Cappers vs.Skinners in the Struggle To Control Costs

Jaan Sidorov

Posted 4/25/12 on The Disease Management Care Blog

The Disease Management Care Blog agrees that if you want a peek at a potential future scenario for health care reform, look at what has happened in Massachusetts since 2006. That’s when the Bay State passed a law that, just like its cousin the Affordable Care Act (ACA), emphasized insurance reforms that included exchanges, subsidies and changes in Medicaid eligibility.

According to this recent New England Journal of Medicine article, the reforms resulted in both good and bad news. The good news is that 98% of Massachusetts’ citizens have insurance coverage; the bad news is that health care now consumes a whopping 54% of the state’s total budget.

In response, the state is now pursuing cost reforms. As the DMCB understands it, Massachusetts is banking on the principle of “global payment” to incent health care providers to work within a budget. If it works out, the providers will embrace “value” by delivering needed services and cutting waste. If it doesn’t work out, the providers could end up putting savings before patients by withholding medical care.

Continue reading “Cappers vs.Skinners in the Struggle To Control Costs”

How Much Does It Cost To Have An Appendectomy?

Kenneth Lin

Posted 4/24/12 on Common Sense Family Doctor

A few years ago, a good friend of mine who holds bachelor’s and law degrees from Ivy League schools lost his job and became one of the estimated 50 million medically uninsured persons in the U.S. Over the course of several days, he developed increasingly severe abdominal pain, fever, and vomiting. Though reluctant to seek medical attention, he finally was persuaded to visit his local hospital’s emergency department, where he was diagnosed with acute appendicitis. Despite his critical condition and the need for immediate surgery, he refused treatment until the hospital’s billing department gave him an estimate of how much an emergency appendectomy would cost. Then, as he was being prepared for the operating room, he somehow managed to bargain with the surgeon to reduce his customary fees.
Continue reading “How Much Does It Cost To Have An Appendectomy?”

Flaws in Cancer Screening

Tom Emerick

Posted 4/24/12 on Cracking Health Costs

Lisa M. Schwartz, MD and Steven Woloshin, MD wrote a good article published in the New York Times called “Endless Screenings Don’t Bring Everlasting Health.” Click here to read the full story.

Many Americans have high expectations for avoiding cancer with the right regimen of tests.  After all isn’t that what our wellness programs teach us? Isn’t that what we hear trumpeted in the popular media? Getting such screenings on a regular basis just makes good sense, no?

Continue reading “Flaws in Cancer Screening”

The Supreme Court and the Mathless Health Care Reform Debate

Eugene Steuerle

Posted 4/10/12 on The Government We Deserve

Regardless of how the Supreme Court decides the constitutionality of the individual mandate, the health care debate is now reignited. If the mandate is sustained, the Accountable Care Act enacted under President Obama still has too many kinks to remain unaltered. If it’s thrown out, a return to the unsustainable system with growing numbers of uninsured is not a solution. Yet no fix is possible as long as elected officials dodge the basic arithmetic of health care.

As for the individual mandate, ignore the constitutional briefs for the moment. Ignore also how a mandate helps address problems that arise if insurance companies must offer coverage regardless of prior conditions and people otherwise are tempted to wait until they are sick to buy it. Instead, let’s see how a mandate fits it into the broader arithmetic of paying for health care.

Continue reading “The Supreme Court and the Mathless Health Care Reform Debate”

Great News! Medicare Tightening Up At Last

Tom Emerick

Posted 4/3/12 on Cracking Health Costs

Good news on the Medicare front.  In a few states (FL, CA, MI, TX, NY, LA, IL) they are at last tightening up on unnecessary surgical procedures, according to a news story in Forbes.  Hurray!

According to the story, “In 2012 CMS will perform an audit before paying for several big ticket cardiology and orthopedic procedures in certain key states.”  All I can say is, at last.

This is huge news.  If Medicare takes this seriously, and gets the results it should get, it will be a great step forward in advancing evidence-based medicine in the public sector.  Further, it will pave the way for employer-sponsored plans to be more aggressive in dealing with over-surgery.  Readers of Cracking Health Costs know that I’ve been tough on Medicare for looking the other way over unnecessary surgery for decades.  May the day come when I can take it all back.

Predictably surgeons are unhappy.  Most surgeons have had no accountability to anyone for getting diagnoses right or doing surgery only when truly necessary.  They will vigorously resist such accountability.  However, such accountability is the norm in most industrialized nations.  That lack of accountability here is one of the main reasons why we spend so much more on health care than our peer nations but get worse and worse results.  Accountability needs to be the norm here too.

Plus Wall Street doesn’t like the idea either.  “Reaction to the report on Wall Street was immediate.  Hospital and medical device stocks plunged after the report was issued on Friday….”  Hmm.  My theory is Medtronic’s stock price is inversely related to America’s economic health.

This is a good test to follow as it is a battle between evidence-based medicine and profit-driven medicine. To see the full article, click here.

