payors to say-- you're doing one every 20 minutes instead of every 90? Then we're cutting back fees accordingly. In the meantime, Ophthalmologists rake it in and are a "top" specialty for medical students.

Eventually, payors and Medicare figures things out and start putting pressures on rates. But it takes a while. The same story is now true for Gastroenterologists, Radiologists and Dermatologists. Radiology was one of the easiest fields to get into 15 years ago. You work in the dark, have little contact with patients, its frankly a weird field for people who went into medicine looking to help people. You used to have a couple of nerdy introvert types who liked being in the dark that chose the field. Now because of the explosion of imaging, and practice efficiency, these guys are reading 3x the images they did 15 years, and making three times as much.

Payments will eventually come down for them too. But in the meantime, Radiology is now one of the hottest fields for medical students. Fixing this perverse dynamic is a key question. PS: General surgeons are the wrong specialty to pick on. What specialty has had vacant spot in the residency matching process the last few years? General surgery. Its a pretty tough life-- in terms of lifestyle impact, they deserve the $75-100K more than the P[rimary Care Physicians]. It's the Radiologists and Dermatologists that have PCP hours but are making 300-400K that are the problem.

This strikes me as a step toward the truth, but it raises as many questions as it answers. After following Medicare's struggle from 2005 to 2008 to update rates paid for out-patient procedures performed at ambulatory surgical centers, I can attest to the slowness of federal updating. (There may have been a lag from 1990 to 2008 if I am reading the rulemaking documents correctly there.) Meanwhile, private insurers may not have the purchasing power needed for foist an adjustment on thriving specialists. If specialists are coordinated or powerful enough, they can refuse to be part of a network--and that refusal can be more harmful to the network than to the specialists.

But one of the key questions here is how did the specialists increase the volume of the procedures they were able to complete? We can sketch two scenarios schematically. In one, exogenous technological change simply makes it easier to do more procedures more quickly. In another, innovation by specialists themselves makes their practices more efficient. It seems that payment systems ought to reward the latter type of efficiency gains.

Pondering the difficulty of distinguishing between these two types of efficiency gains may make one long for a more normal market determination of the price of physicians here. However, the idea of a "just wage" has to enter into policymaking. Pay should be reasonably correlated with the amount of work the physician puts in each week, the value of the services rendered, and the investment of time and money the physician put into her or his training. But when inequality is pronounced and a large proportion of citizens is dependent on public aid for their care (as in virtually every developed country in the world, including the US), the pay of physicians must reflect that fact as well.

I predict that the specialist pay conundrum will only be solved by carrots and sticks that lead to compression of physician incomes and life chances generally: greatly increased educational aid to physicians (so that they can be debt free at the end of their schooling), balanced by lifelong obligations to either take on a percentage of Medicare, Medicaid, and SCHIP patients, or pay others to take on their share.

Doctors' Debts Are Clear; What About the Subsidies?

2008-12-21T13:05:00.000-08:00

Today's NYT story "New Doctors Awash in Debt" paints a grim picture for physicians. It graphs ever-increasing educational costs and salaries that fail to keep pace--at least in terms of percent-increase per year. But there are a few parts of the graph that need to be better explained. First, what exactly is the median compensation for specialists and primary care physicians (PCPs)? More importantly, what are the current subsidies that the federal government provides to medical education? Consider this passage from an article in the Chronicle of Higher Education by Katherine Mangan on an apparent physician shortage:

A larger number of graduating physicians also does not guarantee that the physician work force will be appropriately distributed among specialties. In the future, the nation is likely to need more geriatricians and primary-care physicians, for instance, but may need a smaller proportion of surgeons or other specialists. . . . Jonathan P. Weiner, a professor of health policy and management at the Johns Hopkins University[, says that] [t]axpayers end up paying $500,000 to $1-million to train each new doctor through programs such as Medicare and subsidies to state medical schools. . . .

Admittedly, Weiner's estimate is for new doctor education, not present programs. But it highlights a dimension of current health policy debates that few are discussing presently: what is the stake of taxpayers in the current system? As I explain at the end of this post, the challenge for health reformers may be getting pols to recognize the public's already enormous investment in health care--and mustering the courage to use that leverage to improve care.

