Spinal Surgery as a Barometer of Health Care Cost Increase

This week’s Journal of the American Medical Association (JAMA) has a study showing that Medicare patients have had (we might say suffered) a more than 15-fold rise in spinal fusion surgery in the last eight years.   Simple laminectomies have declined slightly.  Complications are substantially higher with the more complex surgery; life-threatening complications increase from 2.3% (decompression alone) to 5.6% (complex fusions).  Rehospitalizations were higher in the complex surgery groups, and hospital charges were over $80,000 per patient (compared to under $24,000 for simple decompression laminectomies.  It’s unfortunate the authors used hospital charges, rather than actual Medicare payments.)

The authors and an accompanying editorial note that it’s unlikely the proportion of Medicare beneficiaries with the severe pathology requiring complex fusion increased over this time.  There is no evidence that the complex surgery has better outcomes for those with less severe disease; the rate of complications suggests that it is frankly worse.   

So – why did neurosurgeons do so much more complex fusion?

1)       Techniques and tools have improved – so complications are not as high as they once were

2)       Payment is higher

3)       Medical device makers see substantial profits from implanted hardware from the complicated surgery – and they market very effectively.  The major orthopedic device makers have entered into consent decrees and paid fines over recent years for their marketing to physicians

4)       Patients are not in a good position to demand the less invasive surgery when they are in agony and their surgeon suggests what he or she feels is best

What’s the answer to this?

Like most problems in health care cost, there are probably multiple answers – and no single one will magically make everything better.

è More price transparency with patients bearing incremental cost:  If patients knew they would face a $50,000 personal bill for the complex fusion, they would pressure their surgeons for less invasive therapy.  Of course, they might pressure their surgeons for less invasive surgery even in the instances where the more complex surgery is genuinely beneficial.  Further, most plans would (and should) have far lower out-of-pocket maximums 

è Better provider reporting.    What is the complication rate for each surgeon?  This could discourage surgeons from performing more risky surgery where it wasn’t absolutely necessary

è Disclosure (or frank prohibition) of medical device company payments to surgeons.  Minnesota, Vermont Massachusetts and other states have passed laws mandating this type of disclosure.  The embarrassment factor alone should change some behavior. Surgeons don’t believe that pharmaceutical or medical device company lunches, junkets, and honoraria have any impact on their clinical practice, but there is substantial evidence that this marketing expense does change provider behavior

è Decrease in the fee schedule for more complicated surgery.  Higher margin procedures generally are overutilized – so decreasing the margin for this surgery could help.  Japan  has an interesting approach – when a procedure’s utilization jumps, payment is slashed.  That’s why Japan has $100 MRIs – presumably, Japan would also have less of a reimbursement difference from simple laminectomy to complex fusion.

è Bundled payment or capitation – which would leave groups of  providers to decide whether to fund the more expensive surgery themselves.  The provider community is often not arrayed to accept these types of payment methodology – but in general bundling payment leads to much lower utilization of higher cost procedures. 

This JAMA study caused one day of headlines; we’ll see if this will lead to genuine change.

Read More

Unit Cost vs. Utilization As Reason for Health Care Cost Increases

The Massachusetts Attorney General published a final report about two weeks ago showing the impact of unit price increases compared to utilization increases for the three major regional health plans in Eastern Massachusetts.    As you can see, over recent years the overwhelming reason for increased overall health care costs was increase in unit cost - not increase in utilization.  

You can click any of these to enlarge - or go to the full report

Read More

Gaming the System

No one loves a mandate - a government requirement that we purchase something we might not want is especially unattractive.  Further, individual mandates to purchase health insurance are naturally regressive, since the cost of insurance (even after subsidies) often hits those with more modest income the hardest.  Opponents of health care reform are seeking state legislation and court action that could invalidate the individual mandate.

Important news out of Massachusetts suggests that our individual mandate that might not be quite "tight" enough.  Blue Cross Blue Shield of Massachusetts has noted a small group of subscribers who sign up, have expensive procedures, and then give up their policies (presumably gambling that the penalty for being uninsured is less expensive than the cost of the policy once their planned medical procedure is completed.)

BCBSMA states that almost 1000 people signed up for $400 per month policies for less than 3 months, during which time they racked up over $2200 in expenses.  This might overstate the case (some of these people might have had serious and terminal illnesses and disenrolled 'involuntarily.').  But still, a 'leaky' mandate isn't good enough. Making health care reform work requires that virtually everyone is in the system - and in the system through both sickness and health.

Read More