Kickbacks, corruption, and graft are not models for efficiency in health care

‘The Trump administration has labored zealously to cut federal regulations, but its latest move has still astonished some experts on health care: It has asked for recommendations to relax rules that prohibit kickbacks and other payments intended to influence care for people on Medicare or Medicaid.’

So begins the article ‘Trump Administration Invites Health Care Industry to Help Rewrite Ban on Kickbacks’ by Robert Pear in the NY Times, November 24, 2018. The next sentence provides the ostensible motivation for the rule change: ‘The goal is to open pathways for doctors and hospitals to work together to improve care and save money,’ but the sentence immediately after goes to the meat of the issue: ‘The challenge will be to accomplish that without also increasing the risk of fraud.’

The reason that there are anti-kickback laws in any industry is, of course, to prevent fraud. It is bad enough when we discover that a supposed impartial reviewer of a film or a book, or an item we may want to purchase like a car or a computer, is in fact being paid by one manufacturer to recommend their product. It is even worse if it turns out that the product that they are recommending is us, and that someone that we have trusted with our lives and our health, like a doctor, is being paid to send us to a particular lab or x-ray facility or hospital or specialist. Maybe the one we are being referred to is the best one, but it is hard to trust that if we discover that the doctor has a financial interest in that facility, or is receiving a kickback for those referrals. Most people are afraid of this and thus support anti-kickback laws; the exception is always those within the industry who stand to benefit. Surprise! And, it should be noted, it seems to be a core part of the business model of the Trump Organization.

But what about that middle sentence? The one that says that ‘the goal is to open pathways for doctors and hospitals to work together to improve care and save money’? Isn’t that a worthwhile goal? And both the American Medical Association (AMA) and American Hospital Association (AHA) are supporting the proposals. Am I saying that they are crooks or corrupt? Doesn’t it make sense that there can be not only savings but enhanced quality from the efficiencies that can come from such arrangements? How can we realize the efficiencies if doctors and hospitals are prevented from coordination of care?

The answer, as I see it, is “yes, but..”. There should not be unreasonable restrictions to care coordination, provided that they are upfront and obvious to the consumers (patients) such as in health maintenance organizations (HMOs) and the like which use limited panels of doctors, or public hospitals where care is often provided by employed physicians. The core issue, in health care, is to ensure that these arrangements are truly for the benefit of the health of patients, and not mainly to make more money for the providers. When your physician, Dr. Smith, refers you to a particular specialist (Dr. Jones) because they know them and think they are smart, competent and do good work even though another physician across town may have better results by some measures, it may be good or bad but it is honestly being done by Dr. Smith for your benefit. But if you discover that Dr. Jones is paying Dr. Smith for referrals, you might well be chary of the motivation.

There are several important things to remember in this discussion:

1.     Not everyone is, or is likely to become, a crook. There are many, maybe most, individual health care providers (like doctors) who actually care more about people’s heath than profit. There are even some institutional health care providers, hospitals and health systems, that may.

2.     There will always be people and institutions who “push the envelope”, and game the system. They will do everything that is legal, even if it violates the spirit and intent of the law, if it makes them more money. “Give them an inch and they’ll take a mile”.

3.     The looser the rules, the more these people and institutions will game it. There is no reason to suspect that money-grubbing cheaters will be satisfied if given a little more. Think about those (maybe me and you) who routinely feel ok about driving 5-10 MPH above the speed limit on a highway. If the speed limit is 65, we may drive 70 or 75. But if it is 75, we drive 80 or more. Raising the limit on what constitutes corruption will not obviate it.

4.     Carrots don’t work very well to change such behavior, although sticks might work a little better.

Don McCanne recently discussed a study from RAND called ‘Effects of Health Care Payment Models on Physician Practice in the United States’ which described the many different models being employed by various health systems and physician groups in the US, but alertly appened a reference to a NY Times article on October 27, 2018 by Alfie Kohn titled ‘Science Confirms It: People Are Not Pets: Research on the efficacy of rewards tells us that we can’t bribe others into doing what we want’. It reviews the psychological science that there is a difference ‘between intrinsic motivation (wanting to do something for its own sake) and extrinsic motivation (for example, doing something in order to snag a goody). The first is the best predictor of high-quality achievement, and it can actually be undermined by the second. Moreover, when you promise people a reward, they often perform more poorly as a result.’ Indeed, Kohn shows that sticks are not that effective either at changing behavior; I advocate them to some degree because at least they can put the biggest violators in jail!

The Pear article on kickbacks, trying to describe what its supporters see as the good side of loosening restrictions on them, says: ‘‘Federal law generally prevents insurers and health care providers from offering free or discounted goods and services to Medicare and Medicaid patients if the gifts are likely to influence a patient’s choice of a particular provider. Hospital executives say the law creates potential problems when they want to offer social services, free meals, transportation vouchers or housing assistance to patients in the community. Likewise, drug companies say they want to provide financial assistance to Medicare patients who cannot afford their share of the bill for expensive medicines.’ First of all, this is not “likewise”; drug companies who want new customers (and fend off efforts to regulate prices) are different from a hospital or provider offering free or discounted services; extra benefits to attract patients (as opposed to, say, free lunches to attact doctors) are quite different,  provided that these are really free, and the cost is not passed on to Medicare or Medicaid!

There is, in fact, a difference between ‘coordinated care’ and ‘graft’.

Pear also writes ‘‘The Justice Department in April accused Insys Therapeutics of paying kickbacks to induce doctors to prescribe its powerful opioid painkiller for their patients. The company said in August that it had reached an agreement in principle to settle the case by paying the government $150 million. The line between patient assistance and marketing tactics is sometimes vague.’

Vague? This is not vague at all. Creating efficiencies to improve care to patients, and reduce costs, especially to patients, is fine. Kickbacks and graft are not.

Epi-Pen® and Predatory Pricing: You thought our health system was designed for people’s health?