Doctors and Debt

2008-12-20T11:02:00.000-08:00

An article in the NY Times reports that The New England Journal of Medicine has said that “Almost one-quarter of U.S. medical students now graduate from medical school with $200,000 or more in debt, an expense that limits entry to the profession.”

A graph which tracks various educational costs and doctor compensation in relation to the CPI over the last 10 years accompanies the article.

Of particular note, Over the last 10 years:

The CPI has risen slightly more than 30%

The cost of:
Public 4-year undergraduate tuition has risen over 100%
Private 4-year undergraduate tuition has risen over 70%

Public “in state” med school tuition has risen over 100%
Public “out of state” med school tuition has risen 70%
Private “in state” med school tuition has risen 50%
Private “out of state” med school tuition has risen roughly 45%

The median compensation for:
All medical specialists has risen roughly 42.5%
Primary care physicians has risen roughly 30%

The median compensation for primary care physicians has risen slightly less than the CPI.

In a recent post, we noted that the AMA has predicted a future shortage of 35,000 to 40,000 primary care physicians. See full NY Times article and graph here.

Waxman Cedes Lead Role in Health Reform Legislation to Dingell, Pallone Spared

2008-12-19T18:41:00.000-08:00

After ousting Rep. John Dingell (D-Mich.) from the Energy and Commerce Committee Chair, Rep. Henry Waxman (D-Calif.) has entered into a power-sharing arrangement with him. The Hill.com reports that “Waxman will cede to Dingell the lead role in drafting health reform legislation.... In addition, Dingell will retain a sizable staff, remain an ex officio member of each of the panel's subcommittees and become "chairman emeritus" of the full committee.”

According to The Hill, “Dingell reportedly was weighing a bid to chair the panel's Health Subcommittee, a post currently held by Rep. Frank Pallone Jr. (D-N.J.).While Dingell won't get that formal title, he seems to have gotten much more: He will be the lead sponsor of the committee's share of the House's health reform bill and a lead negotiator with other House members, the Senate and the White House.” Read the full story and the joint press release here.

The Congressional Budget Office Puts Numbers On It

2008-12-19T15:25:00.000-08:00

Articles in both the NY Times and Kaiser.org explain the recently published CBO findings regarding the financial impact of various health reform proposals and parts thereof. The CBO issued two reports: "Key Issues in Analyzing Major Health Insurance Proposals," and "Budget Options, Volume 1: Health Care." Both CBO reports may be accessed through the hyperlinks above which include the reports, charts, and a CBO explanatory blog. The reports may also be accessed through the “Resources” section of this blog.

According to the CBO blog, “The first document, Key Issues in Analyzing Major Health Insurance Proposals, focuses on large-scale proposals, provides extensive background information, and explains CBO’s analysis of numerous issues that could arise should the Congress seek to enact major changes in the health insurance system.”

“The second document, Budget Options, Volume 1: Health Care, is much more specific and focused on discrete changes. It presents 115 discrete options, encompassing a broad array of issues related to the financing and delivery of health care. (Volume 2 of Budget Options, which will address policy options in other areas of the federal budget, will be issued in 2009.) The health care volume includes some options that would reduce spending and others that would increase it, as well as changes that would reduce or raise revenues.”

Health Benefit Costs Over Time

2008-12-17T21:04:00.000-08:00

The U.S Bureau of Labor Statistics (BLS) offers a report: “Program Perspectives, On Health Benefits, recent data on employers’ costs and employees’ access.” The report (which also appears in the “Resources” section of this weblog) is user friendly and well worth the moment or two it would take to peruse it. It offers some interesting information on both relative cost and access. Of particular note, however, is “Chart 1,” which is a graphic representation of the “Employment Cost Index, private industry, 12 month percent change, health benefits and total benefits, 1982-2008.” Although BLS offers a caveat on the numbers, it cuts both ways.

BLS characterizes the data thus: “Over the last 25 years, health benefit costs for employers has moved in fits and starts.” The chart shows rapid accelerations in cost accompanied by periods of deceleration. In March1983 the cost of health benefits spiked 23.5% over the year prior; a similar (but not as large) rise may be seen from mid-1987 to mid-1988, and a protracted ascent may be seen from 1996 to 2002. BLS juxtaposes the health benefit costs with the costs of "total benefits;" in comparison, the movement of "health benefit costs" is precipitous.

