1. Kaiser Health News reports on Republican efforts to allow states to tighten Medicaid eligibility rules.
2. Health Affairs writes about the important role that advanced practice registered nurses will play in the imminent ACO landscape.
3. iHealthBeat has a story on how researchers are preparing IBM’s Watson computer for medical applications.
4. Maggie Mahar discusses how, and why, the growth of Medicare is (somewhat surprisingly) below that of inflation.
5. The New England Journal of Medicine has a piece on the policy reasons why we must revisit the E&M coding system that forms the foundation of medical billing.
1. Becker’s Hospital Review describes how the Mayo Clinic, the Cleveland Clinic, Geisinger Health System, and Intermountain Health, are hesitant to join ACOs, at least as ACOs are implemented under the new regulations.
2. The Health Care Blog has a story on how Google Health appears to be in a deep freeze in terms of development.
3. The New England Journal of Medicine has a piece on the ACA’s controversial Independent Payment Advisory Board (IPAB), a 15 member board whose recommendations to Congress for restraining Medicare spending become effective absent legislative action.
4. iHealthBeat reports on how the federal government’s Health IT Policy Committee is weighing adjustments to the second stage of the meaningful use program that incentivizes providers to adopt HIT.
5. Health Data Management discusses a new study showing that medical devices may act as vectors for malicious attacks on the devices and networks to which they attach.
1. The NYT reports on how Florida is retooling their Medicaid system by, among other things, channeling some Medicaid patients into for-profit HMOs.
3. Health Data Management reports on J&J’s acquisition of device maker Synthes for $21.3 billion.
4. Health Affairs has a piece on how comparative effectiveness research can change the practice of medicine.
5. Becker’s Hospital Review has a piece on the 6 technology building blocks of ACOs.
It’s Not the ‘Shared Savings’, Stupid: Why ACOs Under the Proposed Rule Will Change Medicine As We Know It
Filed under: Accountable Care Organization, Cost Control, Health Reform
CMS got the Medicare Shared Savings Program (MSSP) proposed rule largely right, but not because of the actual “shared savings” that the ACO model is commonly associated with. Rather, the MSSP will usher in a shift from the practice of medicine as primarily an art, to the practice of medicine as primarily a science.
The explosion over the last 50 years of drugs and devices — and the studies and guidelines concerning their effectiveness — is staggering. Couple this explosion with the lack of effective means for physicians and health care providers to make sense of the information, and it’s not surprising that we have a bloated, inefficient, and costly system that fails to provide value commensurate with our health care budget.
This systemic problem is no secret. The HITECH Act attempts to target the health information technology (HIT) problem with an incentive program, and PPACA attempts to increase evidence-based medicine (EBM) with projects like the Patient-Centered Outcomes Research Institute. But a piecemeal approach does not ensure the necessary integration between HIT and EBM, nor sufficient incentives for industry to embrace them.
Why such faith in the MSSP?
Because if ACOs want to participate in the shared savings they must meet the dual requirements of EBM and HIT. It’s this double-envelopment — combined with the ‘carrot’ of shared savings — that will finally usher in a medical revolution.
Thomas Kuhn, a trained physicist who is better known for his contributions to the philosophy of science , introduced the idea of “paradigm shifts” that occur as science evolves. In “The Structure of Scientific Revolutions,” Kuhn posits that instead of a linear evolution of scientific discovery, the discovery of anomalies can force traditional explanations of natural phenomena to be questioned. If enough anomalies accrue that seriously undermine an accepted explanation, a “crisis moment” occurs. In this circumstance “a scientist’s world is qualitatively transformed [and] quantitatively enriched by fundamental novelties of either fact or theory and a scientific revolution is born.” But as Kuhn notes — with import to our discussion of the MSSP — prior beliefs and experiences can make accepting a new paradigm difficult for scientists.
Kuhn’s theory of the evolution of science helps to explain health reform, or the lack thereof. Our health care paradigm — the spending of significant resources on health care per capita — has accrued significant anomalies, most notably outcomes that do not match up with our spending. We have tried HMOs, PPOs, and every many other types of arrangements, but to no avail. We are in a “crisis moment.” And we have a new paradigm: health care decision making that utilizes EBM at the point of care.