Martin Shkreli, the former CEO of the drug company Turing, achieved his 15 minutes of fame (or infamy) last year through predatory pricing, raising the price of pyrimethamine, an old drug used to treat a parasitic infection in the brains of immune-compromised (usually HIV-infected) people from $13.50 to $750 a pill (Drug prices and corporate greed: there may be limits to our gullibility, September 27, 2015). Shkreli manage to further alienate people by his testimony before Congress, widely described using adjectives such as “smug” and “condescending”.  The most recent Pharma CEO to hit the news for price gouging, Heather Bresch of Mylan, seems to be trying to avoid Shkreli’s “doubling down” by making an apology, of sorts.

Bresch’s company, unquestionably with her active involvement, raised the price of Epi-Pen®, a self-injectable form of epinephrine that is sold to prevent people from dying from severe allergic (anaphylactic) reactions to a variety of substance, from peanuts to bee stings, from about $100 to $600 for a 2-pack. Two things: first, such pens are lifesavers. As a physician, when I tried to figure out what I needed to pack in an emergency first-aid kit for camping, it was #1. It was the only thing I could think of that actually could keep someone from dying in the woods. Second, epinephrine is an old, cheap drug. As ABC news reported, a doctor in Canada showed how a physician can prescribe a whole vial, plus small syringe and needle, for under $10, and a person can easily inject themselves, just under the skin. The “value” of the Epi-Pen is that it is self-injecting, but hard to even justify the $100. Or the somewhat higher cost of a generic (Mylan, indeed is a generic company.) Bresch, the daughter of a US Senator, was awarded an MBA by West Virginia University despite not finishing the coursework (which led to the resignation of the president). She protested that she wasn’t being predatory like Shkreli, and offered to sell the drug at a 50% discount, only $300! That is still a lot. I have a friend whose daughter is allergic to peanuts; both her day care centers require her to have a 2-pack of Epi-Pen®, with prescription (thus can’t do the epinephrine bottle) – this could cut her outlay from $1200 to $600. Of course, she will spend it to potentially save her daughter’s life, the key point that Mylan and Ms. Bresch understood when they raised the price. At more or less the same time, Ms. Bresch raised her own salary from a paltry less-than-$2 million a year to $18 million. I guess the rise in the price of Epi-Pen® funded that. MAD Magazine® used to do satire but its recent coverage of Epi-Pen® is almost investigative reporting (see picture).

Could it get worse? Sure, why not? Bresch’s father, Senator (and former Governor) Joe Manchin of West Virginia may or may not have been helpful to Mylan (it is, after all, a West Virginia company), but many politicians have been tied to helping drug companies make lots of money. Bill Moyers covers the role of Billy Tauzin, a former Congressman from Louisiana who chaired the House Energy and Commerce Committee when Congress passed the Medicare drug plan (Medicare Part D) under President G. W. Bush. That legislation prohibited Medicare from using its clout to negotiate lower drug prices. Tauzin left Congress in 2005 and became chief lobbyist for the Pharmaceutical Research and Manufacturers of America (PhRMA), converting his well-paid (by campaign donations) service while in Congress to a MUCH better-paid job lobbying his former colleagues. He is credited with having a major impact on the ACA, passed in 2010, ensuring its Pharma-friendly characteristics. And, to be sure, Tauzin, who left PhRMA after 5 years, was scarcely alone in pushing pharmaceutical industry interests in Congress, or in receiving big donations, as the Moyers piece documents. Congress appears to buy the idea that Pharma needs high prices for doing research and development (despite the fact that they spend many times their R&D budgets on marketing, and much of the basic research is done with government funding at universities) and that other countries’ restrictions on the prices of their drugs require them to charge Americans more. Of course, the real reason that pharmaceutical companies charge so much in the US is that they can get it. Whose interests is Congress working in when it does this? Not the American peoples’…

I recently discussed the fact that some large insurers (Aetna, United, Humana)  are leaving the health insurance exchange marketplace in some parts of the country because they are losing money (or, perhaps, just not making enough) because too many sick people and not enough healthy people are signing up, turning the insurance model on its head.  Although the ACA contains an individual mandate, lots of people with less money and/or fewer health needs are not signing up and paying the penalties, which are much less costly (if they are even “caught”). Of course, the ACA did not include a “public option”, which would have been much less costly, specifically to offer these insurers a competition-free field. This is discussed in detail by Princeton health economist Uwe Reinhardt in a JAMA Forum on August 25, 2016 “Why Are Private Health Insurers Losing Money on Obamacare?”. The reason comes down to the same one that has always been true, and that I discussed a number of years ago (October 20, 2009, Red, Blue, and Purple: The Math of Health Care Spending) – a small minority of people account for most health care costs. I have attached a graph from Reinhardt’s piece that makes the same point. And, although he explains the reason insurers lose money, Reinhardt does not excuse it. "If health care costs in the United States were lower, most people would probably agree that ill, low-income citizens should receive the needed health care that is available to better-off individuals. The problem is that our health system is in danger of pricing kindness out of our souls."

So we have both the greed of pharmaceutical companies and the greed of insurers. As discussed in many recent articles in the popular press, the bottom line is that the health benefit to Americans is at best a side effect of complex plans engineered to make profit. This perverted approach, almost unique to the US, has marginalized, bankrupted, and caused illness and death in many. This system doesn’t work for people. A fairly well-off couple caught in the bind of insurance costs is profiled by AP in its “The Big Story: “Without a subsidy, couple faces higher insurance premiums”. The husband notes the failure of our system to ensure that people’s health is a greater priority than corporate profit:  "Ultimately, it's clear that health care is not something that can be efficiently provided by the private sector. The rest of the Western world has figured out that health care is a right and is intrinsically a government, public-sector activity.”

Don McCanne, in his Quote of the Day,  provided that link on August 22. And then, on August 23, a profound and direct commentary from the editors of the Des Moines Register, “Editorial: Government should not rely on private insurers”:

“Americans’ access to health insurance should not depend on the profit margins, business dealings, or mergers of for-profit companies. Not in Medicare. Not in Medicaid. And not in exchanges created by health reform law. Instead of funneling tax dollars to private companies, government is better equipped to administer insurance. It is not beholden to stockholders. It does not seek to turn a profit. And it will not abandon the responsibility of providing health coverage to Americans.”

Professor Reinhardt and those editors are right. Our souls are certainly in jeopardy. And so are our pocketbooks. And so is our health.

Is the US health system about "health" or "profit"?

