Category Archives: Health Economics

45,000 Unnecessary Deaths Per Year

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According to a recent editorial (NEJM 2013; 369: 1180-81), 45,000 American adults die each year because they have no medical coverage (Am J Public Health 2009; 99: 2289-95).

The editorial which describes a late diagnosis of colon cancer in an adult who had been chronically uninsured despite working full-time makes a couple of key points:

  • Lack of insurance can be lethal
  • Underinsured also have higher mortality rates  One example: insurance status, not race, was associated with mortality after an acute cardiovascular event in Maryland (J Gen Intern Med 2012; 27: 1368)

While the rollout for the Affordable Care Act (ACA) has been bad, the underlying reason for it remains sound.  In addition, though the ACA expands coverage, I am skeptical that it will control problems with skyrocketing costs.  As such, many other difficult changes in medical care delivery will ultimately be needed.

Related blog post:

Life in the balance (book) | gutsandgrowth

Safety Net Hospitals -Left in the Lurch

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A recent perspective piece highlights a new threat to safety-net hospitals (NEJM 2013; 369: 1675-77).

Safety-net hospitals are often referred to as Medicaid Disproportionate Share Hospitals (DSHs).  “Only 2% of acute care hospitals nationwide are safety-net facilities, but they provide 20% of uncompensated care to the uninsured.”  Currently, Medicaid allocates $11.5 billion to support these hospitals.  However, this money is provided to the states and many states including Georgia and Ohio spread these payments broadly rather than targeting these DSHs.

The newest threat:  “Because the Affordable Care Act (ACA) was expected to dramatically expand insurance coverage, safety-net hospitals were expected to need less DSH money…the ACA reduced Medicaid DSH funding by $1.8 billion between fiscal years 2014 and 2020.”  And, “because many states that won’t expand Medicaid currently receive large DSH payments, their safety hospitals will be hit hard when the DSH cuts kick in.”

There are several proposals that the Centers for Medicare and Medicaid Services (CMS) are reviewing to try to address this problem.  However, the authors note that it is unlikely that Congress will restore DSH funding to previous levels.

Bottomline: “If the state governments that refused to expand Medicaid also refuse to rethink their approach to allocating DSH funds, there will be little money left to sustain their safety-net hospitals.”

Related blog post:

Life in the balance (book) | gutsandgrowth

Why U.S. Consumers Pay More For Medications

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The NY Times has highlighted the high cost of medical care in the U.S. in a series of articles.  While only affecting about 10% of the total U.S. health cost, the wide variation in the cost of medicines between the U.S. and other countries leaves the U.S. consumer feeling ‘ripped-off.’

Here’s the link:  bit.ly/17p8kKR (from Jay Bookman) and here’s an excerpt:

Pulmicort, a steroid inhaler, generally retails for over $175 in the United States, while pharmacists in Britain buy the identical product for about $20 and dispense it free of charge to asthma patients. Albuterol, one of the oldest asthma medicines, typically costs $50 to $100 per inhaler in the United States, but it was less than $15 a decade ago, before it was repatented.

“The one that really blew my mind was the nasal spray,” said Robin Levi, Hannah and Abby’s mother, referring to her $80 co-payment for Rhinocort Aqua, a prescription drug that was selling for more than $250 a month in Oakland pharmacies last year but costs under $7 in Europe, where it is available over the counter…

Unlike other countries, where the government directly or indirectly sets an allowed national wholesale price for each drug, the United States leaves prices to market competition among pharmaceutical companies, including generic drug makers. But competition is often a mirage in today’s health care arena — a surprising number of lifesaving drugs are made by only one manufacturer — and businesses often successfully blunt market forces….

On the same topic, in Forbes: forbes.com/sites/peterubel/2013/10/15/-expensive-new-drugs/ …

In the U.S., the FDA must deem a drug safe and effective before allowing it on the market.  But at that point, there are no economic barriers to the use of those medications.  By contrast, drugs in the United Kingdom must go through economic analyses by a unit known as NICE—United Kingdom’s National Institute for Health and Clinical Excellence.  Being safe and effective is not enough to pass muster with NICE.  The drug must also be cost effective. …

Should we demand proof of cost effectiveness before allowing drugs on the market?  Or before agreeing to pay for them in Medicare and Medicaid?  Doing so would undoubtedly reduce healthcare expenses.  With medical spending threatening our fiscal future, it makes no sense that Medicare is prevented by law from considering the cost of care when making coverage decisions.  You heard that right—forbidden by law!

