Category Archives: Health Economics

Understanding the Risks of Propofol for Colonoscopy

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A recent article & editorial (KJ Wernli et al. Gastroenterol 2016; 150: 888-94 & 801-2) shows that the use of propofol, delivered by an anesthetist, is associated with a small increase risk of adverse events.  This finding goes against assumptions that there would be reduced complications with an anesthesia expert in the room who could manage resuscitation and airway problems.

The study analyzed claims data from more than 3 million colonoscopies in the U.S between 2008-2011 in 40-64 year-olds.

Key findings:

  • Use of anesthesia was associated with a 13% increase in the risk of any complications within 30 days.
  • The increased risk included perforation (OR 1.07), hemorrhage (OR 1.28), and abdominal pain (OR 1.07).  Interestingly, the perforation risk was increased only in those undergoing polypectomy (OR 1.26) indicating that some confounders may have been difficult to eliminate.
  • Complications secondary to anesthesia were present as well (OR 1.15) and stroke (OR 1.04).

This is not the first study to associate anesthesia with increased risk of aspiration and mechanical complications (Cooper G et al. JAMA Intern Med 2013; 173: 551-6). It is certainly possible that the increased risk is due in part to patient selection, despite attempts to control for this.

It is also important to note that better sedation has not resulted in improved colonoscopy outcomes like increased polyp detection.

Will these results change anything? No.

The small increased safety risk (detectable only in studies of millions of patients), if accurate, is not going to stop the use of anesthesia services for two reasons.

  1. Patient satisfaction
  2. Financial incentives

Patient satisfaction.  Propofol results in excellent sedation, often with complete absence of pain combined with rapid recovery and an antiemetic effect.

Financial incentives.  Many endoscopists are able to employ an anesthetist and generate additional revenue by billing for sedation (in addition to the costs of the endoscopist), whereas this is not allowed with the combination of intravenous opioids/benzodiazepines used for ‘deep sedation.’  Even in the many who do not receive revenue for these services, the rapid recovery expedites patient care and room turnover.

My take: While propofol administered by anesthetists is a little less safe and more expensive, it is here to stay, at least until incentives are created to reconsider this approach.

Georgian Terrace

Georgian Terrace

Understanding Single-Payer Health Care: “Medicare for All”

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A recent commentary (J Oberlander. NEJM 2016; 374: 1401-3) explains the “virtues and vices of single-payer health care.”

“In a country where nearly 30 million persons remain uninsured, even insured patients face staggering bills, and more money is spent on administration than on heart disease and cancer, it’s no surprise to hear calls for sweeping change.”

Virtues of Single-Payer System:

  • Based on Canadian experience, single-payer greatly reduces administrative costs and complexity.
  • Concentration of purchasing power
  • Guarantee that all residents receive care
  • The problems of a single-payer system “pale in comparison” to the current U.S. system

Vices of Single-Payer System:

  • Wait lists for some services
  • Public dissatisfaction
  • Would require increased taxes (though may improve overall finances for most)

It Does Not Matter if Single-Payer is Better:

It would face intense opposition from insurers, medical industry, and would not be adopted by Congress. “In short, single payer has no realistic path to enactment in the foreseeable future.”

My take (in agreement with author): “Preserving and strengthening the ACA [affordable care act] as well as Medicare, and addressing underinsurance and affordability of private coverage is a less utopian cause than single payer. I believe it’s also the best way forward now for U.S. medical care.”

Related blog posts:

Graphic showing association between obesity and asthma

Graphic showing association between obesity and asthma

 

Looking for Value in Medicine

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  • Finding Value in Unexpected Places — Fixing the Medicare Physician Fee Schedule.  RA Berenson, JD Goodson. NEJM 2016; 374: 1306-10.
  • When Is It Ethical to Withhold Prevention? TA Farley.  NEJM 2016; 374: 1303-5.

As noted in yesterday’s blog post, after reading these two commentaries I thought a little more about value in pediatric gastroenterology.  These articles though focus on other aspects.  In the first reference, the authors explain the flaws with moving from volume to value-based care.  They note that the medicare physician fee schedule (MPFS) has a powerful influence on physician activities and “their tendency to perform unneeded tests and procedures.”  In fact, the fee schedule heavily contributes to growing shortages of primary care physicians.  Key points:

  • “Two key flaws in the RBVS [resource-based relative value scale] are its substantial misevaluations of physician work and the failure of current service codes to capture the range and intensity of nonprocedural physician activities, known as evaluation and management (E/M) services.”
  • “The MPFS still assumes that it takes nearly 30 minutes to interpret a magnetic resonance image of the brain…typically takes about 10.”  Echocardiogram per MPFS assumes 31 minutes, but takes 5-10 minutes.  For colonoscopy with polyp removal, MPFS assumes 78 minutes, but this is overestimated as well.
  • Valuations depend on AMA-sponsored expert panels…not surprisingly, updates that reduce RVUs are rarely proposed.
  • While the commentary implies that procedural codes are overvalued, it notes that due to complexity of chronic conditions that E/M codes are undervalued.
  • Their conclusion: “implementing new incentives and quality measures in new payment models while maintaining a broken fee schedule is a prescription for failure.”