Pay Some Doctors More to Save Money

Paul Levy

Posted 3/26/12 on Not Running a Hospital

One of the strange things about health care in America is the manner in which decisions are made about how different kinds of doctors should get paid for their services.  It turns out that the system is controlled in a way most consumers would find unbelievable. As noted by the Wall Street Journal:

 

Three times a year, 29 doctors gather around a table in a hotel meeting room. Their job is an unusual one: divvying up billions of Medicare dollars.

The group, convened by the American Medical Association, has no official government standing. Members are mostly selected by medical-specialty trade groups. Anyone who attends its meetings must sign a confidentiality agreement.

Yet the influence of the secretive panel, known as the Relative Value Scale Update Committee, is enormous. The Centers for Medicare and Medicaid Services, which oversee Medicare, typically follow at least 90% of its recommendations in figuring out how much to pay doctors for their work. Medicare spends over $60 billion a year on doctors and other practitioners. Many private insurers and Medicaid programs also use the federal system in creating their own fee schedules.

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The Right Rx for Better Health Care: Rise Up to Challenge the Industry’s Lobbying Power

Brian Klepper and Shannon Brownlee

Published 3/29/12 in the New York Daily News

Obamacare had its days in the Supreme Court this week, and the justices’ decision could have sweeping consequences for the individual mandate provision in the Patient Protection and Affordable Care Act, and maybe even for the fate of the law itself.

Yet whatever the court decides, we will still be stuck with a problem that this contentious law was not likely to solve on its own: an out of control health care industry that threatens the stability of the U.S. economy and the federal government’s ability to deal with our long-term debt.

Continue reading “The Right Rx for Better Health Care: Rise Up to Challenge the Industry’s Lobbying Power”

Will the Pace of Innovative Change Overtake the Financial Imperative to Slash Spending?

Robert Laszewski

Posted 3/08/12 on Health Policy and Marketplace Review

I thought it was worth passing along the comments by Jim Tallon, president of New York’s United Hospital Fund, in a recent post.

Tallon reflected on an international meeting he attended with health care leaders from a number of industrial nations–“nations whose health care systems, indeed underlying philosophies, ranged from market orientation through hybrids to government authority:”

Continue reading “Will the Pace of Innovative Change Overtake the Financial Imperative to Slash Spending?”

The Fiction Behind the Cost of New Drugs

Merrill Goozner

Published 2/16/12 in The Fiscal Times

The drug industry usually defends the high price on drugs – the latest cancer therapies are tipping the scales at $100,000 a year – by pointing to the large sums it spends on research and development. It is true that drug firms spend alarger share of their revenue on R&D than most other industries, typically anywhere from 15 to 20 percent of sales. And Eli Lilly ran a Super Bowl ad claiming the cost of developing a new drug has now risen to more than $1.3 billion.

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Connecting the Dots: How Anticompetitive Contracting Practices, Kickbacks, and Self-dealing by Hospital Group Purchasing Organizations (GPOs) Caused the U. S. Drug Shortage

Brian’s Note: This piece found its way to me yesterday and, with the author’s permission, I’m republishing it in its entirety. It is a very long but worthwhile read, mostly because it clarifies what we’re up against. Kudos to Ms. Earl and Mr. Zweig for having the courage and tenacity to document this.

Patricia Earl and Phillip L. Zweig

Authors Note: Because of widespread misinformation on the causes of this public health emergency and the extreme urgency of resolving it, we have written this paper in a timeline format. We thank Bill Bandy, retired CEO and founder of United Medical Supply, a Dallas-based medical supplies distribution firm, for his invaluable research assistance.

COPYRIGHT © 2012 by Patricia Earl and Phillip L. Zweig

Abstract:
Recent reports by the Department of Health and Human Services (HHS) Office of Planning and Evaluation (ASPE)1, the Food and Drug Administration (FDA)2 and other sources on the acute shortage of generic drugs have attributed the shortages to everything from raw materials shortages and manufacturing problems to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, and FDA drug approval delays. Based on these analyses, President Obama on October 31 issued an Executive Order instructing the FDA to require manufacturers to notify the agency of impending shortages, to expedite regulatory reviews, and to increase staff in its drug shortages program.

In this white paper, the authors argue that these explanations, and President Obama’s Executive Order, miss the point entirely. These reasons are ancillary to the root causes of this crisis. In fact, it is the direct result of the anticompetitive, exclusionary contracting practices, self-dealing, collusion, kickbacks and conflicts of interests of giant hospital group purchasing organizations (GPOs), which have undermined free market competition in drugs, medical devices, and supplies in the U. S. These purchasing cartels, which contract for $200 billion+ in hospital goods each year for about 5,000 non-profit, acute care hospitals, have rigged this market in favor of a handful of dominant suppliers and distributors, thereby making it unprofitable for other companies to make or sell these inexpensive, hard-to-manufacture drugs.