Related Blog Post:

Should Physicians Dispense Drug Coupons? | gutsandgrowth

Should Physicians Dispense Drug Coupons?

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This is a good question.  Before you answer, consider some of the following information from a recent commentary (NEJM 2013; 369: 1188-89):

  • “Commercial drug-insurance…have tiered pharmaceutical formularies..requiring small patient copayments…for inexpensive generic drugs and higher copayments…for brand-name drugs. Manufacturers use coupons…so that…the out-of-pocket costs are the same as those for generic drugs.”
  • “Coupons were used for approximately 100 million dispensed prescriptions in 2010 –about 11% of prescriptions for brand-name drugs.”
  • The authors performed analysis ‘by manually abstracting information on each coupon advertised in March 2013 at http://www.internetdrugcoupons.com.”  They found that with 62% of coupons there were lower-cost therapeutic alternatives available.  58% had generic alternatives and 8% had less-expensive brand-name therapeutic equivalents (some drugs had both generic alternatives and less-expensive brand competitors).

The arguments against coupons:

  1. “On a population level, drug coupons undermine the tiered-formulary system that commercial insurers have implemented to limit prescription-drug spending.”  Insurers must still pay the higher cost of the brand-name drug.  This leads to higher insurance coverage rates for all patients.
  2. Some have argued that these coupons should be disallowed as illegal kickbacks by subverting the cost-sharing arrangements in patients’ insurance contracts.
  3. The costs for these medications for the patient usually are more in the long run as these coupon offers are often limited to 6-12 months.

Bottomline: when there are lower cost therapeutic alternatives, drug coupon programs increase long-term costs and undermine efforts for patients to have ‘skin in the game.’

Related blog:

Can the FDA prohibit free speech? | gutsandgrowth

Food Safety: Confusion with Use-by and Sell-by Dates

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From the LA Times, http://t.co/9Tt2C4EOPf, an except:

Sell by, use by, best by. Most consumers use the dates stamped on foods to decide what to toss out — and they are often discarding food that’s good to eat, according to a report…

Those dates are manufacturers’ suggestions for when an item is at its peak, or efforts to help stores manage their inventory, and not indications of food safety, the report from the Natural Resources Defense Council and the Harvard Food Law and Policy Clinic says.

More than 90% of Americans say they use date stamps to decide whether to discard food, the report notes.

“I don’t know of any data that consuming a product beyond the date has caused illness,” said Ted Labuza, a professor of food science and engineering at the University of Minnesota who has studied shelf life for decades.

There are several ways that products can be contaminated and can cause illness, including poor handling on farms or in factories and stores, and improper treatment by consumers.

Wednesday’s report follows one about food waste from the NRDC showing that 40% of our food is discarded, resulting in losses of $165 billion a year….People are throwing away food because they believe it’s not safe, she said. And they also may be eating unsafe food because they put too much trust in those date labels.

While there is no research of the exact role those dates play in the 160 billion pounds of annual food waste in the U.S., estimates based on British studies suggest it could be $275 to $455 worth of food per household per year, the report said.

Business suffers, too, as millions of dollars of food is discarded before it’s sold based on those dates, the report said. There is a “dizzying” array of state laws regarding date stamps on food, including no regulations in nine states, Gunders said….

The NRDC report calls for three major changes:

—Putting sell-by dates — meant for businesses — into code so they are invisible to consumers.

—Establishing a uniform date labeling system that differentiates dates for safety from those for quality.

—Increasing the use of safe-handling instructions.

… Among the possibilities being considered is a two-date system that’s clearly marked for the retailer and the consumer.

U.S. Rep. Nita Lowey (D-N.Y.) said she planned to reintroduce the Freshness Disclosure Act, which she had previously proposed, to establish a consistent food-dating system. She said in a statement Wednesday that consumers now were “left in the lurch, forced to decipher the differences between ‘sell-by’ and ‘best if used by,’ and too often food is either thrown out prematurely, or families wind up consuming dangerous or spoiled food. The status quo is really quite absurd.”

NASPGHAN Preview

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I had a few free minutes so I decided to take a look at a bunch of upcoming lectures from the 2013 NASPGHAN upcoming meeting.  With electronic media, it is easy to take a quick glance.  Here’s the master link to all of the following talks:

Annual Meeting page.

