Frequency of Overused Ambulatory Clinical Activity

Today’s Managing Health Care Costs Indicator is $6.8 billion

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The Archives of Internal Medicine published a report this weekend of researchers who reviewed data from two standard national databases to ascertain how often physicians offered the top overused clinical activities in primary care. They then extrapolated the incremental cost of this low-value care across the entire population.

A disturbing percentage of office visits included inappropriate care.  Blood counts were not indicated more than half of the time they were performed, and four in ten kids prescribed antibiotics for sore throats probably didn’t need them.  A third of the time physicians prescribed expensive brand name statins when generics would have saved substantial money. How much money? I’ve truncated the ‘y’ axis here – the brand name statin use is responsible $5.8 billion in excess cost, for the overwhelming majority of excess cost in this study.

The researchers used the Medicare fee schedule and drugstore.com prices, so this underestimates the actual cost of excess office-based care and overestimates drug costs, as pharmacy benefit managers get lower prices.  This is a study based on claims only.  Researchers did not review charts to find subtle reasons for these clinical activities, so this could overstate excess care.

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The $6.8 billion in excess cost is nothing to sneeze at – but removing all of these costs wouldn’t make much of a dent in our $2.3 trillion total health bill.   The generic statin issue will be largely solved, as Lipitor becomes available generically as early as next month and will presumable drop dramatically in price by mid 2012. The resource cost to do an extra blood count, blood chemistry, or EKG is only a tiny fraction of the allowable charge.  

There is a lot of room to improve clinical practice in this country. However, we continue to face mainly a price issue – and eliminating all the overutilization identified in this study would only lower the cost of health care by a quarter of a percent.

Thanks to Eyal Zimlichman, MD for pointing out this article.

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California to Mandate Maternity Coverage

Today’s Managing Health Care Costs Indicator is $12,320 to $17,093

The Los Angeles Times reports that the California Legislature has just passed a bill that would mandate that individual health insurance cover pregnancy-related expenses. 

California already mandates maternity coverage for health maintenance organizations and for state-regulated employer insurance, but until now insurers have been able to write individual policies that exclude coverage for pregnancy.

The $12,320 to $17,093 is the range of estimates of hospital and obstetrician costs is from the International Federation of Health plans in 2009.  This data is not trended forward from 2009, and does not include costs of anesthesia.  This is also for a vaginal delivery; cost is higher for Caesarian Section, which represents about 35% of deliveries in the US at this point.

Governor Jerry Brown has not yet announced whether he will sign the bill. Should he?

Pregnancy is often planned – so theoretically prospective moms could plan their finances to account for this expense.  However, delivery is just too expensive for most people to be able to pay this out of pocket.  It seems to me that pregnancy is exactly why we should have social insurance and share the cost burden across the larger population.

On the other hand, voluntary individual health insurance premiums will rise substantially if  pregnancy is covered.  Women could sign up after their positive pregnancy test – and thus deprive the insurance pool of their pre-pregnancy premiums.   Hence, the cost of the health insurance premium would need to be very high, to account for adverse selection, the selective recruitment of those likely to have the highest medical bills.  Health insurance which is unattractive to the healthy is unsustainable.

This is the problem of voluntary, ‘guarantee issue’ individual health insurance – it’s in each person’s individual best interest to sign up only when she needs benefits, but this limits the ability of the healthy to subsidize those with health care needs. 

The Affordable Care Act’s individual mandate addresses this issue, although it’s wildly politically unpopular to require that Americans purchase private health insurance to avoid a penalty.

Jerry Brown will find it difficult to veto this bill.  He’ll want to show solidarity with pregnant women, and make it easier for them to obtain proper prenatal care.  The maternity care needs to be paid for one way or another – we’re not going to force women to have their children on kitchen tables.   If Brown  does sign the bill, premiums will rise rapidly in the individual market, making it difficult for many to afford the health care insurance they currently have.  

It’s easy to see why policy experts are much more enthusiastic about the individual mandate than Americans filling out public opinion surveys!

Addendum: LA Times editorial supporting mandate

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Today’s Managing Health Care Cost Quote is

"A blog isn't writing. It's graffiti with punctuation"

I went to see Contagion, the newish Steven Soderbergh film, last night.   The story of the film is dreadful – an executive returns from Hong Kong with a new epidemic virus, which kills millions across the world, and threatens to kill a billion people.  The virus kills a quarter of those infected, and is highly transmissible.  It doesn’t spare kids, medical workers, or epidemiologists, although Matt Damon is immune.

A deadly worldwide epidemic brings out the worst in many (looting, rioting, favoritism, and profiteering), although it brings out the best in others (virologists toiling day and night, and testing a potential vaccine on themselves).   A virologist fires the quote above at the Jude Law character, a blogger with terrible teeth who earns millions pitching conspiracy theory and a useless nostrum for the epidemic .

Contagion is scary – an apocalyptic tale where governors seal borders of their states in the vain hope of preventing viral spread, while public health officials in China kidnap World Health Organization officials to gain preferential access to the vaccine for their villages.

I’m reminded by the scrum at the University of Minnesota Hospital about the need for surge capacity within our health care system.  As much as we want health care to be “lean,” we also want to have enough hospital beds to care for the unexpected –whether it is natural disaster, terrorist attack, or infectious disease.

It’s hard for hospitals and provider organizations to justify huge disaster preparedness expenditures in tight budgets – and this will get more difficult still as providers face reimbursement cuts in the coming years.  We’ll be wise to put most disaster preparedness dollars into public health budgets rather than indepedent institution budgets- which can allow flexibility to set up temporary facilities and even structures wherever they are needed.

The movie shows the heroism of the high-tech virologists who are able to get a vaccine to market in just over 4 months, and the public health officials who quickly convert stadiums into hospitals.  Contagion also notes that the best way to save lives is decidedly low tech.  Hand sanitizers, quarantines, and keeping more personal distance are critical weapons in the battle against this harrowing new epidemic.

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