BLS does not offer an explanation. It would be interesting to see charts which juxtaposed the cost of health benefits during this time period with the Inflation Rate, Interest Rates, Avg. ROI in the Stock and Bond Markets--and of course, the reported profit of the major commercial Health Insurance providers.

Primary Physician Shortage Predicted

2008-12-17T15:22:00.000-08:00

Students at the Harvard Business School’s Economic Policy Review point out in a recent article that “A universal health care system may provide insurance to the millions of uninsured, but it will not provide doctors for the uninsured.”

The article states: “The aging US population is driving a need for an increase in primary care professionals; unfortunately, the number of primary care professionals has been declining at dramatic rates over the past decade. The American Medical Association (AMA) predicted a shortage of 35,000 to 40,000 primary care physicians at its 2008 annual meeting.” Read full Economic Policy Review article here.

Alaskan "Medical Home" Approach

2008-12-17T14:57:00.000-08:00

A recent piece in the Anchorage Daily News highlights some health care successes worth noting. Southcentral Foundation serves the medical and other needs of Alaska Natives. Its network includes a primary care clinic and some specialty services and it jointly runs the Alaska Native Medical Center with the Alaska Native Tribal Health Consortium.

Southcentral's approach is one version of the "medical home" model that is said to have piqued the interest of members of the Obama administration. It is a “comprehensive” approach to health care which distinguishes acute and traumatic maladies from chronic conditions. The Southcentral system is premised on the belief that the “mechanical-repair model” (it’s broke, let’s fix it with a procedure and/or medication) “is great if you are in an accident and need trauma care….But the vast majority of health care deals with chronic conditions and the fallout from behavioral choices people make.”

For these chronic issues, Southcentral offers a team which “includes a doctor, nurse, and case manager, as well as access to a nutritionist, traditional healers and a behavioral counselor,” and “follow-up services – pharmacy for drugs, labs for testing – are right on the same campus, making access easy.” Southcentral's Karen McIntire has stated that “70 percent of primary care does not require a doctor,” and that “In our system, who you see depends on what you need." The Anchorage Daily News reports that “With this comprehensive approach, Southcentral reports major changes for the better. Writing in the January 2008 issue of Family Practice Management, CEO Gottlieb reported that emergency room and urgent care visits have dropped by more than 40 percent, while use of specialists fell 50 percent and the number of hospital days shrank by 30 percent.” Read full story here.

Lack of Consistent Medicaid Coverage May Cost More

2008-12-17T08:53:00.000-08:00

The NY Times reports that a five-year retrospective study of almost 5 million California residents has found that “People who have spotty Medicaid coverage are more than three times likelier than those who maintain continuous coverage to be hospitalized for an illness that could have been managed outside the hospital with doctors’ visits and medication." Read more here.

Study Shows Vaccine Cash Incentives Work Too Well In Some Countries

2008-12-16T20:34:00.000-08:00

USA Today reports that in a recent study by the University of Washington's Institute for Health Metrics and Evaluation, “Researchers found that many countries dramatically inflated the number of children said to have received diphtheria, tetanus and pertussis vaccine, thus boosting the amount of money the governments received.”

The vaccination program, funded by the Global Alliance on Vaccines and Immunizations (GAVI), pays $20 for every new child who gets a shot. Pakistan is said to have claimed “in 1999 that more than 1.7 million children were newly vaccinated. It reaped more than $35 million in the bonus payments. Instead, household surveys found that just 250,000 children had gotten shots, justifying just $5 million in payments.”

The study’s lead author, Christopher Murray, stated that "The government of Niger is amazingly claiming 100% vaccine coverage. It doesn't take rocket science to realize there's a lot of over-reporting." USA Today reports that the study showed that “Overall, the countries reported 13.9 million newly vaccinated children, while surveys indicate that the actual number is closer to 7.4 million. At $20 per child, GAVI paid out $290 million, nearly double the $150 million that would have been justified.”