Some of the power point lectures that I’ve seen so far:

  • Is my PPI dangerous for me? Eric Hassall MBChB, University of British Columbia One point in his slides that I had not seen much about was a hypothesis that PPI use may predispose to the development of eosinophilic esophagitis by allowing food proteins to be more intact ( attributed to Merwat, Spechler. Am J Gastro ’09).  He explains that “acid reflux” is a clever marketing term and has a slide with Madmen actors.  If there is “acid,” one must need acid suppression.
  • My child doesn’t go to school Lynne Walker MD, Vanderbilt University.  Lynne shows an interesting fax from a parent that asks if the problem is physical, how will she help? And, if it is psychological, how can this be remedied?  She outlines a lot of pain theory and indicates that parents need to become health coaches, avoid catastrophizing (?spelling), and encourages mental health evaluation.  Use the parents words ‘I’m going to refer xxx for relaxation and stress management.’
  • My child’s H. pylori will not go away – (the resistant bug) Benjamin Gold MD, Children’s Center for Digestive Healthcare. Ben manages to stuff so much information into his talk.  His talk is like one of those clown cars where more and more people keep coming out.  He has slides with worldwide resistance maps, slides with treatment regimens and algorithms, and the reasons for treatment failure. Perhaps I can convince him to give a live preview.
  • Administrative/executive functioning Richard Colletti MD, Fletcher Allen Healthcare. Offers personal and pragmatic advice for career advancement.  His slides indicate that he started his GI fellowship at age 40.  One of his quotes, “80% of success is showing up” (Woody Allen) is definitely true.  It’s pretty much akin to what I learned about success in medical school.  You need the three As: availability, affability, and ability.  My mentor said the first was what people needed most.
  • The changing face of intestinal transplantation
    Simon Horslen MD, Seattle Children’s Hospital.  Lecture notes that number of intestinal transplants have decreased dramatically, particularly in children. In 2012, only about 100 intestinal transplants were performed whereas it had peaked at nearly 200.  Much of the credit is due to intestinal rehabilitation work and adjustments in parenteral nutrition (eg. lipid minimization, line care).  Two most common reasons for intestinal transplantation at this time are gastroschisis and volvulus.
  •  Gluten sensitivity: Fact or fiction Alessio Fasano MD, MassGeneral Hospital for Children. This blog has covered a lot of the same material, but Alessio’s slides are pretty impressive.  Also, I was not aware that Lady Gaga consumes a gluten-free diet
  • Controversies in parenteral nutrition Christopher Duggan MD, Boston Children’s Hospital.  This lecture provides a timely update on nutrient deficiencies due to component shortages and discusses lipid minimization compared with fish oil-based lipid emulsions.
  • Vitamin D and immunity James Heubi MD, Cincinnati Children’s Hospital and Medical Center.  In the beginning of the slides, Jim provides a very user-friendly definition of an expert and a suitable picture.  He indicates that in 2011 there were 3746 vitamin D publications but inexplicably only chooses to review a tiny fraction.

At the time of this posting, I haven’t had a chance to look through these talks:

 

 

Not Understanding Medicare Spending

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A recent report (NEJM 2013; 369: 1066-1073) highlights the lack of understanding regarding the costs of Medicare and the political problems ahead for those who try to reduce these costs.  The data the authors provide is derived from six public opinion polls in 2013 with 1013 to 2017 U.S. adults along with historical data.

Key points:

  • 62% believe Medicare spending is rising faster than it was 5 years ago –it’s not.
  • The three top reasons why the public thinks Medicare has rising costs: poor government management, fraud and abuse, and excessive charges by hospitals .
  • Only 53% are aware that it is one of the largest federal budget items.
  • Only 31% believe it is a major cause of the deficit.
  • Two thirds of respondents believe that most Medicare recipients get benefits worth about the same (27%) or less (41%) than what they have paid in payroll taxes/premiums.  In fact, “Medicare beneficiaries on average pay approximately $1 for every $3 in benefits.”
  • Political implications: among registered voters, 12% say they would be more likely to vote for a congressional candidate who favored cuts in Medicare spending to reduce  the federal budget deficit compared with 58% who be less likely to vote for that individual.

Take-home message: Expectations to solve all of Medicare’s projected costs/financial sustainability by eliminating mismanagement along with fraud and abuse are misguided.  A better public understanding of Medicare’s finances would aid the long-term resolution of these issues.

Related blog post:

Don’t miss the gorilla!

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A recent narrative on improving value in health care (NEJM 2013; 368: 959-62) made use of a few psychological experiments to make some excellent points.

