“We Knew the Coronavirus Was Coming, Yet We Failed”

NY Times: We Knew the Coronavirus Was Coming, Yet We Failed

“The vulnerabilities that Covid-19 has revealed were a predictable outgrowth of our market-based health care system.”

Here’s Why:

1. Ventilators. Operated as businesses, hospitals have zero incentive to stockpile.  A vast storeroom in the basement filled with ventilators that might be needed once in a generation or never?…They are unlikely to do so unless government requires them. We’ve long required ocean liners to have lifeboats and life preservers even though their operators hope to never hit an iceberg.

2. Testing has proved the persistent Achilles’ heel in the U.S. response…[Early on] With requirements for Food and Drug Administration approval expensive and cumbersome, developing a test was a business non-starter…In contrast, South Korea, with its national health system, engaged its private test manufacturers with a plan in January, promising them quick approval for a coronavirus test and the widespread use of it in nationally organized and financed testing.

3. Testing components and P.P.E.  …Conducting tests involves access to a number of components — kits, chemical reagents, swabs, personal protective equipment, sometimes custom cartridges for machines. Miss any one of those things and testing becomes impossible. It’s like trying to make bread with all the ingredients except yeast….Without a national system for such purchases in a crisis, we are essentially forcing hospitals and states to negotiate the price of water during a drought. (Alternatively, we could require all hospitals to have a 90-day supply of essential response items on hand, as Gov. Andrew Cuomo of New York has now done.)

4. Hospitals did not coordinate...In our market-based system, hospitals are primed to compete, not coordinate

5. The hospital rescue... [is needed] partly because they have delivered extraordinary treatment of Covid-19 (which doesn’t pay well) but also because they’ve had to cancel high-profit procedures like joint replacements and sophisticated scans to make room for this low-profit-margin illness…In a functioning health system, pandemic preparedness and response would be part of the expected job.

Whether regulated or run by the government, or motivated by new incentives, we need a system that responds more to illness and less to profits.

Related article: NY Times: How Health Insurers Can Be Heroes. Really.

“The industry is profiting from the pandemic. It needs to pay back by cutting premiums and co-payments, help private practices and finance more protection and care…A great paradox of this pandemic is that while Covid-19 is overwhelming the health care system, health care spending is down a whopping 18 percent. ”

Why Surprise Billing Still Exists

A piece of good news: —Doubletree Reveals Cookie Recipe

This blog does not receive any sponsorships.  That being said, my wife made a batch of these cookies and they are delicious!  My advice is to freeze half the batch and cook some later to avoid overconsumption.

A recent commentary (ECF Brown. NEJM 2020; 382: 1189-91) helps explain why surprise billing still exists despite bipartisan contempt.

Key points:

  • “An estimated 20% of U.S. emergency-department visits, 9% of inpatient admissions, and more than half of ambulance or air-ambulance transports involve an out-of-network provider.”
  • “Surprise medical billing…is more prevalent …in groups owned by certain private-equity investment companies.”
  • There are generally two approaches to solving the problem of surprise medical billing, either arbitration or using a payment benchmark, the former generally favors providers and the latter generally favors payers.
  • “Deep-pocketed private equity firms continue to oppose any legislation that cuts into their profits, as they increase their investments in physician practices…Nearly everyone else agrees that patients should be protected from surprise medical bills.”

My take (borrowed from the author): The outcome of the surprise medical billing issue “raises questions about both the role of private equity in health care and the ability of Congress to pass meaningful health care legislation.”

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Blood Mountain Trail


The Problem with Health Share Plans

Health Share Plans seem appropriate for an April Fools day –if you thought you had health insurance, you may be in for an unpleasant surprise.  The problem with ‘health share’ plans is they often do not provide adequate cost/benefit coverage for those who rely on them.

NY Times: California Cracks Down on Alternative Health Plans

An excerpt:

[California] State insurance regulators accused a ministry offering an alternative to traditional insurance of misleading consumers….

The plans, which have become increasingly popular, rely on pooling members’ contributions to cover their medical expenses, but they are not required to meet standards for traditional insurance plans…

More than one million Americans have joined such groups, attracted by prices that are far lower than the cost of traditional insurance policies, which must meet strict requirements established by the federal health care law, like guaranteed coverage for pre-existing conditions…

State regulators are questioning some of the ministries’ aggressive marketing tactics, saying some consumers were misled or may not understand the lack of comprehensive coverage in the case of a serious illness or conditions that the ministries may not be willing to cover.