Christopher Murray “agreed” that GAVI “got a good health return on that money” and stated that "Overall, GAVI said it would pay $20 to immunize a child. They ended up paying $39. That's still a pretty good buy." Read full story here

e-Prescriptions Increase as Medicare Incentive is About to Take Effect

2008-12-16T08:59:00.000-08:00

The AP reports that in “December 2007, 35,000 doctors were writing at least some paperless prescriptions, according to SureScripts-RxHub, which tracks the drugstore network.
The 2008 count isn't finished yet, but SureScripts estimates that number has doubled to more than 70,000. Moreover, the volume of prescriptions filled electronically grew about 15 percent a month since August, faster than the 5 percent to 8 percent monthly increase seen earlier in the year — presumably as doctors geared up for the Medicare incentive.” Read more here.

LA Times on Daschle Plan & Strategy

2008-12-16T05:49:00.000-08:00

The Los Angeles Times looks at what a Tom Daschle plan might look like and how it would be implemented politically. Read story here.

Medicare for all?

2008-12-15T20:15:00.000-08:00

Two recent articles worth noting have asked the question above, and both have answered it “yes.” The writers are Saul Friedman, columnist for Newsday, and Dr. Oliver Fein, associate dean and professor of clinical medicine and public health at Weill Cornell Medical College in New York and president of Physicians for a National Health Program. Both men see expansion of the Medicare program as a viable solution to the nation’s health care ills. And they are not alone. Congress has before it a proposal for "Medicare for All" (HR676), introduced in February 2007 by Rep. John Conyers Jr., (D-Mich.). The bill is said to have (including Rep. Conyers) “94 co-sponsors…it also has the endorsement of most labor unions, thousands of doctors, nurses and health care professionals.” The Conyers proposal, also backed by the Physicians for a National Plan, would gradually provide Medicare for everyone who wants it and would pay a premium.

The plan seems to have received little mention in the media. According to Friedman, “It would absorb such programs as Medicaid, SCHIP and be paid for by taxes and premiums. It could relieve auto manufacturers and other businesses of paying for health insurance for employees and retirees. Its sponsors say it would save $300 billion a year in administrative costs, for it would deny insurance companies a role.”

And that may be the rub. Friedman states “Getting over that hurdle may be why HR 676 has gotten so little publicity, even from alleged friends of older people. There is no mention of it on the Web site of AARP, which earns $700 million a year in royalties on the sale of private health insurance it sponsors.” Read full column here.

In the Atlanta Journal Constitution, Dr. Fein writes:

However well-intentioned, the Obama/Baucus/Kennedy approaches share a fatal flaw: they preserve a central role for the private health insurance industry.

To varying degrees, they would mandate that everyone buy private health insurance— the private insurance that is failing us today. Some of these plans offer a Medicare-like, public option that people could buy into, but experience with Medicare shows that the private plans refuse to compete on a level playing field. They cherry-pick healthier patients and insist on more than their share of payment.

Experience with mandate-based plans in Washington state (1993), Oregon (1992) and Massachusetts (1988 and today) shows that they simply don’t work, achieving neither universal health care nor cost containment.

As long as we rely on private health insurers, universal coverage will be unaffordable....
There is a cure, however. Eliminating the private insurance industry would save $400 billion annually in administrative costs, enough to ensure that everyone is covered and to eliminate all co-pays and deductibles.

At this critical juncture, a single-payer plan is the only medically, morally and fiscally responsible path to take. Read full column here.

Cato Institute: Medical Licensing is Ineffective and Inefficient, and Patients Would Be Better Served by Relying on Brand Recognition

2008-12-15T14:14:00.000-08:00

The National Center for Policy Analysis quotes from a recent Cato Institute report written by California State University economics professor and Cato Institute fellow, Shirley Svorny, to reach the headline conclusion that “Medical Licensing Impedes Quality, Affordability of Care.”

“Additionally, says Devon Herrick, a senior fellow with the National Center for Policy Analysis, restrictive medical licensure and numerous other needless regulations have kept physician care a cottage industry,” the article states. The article states that Ms. Svorny said “she approached the issue as an economist” and that “Patients are being misled by the license. If there were no licensing, they'd say, who is this guy? And we'd go to national recognition.”

