Wednesday, July 30, 2014

Why do we prescribe pills that don't work?

Today’s Managing Health Care Costs
Number is 1.8%

JAMA Internal Medicine just published an article that shows that doctors really listen –and stop prescribing drugs proven not to be helpful.

At least some do.

We’ve been hopeful for a long time that drug therapy to raise HDL cholesterol might lower the risk of a heart attack.  Alas, our hopes keep on being dashed.  Niacin lowers HDL (Yay!).  But it doesn’t seem to lower the risk of aheart attack (Boo!)  There was a lot of hope that torcetrapib would lower the risk of heart disease, as it’s a wonder at raising HDL.    But in 2007 the New England Journal reported “Torcetrapib therapy resulted in an increased risk of mortality and morbidity of unknown mechanism.

Ezetamibe (Zetia) was introduced to great fanfare – it’s another drug that is remarkable for its ability to raise HDL.  However, in 2008 the ENHANCE trial “demonstrated that ezetimibe use lowered cholesterol levels but did not slow the progression of atherosclerosis.”  In other words – it improves the lab test, but the patient gets no benefit.

The good news.  Ezetamibe prescribing has dropped considerably since 2008.  However, the proportion of patients newly started on this drug alone, rather than in combination with a drug known to be effective, hasn’t budged.   At its peak, ezetamibe was prescribed for 2.5% of the adult American population.  That’s right, one in 40 adults was on this drug not shown to improve health.   By 2010, only 1.8% of American adults (1 in 55) are on this useless drug (which costs over $6 per pill at Costco).

In the 6 months immediately following the release of the ENHANCE trial results, sales of ezetimibe declined sharply,  particularly in the United States. While ezetimibe users stopped refilling their medications, only a small proportion switched to appropriate alternative lipid-lowering therapies, such as statins.  However, this decline in ezetimibe sales was short-lived. In the ensuing years, ezetimibe sales rebounded and now again exceed $1 billion per year,  despite several additional clinical trials having been published that similarly showed that while the drug effectively lowered LDL cholesterol levels, it failed to have a beneficial effect on clinical outcomes.

So there you have it.  An expensive drug that has not been shown to lower risk is being taken by over 3 million Americans, at a cost of over $1 billion a year.   The human cost is even higher –since some people who are taking this drug are skipping more effective medications.

Tuesday, July 29, 2014

Defibrillators for the Demented!

Today’s Managing Health Care Costs

Number is 2.9


Victor Fuchs, one of the deans of US health care economists, has a short article on the Atlantic website reviewing why health care costs so much more in the US compared to other developed countries.

The answer is … we “deliver an expensive mix of services.”   He notes that we deliver more services which are expensive (like MRIs), and we have more equipment on standby, and this produces higher income for many influential parties, including specialists and drug manufacturers.   He also notes that the US has higher prices than any other country in the world, and finally notes that our fragmented payment system leads to sky high administrative costs.

As if to illustrate Fuchs’ first point – JAMA Internal Medicine e-published an article today looking at implantation of cardiac defibrillators in the  the elderly.  The study followed over 16,000 participants over three years, and found that those with the most severe cognitive impairment were most likely to receive implantable defibrillators.  

Those with the most severe cognitive impairment were 2.9 times more likely to get implantable defibrillators than those without cognitive impairment.  (That statistic is not charted above)  The cost of an implantable defibrillator, by the way, is $28 to $55,000. 

I often note that lower prices would solve a substantial portion of our health care cost crisis. This is an example where bad decision-making leads to unnecessarily high utilization as well

Friday, July 25, 2014

News Report Misattributes Savings to Wellness Program

Today’s Managing Health Care Costs

Number is $61 million

Kaiser Health News highlighted an article on Wednesday about a very successful Kings County (Seattle) “Wellness Program.” 

The program’s unusually high financial incentives for participation and an extensive outreach program to promote it are credited in large part for the program’s success.
In its first five years (2007 to 2011), the county’s “Healthy Incentives” program invested $15 million and saved $46 million in health care spending with sustained participation by more than 90 percent of its employees. Two years ago, $61 million in surplus health care funds were returned to county coffers because cost growth was lower than actuaries had projected.

You might think that massive savings came from improved population health due to incentives and wellness program.    You’d be mistaken.

This was an intervention that spanned wellness, plan design and provider network.   Yes, there were health assessments, biometrics, and individual improvement plans for those who were outside of guidelines for weight or blood pressure or blood tests. Sounds like these were highly manual, clunky and pretty unpopular, too.

But the Seattle intervention also included

·         Change of health plan design to drive employees toward use of generic medications
·         Forgiving of a big share of deductibles to encourage beneficiaries to use one health care delivery system – which was able to deliver care for $4000 per person less each year.

That’s big – and it’s highly likely that these elements of the program generated the cost savings cited.

This is reminiscent of Safeway’s claims that its biometric and incentive programs had been responsible for years of flat medical costs, when this trend predated the program, and when Safeway had implemented plan designs highly likely to lower employer health care spending.  The Washington Post did a great article deconstructing this myth in 2010.

The article also claims credit for some savings that were likely even without meaningful programmatic efforts.  The $61 million saved is compared to projections – and health inflation has been unexpectedly low for the past few years.

Wednesday, July 23, 2014

Halbig Appeals Court Decision Unlikely To Sink ACA

Today’s Managing Health Care Costs Number is 4.683 million

Dueling Appeals Courts decisions on whether Affordable Care Act subsidies should be available to those in states which have not set up their own exchanges have again added uncertainty to health care finance and delivery.    This must be profoundly unsettling to the millions who have purchased plans on the federal exchange from the 36 states that don’t have their own exchange. It's also unsettling to health insurers who have decided to offer public exchange products, and to providers who are counting on increased coverage. 

The DC Appeals Court said that lack of a reference one section of the bill means that subsidies are only available to those enrolling through state-run exchanges. The Richmond court held that the legislators clearly intended subsidies to be available to those in any state.   The  Affordable Care Act was passed through the reconciliation process as opposed to the conference committee process after the Democrats lost their 60 vote supermajority in 2010. Hence,  there was no opportunity to do the proofreading that would have prevented this imbroglio. 

Sara Kliff talked to a number of the Congressional staffers who wrote the ACA .

"The evidence of Congressional intent here is overwhelming," John McDonough, who worked on the Health, Education, Labor and Pension committee during the health reform debate, wrote in an email. "There is not a scintilla of evidence that the Democratic lawmakers who designed the law intended to deny subsidies to any state, regardless of exchange status."

It seems highly unlikely that these subsidies will be torn away.   Even if the Supremes side with the DC Appeals Court and require subsidies be limited to state exchanges, it will be hard for the governor and legislators of even Florida  (893,655 residents with subsidies) and Texas (614,626 residents with subsidies) to take away existing subsidies for hundreds of thousands of the working class. Here’s a link to The Incidental Economist blog on this.    These states have hurt their safety net hospitals and  residents with income less than 115% of the federal poverty level by not expanding Medicaid – but taking away benefits from working follks is going to be much more politically unpalatable than not giving new benefits to poor people.  

Ezra Klein says “The Supreme Court simply isn’t going to rip insurance away from tens of millions of people in order to teach Congress a lesson about grammar.”  

This is yet another pothole in the road –but by no means the end of Obamacare.

Tuesday, July 22, 2014

Readmission penalties could shutter hospitals in poor neighborhoods

Today’s Managing Health Care Costs

Number is 15

I wrote sympathetically last week about Atlanta middle school teachers in a disadvantaged neighborhood who cheated on their students’ tests – to avoid their neighborhood school being closed down.  They felt the standardized tests were worse than useless, and the measure of success was simply out of reach.

This week’s Annals of Internal Medicine has data on St Louis area hospitals  - and makes the case that we need to do socio-demographic adjustment of quality scores if we don’t want to avoid closing down every hospital that happens to sit in an impoverished neighborhood.

The graphic above shows that in the poorer neighborhoods, 15 hospitals have closed in the last 40 years (red "G").  The hospitals that remain (blue “V”)  are generally in the less impoverished zip codes (grey).  The authors show that for the remaining hospitals the CMS penalties for readmission fall disproportionately on hospitals in zip codes with more poverty.

This is especially problematic because if we force hospitals in poor neighborhoods out of business, we not only reduce access for the community, but we also eliminate good, high-paying jobs in communities which can ill-afford this loss.  The teacher who cheated to save his school noted that when it “opened, in 1966, it was a source of pride for the community.  Now, he worried about the burden of another large abandoned building in the neighborhood.”    Empty hospitals create as much or more blight in a neighborhood as abandoned schools.

There’s no good answer here.   Perhaps we should be considering metrics for improvement instead of absolute performance for those hospitals in the lowest quartile – or those in the poorest neighborhoods.   Opponents will argue that this is accepting a lower standard of care for the poor.   But what if closing down hospitals in poor neighborhoods actually leads to even worse health in those zip codes?  

The Annals authors conclude:

Safety-net hospitals and providers will fail in increasing numbers under the financial burden of new federal laws and programs aimed at reducing costs, improving quality, and increasing access—including pay-for-performance programs that do not risk-adjust outcome measures for sociodemographic factors. If safety-net providers fail, disparities in outcomes and access will only worsen for low-income and disadvantaged patients.

Monday, July 21, 2014

Medicare and Skilled Nursing Stays: Balancing Administrative Efficiency and Common Sense

Today’s Managing Health Care Costs

Number is 72

Medicare is either an efficient machine – which provides health care coverage for over 49 million Americans with an administrative cost ratio (ACR) of under 3% - or it’s a bumbling bureaucracy, which can’t get out of its own way.   These two descriptions are both apt.

The Centers for Medicare and Medicaid Services operates on a shoestring- processing billions of claims and enrolling over 2 million new beneficiaries every year.  CMS spends over $471 billion on Medicare claims each year.   The average Medicare beneficiary costs over three times as much as a person enrolled in employer-sponsored health insurance, so the raw dollars available to CMS are bigger than that ACR would suggest.

But Medicare payment is rife with fraud – something that public release of physician payments will help address.  Medicare also has rigid rules to prevent misuse of services.  Some of this is because CMS doesn’t hire platoons of doctors and nurses to do utilization review. Medicare is also mandated to include every willing licensed physician in its network unless she has been convicted of Medicare fraud.  

Which brings us to the 72 hour rule.   Medicare pays for skilled nursing facility (SNF – a nursing home) beds for a total of 100 days per “spell of illness” when such a stay is medically necessary.   Medicare requires that a patient has spent 72 hours as an inpatient to be eligible for this coverage.  This is to be sure that Medicare isn’t paying for custodial care – without requiring a huge amount of medical review. 

But this works imperfectly.   Many elderly patients, especially those with dementia, live at home tenuously –and when things go wrong they could be safely admitted directly to a SNF without a hospitalization.  The 72 hour rule encourages an initial hospitalization, but hospitals are increasingly billing such “social” admissions as “observation status,” so the beneficiary is ineligible for Medicare coverage of their initial nursing home/SNF stay.

Simply paying for all initial nursing home stays would increase Medicare costs substantially. Medicare already spends 6% of its total budget on SNF stays.   

The Washington Post reports that CMS is piloting waivers of the 72 hour rule for provider organizations with accountable care contracts – where the providers bear financial responsibility for the cost of that SNF stay.  That’s the right initial approach It should also broaden the 72 hour rule to include hospital observation stays.   CMS should evaluate the result of these pilot efforts before scuttling the 72 hour rule entirely.

From MedPAC:

Medicare covers up to 100 days of SNF care per spell of illness after a medically necessary inpatient hospital stay of at least three days. For beneficiaries who qualify for a covered stay, Medicare pays 100 percent of the payment rate for the first 20 days of care. Beginning with day 21, beneficiaries are responsible for copayments. For 2013, the copayment is $148 per day…A spell of illness begins when a beneficiary has not had hospital care or skilled care in a SNF for 60 consecutive days.  Observation days and emergency room stays do not count toward the three-day requirement.

Friday, July 18, 2014

Can industry price setting coexist with universal comprehensive coverage?

Today’s Managing Health Care Costs

Number is $303,408

The Wall Street Journal reported on Wednesday that the state of Arkansas faces a lawsuit from three young adults with cystic fibrosis. All have the genetic mutation which means that they are highly likely to benefit from Kalydeco, an expensive biopharmaceutical that can delay worsening of lung disease.  The drug costs the state Medicaid agency over $300,000 per year.

Ironically, the actual cost of this drug to the state is far less – as the feds pay 70% of the costs of the Arkansas Medicaid program, and drug rebates to the state average 22% of drug costs – although this is across all drugs.

The cost of specialty drugs continues to represent a huge management challenge for all insurance plans.    Matt Salo, of the National Association of Medicaid Directors, sums the problem up in this quote:

"We have this public health mentality that all people have to be cured no matter what the cost, and also let the innovators charge whatever they want," said Mr. Salo. "Those are fine theories independently, but when you combine them together in a finite budget environment, it's not sustainable.