And that, my friends, is where the savings will ultimately be found.
A 2004 study demonstrated that following evidence-based guidelines for the treatment of hypertension in the elderly would save $1.2 billion annually.
There is no shortage of similar studies showing billions of dollars, and better health outcomes, waiting to be unlocked. So why isn’t it occurring?
A new review by Stanford University’s Adam Elshaug, M.P.H., Ph.D., and Alan Garber, M.D., Ph.D. demonstrates that recent studies on complex vertebral spinal procedures point have “cast doubt on the magnitude of any benefits from these procedures and at worst established their ineffectiveness.” The studies have caused payers like Blue Cross to limit or withdraw coverage of the procedure. After analyzing the data, the authors found that a conservative estimate of the savings of scaling down the costly and ineffective procedure would yield between $450 million and $725 million depending on the continued use of the procedures.
But the authors make a crucial point at the end of their piece:
Of course, savings will be derived from [comparative effectiveness research] CER only if practice changes. In the United States, it’s unclear whether these studies are powerful enough to overturn coverage decisions or cut utilization of established procedures. . . ACA features such as bundled payments, shared savings programs, and outcomes-based payments offer mechanisms for stimulating the adoption of practices that are supported by CER and the abandonment of practices that CER calls into question.
I interpret this as an acknowledgment that we have enough data to start saving money and increasing care, but that we are stuck in a rut where the practice of medicine itself is having troubling embracing science, and we are relying on the payers to pick up the slack.
This is not to say that medicine can ever — or should ever — become entirely science-based. There are embedded values in the process of health care decision making that science cannot determine, such as a patient’s desire for aggressive treatment and the risks or costs they are willing to incur. Regardless, there is a baseline degree of science-based medicine that will improve quality, afford greater patient (and physician) autonomy, and decrease cost. Moreover, studies have shown that better informed patients make more cost-effective choices.
The problem is our inability and/or our unwillingness to embrace the inevitable paradigm shift to a greater science-based medicine even during a crisis moment. That is where the MSSP double-envelopment strategy comes in.
CMS’s Double-Envelopment Strategy: Attract with the Savings, Surround with EBM and HIT
The MSSP allows an ACO, each year, to recoup some of the savings that they have realized in reference to a benchmark cost. There is a fairly complicated procedure for determining the actual savings that the ACO can collect, but the idea is simple: incentivize the health care providers to reduce the cost of care. Health care organizations are racing to form ACOs, but while doing so they are being surrounded by EBM and HIT requirements that will drive a shift in health care delivery.
With respect to EBM, the proposed rule requires ACOs to implement evidence-based medicine or clinical practice guidelines and processes in an effort to improve individual care, improve the health of the population, and lower the growth of health care expenditures. The guidelines and processes must cover diagnoses with “significant potential” for the ACO to achieve quality and cost improvements, taking into account the circumstances of individual beneficiaries. All ACO participants and suppliers/providers must agree to abide by these guidelines and processes, and must be evaluated for their compliance. The rule also states that remedial actions must be a possibility for non-compliance, and ACOs must have policies and procedures for ACO expulsion of participants and/or providers/suppliers.
On the HIT side, ACOs are required to have an infrastructure, such as information technology (which may include EHR technology that is certified for CMS’s incentive-based meaningful use program). This infrastructure must enable the ACO to collect and evaluate data and provide feedback to ACO participants and ACO providers/suppliers across the entire ACO, including providing information to influence decision making at the point of care. Moreover, fifty percent of the primary care providers of an ACO must be “meaningful users” as defined by the HITECH Act by the second year of their ACO contract. As others have noted, the meaningful use requirement is extremely aggressive when considering that the proposed rule allows ACOs to come online as soon as Jan 1st, 2012. Industry has seen the writing on the wall, and has responded with nothing short of an ACO arms race.
The ACO-driven Paradigm Shift
Thus, the proposed rule requires ACOs to leverage HIT to evaluate data and provide feedback to others in the ACO, and do it in such a way that the feedback influences decision making at the point of care. In other words, it is setting the stage for informed decision making for both physician and patient alike. This is the holy grail of health care reform: that is, an HIT network with users that are reporting data that can be leveraged to enable providers to suggest treatments that are proven to have better outcomes for their specific patient, and to do so at the point of care.