In the Cato Institute Report, “Medical Licensing, an Obstacle to Affordable, Quality Care,” Ms. Svorny argues that “licensure not only fails to protect consumers from incompetent physicians, but, by raising barriers to entry, makes health care more expensive and less accessible.” Devon Herrick continues: “The accounting industry is an example of how medical licensure should work. For instance, a Certified Public Accountant is not exclusively licensed to practice; anyone can hang out a shingle advertising bookkeeping to the public. Yet accounting professionals seeking to prove their skills can obtain that certification to illustrate professional competence, and consumers are free to decide the level of accounting skills they are willing to pay for.”

Ms. Svorny further argues in her report that “Consumers would benefit were states to eliminate professional licensing in medicine and leave education, credentialing, and scope-of-practice decisions entirely to the private sector and the courts.”

Poll Shows Americans Not in Favor of Mandatory Health Insurance, But Do Want a Return on Taxpayer Funded Medical Innovation

2008-12-13T13:26:00.000-08:00

Marketwatch reports that a recent poll conducted by Consumer Watchdog shows that“Less than 15% of U.S. voters support, and 53% oppose, a proposal pushed by health insurers requiring every American to provide proof of private health insurance or face tax penalties or other fines.” A mandatory individual health insurance requirement is one of the provisions included in the recently unveiled AHIP health care reform proposal. Earlier in the week, in The American Spectator, Jeff Emanuel likened AHIP’s Proposal to an automobile manufacturer bailout which required every American to buy a car. See Health Reform Watch post here.

Marketwatch reports that the poll also found that “by just under a two-to-one margin voters favor requiring a return on taxpayer-funded research that leads to new medical treatments or prescription drugs.”

Marketwatch noted that “The issue is particularly important as President-elect Obama is proposing doubling research funding from the National Institutes of Health. He is also expected to end the Bush Administration's ban on federal fund of most embryonic stem cell research.” Read full article here.

Merck to Enter “Generic Biotech” Market; 20% Cut in Drug Prices Paid by Medicare Said to Equal 5% Less Profit for Biggest Drug Firms

2008-12-13T12:28:00.000-08:00

In an article dealing with numerous facets of the state of the pharmaceutical industry and Merck in particular, The Economist stated that Merck has announced a “bold $1.5 billion plan to enter the nascent market for “biosimilars,” which are the biotech equivalents of generics….The reason to think Merck may succeed, argues Tim Anderson of Sanford Bernstein, a research firm, is that it has found a way to make biosimilars by culturing them inside yeast cells. This could be much cheaper and more reliable than the usual method, using mammalian cells.”In attempting to gauge the effect of potential governmental price bargaining with drug manufacturers as part of prospective health care reform initiatives, The Economist reports that:

“The more likely outcome is that government health schemes will start demanding discounts from drugs firms, and will buy more generics. Dr Anderson has crunched the numbers, and he reckons this need not lead to disaster. He reckons that a 20% cut in drugs prices paid by Medicare, America’s health-care system for the old and disabled, will shave profits at the biggest drugs firms by a mere 5%.”It is, however, unclear whether the 5% number reflects only the impact of a 20% cut in Medicare pricing, or whether that number includes similar cuts in Medicaid pricing and any projected reverb impact wrought through similar price cuts sought by insurers. Read full article here.

AARP Survey: Impact of Economy on Health Care Behaviors

2008-12-12T22:28:00.000-08:00

“About one in five midlife and older adults have had their health negatively affected by the current economic downturn, and about one in six are not confident about being able to afford medical care next year, according to this October 2008 survey of adults age 45 and older.”

“When asked about 10 things they may have done because of the current economic situation, about half (51%) of respondents said they have taken a generic or over-the-counter medication instead of a prescription drug. About one-fifth said they have delayed seeing a doctor or other medical professional (22%), cut back on other expenses to be able to afford medical care (21%), or sought assistance in getting prescription drugs at lower cost (21%).” Read full story here.

First Steps; Web-based Medical Records?

2008-12-12T21:53:00.000-08:00

The Wall Street Journal Health Blog reports that the Democrats are at work trying to include some aspects of health reform into the economic stimulus package slated to be unveiled next month.

The plan is said to include help for the Medicaid program. The WSJ Health Blog also stated that “according to the Washington Post, there’s also talk of packing the stimulus package with provisions to retrain medical workers, bolster the State Children’s Health Insurance Program and expand Cobra."