The first experiment asked the study participants to focus on a video and to count the number of passes for a team of three basketball players dressed in white while another three-player team dressed in black also played.  “During the video, a woman in a gorilla suit walked across the screen pounding her chest, remaining there for 5 seconds….Consistently, about 50% failed to notice the gorilla.”  Afterwards, when shown the video a second time, many of those who did not see the gorilla insisted that the video had been altered.

The second experiment involved perception.  “One group was initially shown a blurry image of a dog.  Then both groups were shown the exact same image, less blurry.  Those seeing the image for the first time had a much easier time recognizing it as a dog than those who had received previous ambiguous information.”  So, like those in the first experiment who did not  see the gorilla, participants are reluctant to change their opinion even when better information becomes available.

The author notes that the ‘value narrative’ can split patients and physicians into separate teams.  For physicians, value suggests avoiding overuse and providing evidence-based care.  For patients, value means enhancing their experience and catering outcomes that matter to them.  There is a study which shows that patients rate their care as better if they went to an ER for abdominal pain and underwent a CT scan (regardless of whether it was indicated).  Similarly, for back pain, two studies have shown that patients are far more satisfied with their care if they undergo an MRI.

The implications of these experiments on perception is that value in health care needs to be more transparent.

  • “We must admit that turning health care into a customer-service industry may to some extent undermine the delivery of evidence-based care.”
  • We actually know very little “about patients’ values and about how they should or might influence our decision-making.”
  • If we want to control costs and improve quality, “it will first require a look at the whole picture — and then a willingness to believe what we see.”

Off-label medications in pediatrics

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In the U.S., multiple legislative changes have been improving the information available for off-label use of medications (JPGN 2013; 56: 113-4).

The Pediatric Research Equity Act (PL 108-155) and the Best Pharmaceuticals for Children Act (PL 107-109) help the Food and Drug Administration (FDA) promote pediatric trials and better information.

  • Pediatric data must be included in labeling whether results are positive, negative or inconclusive
  • If pediatric trials are not completed because the drug would be ineffective or unsafe, this information must go into labeling
  • Public internet posting of certain FDA pediatric reviews is required regardless of whether the trials led to an approval

Despite these improvements, the data may be difficult to interpret.  The authors of this commentary note that only “48% of trials of products that had pediatric safety information added to the product’s labeling were reported in the peer-reviewed literature.”  Furthermore, in about half of the published articles, the studies did not emphasize the same information as the FDA labeling.

Even when a fair amount of data is provided, it is frequently ignored.  A specific example given by the authors: lansoprazole. Lansoprazole is not approved in patients younger than 1 year and labeling describes a negative trial in this age group. Yet, in the U.S., lansoprazole was dispensed off-label in this population approximately 358,000 times in 2010.

Pharmaceutical companies benefit whether the prescription is for an approved indication or for an off-label use.  Even with approved uses, there have been substantial concerns about adverse effects.  The likelihood of more risk and less benefit is much greater for off-label use.

So with the next prescription, it might be worth thinking about whether the medication works, whether there is sufficient data to support an approved indication, and how much risk is involved.

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Increased complexity or improper coding?

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Not surprisingly, the adoption of electronic health records (EHR) has been associated with higher charges, especially in the emergency room setting (NEJM 2012; 367: 2465-67).  The question remains whether this increased complexity that is being billed is justified or simply due to “gaming” the system with electronic technology.

A specific example has been the increase in the highest level 5 codes used in emergency department (ED) visits, from 27% to 48% of Medicare charges (2001 to 2010).

While “gaming” may be part of the answer, more of the answer lies in the increasing complexity of patient conditions and more complex therapeutic options.  Specifically, the increase in higher coding has been associated with the following:

  • Marked increased use in new diagnostic technology. Overuse of technology is ill defined and failure to diagnose carries a much heavier penalty for physicians.
  • Increased numbers of patients without medical homes.  This increases the need for more diagnostic certainty.
  • Reduced hospital capacity.  Patients may be boarding in ED for quite some time before eventual admission or discharge.

Although the reasons stated explain how there may be more justification for higher complexity, it is well-recognized that EHRs facilitate billing by presenting check-boxes to more easily satisfy coding requirements.  This helps eliminate undercoding.  One of the drawbacks, though, with EHRs has been elaborate documentation at the expense of more direct patient contact.

Take home message:

The current system of coding is flawed.  While the complexity of care has increased, it remains difficult to identify the true value of the care provided. When most incentives reward increased testing and increased documentation which are easy to quantify, this is what will happen.