Cornering the Generic Markup

Posted on November 26, 2014 by gutsandgrowth

Older generic drugs are not always a bargain these days. A recent editorial (NEJM 2014; 371: 1859-62) highlights how some of these drugs have seen dramatic increases in prices.

Albendazole, an antiparasitic drug, used to cost $5.92 per daily dose. Now $119.58 per daily dose. The total Medicaid costs for albendazole have increased from less than $100,00 per year in 2008 to more than $7.5 million in 2013.
Captopril, a blood pressure medication, increased from 1.4 cents per pill in 2012 to 39.9 cents per pill one year later.
Doxycycline, a commonly-used antibiotic, increased from 6.3 cents per pill to $3.36 per pill.

What’s driving these changes? While these medications are not protected by patents or market exclusivity, some pharmaceutical companies attempt to corner a market and then unilaterally raise the prices.

Bottomline: Businesses that exert near monopolies don’t have to offer any “Black Friday” specials.

Malpractice Reform, Defensive Medicine, and Real World Costs

Posted on October 31, 2014 by gutsandgrowth

A recent study (NEJM 2014; 371: 1518-25) showed that tort reform has little effect on medical costs, imaging rates, or admission by emergency room physicians.

One frequently heard argument in controlling medical costs is that fear of malpractice lawsuits drive physicians to order unnecessary care (“defensive medicine”); as such, if tort reform is broadly enacted this would presumably be an “easy” way to lower medical costs. To examine this issue more closely, the authors examined three states which changed the malpractice standard for emergency care from “ordinary negligence” to “gross negligence.”

Texas (in 2003)
Georgia (in 2005)
South Carolina (in 2005)

Using a 5% random sample of Medicare fee-for-service beneficiaries, the authors examined all ER visits to hospitals in the three reform states along with neighboring (control) states from 1997-2011 (total of 9 states examined).

Key finding: “We found no reduction in the rates of CT or MRI utilization or hospital admission in any of the three reform states and no reduction in charges in Texas or South Carolina. In Georgia, reform was associated with a 3.6% reduction (95% confidence interval, 0.9 to 6.2%).”

While these reforms caused little changes in practice intensity and charges, the authors note that the Texas reforms, which affected other specialties as well, were associated with a 60% overall reduction in malpractice claims and 70% reduction in malpractice payments.

While the goal of tort reform may have been driven by costs, there could be other potential effects:

Physician job satisfaction
Improved physician regional supply
Reduction in claims
Less compensation for injured patients

Overall, the “effect of malpractice reform on the quality of care has been mixed.”

Take-away points (from authors)

“Physicians are less motivated by legal risk than they believe themselves to be”
“When legal risk decreases, the ‘path of least resistance’ may still favor resource-intensive care.”
“Malpractice reform may have less effect on costs than has been projected.”

Related blog post: 200 years of Health Law | gutsandgrowth

Deriving Measures of High Value Pediatric Care

Posted on October 14, 2014 by gutsandgrowth

A recent article titled, “How does a gastroenterologist demonstrate value?” (linked to full text) DOI: http://dx.doi.org/10.1016/j.cgh.2014.08.021 provides some insight into what is in store for gastroenterologists as the shift from fee-for-service is influenced by value care initiatives.

Key points:

Value = Outcome/Cost
Healthcare value = Health of population/Cost
“AGA has spent the last 7 years developing measures that focus on outcomes and population management. They are available at http://www.gastro.org/practice/quality-initiatives/performance-measures.”This website provides several measures for hepatitis C, inflammatory bowel disease, endoscopy, and others.
For example, endoscopy measures:Measure # 1: Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk PatientsMeasure #2: Surveillance Colonoscopy Interval for Patients with a History of Colonic Polyps- Avoidance of Inappropriate UseMeasure # 3: Comprehensive Colonoscopy Documentation

As a pediatric gastroenterologist, it is clear that more efforts will be needed for the pediatric population. While the authors note that “financial pressures will intensify over time,” at the current time there is extremely wide variation on the use of common procedures; in fact, physicians are typically incentivized to perform procedures even in the setting of low yield. So the first steps will be to define a high value pediatric GI practice.

Another reference with regard to value care (J Pediatr 2014; 165: 650-51) discusses how infectious disease consultations improve outcomes, can decrease costs (length of stay, complications) and improve usage of appropriate antimicrobials. Another helpful point: “Although common, curbside consultations have been shown to be associated with inferior patient outcomes compared with official bedside consultations.” This is often due to incomplete or inaccurate data.

Related blog posts:

Do You Really Need Both a CRP and ESR?

Posted on September 18, 2014 by gutsandgrowth

An erythrocyte sedimentation rate (ESR) and a C-reactive protein (CRP) are often ordered together, but many times provide similar information. An ESR is a measure of acute phase proteins in the plasma. A CRP is a proinflammatory acute phase reactant “which responds to infection and trauma by activating the complement/phagocytosis components of the immune system.”