From The Onion

NY Times: What’s Behind $urprise Billing

NY Times: Who’s Behind Your Outrageous Medical Bills?

This article describes how “surprise bills are just the latest in a decades-long war between players in the health care industry over who gets to keep the fortunes generated each year from patient illness — $3.6 trillion in 2018.”

Key points:

  • “Forty years a go, …billed rates were far lower…and insurer mostly just paid them…That’s when a more entrepreneurial streak kicked in…If someone is paying you whatever you ask, why not ask for more?”
  • “Surprise bills are the latest tactic: when providers decided that an insurer’s contracted payment offerings were too meager, they stopped participating in the insurer’s network; they walked away or the insurer left them out. In some cases, physicians decided not to participate in any networks at all. That way, they could charge whatever they wanted when they got involved in patient care and bill the patient directly.  For their part, insurers didn’t really care if those practitioners demanding more money left.”
  • Members of Congress can address this problem and “tackle the obvious injustice. Will they listen to hospitals, doctors, insurers? Or, in this election year, will they finally heed their voter-patients?”

My take: When physicians/hospitals and insurance companies are at odds, patients/families are the ones paying the price.

Related article: NY Times: My $145,000 Surprise Medical Bill What my brief glimpse into the financial abyss taught me about the American health care system.

Garden at UNC Chapel Hill

Surprise $urgical Billing –Affects 1 in 5

A recent study has shown how pervasive surprise billing has become.  This is another area in medicine in which deceptive billing practices undermine the relationship between families and health care providers.

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Legislative Agenda for Drug Pricing

There have been some recent terrific advances in pharmacology –a few that come to mind:

The one common feature is that these are all very expensive; there are many other expensive medications with less benefit.  Given the rise in costs of these medications, there is a need to do a better job in getting good value in our drug costs.  A potential path forward is outlined in a recent commentaries (SB Dusetzina, J Oberlander. NEJM 2019; 381: 2081-4; PB Bach. NEJM 2019; 381: 2084-6).

In the first commentary, the authors review the Elijah E Cummings Lower Drug Costs Now Act of 2019 (HR 3).

  • In essence, this act establishes a drug-price negotiation process and limits price increases on existing products.  “Companies whose products are selected for ‘negotiation’ will in reality face price regulation and a severe penalty for noncompliance.”
  • The act would examine U.S. prices compared to prices paid in other countries.  “There would also be a legislatively set maximum price that could not exceed 120% of the average net price paid for the same drug in designated countries.”
  • The bill also would cap Medicare Part D out-of-pocket spending at $2000 per year.

In the second commentary, Dr. Bach notes that drugs that have too little evidence to support full approval and those that are ‘too late in their life cycle’ both should have their pricing negotiated by the government.  This would side step some of the arguments about undermining the incentive for new drug development.

“Too little”

  • The FDA grants approval of some drugs on the market conditionally on the basis of data indicating that they improve a surrogate marker of patient benefit. “Despite the conditional nature of the approval, …the pharmaceutical firms currently charge the same high prices that fully approved drugs capture.”
  • Required studies frequently show that these conditionally-approved medications are ineffective.  Of the 198 indications granted accelerated approval since 1992, only 115 have garnered full approval.  Also, conditional approval may result in less incentive to complete the needed trials in a timely fashion.

“Too late”

  • In this category, the author notes that some medications have found many ways to extend their monopolies, which are intended as a time-limited reward for the effort of developing a new medication.  These include overlapping patents, refusing to provide samples to competitors, and paying other companies to delay bringing generic or biosimilar products to market
  • Most of the potential for savings are in this category rather than the ‘too little’ category
  • Negotiating prices of the top 10 too little and 10 too late medications with reference to 120% of UK pricing would have provided about nearly 27 billion in savings in 2019

My take: While current partisanship makes reaching agreement difficult, targeting soaring pharmaceutical costs is one area in which I predict common ground can be found.  While many are going to benefit from the therapeutic advances listed above, there are other medications which are overpriced and should be negotiated like in other high-income countries.