This is in contrast to the current paradigm of managing costs by relying primarily on ex post decision making at the payer level. Often, however, the consumer who has their desired procedure or drug denied (for reasons often opaque to either the physician, insurer, or patient) will decide to pay out of pocket, and can go bankrupt in the process. In this case, no costs have been reduced, rather, they have been shifted to the consumer. While some insurers create and use HIT and EBM, their behind-the-scenes decision making has not been embraced by physicians or patients. That’s because patients trust their physicians, not their insurers. The locus of reform must be on the decision making at the physician-patient level, and that is precisely where the proposed rule places it.
The proposed rule also clearly addresses the fact that you can’t get new practices adopted if physicians have to, for example, minimize their EHR application, fire up their web browser, and start searching the Cochrane Collaboration or some other site for possibly relevant data. They are going to have to do it from within the HIT system.
There is an added benefit politically to this paradigm shift: if the focus is on data-driven doctor-patient decision making, we bypass the political push and pull often associated with determining what treatment is “medically necessary.” This would satisfy the progressive ideal of providing high quality care without overbearing cost-control, while also satisfying the conservative refrain that the doctor-patient relationship remains independent. If the process of creating EBM decision making is HIT-focused, it also encourages the antithesis of cookbook medicine by tailoring the process to the individual patient.
The Long View
Too much focus has been placed on the short term issue of how much money the ACOs can recoup. This is a valid worry for the industry, particularly the smaller practices that can’t afford setting up an ACO. The federal government must do whatever it can to allay these worries so that industry further strives to create the HIT-EBM framework that the shared savings program envisions. If it means increasing the percentage of savings that the ACOs can receive, then so be it. Or perhaps ACOs should come online a year later after the meaningful use stage of EHRs has progressed.
Regardless of how the final rule mitigates industry difficulties, the ACO model is our best chance at creating a true paradigm shift that will better provide the medically necessary and efficient delivery of health care resources. It may take 5, 10, or 20 years to robustly develop the systems and the data, but nobody said a medical revolution would be easy.
CMS recently released the proposed rule that will regulate PPACA’s Medicare Shared Savings Program (MSSP). The MSSP relies on the accountable care organization (ACO) model in order to generate and distribute savings. HealthReformWatch.com has discussed the general framework for ACOs before. Clocking in at nearly 500 hundred pages, the proposed rule helps to flesh out what was largely a philosophical exercise in cooperative health care delivery. Below are what I believe to be a number of key pieces of the proposed rule.
Proposed Rule Highlights
The 2 ACO Models – (425.7)
There will be two ACO models. The choice between models appears to be largely geared towards minimizing ACO risk while hospitals and providers are first bringing their ACOs online.
- One-Sided Model: A one-sided ACO shares in the savings, but is not on the hook to share in any of the losses (i.e., costs surpassing the ACO’s benchmark as determined by CMS, see below).
- Two-Sided Model: A two-sided ACO shares in both the savings as well as the losses.
Basic Time frame and Structure
Not surprisingly, ACO hopefuls must form an agreement with CMS directly. ACOs under the MSSP must last for not less than three years after the application has been approved. (425.18). The performance period will be 12 months. The ACO must have at least 5,000 beneficiaries, and must include a sufficient number of primary care physicians to treat the ACO beneficiary population.
- First 3 years of ACO life: Choose a Track – 425.5(d)(6).
- Track 1: ACO operates under a one-sided model for two years, and under a two sided model for the third year. With the exception of quality performance, the third year of this track will be measured using the methodologies that measure the first year of the Track 2 ACOs.
- Track 2: ACO operates under the two-sided model, sharing both savings and losses with the Medicare program for three years.
- After 3 years
- ACOs operate under the 2-sided model, thus sharing both gains and losses with Medicare.
Regulating Risk and Payment — 425.5(d)(6)(b)(4)
ACOs must obtain reinsurance, place funds in escrow, obtain surety bonds, establish a line of credit that Medicare can draw upon, or establish other repayment mechanisms that will provide for payment of losses to Medicare under the 2-sided model.
Legal Structure — 425.5(d)(7)
ACO must be constituted as a legal entity for the purposes of, among other things, receiving and distributing shared savings, repaying shared losses, and establishing reporting.