Inevitably with the two tests, there is a higher sensitivity; for example, with osteomyelitis, one study found the paired testing had a 98% sensitivity compared with a 95% sensitivity for CRP alone (not statistically significant). However, the authors note that “concordant or discordant results also have been found to lack clinical utility.” As a consequence, the authors decided to investigate the costs of pairing these tests. At their 739 tertiary care hospital, the additional cost resulted in charges between $250,000-400,000 more than ordering a single test. They extrapolate the cost to $300 million nationally.

Take-home message: If you were spending your own money &/or trying to be a good steward of someone else’s, could you justify the expense of routinely obtaining both an ESR and a CRP?

Related blog post:

What physicians can learn from fast-food restaurants and …

My First Take: It is Hard to Save $$$ at a Rolls-Royce Dealership

Posted on June 4, 2014 by gutsandgrowth

A recent article looked at a crucial issue –trying to deliver “best care at lower cost” (Inflamm Bowel Dis 2014; 20: 946-51). “The goal of this report is to answer the primary question: What are implementable strategies and exploratory considerations for cost-efficient anti-TNF use while maintaining the highest quality of IBD care?”

The strategies that are discussed include the following:

Reduce costs of avoidable dose intensification of class switching by eliminating episodic anti-TNF use and improving patient education
Reduce over-utilization costs by accurately determining indication for escalating anti-TNF use
Reduce nondrug infliximab costs through shortened infusion times after initial safety is clearly established

Exploratory considerations:

Self-injectable anti-TNFs
Combination therapy
Monitoring anti-TNF drug levels and autoantibodies
Assessing mucosal healing as a clinical endpoint

The authors discuss both the exploratory issues and the strategies. Some of each could easily increase costs, at least in the short-term, rather than reduce them. The authors also make note of the development of an infliximab biosimilar (Inflecta) which could be approved in U.S. by 2015.

While the review article is a good read, in my opinion the authors fail to address in a meaningful way the larger context. The costs for hospital-based care are enormous; pediatric hospitals are like Rolls-Royce dealerships; and by the way, if you have to ask how much it costs, you probably cannot afford it. With regard to charges/costs, there is little transparency, high variability, and little accountability. Understanding health care costs and trying to get a good deal is much harder than buying a car.

For IBD care, as an example, the authors make note of the cost of infliximab at one pediatric tertiary care center. At this institution, “77% of the total health care cost for each infusion encounter” was for non-drug costs. Given how expensive the drug cost is, the expense for an infusion is very high, but probably similar to many other pediatric hospitals.

If one is interested in reducing the costs of infliximab and other infusions, the first practical step would be to consider infusion outside of a hospital-based setting, such as an infusion center. In such a setting, the patient safety would still be excellent but the costs would be less.

In Atlanta, there have been some high-profile hospital acquisitions that have increased health care costs (When doctors sell out, hospitals cash in | www.myajc.com). In many circumstances, when a hospital acquires a physician practice, infusion center, or endoscopy center, the charges and reimbursement increase despite no change in clinical care. In this way and many others, the current system promotes cost-inefficient care.

Related blog entries:

Considering Cost in Treatment Choices

Posted on May 3, 2014 by gutsandgrowth

A recent article indicates a growing trend in medicine –considering the cost of therapy not just the effectiveness. Physicians, by and large, view the patient sitting in front of them as their top priority, not “bedside rationing.” On the other hand, policy makers often avoid engaging in cost issues and argue that physicians are best-suited to make decisions for their patients.

Here’s an excerpt:

Some doctors see a potential conflict in trying to be both providers of patient care and financial overseers.

“There should be forces in society who should be concerned about the budget, about how many M.R.I.s we do, but they shouldn’t be functioning simultaneously as doctors,” said Dr. Martin A. Samuels, the chairman of the neurology department at Brigham and Women’s Hospital in Boston. He said doctors risked losing the trust of patients if they told patients, “I’m not going to do what I think is best for you because I think it’s bad for the health care budget in Massachusetts.”

Doctors can face some stark trade-offs. Studies have shown, for example, that two drugs are about equally effective in treating an eye disease, macular degeneration. But one costs $50 a dose and the other close to $2,000. Medicare could save hundreds of millions of dollars a year if everyone used the cheaper drug, Avastin, instead of the costlier one, Lucentis.

But the Food and Drug Administration has not approved Avastin for use in the eye, and using it rather than the alternative, Lucentis, might carry an additional, albeit slight, safety risk. Should doctors consider Medicare’s budget in deciding what to use?

