A Tough Week

Today’s Managing Health Care Costs Indicator is Five

It’s been a tough week for health care wonks of my persuasion.  

The Supremes – or at least the all-important Anthony Kennedy – suggested that the individual mandate could be toast, which would mean that the Affordable Care Act would insure millions fewer Americans.  Scalia et al suggested that if the mandate fell, the Court should invalidate the entire law, which would mean years or decades before we start trying the many good ideas embodied in this bill – including a path to generic biologic drugs, more comparative effectiveness research, and pilots to bundle payment.   The ACA is imperfect – but is chock full of good ideas for how to improve value in health care.  Many of these ideas won’t work as well as we would hope – but if we aren’t experimenting responsibly, our health care cost crisis will just continue to get worse and worse.

We need five justices to uphold the mandate, or at least to fail to declare the entire ACA unconstitutional. 

Two studies that came out this week also heightened my sense of malaise.  

The Premier Medicare Pay for Performance pilot – in which a group of 252 hospitals could earn bonus payments for improving certain quality metrics – showed no effectiveness whatsoever in lowering 30 day mortality.  NOW- this project wasn’t aiming to lower mortality. The bonuses were to encourage higher scores in certain evidence-based quality metrics – such as use of beta blockers and aspirin for heart attacks  and rapid antibiotics for pneumonias.   The reasoning was that this could improve quality and lower costs.

 Click Image to Enlarge. Source 

There are a lot of reasons why the Premier Medicare project might not have worked

·      The quality metrics might not actually be associated with lower mortality (good ideas –but not effective at diminishing death rates)

·      30 day mortality might be a bad metric itself – perhaps the hospital has more control over 15 day mortality, or 45 day mortality

·      The risk adjustment could have been flawed

·      The incentive might not have been large enough. The incentive was distant from the action, and although there was a potential penalty, hospitals could drop out if they faced a penalty.

·      The communication with the thousands of medical staff of these hospitals might have been ineffective

But all of this is whining.  Bottom line – this is  a deeply disappointing study.    Kudos to CMS, Premier, and Jha et al for publishing these negative results.  The only way to move forward effectively is to publish both positive AND negative results.

Ashish Jha had a double header in the NEJM last week – he also had an editorial suggesting that the emphasis on preventing hospital readmissions might be misdirected.  Hospital readmissions are staggering in the US Medicare population (almost one in five in 30 days).  However, readmissions are much lower in those under 65.   Further, Jha points to a literature review from the Canadian Medical Association Journal (The JAMA of the North) that showed that with clinical record review less than 12% of readmissions were judged to be preventable.  Overall only 2.2% of discharges led to a preventable readmission in this literature review.  Jha points out that penalties for high readmission rates could inadvertently penalize hospitals with lower mortality rates (who discharge patients who are by definition sicker).  Emphasizing the “wrong” measure draws our attention from other areas that may lead to better outcomes or more cost savings.

Now that we see coherent arguments against focusing too much attention on the “core measures” in the Premier demonstration and readmission rates, we just have to identify  on which metrics we SHOULD focus our attention.

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The Supremes Strike a Blow for Health Care Affordability

Today’s Managing Health Care Costs Indicator is $3000

All eyes are on the Supreme Court’s six hours of oral arguments on the Affordable Care Act this week – but we shouldn’t lose sight of a hugely important decision last week to limit the ability of biotechnology companies to patent “natural laws.”

The Supreme Court last week ruled that Prometheus Pharmaceuticals could not patent a test that suggests medication dose changes based on amount of metabolites in the patient’s blood.  Mayo Clinic had developed a similar test – with its own validated normal range, but Prometheus sued to stop Mayo from marketing its test.   Now there can be competition in this field, which is likely to lead to more innovation and lower price.  

This has led the Supreme Court to ask an appeals court to review its earlier finding that Myriad Pharmaceuticals and the University of Utah could continue to be the sole owners of a patent  for BRCA 1 and 2 – the genes that are associated with heightened risk of breast and ovarian cancer, especially among Ashkenazi Jews.  The  genetic test for these genes now costs $3000 – and many insurers are reluctant to provide coverage.

Advocates periodically assert that “personalized medicine” can improve quality and outcomes while lowering overall resource costs, and point to tests that can protect patients from drugs that would offer them no benefits, and help determine the best dose based on genes rather than trial and error.  There is no question that genetic testing is already saving and improving lives.   The current high expense of genetic tests makes it unlikely we can achieve the goal of cost savings  - and single source manufacturers would fight hard to maintain high “brand name” prices.  These Supreme Court decisions can inject competition in the biotechnology market,  offering the prospect of price relief in the all-important market of genetic tests and gene therapies.

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The Continued Decline of Employer-Sponsored Health Insurance

Today’s Managing Health Care Cost Indicator is 53.5%

Click on image to enlarge. Source http://hschange.org/CONTENT/1280/

A report from the National Institute for Health Care Reform this week reports that 53.5% of Americans under 65 were covered by employer-sponsored health insurance in 2010 – a startling 10 point drop over only four years.  This continues a long term trend – almost 70% of Americans were covered by employer-sponsored health insurance in 2001. 

Employer-sponsored health insurance can decline for three reasons

1.      Fewer people have been employed.
2.      Fewer employers might offer health insurance.
3.      More employees might decline employer-sponsored insurance, usually due to high employee premiums.

The Great Recession has reshaped all three elements of the employer health insurance market.  It will take us years (or decades) of growth to get back to employment levels that would have been predicted pre-Recession – and fewer jobs for applicants has meant a labor market where employees have more readily accepted poorer benefits – grateful just to have a job.   

More employees are working as independent contractors rather than full employees – and therefore ineligible for employer benefits.  Further, employers have felt enormous pressure to lower their costs –and with benefits (largely health insurance) often running an additional 30% of payroll, many employers have offered plans with lower benefits and higher employer premiums.  The higher premiums mean that more employees will opt-out –and be uninsured.

Government-sponsored insurance has picked up a substantial portion of the slack. Medicaid has increased from 9.5% of the population to 17.6% from 2001-2010, and even Medicare coverage has increased from 1.6% to 3% of the population (presumably more Americans who qualify for disability).    Still, the uninsured went from 14.1% to 19.5% of the population. (The 15% usually cited includes the elderly, who are nearly universally covered by Medicare).

Employers are advantaged purchasers of health insurance. They have a ready-made and stable group (sothey can spread risk across the population, and  it’s easier for actuaries to estimate future costs.)  They can enroll employees and families easily – lowering transactional costs compared to health plans enrolling individuals and small groups.

But employer-sponsored health insurance also causes “job lock,” where those with serious illness in their family are unwilling to change jobs for fear of insurance interruption.  This decreases labor flexibility – lowering overall growth and productivity. 

The decline in employer-sponsored health insurance illustrates the importance of establishing other ways to obtain health insurance.  These alternative means should have low transactional costs, and should allow substantial spreading of risk over the population.  That’s why we need health insurance exchanges to maintain access to health insurance and health care, and an individual mandate (or something close) to discourage the healthy from opting out.  

The nature of employment in the US has changed substantially, and the ACA allows the insurance market to effectively respond to these changes.  We’ll see what happens this week during Supreme Court arguments over the constitutionality of the Affordable Care Act.

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Supreme Court Overturns VT Ban on Selling Physician Drug Data

Just a brief note.  The Supreme Court agreed with my post from a few months ago and will allow pharmaceutical companies to purchase data on physician drug prescribing practice. The vote was 6-3; Sonia Sotomayor joined Anthony Kennedy and the four pro-business conservatives.

I think having more of this data collected in a standard way will be good - and eventually will help us improve prescription practices.  I'd like to see this data available in patient-friendly ways.

In an era of high patient cost-sharing, patients will start wanting to know if their doctor is making cost-effective prescription choices.

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Let the Pharmas Data Mine Prescription Records

Today’s Managing Health Care Costs Indicator is 3.99 billion

Vermont, New Hampshire and Maine have passed legislation prohibiting pharmaceutical companies from using data from aggregators that track physician prescribing practice for marketing purposes.  The Supreme Court heard arguments yesterday about whether these laws should be struck down as restrictions of free speech.

Physicians wrote 3.99 billion prescriptions in 2010 , a rich database that can be used to increase the value of the health care system, or to market increased use of high margin medications.

I don’t have a lot to say about the constitutional issues posed by this legislation, but I’ve been thinking about the practical implications.  When I was in full-time clinical practice, I was always surprised that the drug representatives who visited our practice knew which drugs I used and which I didn’t.  Frankly, I didn’t much like it.  However, I certainly learned that my prescription practices were being watched.

The pharmaceutical companies use this data to focus on which physicians are more likely to be persuaded to prescribe the drugs that they were targeting –which were often high-priced high-margin brand name medications.  The legislators in northern New England saw a powerful public policy reason to restrict use of this data. They saw physicians prescribing unnecessarily expensive medicines, impoverishing patients, raising the cost of health insurance, and increasing the cost of state Medicaid programs.  Further, they also explicitly allowed use of this data for purposes felt to be socially beneficial, such as research or quality reporting.

The pharmas, the data aggregators, and the American Medical Association have lined up in opposition to these state efforts to restrict data mining.  The AMA is concerned that physicians might be inappropriately profiled, and also incidentally  makes more money from licensing physician lists than it does from member dues each year. 

 

I hope that the Supreme Court does not uphold the states’ rights to restrict the use of this data . I think there is a good public policy reason to let the pharmas use this data – even while knowing that their intent is to increase profits, which will drive up the cost of health care.  

I fear that if the pharmas are not allowed to use this data in a way that  they find commercially viable, it’s highly likely this data will not end up being developed.  It’s fine in theory to restrict the use of this data to “socially valuable” purposes like research, physician quality profiles, and counter-detailing.   But there are large costs involved in sorting through this data, and lack of an “anchor customer” to underwrite the cost makes it more likely that this data will never see the light of day.

Transparency can help decrease variation, and can be used to develop profiles in which physicians are most cost-effective.  I imagine a future where patients will be able to have robust information about the practice patterns and quality of their physicians. Open databases are more likely to lead to accountability and systematic improvement than databases subject to large restrictions on their use.  I support the open availability of this data, even when it will be sometimes be used in ways that don’t make me happy.

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