The second reference bemoans the fact that the medical system will spend enormous amounts of money to prolong the life of an individual with terminal cancer for a few weeks but will not see the imperative of providing adequate prevention measures. Key points:

  • “Many people reject any attempt to put a dollar value on human life…but…limits of funding make it impossible to pay for every conceivable intervention.”
  • Cost-effectiveness is not considered by Medicare in determining treatment.  “For example, treatment of metastatic lung cancer may cost $800,000 per QALY [quality-adjusted life-year], but it is typically provided.  In sharp contrast, primary preventative services are often withheld even if they are highly cost-effective.”
  • Diabetes prevention program focused on exercise and nutrition has QALY costs of $14,000.  Smoking cessation with nicotine-replacement therapy has QALY <$5000.
  • Author’s conclusion: “because withholding primary prevention leads to unnecessary suffering and death, we should be just as creative in finding ways to pay for it” as we do with treatment of all illnesses.

My take: At an individual physician level, we need to keep working to utilize our resources more carefully.  However, at a policy making level, efforts at improving incentives for primary prevention and primary care are needed.

Related blog posts (see yesterday’s post Why are so many Low Value Endoscopies Performed? for related links as well):

Poster on Front of High Museum is reproduction of Vik Muniz piece created from Jelly and Peanut Butter

Poster on Front of High Museum is reproduction of Vik Muniz piece created from Jelly and Peanut Butter

 

Why Are So Many “Low Value” Endoscopies Performed?

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After reading a few commentaries regarding value in medicine (which I will summarize tomorrow), it made me think a little more about value in pediatric gastroenterology.

I recently observed that a pediatric gastroenterologist in another group had a pattern of scheduling a lot of procedures.  In pediatric gastroenterology, we are not doing endoscopies to screen for malignancy.  The majority of children evaluated in our offices do not have organic disease.  In addition, there are a number of variables that can be used to select patients who are most likely to benefit from evaluation. In fact, much of our value comes from this selection process, because non-physicians can be taught to be endoscopic technicians.

My reaction to this volume of cases was that I thought either this practitioner was seeing a ton of patients, had been away and had accumulated a number of cases, or that this was low value care.  Though, another possibility is that the physician may be influenced by the “illusion of control” or “therapeutic illusion.” (NEJM full text: The Science of Choosing Wisely –Overcoming the Therapeutic Illusion).  According to a recent editorial, “When physicians believe that their actions or tools are more effective than they actually are, the results can be unnecessary and costly care.”

“The therapeutic illusion is reinforced by a tendency to look selectively for evidence of impact — one manifestation of the “confirmation bias” that leads us to seek only evidence that supports what we already believe to be true.”

Whatever the circumstances with regard to endoscopy volume, my intent is not to single out an individual or specific group.  My impression is that there are a lot more pediatric endoscopies being done these days and many are not needed.  While I recognize that clinicians recommend endoscopy with a great deal of variation, my suspicion is that those who use endoscopy less frequently are likely to see similar outcomes.  So, why are there so many low value endoscopies performed?

  1. The entire system is incentivized to do more procedures.  Physicians and hospitals are compensated more for doing these procedures.
  2. Families and sometimes referring physicians think these procedures are necessary.  In fact, there are studies that generally indicate higher levels of patient satisfaction when more diagnostic tests are done even if they are unnecessary.
  3. Physicians have a great deal of knowledge asymmetry in healthcare compared with families and it is expected that they will use their knowledge to help families pursue appropriate care.  While all physicians may have some lapses, some physicians skirt this part of their job.  One physician described this type of pediatric GI practice to me: “Scope first, think second.”

This blog has highlighted numerous aspects of health care economics.  Pharmaceutical companies and hospitals have been criticized for gaming the system.  The blog has discussed efforts to improve value like the “Choosing Wisely” campaign.  Though, it is interesting to note that even with this campaign, most physician groups rarely identified areas that would affect their financial bottom-line.  Among pediatric gastroenterologists, a frequent concern that I hear regards the overuse of CT scans by emergency room physicians.