There are two forces at work in the system of health care delivery in the US which are essentially incompatible. One, which might be called the “health” approach, is focused on improving the health of the people. This could, should, and does include efforts to control costs, because this makes it possible to maximize the number of people who can benefit. This approach, which is codified in almost all international and most national health goals, seeks to use whatever resources exist (financial, structural, institutional, and human) to have the greatest health benefit for the most people. The World Health Organization (WHO) defines health as “…a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity”. A cornerstone of this is understanding that public health measures, which benefits populations, are generally of greater urgency and wider benefit than individual medical interventions.

While the need for a public health approach is perhaps more obvious for poor countries which lack, for example, clean water, it is no less important for wealthy nations such as the US; we just don’t usually think of the fact that we usually have clean water as a “health benefit”. As with many things, we are less likely to notice things that are good than those that are problems, and we relegate them to the background of our consciousness. We don’t wake up each morning saying “I’m glad I don’t have cholera because I have access to clean water!” Indeed, it is only when we travel abroad and have to use only bottled water, or when a crisis like the lead pollution of the water supply in Flint, MI grabs our attention, that we give this any thought at all. The result is that public health efforts pay the price; less than 6% of our US health expenditures are on public health, with the bulk spent on direct individual medical care, and the profit that insurers, providers and middlemen skim. In addition, our country spends much less, proportionally, on efforts that impact upon the social determinants of health, those characteristics of people’s lives (housing, food, safety, education) that affect people’s lives much more than health care.

Still, when we – or those we love – are sick and in need of medical care we are grateful that it is there. But for many or most of us, it is often hard to pay for it. When we cannot, when the incredible amount of money we have to pay for medical care (often even when we are insured) threatens our families’ well-being, our ability to pay for shelter, food, education, it is a different story. And we know that access to and use of such individual medical care is neither randomly distributed among the American people nor allocated based on the greatest need; no one is shocked to discover that rich people get more medical services. (What may be shocking to learn, however, is that this does not always lead to better health. Services are often delivered -- to those who can pay -- whether they are really necessary or not, and sometimes this leads to complications and worse health!)

It is in this context that a new study in the journal Health Affairs by Dickman, et al., “Health spending for low-, middle-, and high-income Americans, 1963–2012”[1] is very revealing. The authors provide data on both the amount health spending among the American people over that 50 years, and how it has been distributed by quintiles of income. To summarize the findings: in 1963, before Medicare and Medicaid, spending was heavily skewed toward wealthier populations, but after those programs were implemented spending became more equal among the quintiles (although, adjusted for disease burden, which is higher in low-income populations, it was still not equitable). Then, over the last decade studied, the spending gaps returned, with much more being spent on the upper than lower quintiles (despite the generally better hea

lth of those who are better off), for the population under 65 (presumably because those over 65 all have Medicare). The authors state that “The rising income-based disparity in spending suggests a shift from allocation of health care according to need to allocation by willingness (and ability) to pay,” and it clearly does. They add that “It is unclear whether this shift arises from the underuse of needed care among the poor or overuse of unnecessary care by the wealthy,” but I am going to go out on a limb and suggest that it is both.

The reason for this is the prominence of the second force at work in health care systems (you were wondering if I would ever get to this!), which I will call the “profit” approach. This approach looks at health care as a commodity to be purchased and marketed. Unsurprisingly, those taking this approach choose to preferentially market both certain services over others (those for which the reimbursement is much higher than the cost of providing them, called even in non-profit institutions the “profit margin”), and market them to certain populations over others (those with money or insurance, and relatively good health so there are less likely to be costly complications). While this approach tends to favor the wealthy, leading to the data presented by Dickman et al., it also favors the less sick. Since older people tend to be sicker than younger (and are covered by Medicare, which pays less well than private insurance), this may in part explain why the quintile-of-income differences are less for the elderly. In summary, health care providers (mainly hospitals and physicians, but also others), want to market the services on which they can make the most money to the people who, arguably, need them the least. You can have greater difficulty accessing care because you are the wrong person (too poor, too sick) or have the wrong condition (one for which treatment has a low profit margin).

Dickman and colleagues present their data fairly dispassionately, without hammering home the obvious conclusion that it reflects a society more driven by the “profit” than the “health” approach to health care delivery. Essentially, it is a story of half-hearted (called “practical” by its advocates) efforts to introduce greater equity into our health care system being overcome by the tactics that smart and well-paid insurers and providers employ to “game the system”. In his regularly outstanding “Quote of the Day” commentary on the Dickman article, titled “Redistribution of health care from the poor to the wealthy”, Dr. Don McCanne takes the discussion a little farther, noting that a single-payer health care system, in which everyone had the same coverage and which could regulate the marketplace, decreasing the profit incentive, would improve the population’s health.

When I wrote to Dr. McCanne that the effort to find ways to preferentially deliver high-profit care to well-insured high-income folks rather than those who needed it most upset me (OK, I said it made me want to puke), he wisely responded that it “seems like our health care system has excelled at creating ‘work arounds’ for those measures that health care justice advocates keep attempting to advance.” Usually when people use the term “work arounds” they are referring to finding ways to do what needs to be done in the face of bureaucracy or inefficiency. In this case, however, it means propagating inequity in order to make money.

The two different approaches, putting “health” or “profit” as the primary impetus to our health care system, get different results. Personally, I favor “health”. Sadly, though, the other is often more prominent.

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[1] Dickman SL, Woolhandler S, Bor J, McCormick D, Bor DH, Himmelstein DU, “Health Spending For Low-, Middle-, And High-Income Americans, 1963–2012”, Health Affairs 35(7):1189

What can we really expect from ObamaCare? A lot, actually.

Despite the constant refrain heard from many (particularly Republicans, particularly in Congress, and particularly from the particularly self-promoting Sen. Ted Cruz of Texas) that “ObamaCare” (the Affordable Care Act, ACA) is the first sign of the coming apocalypse, and concerns from people like me that it is a great deal for insurance companies and will still leave many people without coverage, it is going to happen and it is going to be a good thing for the health of many people. It’s too bad that the crêpe being hung by the nay-sayers is believed by so many, largely a result of it being so well funded. Of course, this doesn’t mean that Sen. Cruz is going to change his tune or that I am going to stop worry about those who continue to be without insurance (especially in states that don’t expand Medicaid, like mine).

