The Goose and the Elephant

Brian-KlepperAmerica’s drug and biotech industries are no doubt alarmed by the national firestorm that erupted when Turing Pharmaceuticals raised the price 55 times of its 62 year old lifesaving drug, daraprim. They must worry that CEO Martin Shkreli’s tone-deaf reactions to the public’s scorn could precipitate close scrutiny of broader drug industry dynamics. The last thing pharma wants is a vigorous, in-depth national discussion of pricing, value, what we can afford and how other advanced countries handle drug spending. All this could kill the golden goose.

Seeking distance from the furor, PhRMA tweeted that “Turing Pharma does not represent the values of PhRMA’s member companies.” Then BIO, the biotech industry’s association, rescinded Turing’s membership and returned its dues, the equivalent of booting Turing out of the country club.

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The RUC, Health Care Finance’s Star Chamber, Remains Untouchable

Brian Klepper

Posted 2/1/13 on The Health Affairs Blog

BK PhotoOn January 7, a federal appeals court rejected six Georgia primary care physicians’ (PCPs) challenge to the Centers for Medicare and Medicaid Services’ (CMS) 20-year, sole-source relationship with the secretive, specialist-dominated federal advisory committee that determines the relative value of medical services. The American Medical Association’s (AMA) Relative Value Scale Update Committee (RUC) is, in the court’s view, not subject to the public interest rules that govern other federal advisory groups. Like the district court ruling before it, the decision dismissed the plaintiffs’ claims out of hand and on procedural grounds, with almost no discussion of content or merit.

Thus ends the latest attempt to dislodge what is perhaps the most blatantly corrosive mechanism of US health care finance, a star-chamber of powerful interests that, complicit with federal regulators, spins Medicare reimbursement to the industry’s advantage and facilitates payment levels that are followed by much of health care’s commercial sector. Most important, this new legal opinion affirms that the health industry’s grip on US health care policy and practice is all but unshakable and unaccountable, and it appears to have co-opted the reach of law.

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Niseritide, the “Lost Decade”, and the Pinto

Patricia Salber

First posted 7/14/11 on The Doctor Weighs In

Eric Topol, MD wrote an interesting commentary in the July 7, 2011 issue of the New England Journal of Medicine, titled “The Lost Decade of Nesiritide.” Nesiritide is a drug for heart failure symptoms (e.g., shortness of breath) that was approved by the FDA in 2001. Since that time, according to Dr. Topol, “well more than $1 Billion was wasted on purchasing the drug.”

It turns out that the FDA approved the drug was based on a relatively small, not particularly well done clinical trial that showed improvement in self-reported symptoms of shortness of breath 3 hours after the drug was administered. Once the drug was approved, the drug was marketed like crazy. For profit outpatient heart failure “tune up” clinics opened so that heart failure patients could get weekly intravenous infusions of the drug.

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Secret Shoppers: Needing A Weatherman To Know Which Way The Wind Blows

Brian Klepper

Every now and then, a well-intentioned administration does something relatively harmless but so hare-brained and openly foolish that it takes our breath away. The Obama Administration’s primary care “secret shopper” plan fit this bill, and has already been shelved due to the withering criticism. My inbox a couple days ago was filled with rants by physicians of all political persuasions marveling at the lameness of the idea.

Here’s a short description from Robert Pear’s article in Sunday’s New York Times.

The administration says the survey will address a “critical public policy problem”: the increasing shortage of primary care doctors, including specialists in internal medicine and family practice. It will also try to discover whether doctors are accepting patients with private insurance while turning away those in government health programs that pay lower reimbursement rates.

Continue reading “Secret Shoppers: Needing A Weatherman To Know Which Way The Wind Blows”

Health Costs Haunt the US’ Long Term Budget Outlook

Jane Sarasohn-Kahn

First published 6/24/11 on Health Populi

“With the aging of the population and growing health care costs, the budget outlook, for both the coming decade and beyond, is daunting,” reports the Congressional Budget Office (CBO) in the2001 Long-Term Budget Outlook report. If you read between the lines and into the future scenarios on health spending and budget deficits, it’s clear that as Baby Boomers age, America’s fiscal outlook gets bleaker by the year.