When I take my car for repairs, I don’t want them doing an expensive overhaul unless it is really needed.  If a car needs a muffler change, but the repairman recommended a few thousand dollars of repairs, that would be outrageous.  Yet, in many cases with children, who are more precious than cars, the main difference with excessive endoscopic procedures, is that health insurance covers the majority of the costs.

I wonder too whether the frequency of endoscopy procedures actually discourages some families from having endoscopic procedures when they are clearly needed (eg. suspected celiac disease, suspected inflammatory bowel disease).

My take: Financial resources are limited.  When physicians do not help utilize resources well, this results in poor care, whether families realize this or not.  Ultimately, this will result in increased regulatory burdens for all physicians to more carefully justify what they are doing and/or result in efforts to eliminate financial incentives for unnecessary care.  However, as noted previously (Do deductibles work to improve smart spending on health care?), financial incentives often affect both low value and high value care.

Any readers care to comment?

Related blog posts:

ViK Muniz Art -done completely from chocolate syrup

ViK Muniz Art -done completely from chocolate syrup -see the picture below for comparison.

The Vik Muniz piece is modeled after this photograph of Jackson Pollack

The Vik Muniz piece above is modeled after this photograph of Jackson Pollack

Treachery or Sound Business Decision: Health Care Tax Inversions

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An insightful commentary (HJ Warraich, KA Schulman NEJM 2016; 374: 1005-7) provide some insight into “corporate inversion” or “tax inversion” and how they apply specifically to pharmaceutical companies.  This article was prompted by Pfizer’s plans to merge with Ireland-based Allergan which would create the largest pharmaceutical company in the world, worth ~$160 billion.

  • Inversions allow U.S. companies to lower their tax rate from as high as 35% (most never pay the full rate) to as low as Ireland’s corporate rate of 7.7%.  While this seems like a sound idea, there are reasons why U.S. tax payers should be outraged:
  • These firms “generate substantial revenue from purchases made by Medicare, Medicaid, and the Veterans Health Administration.  These programs are supported by revenue from federal taxes — precisely the taxes companies are trying to avoid by inverting.”
  • In fact, Medicare “parts B and D, received 76% and 80%, respectively of their funding from federal tax revenues in 2015.”
  • These companies charge U.S. consumers much more than anywhere else in the world for their products. For Pfizer, for example, in 2013, two of its leading drugs (Enbrel and Celebrex) were twice as expensive in the U.S. as in the U.K.
  • The U.S. government has pursued policies to protect these “domestic” industries in numerous trade agreements to secure intellectual-property rights.
  • The National Institutes of Health has provided funding that supports the development of new pharmaceuticals.

What should be done?

  • Policies to discourage inversion should be pursued.
  • This could mean that Medicare and Medicaid should be given a free hand to negotiate drug prices with inverted companies or to require additional reviews to qualify their products.
  • The FDA could withhold priority review from companies who have undergone inversion.
  • The IRS could be allowed to levy exit taxes on inverting companies.

My take: Pharmaceutical companies want to extract billions of dollars of benefits from the U.S. taxpayers and charge U.S. consumers higher costs than anywhere else. Avoiding paying U.S. taxes is not business as usual and should be met with consequences.

 

Gibbs Gardens, Ball Ground

Gibbs Gardens, Ball Ground

Patient Assistance for Lab Testing

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Since 2015, “a partnership of several leading consumer health organizations announced the launch of Patient Assistance for Lab Services (PALS).” (Gastroenterol & Endoscopy News, March 2016, pg 54).  PALS offers access to more than 85 lab tests, most costing only $5 and all of the tests at a fraction of the cost of pricing at competing labs. (See request-a-test for competing costs: requestatest.com)

PALS website: Patient Assistance for Lab Services

Some examples of costs:

$5 tests: (There is a $15 shipping fee as well which covers all testing)

  • Hepatic Function Panel
  • CBC/d
  • Complete Metabolic Panel (CMP)
  • Hemoglobin A1C
  • Cholesterol
  • TSH w reflex to T4

Some tests are more expensive but still heavily discounted:

  • Hepatitis C RNA PCR Quantitative $100

The process of filling out the paperwork & having signed by a physician along with getting the testing complete will likely take a few weeks; so this testing right now is not useful for urgent testing.

My take:  Due to cost constraints, some patients are not receiving lab monitoring as frequently as recommended.  This discounted testing could be a useful for option in this scenario.

Key words:

  • Patient assistance
  • Cheap
  • Inexpensive
  • Lab test
  • Bloodwork
  • No insurance

Related blog post: What physicians can learn from fast-food restaurants and …

Gibbs Gardens

Gibbs Gardens

Do deductibles work to improve smart spending on health care?

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According to a recent NY Times article –the answer is no.