Some have suggested that the biggest fear Republicans have is that it will work, and people will benefit, and that now is the time to scare people to try to get rid of it, since once it is in place people will not want to give it up (see: Medicare). Right now, satirist Andy Borowitz can make fun of the right’s hyperbole with bits like “Fox News: Obama In Plot To Force Americans To Live Longer”, but when people actually do get health care, and the costs do go down, and maybe they do live longer, or at least live in better health (longer “healthy life expectancy”, or HALE; see The State of US Health: improved over 20 years, but not nearly enough”, July 14, 2013), they are going to be happy with it. When you can get health insurance even though you have a pre-existing condition, when you can get health insurance on the exchange marketplace even though your employer hasn’t offered health insurance to you, when you can afford the premiums because those between 133% and 400% of the poverty level will get federal subsidies, it is not likely to make you unhappy and you are very unlikely to want to give it up.

Of course, those who are under 133% of poverty were to have been covered by Medicaid expansion, and this is not going to happen in a lot of states, so these folks will be left out. Chang and Davis, writing in the Sept-Oct issue of the Annals of Family Medicine examined “Potential Adult Medicaid Beneficiaries Under the Patient Protection and Affordable Care Act Compared With Current Adult Medicaid Beneficiaries”. Using a large federal database (NHANES) they compared over 13 million people in each category, and found that the potential beneficiaries were more likely to be male and white and to have about the same level of educational attainment as current recipients. They also had better self-reported health status, and were less likely to be obese or depressed. The prevalence of diabetes and hypertension were about the same, and the potential beneficiaries were more likely to be smokers and heavier drinkers. So, in general, expanding Medicaid to this larger population would result in a healthier (and thus less costly) group to care for, although with significant risk factors. This is related to the argument I have for expanding Medicare to include everyone (a single-payer health system): the highest cost utilizers, the old and disabled, are already in it and expanding it will, thus, not cost as much more as one might think (or certainly not as much as using the private insurance market as we currently do, or even under the Obamacare expansion).

Two editorials accompany this article. Danel Derksen discusses how the ACA will offer opportunities for (and challenges to) both family physicians and public health, while J.P. Silvers compares the objectives of the plan and the results that it is likely to achieve in the real (“imperfect”) world, with emphasis on the potential for “market failure” as the limiting factor. He lists the 3 main objectives of the ACA as 1) reforming the private insurance market, 2) expanding Medicaid, and 3) changing the way that medical decisions are made. The first, the effort to get those currently left out of the insurance market primarily because they are self-employed or work for small companies, is to be accomplished by the subsidized health insurance exchanges, with quite significant subsidies; the idea is that competition will lead to lower prices and better coverage. If this doesn’t happen (“market failure”) then the goal is not going to be achieved. So far, I note, in most states it seems to be working.

Expansion of Medicaid to cover people who are below 133% of poverty and yet not currently eligible was a cornerstone of the program, and the one that the Supreme Court made optional; per this map from the www.Bankrate.com website, 23 states + DC will be expanding Medicaid, 21 will not be, and 6 are undecided. The fact that the federal government will be paying for it seems to have convinced several Republican-controlled states (e.g., Arkansas, Kentucky, North Dakota, and Arizona) that it would be a good idea. Of course, it is a good idea, and not doing it is a way for those who are themselves “feeding at the public trough” (legislators who get publicly-funded insurance) to punish the needy, falsely cloaking themselves in the language of conservatism. As Silvers notes, to really improve health, Medicaid rates will need to be high enough that providers will actually care for beneficiaries.

The third area is changing medical decision making, to both improve the quality of care and lower the cost, issues about which I have often written (see, for example, Controlling the cost of health care by doing the right thing, Sept 22, 2013). Silvers cites, in particular, comparative effectiveness research (CER) which will show us which things work and which things cost the least to achieve comparable results, and which, it is to be hoped, would actually change medical practice. He then goes on to describe the factors which exist in our “imperfect world” that threaten the achievement of these goals, because “There are serious problems in the way the US health system is organized and paid, in the information and choices available, and in the ability of participants to respond to the pressures and incentives provided in reform.” The three classes of problems he discusses are “when decisions are delegated to someone who is supposed to act strictly in our interest as an agent, but doesn’t”, such as brokers who are paid commissions from someone else for signing us up; limits on potential competitors (as arising from pharmaceutical patent protection); and “when one party in a transaction has differential information that allows them to dominate or exploit decisions”, in play with regard to physicians, hospitals, drug companies, insurance companies, and almost everyone involved in health care compared to regular folks. He notes “Finally, the plethora of perverse payment incentives is the most obvious problem in having informed free choice leading to the optimal outcomes desired.”

And this is the real point. The web of multiple strategies for achieving coverage are incredibly complicated, with roots in both the Clinton plan and Massachusetts’ “Romneycare’ and (ironically) in the ideas of right-wing think tanks over the last several decades. This patchwork of fixes has always been a Republican (and conservative Democratic) hallmark. While Silvers titles his final section “What does it mean for the future and what can be done?”, in fact he mostly tells us what the risks are rather than what could be done. There are many who suggest (or fear) that the biggest threat from a potential failure of Obamacare would be that it would make the fact that a single-payer system would be much simpler and effective more obvious; see Morici “First Obamacare, Then a Single Payer System” on www.breitbart.com, cited by Don McCanne in Quote of the Day.

That’d be nice.

Squeezing the needy: a truly flawed financing system for healthcare

In his always-valuable “Quote of the Day” for February 26, 2013, Don McCanne, MD, cites an article by Robert Pear in the New York Times from February 25, “States Can Cut Back on Medicaid Payments, Administration Says”. He quotes from the article that “In a brief filed with the United States Court of Appeals for the Ninth Circuit, in San Francisco, federal officials defended a decision by California to cut Medicaid payments to many providers by 10 percent…. [it] urged judges to uphold those cuts, which are being challenged by patients, doctors, dentists, hospitals, pharmacists and other health care providers in California…[who] said California’s payment rates were inadequate even before the cuts. They pointed to a federal study that said,’ “California stands out because of its very low Medicaid payment levels.’”