Spending on Medicare, and health care as it’s paid for today, is unsustainable. The pie chart shows that 22% of spending on health was for Medicare in 2009, 17% was allocated to Medicaid and CHIP for children, and 11% of spending was for other public health programs provided by state and local governments, the Department of Veterans Affairs, the Department of Defense, and workers’ comp.

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Why Primary Care Needs A New Organization

Paul M. Fischer

First published on 6/15/11 on MedPage Today

A few weeks ago, the Board of the American Academy of Family Physicians (AAFP) announced that, for now, it would continue participating in the Relative Value Scale Update Committee (RUC), the secretive American Medical Association committee that, through a longstanding relationship with the Centers for Medicare and Medicaid Services (CMS), has heavily influenced physician reimbursement.

At nearly the same time, Medicare announced that it will go broke in 2024, a decade sooner than expected and only 13 years away.

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Means Testing Medicare Premiums

by Patricia Salber

First published 6/14/11 on The Doctor Weighs In

With all of the hullabaloo about health reform, the Ryan plan and other Medicare-related excitement, I somehow missed a major change in how Medicare is doing business – which is pretty funny since I have spent the last 5 years working for Medicare Advantage plans.  Since January 2011, Medicare has been means testing the Part B premium.  Even more amazing is that some of my most wonky policy wonk friends didn’t know about this – not mentioning any names.

Anyway, I found out in the rudest of ways – a letter from the Social Security Administration describing the impact of the new approach on my own premiums.  It was a shocker for someone used to paying nothing for health care.  (I know, no sympathy for me on that one.)

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Neither Dems Nor Reps Care Proposals Are Supported By Past Performance

Robert Laszewski

First published 6/07/11 on Health Policy and Marketplace Review

I call your attention to Ezra Klein’s column in the Washington Post this morning.

In it he cites data that has been out there for a long time but Ezra puts some perspective on it that never occurred to me before.

Examining the Kaiser Family Foundation brief, “Health Care Spending in the United States and Selected OECD Countries” he points out, “Our government spends more [as a percentage of GDP] on health care than the governments of Japan, Australia, Norway, the United Kingdom, Spain, Italy, Canada, or Switzerland.”

The data would seem to indicate that even our single payer government-run American health care programs, Medicare and Medicaid, cost way more than similar health plans in these nations.

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Some Of My Best Friends Are In Private Equity

Paul Levy

First published 6/2/11 on Not Running a Hospital

Like moths to a flame, private equity investors are quick to pounce on those sectors of the economy that have the potential for higher than average returns. Such investors also have an appetite for the higher risk that accompanies those sectors. In this manner, private equity can serve a useful role in capital formation for the economy. It also helps money managers who want a portion of their portfolio to be in that part of the risk-reward spectrum.

Health care is a fertile field for private equity. You might not think so because of concern about rising costs, but as someone once said, “One person’s costs are another person’s income.” Let’s look at it this way. First, more people will have access to insurance to pay for diagnosis and treatment because they will be newly eligible for private insurance under the national health care reform law. Second, demographic changes in society are producing an ever-increasing demand for health care services. Longer lifespans and the aging population offer a growing number of people with cancer and the other diseases that are more likely to occur with age. The number of Medicare beneficiaries is projected to rise from 46.6 million today to 78 million in 2030. (It was 40 million in the year 2000.)

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An Important Article in the New York Times

Today’s NY Times has a terrific op-ed by Rita Redberg MD, a Professor of Medicine at the University of California in San Francisco, that clearly describes the massive waste that occurs in Medicare (and the rest of health care) from incentives for care services that have no basis in evidence. The article provides concrete examples of blatantly unnecessary or incorrect services that have become commonplace and immensely costly, without clinical benefit.