Max Baucus, Senate Finance Committee Chairman, is said to have stated that the package will likely include grants and tax breaks for doctors and hospitals to invest in health IT. The Washington Post is said to have reported that it’s sources "cited $10 billion as a potential figure for health IT in the stimulus package." Read full story here.

In a related story, the Health Blog reported that the cousin of President George Bush, athenahealth CEO Jonathan Bush, has called for the use of a Web-based platform for health IT initiatives. Athenahealth currently provides a Web-based medical records platform for 17,000 customers. “Bush says. Software ‘isn’t the dominant approach in financial services or retail banking or anywhere else, and it shouldn’t be in health care.’” Read more here.

It’s Official, Daschle nominated to head HHS and new White House Office of Health Reform.

2008-12-11T16:23:00.000-08:00

In a press conference, President-elect Obama announced his choice of former Senate Majority Leader Tom Daschle to head both Health and Human Services (HHS) and the new White House Office of Health Reform. "As such he will be responsible not just for implementing our health care plan. He will also be the lead architect of that plan," Obama said. Jeanne Lambrew was picked to serve as deputy director of the White House office. She served as a health and economics adviser during the Clinton administration. Read full story here.

e-Health Care Reform, e-Inclusion?

2008-12-10T21:07:00.000-08:00

McClatchy Newspapers recently examined the Obama Web based initiatives and asked whether they are “real or smoke?”

In what has been hailed by many as a revolutionary concept in governance, the Obama team has requested input from The People—via the web. In addition to calls for personal stories of economic crisis, “concerns and hopes,” and a call for administration job applications, the Obama team has asked for suggestions to improve health care. The response is said thus far to be staggering, with emails virtually flooding the change.gov site. The People have spoken; the question is, McClatchey states, “is anybody listening?”

"‘We have an incredible group of volunteers who read through the essays with a goal of reading through all of them if possible," e-mailed Jen Psaki, an Obama transition press aide.’” Thus far, the McClatchey article states “A few submissions have been singled out on change.gov, including suggestions for health-care restructuring. They may not be yielding much new insight, however. While Daschle hailed all three in a YouTube video posted on change.gov as "fantastic ideas from the American public," two — preventive medicine and cost containment — have been major topics in the health-care debate for years. The third idea, a Peace Corps-like Health Service Corps, already appears elsewhere on change.gov as an Obama proposal.”

In addition, the article notes that “two of the three health-care ideas that Tom Daschle lauded from more than 3,700 responses came from the first of 59 pages of suggestions. The primary means of ordering the responses on the site is through a “thumbs up, thumbs down,” approval/disapproval system—with those responses which have garnered the greatest amounts of approval appearing first on the page. This “can lead to what Lillian Lee, a language-processing researcher, calls a ‘rich get richer’ bias.” The process is somewhat akin to the “google-graveyard.”

"High-ranked posts are put at the top of the page so that lower-ranked posts are never seen in order to be rated in the first place," explained Lee, who teaches computer science at Cornell University in Ithaca, N.Y.

In a final note, the article points out something that may well have warranted an entirely separate post: Not everyone uses the internet.

“According to a survey in May by the Pew Internet and American Life Project, 41 percent of non-Hispanic blacks don't use the Internet. Nor do 65 percent of people older than 65. A third of rural residents and more than half of Americans who never finished high school don't use the Internet either.”
Read full article here.

AHIP Plan Criticized in The American Spectator

2008-12-10T18:03:00.000-08:00

In a “Special Report,” Mandate Nation, Jeff Emanuel roundly criticized the AHIP Health Reform Plan released last week. Mr. Emanuel likened AHIP’s plan to an automobile manufacturer bailout which required every American to buy a car. He noted that the AHIP proposal includes “an enforceable individual coverage mandate,” and provision which calls for Congress “to legislate the cost of health care down by 30% over the next five years.”

Emanuel chided: “Imagine that: a "reform" plan, released by a service provider, that proposes that the government (a) require every American (all 300 million plus of them) to purchase what they're selling, often with taxpayer dollars, and (b) declare by law that those insurers must be charged less by providers and hospitals for the services their policyholders require.” Read the full article here.