 A similar article that he cites from the Los Angeles Times by Anna Gorman, February 25, 2013, “Healthcare overhaul may threaten California's safety net” states that “An estimated 3 million to 4 million Californians — about 10% of the state's population — could remain uninsured even after the healthcare overhaul law takes full effect,” while at the same time the public hospitals and clinics that would provide care to those additional millions are having their funding streams from the state cut.

And this is in a state with a long history of providing care for its medically indigent by having such hospitals and clinics (unlike, oh, say, Kansas) and with a reasonably progressive Democratic governor, Jerry Brown. But it also has a huge budget deficit. At the most narrow level, the state has no choice but to spend less on the programs over which it has control, and these programs are the ones that benefit those whose low-wage jobs (or no jobs at all) make them dependent on public programs to ensure the health of their families.

The key point here is that the huge transfer of funds from the public sector to private control, as a result of tax cuts on corporations and wealthy individuals, has led to the inability for even states such as California, which arguably want to, to provide the basic health and social safety net for its most needy citizens. This is precisely the result that advocates of these programs want, to “choke” government, and precisely the impact on the poor that would be predicted. Meanwhile, at the local, state and federal level, tax “relief”, in terms of both cuts and direct giveaways to major industries, continue to support the least needy.

At the same time (February 20, 2013), Time magazine has published an amazing exposé by Steven Brill of the ridiculous over-pricing and capricious billing done by US hospitals, “Bitter Pill: Why Medical Bills are Killing Us”. It is a long and through article, citing case after case and example after example, of how the current system of billing and reimbursement in health care, and particularly in hospitals costs a fortune, is sapping the economy overall. And, of course, the burden falls hardest on those who are either uninsured or poorly insured, and are billed “list” prices, which are much higher than those paid by either public (Medicare or Medicaid) or private (eg., Blue Cross, Aetna) insurers. MUCH higher. Often dozens of times higher. A few examples that he cites:

• A troponin (blood test for a heart attack) test billed to an uninsured patient at $199. Medicare pays $14; a CBC (blood count) billed $157 when Medicare pays $11.
• A nuclear heart scan for which Medicare pays $554 billed at $8,000.
• A Medtronic spinal stimulator that lists for $19,000 from the manufacturer (if the hospital paid full list) billed to the patient for $49,000.

The article is good investigative journalism, and goes beyond such simple examples to look at the entire structure of the health system’s payment mechanism, including the incentives to do more and more (even when unnecessary or possible even harmful) expensive – and high profit – tests and procedures. It looks at enormous hospital profit margins and salaries of “C-suite” executives: “…in our largest cities, the system offers lavish paychecks even to midlevel hospital managers, like the 14 administrators at New York City’s Memorial Sloan-Kettering Cancer Center who are paid over $500,000 a year, including six who make over $1 million.” (Of course, salaries in the measly low one-digit millions pale before the incomes of those in the pharmaceutical industry!) It helps us to understand both why costs are so high and why programs that limit payment, like Medicare and Medicaid, are so hated/fear/despised by hospital administrators.

The hospitals may well be taking a loss on Medicaid/Medicare reimbursement, because “Medicare takes seriously the notion that nonprofit hospitals should be paid for all their costs but actually be nonprofit after their calculation.”  But while “Hospital finance people argue vehemently that Medicare doesn’t pay enough and that they lose as much as 10% on an average Medicare patient...even if the Medicare price should be, say, 10% higher, it’s a long way from $11.02 plus 10% to $157.61.”  The thing is that they “need” to make more because, although “non-profit” they make big profits – they just don’t share them with stockholders. “…thousands of nonprofit institutions have morphed into high-profit, high-profile businesses that have the best of both worlds. They have become entities akin to low-risk, must-have public utilities that nonetheless pay their operators as if they were high-risk entrepreneurs.”

What was interesting to me is that most of the patients who received those outrageous bills above were neither unemployed nor uninsured (although the one who was uninsured had the misfortune of being 64 rather than 65, so paid the $199 for her troponin instead of Medicare paying the $14). Rather, they were employed in low wage jobs and had lousy insurance, with very low per-visit, per-year, or lifetime caps and were treated by the hospitals as if they were uninsured (“’We don’t take that kind of discount insurance’ said the woman at MD Anderson [Cancer Center]” when Stephanie Recchi called to make an appointment for Sean; they needed to come up with $48,900 cash up front – and that was just the down payment!). So all estimates about the burden on the uninsured need to be augmented by the impact on the under-insured.
Dr. McCanne’s incisive comment on the two articles notes that while “We have said over and over again that Medicaid, as a welfare program, will never have the political support to fund it adequately. The burden of the additional load of Medicaid patients will surely find the health care resources strained beyond the capacity of willing providers, especially when you consider that California already is not meeting the costs of providing care to this vulnerable population…

"Here's an amazing fact: Low income patients do not have the money to pay for health care. (What an intuitive stroke of genius!) What they need is an affordable system that removes financial barriers to care while ensuring adequate financing of our entire health care delivery system, thereby removing health system disincentives to providing essential care for this vulnerable population. Make that for all of us.”

All of the nonsensical billing and collecting issues that are so horrifyingly reported on by Brill do not need to occur. The simple answer is that there should be a single, posted, price for each item or service and everyone is billed at and pays (or their insurance pays) the same amount. This is the situation in Canada, where fees for physicians are negotiated annually with the provinces and hospitals operate within a global budget. Probably fewer millionaire hospital administrators, but of course creating them should not be the goal of the money we spend on health care.

No poorly-insured, well-insured, uninsured, Medicaid-insured or Medicare insured. Just everyone covered. Simple, clean, elegant, and effective.

Multimorbity, primary care,social determinants, and universal insurance: where they all come together

Tinetti, Fried, and Boyd, writing in JAMA June 20, 2012, discuss “Designing health care for the most common chronic condition – multimorbidity.”[1] They note that adult patients with only a single chronic disease are the exception (e.g., only 17% of people with coronary disease have that as their only chronic condition) and the rate of multi-morbidity increases with aging. However, the medical system is organized around individual diseases, both in terms of reimbursement (based upon International Classification of Diseases, 9^th Edition, or ICD-9, codes) and in terms of specialty structure. Thus, cardiologists care for heart disease (only), oncologists for cancer (only), endocrinologists for diabetes and thyroid disease, etc.