…Generally, Medicare is not supposed to consider cost effectiveness in coverage decisions, and other government attempts to do so are susceptible to criticism as rationing. Insurers do perform cost analyses, but they also risk ire from patients and doctors…

Also, in recent years, as part of a campaign called Choosing Wisely, many medical societies have submitted lists of the top five procedures, tests or products to be questioned because they are considered wasteful…

Dr. Steven D. Pearson, a visiting scientist in the ethics department at the National Institutes of Health, said the move by some societies to incorporate economic analysis “heralds an important shift in the way doctors in America are talking about cost and value.”

He said that having societies do such evaluations was better than having a doctor make such trade-offs while treating an individual patient, which is sometimes called bedside rationing…

Related blog post: Do you know about the “Choosing Wisely Campaign …

PCORI: Spending Money to Save Money

Posted on March 5, 2014 by gutsandgrowth

I hadn’t heard much about PCORI (Patient-Centered Outcomes Research Institute) until I learned about two large awards given to ImproveCareNow (ImproveCareNow | LOOP). (This blog has previously discussed ImproveCareNow -see links below.)

Now a perspective article provides a lot more detail regarding PCORI (NEJM 2014; 370: 592-94) including the fact that it will commit as much as $1.5 billion over the next 3 years to research projects. While this is impressive, on a side note, PCORI could benefit from a better name. In England, a similar organization is called NICE (National Institute for Health and Care Excellence). Of course, NICE may be more about promoting evidence-based medicine than funding clinical effectiveness research (CER) like PCORI.

A full list of funded projects is available at http://www.pcori.org/pfaawards/?viewby=priority. From this website: “The Patient-Centered Outcomes Research Institute (PCORI) was created to fund research that will provide patients and those who care for them with the evidence-based information needed to make better-informed health and healthcare decisions. We do this by supporting studies that seek to answer questions important to patients and meaningfully involve patients and others across the healthcare community at all stages of the research process.”

According to the perspective article, PCORI has funded 162 CER studies, “37 (23%) focus on cancer detection, treatment or surveillance; 30 (19%) on mental health; 26 (16%) on cardiovascular diseases; and 18 (11%) on endocrine disorders, including diabetes mellitus.”

Bottomline: Though I would appreciate a better name, PCORI clinical effectiveness research projects are going to shape many important healthcare decisions.

Related blog entries:

Improve Care Now | gutsandgrowth -this post details the success of the improve care now network, provides a link to improve care now patient notebook, and gives extensive background on quality improvement (& gives input from Albert Einstein and Lord Kelvin)
Quality improvement and better outcomes in … – gutsandgrowth

Do you know about the “Choosing Wisely Campaign?”

Posted on February 25, 2014 by gutsandgrowth

If I had been given a multiple choice question about the “Choosing Wisely Campaign,” I would not have selected anything related to limiting low-value health services. Yet, this campaign is in fact an effort to have physicians and physician groups develop a focus on becoming better “stewards of finite health care resources.” A short perspective (NEJM 2014; 370: 589-92) on the rollout of this campaign which was launched nearly two years ago details some of the first steps.

In essence, Choosing Wisely promoted by the National Physicians Alliance and funded by the American Board of Internal Medicine has two core objectives (The Choosing Wisely™ Campaign Five Things Physicians and …). The first is a developing lists by specialty societies of low-value tests and treatments (low-value services are often a waste of money) and the second is a patient education component led by Consumer Reports. The authors state that the careful design has avoided negative publicity regarding issues like rationing and undermining the patient-doctor relationship. An alternative explanation could be that the information has not been widely disseminated yet.

The article then details the low-value services that different societies identified. “Participating societies generally named other specialties’ services as low-value…29% of listed items target radiology; 21% cardiac testing; 21% medications; 12% laboratory tests or pathology. Cognitive specialists name very few of their own revenue-generating services.”

Examples of speciality groups that avoided any tough decisions:

American Academy of Otolaryngology: chose three imaging tests and two antibiotics. It did not select any ENT procedures despite the extensive literature on the overuse of several.
American Academy of Orthopaedic Surgeons: listed an over the counter supplement, two small durable-medical equipment items and a rare minor procedure (needle lavage for osteoarthritis of the knee). No major procedures were selected.

While atypical, some organizations did identify potential low-value services which were more meaningful:

Society of General Internal Medicine: their list included the annual physical
American Gastroenterological Association: their list included three specific endoscopic procedures, including not performing a repeat colorectal cancer screening within 10 years of a high-quality exam (Choosing Wisely • American Gastroenterological Association (AGA)

While the initial goals of Choosing Wisely were “not intended to inform cost-containment efforts and quality measures,” ultimately, when physician groups can identify low-value services, these will be targeted with financial incentives or with quality measurement tools.

Take home message: Choosing Wisely campaign is a start towards identifying tests, medicines, and procedures that are often unnecessary. However, most physician organizations have not identified low-value services that would affect the revenue streams for their members.