Member of Obama’s campaign health care advisory committee cites private sector increase in computer-based health records systems

2008-12-10T17:33:00.000-08:00

Glen Tullman, CEO of Allscripts and a member of Obama’s campaign health care advisory committee, cited the need to cut costs and reduce the risk of medical errors as reasons for an increase in physician and hospitals switching to computer based health records. “According to Tullman, Allscripts, the largest U.S. provider of software to physicians, has seen a fivefold increase in the number of physicians who are using electronic prescribing technology.” Tullman also noted that CMS has modified its Medicaid and Medicare reimbursement payments to include a 2% incentive to encourage hospitals to upgrade their records systems with health IT and a 2% penalty within two years for hospitals that do not adopt health IT (Bloomberg, 12/9). Read more here.

2008-12-09T06:39:00.000-08:00

Ted Kennedy steps down from the Senate Judiciary Committee to focus on Health Care reform.
“As chairman of the Senate Health, Education, Labor and Pensions Committee, I expect to lead a very full agenda in the next Congress, including working with President Obama to guarantee affordable health care, at long last, for every American,” said Kennedy. Read more here.

Obama announces plan to include Medicaid and Health Information Technology in stimulus package. Set for January?
Although some “congressional sources have expressed skepticism” about the ability to pass legislation of such magnitude so quickly, “top economic advisers to Obama and congressional Democrats hope to complete work on the package in January to allow Obama to sign the legislation when he takes office on Jan. 20, 2009.”
One aspect of the proposal, computerizing medical records to coordinate efforts and avoid redundancies is said to enjoy “bipartisan support in Congress,” though privacy concerns have been a matter of contention. Read more here.

A Study which examined the hospital treatment for 78,254 heart attack victims shows a disparity in treatment and results for men and women with massive heart attacks.
The study showed a greater mortality rate for women with massive heart attacks, and a lesser likelihood for women to receive recommended medicines such as aspirin within the crucial 24 hour time frame. The study also showed that women were less likely to get treatment to restore blood flow, or that it wasn't given quickly enough. Read more here.

Partners Health: Better or Just Better Paid?

2008-01-03T21:42:00.000-08:00

Harvard Business School Professor Regina Herzlinger has long fought for "consumer-directed health care," claiming that "People can choose from 240 models and makes of cars pretty intelligently . . . .Why do we assume they can't do the same when it comes to their health?" A recent Boston Globe series on hospitals in her own backyard highlights some reasons why.

The Globe's fascinating series on the rise of Partners Health in Massachusetts tells a story of market forces inexorably driving up the cost of health care, without commensurate quality improvements. Threatened by declining insurer reimbursements in the 1990's, Mass General Hospital and the Brigham & Women's Hospital united to anchor Partners. Now they're in the driver's seat, demanding reimbursements up to 30% over what other hospitals receive for identical procedures. Their market share has steadily increased as well, allowing them to stockpile the resources necessary to enter into new markets and threaten the viability of cheaper community hospitals.

[A 31-year old named Dahl] lives less than 2 miles from Mount Auburn Hospital in Cambridge, but when she became pregnant with her first baby last year, she decided to go to a Boston teaching hospital to deliver. "I talked to women in the area who had babies in Boston," said Dahl, a self-described nervous patient who gave birth to son Henry by Cesarean section at the Brigham last November. "I also looked at the US News rankings for female care. The Brigham was rated very high."

State health officials have tried to encourage women like Dahl to reconsider their flight to Boston, pointing out in a 2003 study that community hospitals are generally just as reliable as teaching hospitals for normal births. In fact, they had a slightly lower complication rate - and they're a lot cheaper. Dahl's care cost $8,282.14 at the Brigham, while the cost at Mount Auburn would have been about $5,700, according to state insurance data.

In other words, brand power has a lot more to do with choices here than objective assessment of outcomes.