Moreover, they observe that even more recent efforts to reward quality have been single-disease focused, with metrics related to acute myocardial infarction (heart attack), pneumonia, and particular surgical procedures. This is added to the fact that these criteria focus on hospitalized patients, rather than on efforts to keep them well. They state that “To align with the clinical reality of multimorbidity, care should evolve from a disease orientation to a patient goal orientation, focused on maximizing the health goals of individual patients with unique sets of risks, conditions, and priorities.”  This is a long way of saying care should be patient-centered. They also say that “The process for assigning responsibility for providing clinical care also needs redesign, perhaps beginning with a systematic process for determining which clinician should have primary responsibility for helping patients make decisions,” which is a long way of saying people need generalists, or primary care physicians.

This group does not want to call them generalists, though. Perhaps this is because they are from Yale, a school well-known for its research and for its high-tech tertiary and quarternary care capability, but woefully weak in training physicians to provide general, or primary care. It doesn’t even have a Family Medicine department, despite the fact that this is the specialty that provides the largest number of primary care physicians, so these authors are from Internal Medicine. They have suggested that such physicians be called comprehensivists rather than generalists because the latter term “fails to capture the breadth of skills and expertise required”  to care for patients with multiple comorbidities.

While this article suggests nothing new (for example, I have addressed these issues several times, including Primary Care: What takes so much time? And how are we paying for it?, May 21, 2010 and Primary Care’s Image: A Problem?, November 17, 2009), it is good that it keeps these issues on the table. Providers, particularly hospitals, want to be paid for metrics that are easily identifiable and relatively easy to achieve. Students choosing careers often want to pick a field in which they can feel that they are masters of a limited field of knowledge.Patients sometimes want to get help for a specific problem from a particular specialist. But everyone is better served if there is coordination of care and decisions regarding the care of one condition take the others into consideration. This means that medications which have negative interactions or countervailing effects are less likely to be prescribed. It means that the difficult decision about whether or not to have a particular surgical procedure is taken in the context of all of the health issues confronting the person. It means that decisions about interventions in desperate situations or at end of life are made wisely, and in full possession of the available information, without bias toward treatment of a particular disease regardless of its impact on others.

In a recent “Doctor’s Blog” on the British Medical Journal’s (BMJ) “doc2doc” site [disclaimer: I also blog at this site] one doctor presented their thoughts on “Is prevention ALWAYS better than cure?”. I do not agree with all of Dr. Lush’s points, and am not sure I even understand them all, but that “…as we get older the risks of many diseases increases so that many patients end up on a cocktail of preventative drugs, probably 2 antihypertensives, aspirin, beta blocker, statins, anti-inflammatory medications, diuretic, asthma treatment, type 2 diabetic treatments, analgesics, etc etc.” is a fact. Many of these medications can be for either prevention or treatment or both (remember the concepts of secondary and tertiary prevention, so that treatment of one condition – say high blood pressure – can be prevention of another – say heart attack), but they often lead to patients saying “too much!” Worse than that, some may have opposing effects – the anti-inflammatory medication you take for your arthritis can lead to GI bleeding and kidney failure. The narcotics you take for your pain, in addition to the more well known negatives of addiction, cause constipation so serious it may well be the source of even worse symptoms.

Even the presence of a National Health Service is not sufficient. A study from Scotland published recently in the Lancet, “Epidemiology of multimorbidity and implications for health care, research, and medical education: a cross-sectional study”, demonstrates an extremely high rate of multi-morbidity in that county, with much higher rates in poorer communities. The “[O]nset of multimorbidity occurred 10–15 years earlier in people living in the most deprived areas compared with the most affluent”. The authors conclude that their findings “…challenge the single-disease framework by which most health care, medical research, and medical education is configured. A complementary strategy is needed, supporting generalist clinicians to provide personalised, comprehensive continuity of care, especially in socioeconomically deprived areas.”

Of course, unlike Britain, which has a National Health Service, the US does not cover everyone. A Kaiser Family Foundation (KFF) “health reform subsidy calculator”, cited by Don McCanne in his Quote of the Day, demonstrates the amazing out-of-pocket costs for health insurance that come with slight incremental increases in family income, and would be mitigated, although not eliminated, by the Affordable Care Act. This creates a real difference in our two health cultures, because many people in the US do not seek care because of the financial barriers, and then only for acute episodes.

In terms of having a supply of physicians who can fill the role of caring for multiple morbidities, Britain has much more extensive primary care base than the US. It is possible that their system has as great a risk as ours of generalists not being sufficiently “comprehensivist”; our system, with more hospitalists, is moving in the British direction of having primary care doctors who do not follow their patients into the hospital. But in the US, we are without a sufficient number or percent of primary care doctors altogether.

The reality is, as I have often observed before, is that a comprehensive national health insurance system is a necessary, if not sufficient, component of a plan to actually ensure health. Two other major components are also necessary. The first is addressing the social determinants of health, which are largely associated with class/socioeconomic status, and the second is having an adequate primary care base, And, while, as the Scottish study indicates, the national health service in Britain does not guarantee either, it does provide a vehicle for addressing the second and mitigates the impact of the first.

The absence of such a system in the US makes the problems of an inadequate primary care workforce and the impact of socioeconomic disparities much worse.

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[1] Tinetti ME, Fried TR, Boyd CM, “Designing health care for the most common chronic condition – multimorbidity”, JAMA 20Jun2012;307(23):2493-4.

Would free medical schools increase primary care?