Governance — 425.5(d)(8)
The ACO must establish and maintain a governing body to fulfill and execute ACO functions. It must be comprised of ACO participants or their representatives, as well as representatives of the Medicare beneficiaries in the ACO. At least 75 percent of the governing body must consist of ACO participants. ACO participants and ACO providers/suppliers must have a meaningful commitment to the ACO’s clinical integration, which may consist of a financial investment or a meaningful human investment in the ongoing operations of the ACO, such that potential loss or recoupment is likely to motivate that participant.
Overseeing Quality and Performance — Accountability Internally Enforced by Physician-directed Committee — 425.5(d)(9)(v)
ACOs will be required to have a physician-directed committee tasked with overseeing a quality assurance and improvement program. This program must establish internal performance standards for quality of care, cost-effectiveness, and process and outcome improvements. The committee must hold the ACO providers/suppliers accountable for meeting these standards. The program must have processes and procedures to identify and correct poor compliance.
Evidence-Based Medicine — 425.5(d)(9)(viii)
The ACOs are required to implement evidence-based medicine or clinical practice guidelines and processes in an effort to improve individual care, better the health of the population, and lower the growth of health care expenditures. The guidelines and processes must cover diagnoses with “significant potential” for the ACO to achieve quality and cost improvements, taking into account the circumstances of individual beneficiaries. All ACO participants and suppliers/providers must agree to abide by these guidelines and processes, and must be evaluated for their compliance. Remedial actions must be a possibility for non-compliance, and ACOs must have policies and procedure for ACO expulsion of participants and/or providers/suppliers.
Health Information Technology — 425.5(d)(9)(viii) & 425.11
ACOs are required to have an infrastructure, such as information technology (which may include EHR technology that is certified for the meaningful use program) that enables the ACO to collect and evaluate data and provide feedback to ACO participants and ACO providers/suppliers across the entire ACO, including providing information to influence care at the point of care.
By the second year, at least 50 percent of an ACO’s primary care physicians must be meaningful users of EHR technology. Failure to fulfill this obligation could lead to ACO termination.
Assigning Beneficiaries to ACOs — 425.6
The general approach of the CMS is to assign beneficiaries to ACOs based on the utilization of primary care. 425.6(a). Beneficiaries are assigned based on their utilization of primary care services by a primary care physician who is an ACO provider/supplier during the performance year for which shared savings are to be determined. Assignment to an ACO in no way diminishes or restricts the right of the beneficiaries assigned to an ACO to exercise free choice in determining where to receive health benefits.
More specifically, beneficiaries will be assigned to the ACO where they receive a plurality of their primary care services. 425.6(b). CMS will establish a fixed benchmark which will be adjusted for overall growth and beneficiary characteristics, including health status. This benchmark will be updated annually based on the absolute growth in national per capita expenditures for Medicare Part A and Part B services under the original Medicare fee-for-service program.
Payment and Treatment of Savings — 425.7
- Shared Savings under One-Sided Model — Each year, CMS will determine whether the estimated per capita Medicare beneficiary expenditures under the ACO are below the benchmark for Medicare fee-for-service. To qualify for savings, an ACO in this model must have costs below the benchmark by more than a “minimum savings rate,” as determined by CMS. ACOs in the one-sided model that exceed this minimum savings rate (as determined by CMS calculations) are eligible to share savings net 2 percent of its benchmark. One sided ACOs can share in a maximum of 50 percent of the savings, with an additional 2.5 percent being allowed for rural hospitals or federally qualified health centers–in certain circumstances. Payment is capped at 7.5 percent of the ACOs benchmark. However, ACOs will not be able to blindly slash costs in an effort to obtain savings. Rather, eligibility of the shared savings will be contingent on the reaching of certain minimum quality performance measures. These measures will focus on five areas, including patient/care giver experience, care coordination, patient safety, preventative health, and at-risk population/frail elderly health. In addition to determining general eligibility for savings, the quality performance measures will also determine the actual percentage of savings that the ACO is eligible to take home.