Dr. Redberg has an interesting bio. A Cardiologist, she is Chief Editor of Archives of Internal Medicine. Even more provocative, she “has spearheaded the journal’s new focus on health care reform and “less is more”, which highlights areas of health care with no known benefit and definite risks.

Please read today’s piece and then rebroadcast to your professional network. In it, Dr. Redberg has encapsulated the core of America’s health care cost crisis. Appreciating this reality is the predicate to changing health care and its threat to the larger American economy.

The Ryan Plan

Richard Young

First published 5/22/11 on American Health Scare

It’s been interesting watching the political maneuvering since Newt Gingrich criticized the plan to reduce the federal budget deficit proposed by the House Budget Committee Chair Paul Ryan of Wisconsin. After receiving push back from fellow Republicans, Gingrich spent the week backpedaling from his earlier remarks.

Many pundits have recognized Ryan for his courage to present his ideas in the first place. I also applaud the fact that he was willing to put the issue of fiscal sanity on the radar screen in a concrete way few other politicians have been willing to. This comes against the backdrop of recent estimates that a 56-year old couple will pay $140,000 in Medicare taxes per person over their work lives, but will receive $430,000 of benefits. This is unsustainable welfare.

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Health Care Reform Revisited – The Elephant in the Room: Part 1

Sean Sullivan, JD

First published 5/17/11 on the Institute for Health and Productivity Blog

I had the pleasure week-before-last of attending one of my favorite health care events – the CAPG 2011 Annual Conference in Palm Desert, California (just a few hours’ drive away from IHPM’s headquarters in Scottsdale, Arizona).

CAPG stands for the California Association of Physician Groups, considered by many the most significant physician-based organization in the country and IHPM’s partner in a new initiative aimed at harnessing the power of the nation’s most advanced medical groups to proven worksite health improvement programs to produce even better outcomes in the working population.

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Average Annual Health Costs for a US Family of Four Approach $20,000, With Employees Bearing 40%

Jane Sarasohn-Kahn

First published 5/11/11 on Health Populi

Health care costs have doubled in less than nine years for the typical American family of four covered by a preferred provider health plan (PPO). In 2011, that health cost is nearly $20,000; in 2002, it was $9,235, as measured by the 2011 Milliman Medical Index (MMI). To put this in context,

  • The 2011 poverty level for a family of 4 in the 48 contiguous U.S. states is $22,350
  • The car buyer could purchase a Mini-Cooper with $20,000
  • The investor could invest $20K to yield $265,353 at a 9% return-on-investment.

Continue reading “Average Annual Health Costs for a US Family of Four Approach $20,000, With Employees Bearing 40%”

Bin Laden, Patriotism and Our Health Care Crisis

Michael Millenson

First published on 5/2/11 on the Forbes Blog

In the near-decade since the Sept. 11, 2001, terror attacks, the “War on Terror” has cost the United States about $1.3 trillion, according to the National Center on Defense Information.

By comparison, it took just six months for the U.S. to spend that much money on health care, based on the $2.5 trillion spent in 2009.

Why does that comparison matter? Because as health care costs rise, they have begun to crowd out the money available in state and federal budgets for elementary and secondary education, infrastructure and other pressing human needs. The War on Terror isn’t going away and, in fact, may increase in intensity in the short term if fears of Al Qaeda retaliation prove true, so we won’t be de-funding the military to provide to get money to shore up crumbling bridges, roads and schools.

2009 report from the Office of Management and Budget put it plainly: “The Federal Government’s long-term fiscal shortfall is driven primarily by escalating health care costs…These growth rates are simply unsustainable and are why slowing the growth in health care costs is the single most important step we can take to put the Nation on firm fiscal footing.”

David Walker, the former U.S. Comptroller General turned crusader for fiscal responsibility, has said repeatedly, “If there’s one thing that could bankrupt American, it’s health care costs.”

Perhaps some of the patriotic unity inspired by the successful operation to kill Osama bin Laden can carry over to the efforts to responsibility control health care costs and preserve what makes America great. Not very likely – but, hey, one can always dream.

Michael Millenson is President of Health Quality Advisors.