Continue reading “Connecting the Dots: How Anticompetitive Contracting Practices, Kickbacks, and Self-dealing by Hospital Group Purchasing Organizations (GPOs) Caused the U. S. Drug Shortage”

Addressing Chronic Illness Can Help Cure The US Budget Deficit

Chronic illness represents $3 of every $4 of annual health spending in the U.S. That’s about $1.5 trillion.
– Adopting evidence-based interventions for disease preventionLiving Well With Chronic Illness, a report fromThe Institute of Medicine (IOM), issues a “call for public health action” to address chronic illness through:

– Developing new public policies to promote better living with chronic disease
– Building a comprehensive surveillance system that integrates quality of life measures, and
– Enhancing collaboration among health ecosystem stakeholders: health care, health, and community non-healthcare services.

Continue reading “Addressing Chronic Illness Can Help Cure The US Budget Deficit”

What is “Sustainable” Health Spending

Charles Roehrig

Posted 2/3/12 on the Health Affairs Blog

©2012 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

As we embark upon a presidential campaign season, we can anticipate many lively debates on the topics of taxation and spending in this nation.  As health spending in the Unites States accounts for 18 percent of our gross domestic product – a rate often called unsustainable – it is critical that we be clear-eyed in our understanding of the tradeoffs between tax revenues and a sustainable rate of national health spending.

Few have tried to paint a comprehensive scenario of what a sustainable rate of health spending might look like in the United States. That is what the research team at Altarum institute’s Center for Sustainable Health Spending has endeavored to do in this article.  Only by having a well researched and objective picture of sustainable spending growth can we set measurable targets and track progress toward reaching what should be a national goal of this highest priority.

In an earlier blog on Altarum Institute’s Health Policy Forum, I defined sustainable health spending as a projected growth path of spending that is within what the nation is willing to pay.  I argued that, under the Affordable Care Act (ACA), the protections provided by the federal government reduce the effects of health spending growth on other stakeholders. (See note 1)  Consequently, the sustainability of a given rate of health spending growth largely rests with the federal government’s ability to meet its various health spending commitments, including those added under the ACA.  This, in turn, rests upon the willingness of the citizenry to allocate the necessary tax revenues.  Given the inherent uncertainties regarding the public willingness to pay future taxes, this research is partly hypothetical, but I think it provides insights into the tradeoffs between tax revenues and health spending that contribute to informed decisions about targets for taxes and health spending.

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A Thousand Dollars Says Dr. Ezekiel Emanuel Is Wrong About ACO’s Long Term Prospects

Jaan Sidorov

Posted 2/1/12 on the Disease Management Care Blog

Approximately 15 years ago, the Disease Management Care Blog was a speaker at a conference with an audience mostly made up of managed care leaders. It boldly argued the nation’s disease management vendors were going to help put the nation’s health insurers out of business by simultaneously assuming risk and lowering costs.

Hows that for chutzpah. The DMCB was never invited back, but not because it isn’t an outstanding conference speaker who deserves fat fees.

It was because it was utterly wrong.

And so is this online commentary on accountable care organizations (ACOs) courtesy of the The New York Times. In it, Dr. Ezekiel Emanuel boldly predicts that by 2020, ACOs will drive health insurance companies out of business. They’ll do that by assuming full risk, dropping patient barriers to care, coordinating services, fostering communication, promoting health, banning fee-for-service, increasing efficiency, relying on evidence-based care, being locally responsive and competing against other ACOs on cost and quality

Dr Emanuel is being astonishingly overconfident for four reasons.

Continue reading “A Thousand Dollars Says Dr. Ezekiel Emanuel Is Wrong About ACO’s Long Term Prospects”

Trusting Government: A Tale of Two Federal Advisory Groups

David C. Kibbe and Brian Klepper

Posted 2/2/12 on the Health Affairs Blog

©2012 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

Americans increasingly distrust what they perceive as poorly run and conflicted government. Yet rarely can we see far enough inside the federal apparatus to examine what works and what doesn’t, or to inspect how good and bad decisions come to pass. Comparing the behaviors of two influential federal advisory bodies provides valuable lessons about how the mechanisms that drive government decisions can instill or diminish public trust.

Continue reading “Trusting Government: A Tale of Two Federal Advisory Groups”

Health Care’s Medical Gluttony

Dan Munro

Posted 1/31/12 on Forbes

Dan MunroSeems to me we always have a few big breaking healthcare stories early in the year.  I remember last year when Mary Meeker released her stunning report – USA, Inc.  For the first time, it gave us a detailed view into the health of our country – as if it were a Corporation using balance sheet accounting.  That report is truly outstanding.  If you haven’t read it – I can’t recommend it highly enough.  In some ways I think it’s “table stakes” for any intelligent discussion around the health (and healthcare) of our Country. In that report are two charts that graphically illustrate the size of our healthcare spending (as reported through 2009) – and then the results of our healthcare system.  This was the first one: