Managing Healthcare Costs: physician efficiency

Today’s Managing Health Care Cost Indicator is $93,000

The Washington Post has a thoughtful article this morning about a new prostate cancer vaccine, Provenge. The vaccine must be individualized for each patient, and the price has been set at $93,000 per person (each receives just a single dose). Average life expectancy increase using Provenge is 4 months.

This is great news. Individualized medicine is here! The promise recounted in Jerry Groopman's Dr Fair's Tumor (1998, New Yorker) is finally available for the masses. This drug will be very desirable for people with terminal metastatic prostate cancer, their families, and their providers. It's also good news for those of us who will get other cancers - where this type of technology could be life-saving or life-prolonging.

The good news, of course, carries a steep price tag. The increased life expectancy means that Provenge will cost substantially over $300,000 per quality adjusted life year. ($93K *3, and assume that for someone with terminal prostate cancer, each surviving month will be at least slightly discounted because of suffering or disability associated with the cancer). That's far more than we usually spend -and a price point that could leave us unable to invest in other health care initiatives with as much or more promise. Even this steep price tag can be good for those with cancer, though. Such a high price encourages more investment in future biologics to treat cancer.

Most prostate cancer is in those over 65, so Medicare's payment approach for Provenge will determine whether this drug is used commonly, or whether it is available to only the superrich. Medicare has established a national coverage analysis for this product, and will have a public hearing later this month. If Medicare makes a national coverage determination, it will be binding on all Medicare intermediaries across the country.

This is a good example of a "quadrant four" decision. It's much like Folotyn, another recent cancer therapy priced similarly.

It's easy to decide to push more quadrant one therapies (increase quality while decreasing costs). The problem is that we don't have enough of them! It's easy to decide to prevent quadrant three therapies (increase cost while lowering quality). It's tough to decide to push medical decisions in quadrant two (where quality is lowered a tad for a huge price savings). It's also tough to forgo incremental quality at any price - even a high one.

There is rumbling that having a national coverage analysis is akin to having Don Berwick, the head of CMS, convene a 'death panel.' We need to have a sensible national discussion about what price we can afford to pay for incremental health . But it's hard to do that, especially when patients have much more compelling stories than a bunch of dry statistics that only an accountant could love.

The conversation about limits to the resources we want to dedicate to health care will be a difficult one. We're likely not ready for it.

Warning – a wonky post.

Ateev Mehrotra and colleagues from RAND have analyzed how different rules about what physician is responsible for a patients’ care can lead to impressively different efficiency scores for physicians.

They evaluated 2 years of medical and pharmacy claims data from 1.1 million commercially insured members in Massachusetts, representing about 80% of those with employer-sponsored insurance. Claims were assigned to episodes of care using Episode Treatment Groups, ETGs, an industry standard. Then, twelve ‘attribution rules’ were used to assign the costs of each ETG to one or more physicians. These rules ranged in how much professional or evaluation and management cost a physician must be responsible for to be credited with the cost of the episode. Some of the rules allowed crediting a single case to multiple physicians, and others did not. Each physician was allocated to a high, average or low cost group (and some physicians were in a fourth group, without 30 evaluable episodes).

The choice of ‘attribution rule’ mattered a lot. Compared to the ‘standard’ rule, different attribution assigned a physician to a different efficiency group between 17 and 61% of the time.

This is an especially elegant study. Mehtrotra standardized prices so that this evaluation is really all about utilization, not cost per unit. In the ‘real world,’ though, cost per unit helps drive overall cost – so it’s possible that this study should be repeated without standardizing cost. The researchers provide data in an appendix showing that most of the difference among the different attribution rules is movement of efficiency categories – not movement between efficiency category and insufficient sample size.

This matters. We recognize there is a large utilization difference between “efficient” and “inefficient” physicians. If the measurements of physician efficiency are this unreliable, it is far harder to develop tiered networks to encourage patients to use more efficient physicians. This also helps explain physician unhappiness at being assigned to different tiers in different health plan rating systems.

This might be another reason we should profile groups of physicians, rather than individual physicians.