Admittedly, insured individuals may be so insulated from health care costs that they have little reason to sniff out the best deals. The private health insurance market is supposed to help here, acting as proxy and agent for the insured, but consider how Tufts was treated by its customers when it tried to bargain with Partners:

Partners' dominance became clear in 2000, when executives of Tufts Health Plan had the temerity to refuse Partners' demand for a substantial rate increase. Partners countered by declaring it would no longer accept Tufts insurance at its hospitals. Within days, as thousands of Tufts customers threatened to change insurance rather than lose the right to treatment at the two famous hospitals, Tufts gave in to Partners' demands. Since then, Partners has negotiated one big pay increase after another from insurance companies fearful of a similar humiliation.

Those reimbursement rate increases are not simply windfalls to Partners' highest-paid employees and shareholders. They are also serve as a warchests for Partners' expansion into the lucrative niches that now keep many community hospitals afloat. As Marc Roberts, a professor of political economy at the Harvard School of Public Health, says in one Globe piece, "By paying Partners more, you build up their war chest and then they build more and more and then they drive other people out of business . . . . This is a huge slow-motion train wreck for the Massachusetts healthcare system."

I've explored the dynamics of specialty hospitals elsewhere; suffice it to say, it's now become evident that certain procedures in hospitals serve to cross-subsidize other, less-profitable ones. A former chief of a hospital likely to be adversely affected by Partners' expansion puts it this way:

During an interview earlier this year at Caritas Norwood, Chessare passionately decried Partners' move into his neighborhood, arguing that the healthcare giant was triggering a medical arms race in which the rich get richer and the poor face extinction. Community hospitals are already doing much of the same work that Partners is offering and doing it more cheaply and, for the most part, just as well, he said. "It's cherry picking," Chessare said. "What are they going to do there? They're going to do high-end imaging. Why? Because you make money at it. And they're going to do ambulatory surgery. Why? Because you make money."

Partners officials said some of the ratings are based on untrustworthy data that should not be used for scoring. In general, they said, the statistical methods used to adjust for the sickness of the patients at different hospitals are not sophisticated enough to recognize how much more vulnerable their patients are. They also noted that even as governments are making more data public, many of the existing measures are controversial and often fairly crude.

"I think a consumer that relies on the cross-section of information that's out there and available to them, it's akin to being a cork floating in the ocean," said Dr. David F. Torchiana, head of the Massachusetts General Physicians Organization. "You'll be driven in random directions by the randomness of the information that you will obtain."

I've also questioned the utility of many "best doctors" survey and other data. Certainly we can do more to improve data collection and interpretation. But we also have to worry about rankings becoming a self-fulfilling prophecy, increasing the distance between top and bottom that they are meant merely to report. As the Globe notes, "the pay gap undermines less powerful hospitals, whose officials say that they steadily lose doctors to those that can pay more. . . . Partners' 6,000 physicians are paid 15 percent to 40 percent more than most other Massachusetts doctors, based on Blue Cross rates, while the company's community hospitals earn at least 10 percent more than their peers." Small initial differences can become self-reinforcing. What began as a difference largely rooted in perception may become one rooted in reality, if we can assume that the highest-paying entity can purchase the services of the most competent providers.

Joe Biden's Chief Economist, Jared Bernstein, has pointed out something fundamental about pricing in a market economy: it can be driven by power as much as by productivity. The story of Partners sheds disturbing light on the possibility of market-driven initiatives to significantly improve efficiency or quality in health care. Consumers appear bewitched by marquee brands which insurers are powerless to bargain with. Only state action in Massachusetts appears to be an effective check here, leading the Boston Globe to call for more equity in reimbursement generally:

One alternative is to shift from the private dealing between insurers and hospitals to a more transparent system of performance-based reimbursements. These would have to account for complicated medical procedures. Or the state could set an allowable range for the cost of each procedure.

Ideally, rate-setting would move toward a single payment system: a gallbladder removal would be reimbursed at the same rate by a private insurer, Medicaid, or Medicare. Currently, Medicare pays somewhat less than actual cost, Medicaid much less, and the insurers subsidize both programs. Ending this disparity would benefit the hospitals with disproportionate shares of Medicaid and Medicare patients. A saner rate-setting system would also pay more for primary care and less for the interventions by specialists that inflate overall costs and lure medical students away from basic care.

If this system could be implemented in a way that preserved incentives for innovation, it could be a vast improvement on the current high-stakes winner-takes-all atmosphere of hospital-doctor-insurer gamesmanship.