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An op-ed by Peter B. Bach and Robert Kocher in the NY Times March 28, 2011, “Why medical school should be free”, makes a strong argument for just that. They acknowledge that this might seem unreasonable given the fact that physicians, regardless of specialty, make so much more that the average American; indeed are “all but 2 of the 15 highest paid professions”. This data is from the Bureau of Labor Statistics, published just a week earlier. An article by Harry Bradford in the Huffington Post, “America’s 10 best paying professions: Bureau of Labor Statistics”, that indicates that 9 of those top 10 are physicians, surgeons and dentists, with CEOs the only non-medical profession cracking the group, and that at #9, ahead of psychiatrists (#10) but just behind family and general practitioners (#8). The actual numbers from BLS may be suspect; while $174K for FPs may be close to correct, there is no where I know of, one could hire an anesthesiologist for anything close to as little as $220K (or radiologist or orthopedist or surgeon).

So why shouldn’t students pay to get into such lucrative professions? After all, other schools, professional and non-professional, cost money; this is true whether the degree is in law, business, engineering and accounting, which all pay relatively well, or  music, art, teaching and social work, which pay much more poorly. What is special about physicians that should make them be able to go to school for free, as do, say, firefighters and police? Bach and Kocher argue that the high cost of medical education, with students currently averaging over $150,000 in debt and rising, contributes significantly to both the shortage of primary care physicians that this country desperately needs and will continue to need in increasing numbers, and the cost of health care, with physicians entering the specialties that make lots of money by doing lots of highly-reimbursed procedures, many of which may not be medically necessary. As discussed in the recent blog piece Primary Care, Medical School Debt, and US Health Needs: Analysis from the Graham Center (May 30, 2011), the shortage of primary care doctors is projected to significantly increase as a result of the aging of the population, the influx of formerly uninsured people through ACA, and the fact that students are entering primary care at a rate too low (just over 20%) to even replace the already-too-low percent of the physician workforce that is now primary care (just over 30%), not to mention raise it to the necessary 40%-50%. By making medical school free, and thus eliminating this debt burden, students who were interested in primary care would have far less disincentive to entering the field – and earn very good livings, as what is currently the 8^th most highly paid profession.

Going beyond this, Bach and Kocher suggest a creative method of financing the estimated $2.5 billion that this would cost (based on average current medical school tuition): charging for post-graduate (residency) training in non-primary care specialties. Medical school graduation (unlike most other schools, including graduate schools) does not prepare one to be a doctor; rather it prepares the student to be trained in a medical specialty (residency). Residents are not charged tuition, but are instead paid as workers (although it is often considered an educational “stipend”; labor law decisions have varied from state to state). Under this proposal, students entering primary care residencies would continue to receive the stipend, while those entering other specialties (in which they could expect to make a great deal more money) would actually pay (they suggest $50,000 a year, in current $) that would be put into a pool to cover the cost of medical school tuition. The actual process of collecting this money and transferring it to the medical schools, as well as controls on methods of gaming the system (for one, they note, medical schools raising the tuition as students no longer have to pay it themselves) would have to be fairly complex. Nonetheless, this is a great idea; if medical school and residency together are the educational requirement for practicing medicine, then the basic education would be free to the student while entry into higher-income specialties would require additional years of, essentially, tuition. There would be no restrictions imposed upon student choice, but the financial incentives would significantly switch from the “voodoo” workforce policy Dr. Phillips identifies (see May 30, 2011 blog) to one that is aligned with desired outcomes.

A particularly attractive aspect of this proposal is that it would not further add to the debt burden of lower-income students seeking to become primary care physicians; in the May 30, 2011 blog I quote E. Grey Dimond, founding dean of the University of Missouri-Kansas City Medical School (now the highest-tuition school in the US) saying “Farm kids in Missouri from little towns that need doctors can’t pay what we have to have.” Under the system proposed by Bach and Kocher, those farm kids – and kids from underserved urban areas – would have a chance to gain a medical education and return to serve their communities.

The other ostensible benefit, decreasing medical costs, is not likely to come from this policy alone, however. Indeed, those students entering those more highly paid specialties would wish to maintain their incomes at high levels to justify the additional cost of their education. If there indeed are many procedures being done which are not medically indicated, and there is evidence that there are (see, for example, Rita F. Redberg’s Op-Ed piece in the NY Times “Squandering Medicare’s money”, May 25, 2011), the way to reduce them is to place further restrictions on them and decrease the amount that they are reimbursed by Medicare and other payers. This would further decrease the financial incentive to choose these specialties instead of primary care.

An alternative, however, is to continue to pursue – and exacerbate – “voodoo” workforce policy. The AMA’s “RUC”, described in Outing the RUC: Medicare reimbursement and Primary Care, February 2, 2011, which is only willing to consider increased payments for primary care if the entire pie is increased thus permitting other specialists to not make any less, is a great example of how to do this. Another is the policy of “balanced benefits” contained in two bills, the Medicare Patient Empowerment Acts, introduced in the House by Rep. Tom Price and Senate by Sen. Lisa Murkowski, and strongly endorsed by the AMA, and described in detail by Dr. Don McCanne’s “Quote of the Day” on May 27, 2011.Hidden by the high-sounding names, this bill would destroy Medicare as it currently exists, and replace it with a de jure, as well as de facto, two-class system of health care. Under the current Medicare law, physicians who accept Medicare have to accept the amount Medicare pays for a given service, plus the amount that Medicare determines to be patient responsibility, as payment in full.  Under these new bills, Medicare patients could see physicians who do not now accept Medicare, use their Medicare benefits to pay the what it pays, and then pay out of pocket the difference between that and the doctor’s charge. Essentially, this would turn all but high-income Medicare beneficiaries into the equivalent of Medicaid recipients.

It is a vile proposal, which would harm most Medicare patients and pad the incomes of physicians. It is more than embarrassing that it has been so strongly endorsed by the AMA and many other physician groups, who are clearly in the business of increasing the income of their members rather than benefiting patients. Dr. McCanne notes that the American Academy of Family Physicians and the American College of Physicians (internists) are conspicuously absent from the group of endorsers. For that he, and I, and the members of these organizations, are grateful. The AMA and the other endorsers of the Price and Murkowski bills deserve the strongest condemnation from Medicare beneficiaries, their families, and the American people.

Insurance company profits up and patient care down

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The third post in the series "Family medicine in the era of health reform" will appear at a later date. I  wanted to cover another topical issue.

Almost a year after the passage of the Affordable Care Act (ACA), amidst the dire predictions from the right about everything from death panels to socialism and their bloviating about overturning it, it turns out that the fears of the “left” are more accurate; that is, that it is insurance companies, not the American people, who are receiving the greatest benefits. There have indeed been benefits to consumers; notably the ability of young people to stay on their parents’ insurance until 26 and the elimination of restrictions on pre-existing conditions, and there will be more later on as 2014 rolls around. But the biggest impact of the bill so far has been inflating the coffers of health insurers.

The lead article in the New York Times, May 14, 2011, by Reed Abelson, is Health Insurers Making Record Profits as Many Postpone Care. In his wonderful daily commentary on health news, Quote of the Day, Dr. Don McCanne simply observes “The headline says it all.” That’s the gist of it, but it does deserve a little more discussion. For one thing, the health insurance companies, despite record profits over the last two years, are continuing to raise their premiums very significantly, justifying this by saying that they expect that, as the economy improves, people who have been delaying getting health care will begin to do so and create a great demand.

“Yet the companies continue to press for higher premiums, even though their reserve coffers are flush with profits and shareholders have been rewarded with new dividends. Many defend proposed double-digit increases in the rates they charge, citing a need for protection against any sudden uptick in demand once people have more money to spend on their health, as well as the rising price of care.”

Excuse me? This is a justification for raising rates now? That people, insured people, find the co-pays and deductibles currently in place to be so high that they are denying themselves needed care, so maybe later they’ll want to get it, so then it will finally cost the insurers money, so let’s pre-emptively raise premiums to cover it? Meanwhile, what it actually does is to ensure that even fewer people access care because the higher rates mean that they opt for policies with even greater co-pays and deductibles or even drop their insurance altogether.

The article quotes a number people, including physicians, describing how they or their patients have gone without or put off obtaining health care.
“’I am noticing my patients with insurance are more interested in costs,’ said Dr. Jim King, a family practice physician in rural Tennessee. ‘Gas prices are going up, food prices are going up. They are deciding to put some of their health care off.’ A patient might decide not to drive the 50 miles necessary to see a specialist because of the cost of gas...”
While the insurance companies are using the opportunity to stash away even more money for the flood that may, or may not, come: the Times quotes an industry analyst as saying about demand for health care services “The big question is whether it is going to stay weak or bounce back…Nobody knows.” They are raising their rates by double digits (for example, an Oregon Blue Cross/Blue Shield raised them by 22%), while having big profits (“…big insurance companies have reported first-quarter earnings that beat analysts expectations by an average of 30 percent.”)

Some of the reports suggest that people seem less interested in getting medically unnecessary services which they wanted when someone else was paying; according to Dr. King ”Fewer [people] are asking for an MRI as soon as they have a bad headache. “People are realizing that this is my money, even if I’m not writing a check.”  But others, such as the woman who has been putting off paying $350 for dental crowns she has needed for a year, are avoiding needed care. The effect on the health of the consumer may not be all bad; a doctor says more patients are “…asking for the generic alternatives to brand-name medicines, because of hefty co-payments. ‘Now, all of a sudden, they want the generic, when for years, they said they couldn’t take it.’” Let me be clear: in general, choosing generic drugs is a good thing; it is very uncommon that a patient is intolerant or allergic to a generic medication, or that it works less effectively than a brand-name one. Why, then, have this doctor’s patients heretofore been asking for them and saying that they “couldn’t take” the generics?

If you guessed “drug company advertising”, congratulations! It may seem obvious but it is also true; direct-to-consumer advertising, particularly on television, has major impact in creating demand from people on their doctors. The advertising is, of course, all for brand name drugs that are currently under patent and not available generically. Like other advertising for brand-name products it creates the (usually incorrect) impression that, somehow, this drug is better than the “no-name” drug. Why should this be surprise when it is clear that people prefer brand names in clothes, food, and other consumer items even when there is no demonstrated quality difference? [Amazingly (to me), people  -- even people over 14 years old! --pay good money to walk around with a designer’s name scrawled across their T-shirt and believe that this has cachet!]

The simple goal of drug manufacturers is to get people to switch to their drug when it comes out, develop brand loyalty when it is under patent, and stay with the brand even when generic competitors come out. The actual best thing for people’s health is to rarely adopt a new drug that “seems like it might be” better (unless all the old drugs are not working or have serious side effects or allergies), but rather wait until there is convincing evidence, usually after several years of use, that it is both more effective and has fewer dangerous side effects than the old drug it was replacing, especially if it is not cheaper. So, to the extent that higher co-pays and deductibles might counteract the impact of drug-company advertising, it can have a positive impact, and fulfills the expectations of many health care economists.

But it is not, after all, a very good way to do it. Raising health insurance premiums and co-pays and deductibles may make people more cautious with their health care dollar, but as indicated in this article, and shown years ago in the RAND Health Insurance Experiment (as cited in Freedom abroad, health at home: experiments in preventive health care, February 13, 2011; the study was published in the New England Journal of Medicine in 1983[1]; and it is summarized in an article by Joseph P. Newhouse, "Free for all?:  lessons from the RAND Health Insurance Experiment", RAND 1993), people are at least as likely to skimp on  necessary care and preventive care that may have a negative impact on their health, as well as be more likely to create high costs, in the future, as they are to forego elective or unnecessary care. They may not demand an MRI for a headache, but also may not want to pay for it when it is medically indicated. They may be more likely to ask for generic drugs, but may also skip filling the prescriptions altogether.

Dr. McCanne continued his brief comment by saying “Under the Affordable Car Act we're getting more of the same, except worse (higher costs, skimpier coverage). It doesn't have to be this way.” He is completely correct.  There is a better way to control costs, and to ensure quality health care. It is to make sure that everyone has coverage, such as through the single-payer plans recently introduced in the Senate by Bernie Sanders and the House by Jim McDermott, to have central pro-active control of costs by regulation of premiums and profit, using the power of bulk purchasing by federal agencies such as CMS to drive down drug prices, and to use the incredible power of an increased primary care workforce to increase quality and “bend the cost curve”. More on that in an upcoming blog.

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[1] Brook RH, et al., “Does Free Care Improve Adults' Health? — Results from a Randomized Controlled Trial”, N Engl J Med 1983; 309:1426-1434