Related link from Atul Gawande’s twitter feed: http://t.co/JtZWKRpGJp

Related blog post:

Trying to make Cents out of Value Care | gutsandgrowth

More Cents in Value-Added Care

Posted on December 11, 2013 by gutsandgrowth

While health policy experts of all political backgrounds agree that moving to a value-based (rather than volume-based) payment is worthwhile, there are many problems with this that were alluded to in the previous post. As an aside, I would like to see sports teams move to a value-based system so that I don’t have to hear that my team is paying its worst-performing players gobs of money.

Due to the potential pitfalls in transitioning to a value-based care system, an alternative strategy of working on the relative-value units (RVUs) has been advocated (NEJM 2013; 369: 2176-79). RVUs has provided a “uniform, formulaic metric for myriad clinical services” and serve as the method for setting fee-for-service payments for both Medicare and private insurance.

“Ideally, physicians’ work would be reimbursed on the basis of metrics that signal whether their clinical services efficiently improve patient outcomes and that use effective clinical risk adjustment. In reality, using patient outcomes as a basis for payment can work well at the health-system level, but small samples and inadequate risk adjustment limit their use for individual physicians and many group practices.”

Advantages of using an RVU-based system over other pay-for-performance benchmarks:

Long experience with RVUs (developed in 1988)
RVUs influence care delivery. “RVU distortions drove the development of …(ambulatory) procedural centers and the movement of cardiac imaging from physicians’ offices to hospital outpatient units.” This was “associated with a tripling of the proportion of cardiologists employed by hospitals.”
RVUs can be weighted towards activities that improve patient outcomes and high-value clinical services. Proposed examples: increased RVUs for smoking cessation counseling, and increased RVUs for stenting within 60 minutes for ST-segment elevation myocardial infarction
To start, “RVU levels for cognitive clinical work could be increased and those for procedural work could be decrease to create incentives for primary care services.”

Disadvantages of RVUs:

RVU levels are set by the American Medical Association’s Relative Value Update Committee; the process for setting RVUs is secretive and proprietary (though these can be modified by Medicare or other insurance companies)
RVU levels are not designed for team-based care

Bottomline: “Ultimately, refining this durable, well-entrenched system may be preferable to replacing it with unproven alternatives.”

Update -Last week I overestimated cost of sofusbuvir for hepatitis C (only $84,000 rather than $90,000), each pill is $1000, nyti.ms/1d6YxNk :

Gilead said the wholesale cost of Sovaldi, which is known generically as sofosbuvir, would be $28,000 for four weeks — or $1,000 per daily pill. That translates to $84,000 for the 12 weeks of treatment recommended for most patients, and $168,000 for the 24 weeks needed for a hard-to-treat strain of the virus.

Trying to make Cents out of Value Care

Posted on December 10, 2013 by gutsandgrowth

A series of commentaries helps outline the uncertain future with regard to ‘value-based care.’

NEJM 2013; 369: 2076-78
NEJM 2013; 369: 2079-81

Terminology:

Centers for Medicare and Medicaid Services (CMS)
Physician Value-Based Payment Modifier (PVBM)
Hospital Value-Based Purchasing (HVBP)
Affordable Care Act (ACA)
Physician Quality Reporting System (PQRS)

Background:

As part of the ACA’s attempt to bend the cost curve and improve quality simultaneously, PVBM seeks to financially reward physicians who provide high value cost-effective care to Medicare recipients. For physicians, the maximum bonus is 2%. Overall, the cost is neutral in the program as low-performing physicians are penalized. In 2015, this incentive will roll out for physicians in groups of 100 or more and for all physicians by January 1, 2017.

For hospitals, similar to PVBM there is HVBP. However, an important distinction is that hospitals have participated in the Hospital Inpatient Quality Reporting program for 9 years prior to the start of HVBP; over 90% of the roughly 3500 hospitals have participated in these quality measurements which serve as a lead-in to HVBP.

In contrast, less than 30% of eligible physicians actually report the analogous PQRS. Unlike hospitals, for physicians a difference of 1-2% in reimbursement is “small change.” The effort to report the data may be more costly than generating additional patient encounters.

What could go wrong?

“CMS cannot accurately measure any physician’s overall value, now or in the foreseeable future.” As a result, physicians do not respect the quality measures (PQRS) –for good reason. Some examples:

“Primary care physicians manage 400 different conditions in a year, and 70 conditions account for 80% of their patient load. Yet a primary care physician currently reports on as few as three PQRS measures.”
For radiologists, because there are not measures of diagnostic accuracy, PQRS measures exposure time to fluoroscopy.
For surgeons, because judgement of whether to do an operation and because the technical skill employed cannot be measured, PQRS measures adherence to antibiotic usage and anticoagulation prophylaxis. While these are important, they do not reflect a surgeon’s value.

gutsandgrowth

Pediatric Gastroenterology

Category Archives: Health Economics