Category Archives: Health Economics

Do you know about the “Choosing Wisely Campaign?”

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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

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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

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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.

Other problems:

  • Current methods do not adequately address case-mix and patients’ severity of illness
  • Individual physician volumes are insufficient to apply most quality measures.
  • Many physician practices do not have the infrastructure to obtain the needed quality data
  • There are nearly 150 times as many physicians who bill Medicare as there are hospitals. Also, the physicians come from much more varied backgrounds, including  primary care, subspecialists, and surgical specialists.
  • How can one measure empathy, respect, and thoroughness?

What needs to happen?

  • New tools that more accurately measure value-based care will be needed.
  • To truly influence physician behavior, the incentives will need to be greater; this is likely to occur downstream which may be a stronger reason for physicians not to ignore these quality indicators.

Bottomline: For pediatric healthcare providers, the lessons from Medicare with regard to value-based care will be applied more broadly.  So, pay close attention.

Related link on Accountable Care Organizations (ACO):

Make Physicians Full Partners in Accountable Care Organizations …

Also Noted:

Meaningful-use deadline pushed back one year – http://ow.ly/rx4vW  

An excerpt:

The CMS is giving providers another year to show they’ve met the Stage 2 criteria of the federal government’s incentive program to encourage the adoption and meaningful use of electronic health records. That means the start of the next phase will be pushed back a year. 

Stage 2 will be extended through 2016 and Stage 3 won’t begin until at least fiscal year 2017 for hospitals and calendar year 2017 for physicians and other eligible professionals that have by then completed at least two years at Stage 2, the CMS said Friday. 

The latest extension parallels what the feds did with Stage 1, which was originally set to last two years but was lengthened by a year when it appeared the industry would be overstretched to build and get acclimated to systems capable of meeting the federal payment program’s more stringent Stage 2 criteria.

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: