Friday, October 31, 2014

"Do you want an icepack?" "I can't afford it!"

Today’s Managing Health Care Costs

Number is 20

We the Economy (a project of Paul Allen, one of the founders of Microsoft, and Morgan Spurlock, of “Supersize Me” and other films) has created 20 films that explain the economy – from a left-center point of view.   Here’s  their film explaining the high cost of health care in the US.

Watch WE THE ECONOMY - This Won't Hurt a Bit on Vimeo.

Thursday, October 30, 2014

“Copper” plans would be a poor choice for the working poor

Today’s Managing Health Care Costs

Number is 50%

Ezra Klein in yesterday highlighted an effort to lower the cost of Obamacare by adding a fifth level of insurance coverage, Copper.

Health insurance premiums for a plan that covered only 50% of the actuarial value of all care would be 18% lower – making purchase of insurance more affordable , especially for those just over 400% of the federal poverty level who get no subsidy for insurance purchase. 

Many health policy experts have long noted that the poor tend to “overinsure,” paying insurance premiums for services that they are highly unlikely to need.  But I feel differently.  Those who are living on the financial edge should purchase more insurance- since a relatively smaller “financial hit” could lead to their ruin.  The working poor need lower deductibles and less coinsurance, while rich people are in a better position to “self insure” up to a higher level.  

I’ve been worried for some time that those who purchase health plans with high deductibles (ACA Bronze plans can have out of pocket maximums that exceed $12,000 per family) are severely underinsured.  Remember that the “actuarial value” is an average – so that for those who suffer a severe illness or have an expensive set of medical procedures, their out of pocket costs will  likely be the maximum – not half of the average cost of a health plan.

The Kaiser Family Foundation published a brief on the uninsured yesterday.    As you can see, only 15% have income over 400% of FPL.  Do we want $9000 individual deductibles for people with pretax income of under $47,000 a year?  

The Copper plans could represent a great value for healthy people who can afford a pretty big one time bill if they get sick. They represent a poor choice for those who would otherwise have a hard time paying for bronze or higher levels of exchange plans.

Tuesday, October 28, 2014

Happy Birthday Jonas Salk

Today’s Managing Health Care Costs

Number is $13.5 billion

Google today is celebrating the 100th birthday of Jonas Salk, who developed the first polio vaccine.  The “google” is spelled out with happy children, a balloon, and a pretty serious looking bespectacled doctor in a white jacket.

The Salk vaccine was supplanted by the Sabin (oral) polio vaccine, and by 1979 polio had been wiped out in the US.   Polio today is endemic in only three countries , Afghanistan, Nigeria and Pakistan. It could be endemic in Syria too – but reporting there is impaired by the war.    

We’re headed backwards with polio – there is an epidemic in Pakistan where extremists have murdered vaccinating nurses.  Pakistan represents 85% of the reported cases of polio so far this year.  However, polio is likely underreported in war zones like Syria, and wild polio virus was found in sewers in Israel and the West Bank earlier this year. Over 100 children died in rebel-held Syria from contaminated vaccinations – a tragedy that deserved far more media attention than it got.    Vaccination rates have plummeted in West Africa, where the health care system has been overwhelmed by Ebola.  

Vaccines are the most cost saving intervention in our medical arsenal – preventing 20 million cases of disease and 42,000 childhood deaths in the US each year. Medical cost saving from childhood vaccines is $13.5 billion (ROI 3.0), and total societal benefits are $68.8 billion (ROI 10.1)

Happy birthday, Jonas Salk. Thanks, Google, for reminding us!

Monday, October 27, 2014

Pile On Pricing

Today’s Managing Health Care Costs

Number is $2457

Elisabeth Rosenthal continues her series “Paying Til it Hurts” in the Sunday Times.  She reports on health care providers – mostly hospitals – which tack on huge unexpected charges which are not covered by insurers, often without informing patients in advance.  

-       Room fees to see an in-plan psychologist ($100)
-       Trauma team activation fee for a bicycle accident ($2457)
-       Emergency department fee for a scheduled delivery induction ($1400)
-   Charges for noncovered services bundled with preventive care visit  ($300 lab fee)

This is on top of other facility fees that hospitals often add to physician office visit fees after those physicians have been purchased by the hospital.  There have been previous reports of trauma fees charged by hospitals as well.

Billing practices like this help make health care unaffordable, and make it much more likely that states will start more closely regulating provider pricing and billing policies.  It’s not clear that the insurance plans have the leverage to prevent this type of pile-on pricing, and as they look to integrate more closely with providers in accountable care and other arrangements its not clear they want to advocate for patients on this issue.

Friday, October 24, 2014

Kickback Friday

Today’s Managing Health Care Costs

Number is $389 million

Today’s Wall Street Journal has another episode in their continuing series on self-dealing urologists.  In this instalment,  21st Century Oncology, a radiation therapy provider that includes 95 urologists, is responsible for ordering 1/5 of all the FISH (fluorescent in situ hybridization) bladder cancer screenings tests in the country.  By the way, that’s 1% of the urologists ordering 21% of the tests.  The two 21st century urologists collected over $4 million for this test in 2012 – all the other urologists in the country combined collected under $20 million. 

For the urologists, who were paid more by 21st Century based on lab volume, this was a double win.  FISH is not proven to better at detecting bladder cancer than older tests that cost 1/10 as much – but it has a higher false positive rate.  This higher false positive rate means more (unnecessary) cystoscopies to do biopsies to confirm that the patient does not have bladder cancer.   Double win!

It wouldn’t be kickback Friday without another story.   Davita settled a dialysis center kickback case for $389 million Iwithout admitting guilt).  The allegation here is that the company set up illegal joint ventures to provide payment to nephrologists for exclusively referring to their centers.

The common thread here is that Medicare pays way too much for some services. When the margin for a service is ridiculously high- it’s pretty much natural for providers (and others) to seek to deliver more of the service.   Here’s the pathologist wil billed $5 million to Medicare for the bladder cancer test (who should have known better than to talk to the WSJ):

“If you’re going to be the beneficiary of testing that you order, and you’re going to order a test for $50 and get an answer…or maybe somewhat justify ably order a similar test for $1,000,” he says, “it might be reasonable to think that some individuals would be swayed by the test that is more highly compensated.”

Maybe the answer is to lower the price of these overused tests.  Medicare cut the price of the FISH test from $100 to $430 in 2012 – but this apparently still left too much margin.  

The WSJ’s lawsuit to force Medicare to divulge recipients of payments makes it much easier to report on patterns that suggest overbilling or even frank fraud.  That could diminish the number of kickback Fridays in the future.

Wednesday, October 22, 2014

Castlight publishes data on how its transparency tool saves money

Today’s Managing Health Care Costs

Number is $124.74

Note that savings are for those who searched within 14 days of service; savings were smaller for those who searched earlier

Castlight published data in todays JAMA on cost per unit for those who used its search tool, compared to those insured by the same employers who did not use its search tool.    The results show pretty substantial savings in advanced imaging, modest savings for laboratory tests, and miniscule savings for physician office visits.  The savings in advanced imaging and laboratory tests are statistically significant; the savings in office visits are not.

Castlight has published its data in a peer reviewed journal, and taken pains to identify potential sources of bias. The database is robust – 500,000 patients, about 3 million lab tests, 120,000 imaging services, and 2.6 million office visits.  They were beneficiaries of 18 employer sponsored health plans, some of which were high deductible and some of which weren’t.  The actual number of beneficiaries is probably higher – since the “searchers” and “nonsearchers” equal about the number of stated eligibles – and it’s likely that not every single eligible beneficiary needed one of these three services.

Searchers were more likely to be women, and came from zip codes with significantly lower income.  Searchers and nonsearchers had similar cost sharing.  Counterinutuitively searchers with plans without cost sharing  saved more than searchers who had plans with more cost sharing.  A much higher percentage of office visits were associated with searching, even though the office visit savings were tiny.  Those who used the search tool had similar previous utilization – which might mean that they were not better “primed” to shop based on past experience. There’s no indication of how the total cost savings compares to the total cost to implement Castlight’s solution – but prices are proprietary so we wouldn’t expect that.

Here’s my scorecard from this report. Note that the authors did not include enough data to assess savings from these procedures over a defined population - they had data for up to three years, and we don't know the total number of eligible members.   The total savings by my calculations look modest. These could be higher if one included additional services, or if a better communications program led to higher use of the Castlight tool.

Transparency of prices is good.  It’s most effective for elective procedures that are commodities like imaging tests which feature high prices and robust competition within a market.   Castlight and other tools will be even better when they incorporate meaningful patient experience and quality measures.  Castlight now has the data to show the return on investment from its intervention.

H/T to Jason Millliman of Wonkblog who published an assessment of this article yesterday.

Tuesday, October 21, 2014

Specialty Cancer Drugs – The Problem is Worse Than It Looks

Today’s Managing Health Care Costs

Number is 25%

This chart shows that inpatient care represents the largest portion of total cost of those with advanced cancer, and also has the largest amount of variation .  Source 
This month’s Health Affairs has a series of excellent articles on the costs of specialty drugs. Specialty drugs, those aimed at a very narrow portion of the population, often designed based on genetic testing and often biopharmaceuticals, represented 25% of all drug costs in 2013 and are expected to quadruple by 2020.  

An article on variation in the cost of cancer care (Brooks) suggested that the cause was much more likely to be inpatient care rather than high costs of specialty medications. 

Acute hospital care was the largest component of spending and the chief driver of regional spending variation, accounting for 48 percent of spending and 67 percent of variation. In contrast, chemotherapy accounted for 16 percent of spending and 10 percent of variation.

On the other hand, another article (Conti) notes the high cost of recently approved oral cancer medications:

Our results suggest that spending levels and trends are driven by the use of new brand-name oral oncologics. Many of these drugs represent significant therapeutic advances over the standard of care for the treatment of specific cancers.

How can we square these two articles?

The Brooks article is focused on those diagnosed over 65 with just four cancers (lung, prostate, breast, colorectal, and pancreatic) which were incurable when diagnosed (metastatic and generally Stage IV).   This isn’t necessarily applicable to those under 65, or those with other cancers.   New specialty drugs for hematologic malignancies (leukemia and lymphoma) are excluded.  

Ironically, chemotherapy administered in the hospital was not distinguishable from other inpatient costs; hence some of the variation in hospital cost was likely due to specialty drugs, too.  Even more oncology specialty drugs have become available since the conclusion of the study period.  The authors also only focused on variation --- so that if a new expensive oncologic agent was almost universally used, the increased cost would be real, but not measurable through variation.

Both hospital care and specialty medications are driving costs and cost increases in cancer treatment among the elderly.   We ignore the impact of specialty drugs at our own financial peril.