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Bathroom mural for bicycle enthusiasts (at a stop on the Petit Train du Nord Linear Park)

“America’s Huge Health Care Problem”

From Vox: A CT scan costs $1,100 in the US — and $140 in Holland

An excerpt:

The Health Care Cost Institute put out a new report Tuesday showing how the prices paid for medical services by private insurance in the United States stack up against prices in other countries. As expected, American prices are collectively higher than the rest.

But four charts, based on the report, show just how thoroughly the United States is outspending other countries for almost every medical service or prescription drug.

Image Available on Twitter and Can be Found in Article

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Healthcare: “Where the Frauds Are Legal”

A recent NY Times commentary: “Where the Frauds Are Legal” details another group of problems with health care economics.  These problems are on top of a long list of other problems which at their core relate to lack of price transparency/hidden charges and excessive charges for some services.

Here’s an excerpt:

Much of what we accept as legal in medical billing would be regarded as fraud in any other sector…

Medical Swag…Companies are permitted by insurers to bill for “durable medical equipment,” stuff you receive for home use when you’re in the hospital or doctors’ office. That yields some familiar marked-up charges, like the sling you can buy at Walgreens for $15 but for which you or your insurer get a bill for $120 after it is given to you at urgent care…

The Cover Charge…Trauma activation fees have been allowed since 2002, after 9/11, when the Trauma Center Association of America, an industry group, convinced regulators that they needed to be compensated for maintaining a state of “readiness.”…

Impostor Billing…We received bills from doctors my husband never met… for bedside treatment from people who never came anywhere near the bed to deliver the care…

The Drive-By…There was no significant health service given. Just an appearance and some boxes checked on a form. It’s a phenomenon called drive-by doctoring.

The Enforced Upgrade…[like meeting] in the emergency room [because clinic is closed]

Why do insurers pay? Partly because insurers have no way to know whether you got a particular item or service. But also because it’s not worth their time to investigate the millions of medical interactions they write checks for each day. Despite the advertised concern about your well-being, as one benefits manager enlightened me: They’re “too big to care about you.”…these are all everyday, normal experiences in today’s health care system, and they may be perfectly legal. If we want to tame the costs in our $3 trillion health system, we’ve got to rein in this behavior, which is fraud by any other name.

My take: I find it troubling to be a cog in a system that has such devious billing practices.  This particularly relates to my interactions when providing hospital-based care.  In our office, we have at least some measure of control and we can offer services like outpatient endoscopy at one-third of the cost compared to hospital-based endoscopy; similarly, our outpatient infusions are much more cost-effective than hospital-based infusions.

In terms of the health care system, my expectation is that there is not a strong enough incentive or empowerment for physicians to tackle rising health care costs (& low value care) and as such the industry will face a reckoning from outside forces.

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Hidden Costs of Medical Schools

From NY Times: ‘I Have a Ph.D. in Not Having Money’

An excerpt:

Medical school is expensive for everyone. But for low-income students, the hidden costs can be prohibitive…

American medical schools are the training grounds for a white-collar, high-income industry, but they select their students from predominantly high-income, and typically white, households…Between 1988 and 2017, more than three-quarters of American medical school students came from affluent households…

Students from low-income families who choose to apply to medical school find the path lined with financial obstacles. The application phase entails MCAT registration ($315) and preparation, application fees ($170 for the first school and $40 for each additional one), travel and attire for interviews (on average more than $200 per school). After enrollment, students are expected to purchase equipment and study aids. Each year brings new certification tests, with registration fees running upward of $600.

Aspiring doctors know that tuition is costly; the median educational debt held by medical school graduates in 2018 was $200,000, up 4 percent from the previous year. But less advertised are all the hidden costs of a medical education.

Rising ER Costs & Changes in Billling Codes

USAToday: ‘Really astonishing’: Average cost of hospital ER visit surges 176% in a decade, report says

An excerpt:

The average emergency room visit cost $1,389 in 2017, up 176% over the decade. That is the cost of entry for emergency care; it does not include extra charges such as blood tests, IVs, drugs or other treatments…

In 2008, 17% of hospital visits were charged the most expensive code. That surged to 27% of visits in 2017, the report said. The average price for the most expensive code more than doubled from $754 in 2008 to $1,895 in 2017.

Hospitals also increased billings for the second most expensive code, but they billed the three least expensive codes less often compared to a decade ago.

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