The problem:

  • With high deductible plans, people reduce both high-value and low-value care
  • Many people cannot afford very valuable care due to their deductibles

Link: The Big Problem With High Health Care Deductibles

Here’s an excerpt:

Some health economists say the solution to the problem may be smarter but more complicated forms of health insurance that provide patients with important care free, but charge them for treatments with fewer proven benefits. Mr. Chernew, for one, argues that ordinary deductibles are too “blunt” an instrument, but smarter insurance plans could harness economic incentives to reduce wasteful health spending without discouraging needed care. If such plans held down costs as well as deductibles, they could keep insurance affordable without as many risks. The theory behind such plans is compelling, but given how bad people are at shopping for health care, more empirical evidence is needed to know how well it works in practice.

US Infinity Pool

“The Solution to Drug Prices”

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Worth a read: “The Solution to Drug Prices” by Eziel Emanuel

An excerpt:

WE’RE paying too much for prescription drugs….Despite representing about 1 percent of prescriptions in 2014, these types of high-cost drugs accounted for some 32 percent of all spending on pharmaceuticals….

Almost all developed countries… making drugs available at fixed prices …Drug companies would immediately raise two objections: the high risks associated with drug development and, related, the high cost of research and development. But both of these arguments are fatuous…

Also, as outrageous as they are, prices are not the real issue. Value is. What really frustrates people are expensive drugs that do not provide a cure. For instance, Opdivo adds an average of 3.2 months of life to lung cancer patients and costs $150,000 per year for treatment…

Everyone, including drug company executives, believes that high prices cannot continue. Indeed, that is one reason that companies are trying to maximize profits while they can. We must come up with a comprehensive solution now.

“Negative Externality,” Splitting Checks, and Feeding Psychology

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If you have a great psychology book that you recommend, please let me know.  As frequent readers of this blog know, I am fascinated with psychology experiments.

In a recent blog from fivethirtyeight.com, the author tackles the question of whether people eat more when they know they are splitting a dinner check. Does it Make Sense to Split The Check at a Restaurant?

Here’s an excerpt:

In 2004, a study in The Economic Journal, a publication of the Royal Economic Society, …the researchers told four groups of diners (always three men and three women) to split the bill equally among them. They told another four groups to pay for what they had ordered. Lastly, they told two lucky groups that they would get their meals for free…

Those who were getting a free meal spent the most … Those who were splitting the bill spent less, and those who were paying individually spent the least…

Any time you make a decision that affects someone else without considering how it might affect that person, whether positively or negatively, you create an externality — it’s basically a fancy way of saying “indirect effect.” There are positive externalities (e.g. when you decide to get a flu shot, other people benefit) and negative externalities (e.g. when you decide to fart, other people suffer).

The unscrupulous diner’s dilemma reveals how negative externalities — and even the mere threat of negative externalities — affect our behavior. Participants in the bill-splitting experiment expected the others to order more, so they tried to maximize what they could get out of the situation by ordering more themselves.

Bottomline: It is fascinating to me how something as simple as splitting a bill may encourage someone to order a lot more.

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Near Fairy Falls, YW

How the Trans-Pacific Partnership Could Affect Health Outcomes

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Generally, trade agreements are not something I scrutinize and typically have little to do with the medical field.  Recently, I was surprised to learn that the Trans-Pacific Partnership (TPP) has language in its intellectual property chapter that could impact the lives of millions (A Kapczynski. NEJM 2015; 373: 201-3).  The background for this story is that pharmaceutical companies want to have patent protection for their medications for as long as possible.  This has a substantial impact on pricing.  “For example, patents increase the annual cost of antiretroviral therapy from around $100 per person to $10,000 per person.”

Some countries, like India, have undermined patent protections.  “India allows patents on new drugs but not on new uses of old drugs or new forms of known drugs that do not increase therapeutic efficacy.”  Other countries have been following India’s lead.  Even in the U.S., there are efforts to decrease data exclusivity, which prevents regulatory agencies like the FDA from registering a generic version of a drug.

“President Barack Obama’s fiscal year 2016 budget proposes rolling back the data exclusivity period for biologic drugs in the United States to 7 years from 12 years, yielding a projected savings of more than $4 billion over the next decade. In the TPP negotiations, however, the United States is proposing a 12-year term of exclusivity.”

Other potential concerns include both the elimination of a provision to use “competitive market-derived prices” and the potential for promoting foreign companies to sue TPP countries for millions of dollars in damages due to loss of profits.

Currently there are escalating drug prices, both with innovative new medications and well-established treatments. Even lifesaving cures are being rationed in the United States.  While the TPP has not been finalized, there are provisions that could limit the United States  from regulating “critical aspects of health policy for years to come.”

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Cascade Canyon, Grand Tetons

Cascade Canyon, Grand Tetons