- Shared Savings under Two-Sided Model – In the two-sided model, CMS will also determine a benchmark of Medicare Part A and Part B costs. This benchmark will determine whether the ACO is eligible for savings payments or — as is unique to the two-sided model — whether they are liable for losses. To trigger savings or losses, the ACO must be below or above their benchmark by more than a minimum savings rate, or alternatively, a minimum loss rate when considering losses. Unlike one-sided ACOs whose minimum savings rates are calculated based on the beneficiary population, the minimum savings rates for two-sided ACOs are capped at 2 percent below the benchmark rate. Likewise, to be subject to loss, the ACO’s expenditures must be above 2 percent of its benchmark. Two-sided models also use the quality performance measures to determine eligibility as well as the rate of shared savings. Two-sided ACOs can share in a maximum of 60 percent of the savings, with an additional 2.5 percent being allowed for rural hospitals or federally qualified health centers–in certain circumstances. In addition, whereas the shared savings of the one-sided model caps out at 7.5 percent of the ACO’s benchmark, the two-sided model caps out at 10 percent.
Preventing Cherry Picking — 425.12(b)
CMS will use the methodologies it applies to analyzing ACO performance in an effort to prevent ACOs from “cherry picking” the healthiest individuals for their ACOs. CMS reserves the right to terminate an ACO for avoiding at-risk beneficiaries. Other less drastic options are also at the option of CMS.
Ensuring quality performance — 425.12(c)
CMS will be monitoring ACO compliance by analyzing the data provided by the ACO to determine its eligibility for, and its percentage of, shared savings. If the ACO fails to meet CMS performance standards it will be given a warning. An ACO given a warning will be reevaluated the following year. If the ACO is still failing to meet the performance measures CMS may terminate the ACO immediately or take alternative actions as specified in the rule. If the ACO does not submit the requested quality performance data, CMS will request submission of the data, allow for a correction of the data, or allow for a written explanation of why the data was not provided. ACOs that continue to fail in providing the requested data will be terminated immediately.
Beneficiary Data Sharing – 425.19(d)
CMS will provide ACOs with monthly claims data for potentially assigned beneficiaries. CMS makes clear that HIPAA protections will apply to this data sharing. More notably, ACOs must provide the beneficiary with the opportunity to opt-out of sharing his or her personal health information for the purposes of ACO activities.
Public Reporting and Transparency – 425.23
ACOs will be required to publicly report a variety of information, including quality performance standard scores, shared savings or losses information, the total amount of shared savings distributed among ACO participants, and the total proportion that was used to support quality performance.
1. CMS [Proposed Rule]: Medicare Program: Medicare Shared Savings Program: Accountable Care Organizations on ACOs. For those wanting the rule without the preamble, I have uploaded it here. It is only 59 pages.
2. CMS and HHS Office of the Inspector General [Notice with Comment]: Medicare Program; Waiver Designs in Connection with the Medicare Shared Savings Program and the Innovation Center.
3. DOJ and FTC [Proposed Statement]: Proposed Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program.
1. Medicaid Moves: Kaiser Health News reports on Medicaid policy developments, including controversial GOP efforts to reform Medicaid.
2. HIT: The New England Journal of Medicine outlines the unrealized potential of HIT.
3. ACOs: The Wall Street Journal discusses Atrius Health, a large ACO-like entity that offers insight into the ways in which such organizations have been successful.
4. Doc Fix Fix?: The Commonwealth Fund reports on MedPAC’s alleged plan to revise the Sustainable Growth Rate, and with it, the perennial ‘Doc Fix’ problem.
5. Waste: A Health Care Blog piece outlines the myriad ways that the U.S. health care system is ‘wastefully complex‘.
1. Insurers are Expanding Their Reach: Kaiser Health News reports that health insurance companies — in fear of losing revenue from health care reform — are looking to expand to other unregulated areas of business.
2. Single-Payer at the State Level: The New England Journal of Medicine has a piece detailing Vermont’s attempt to enact single-payer, state-based health care.
3. Innovation: The Health Affairs Blog has a piece detailing innovations to the health care system that are incorporated in the ACA.
4. Hospital Help: Becker’s Hospital Review discusses the 10 struggling New Jersey hospitals that are receiving upwards of $30 million dollars from the New Jersey Health Care Stabilization Fund.
5. Happy Birthday ACA!: Ezra Klein discusses the first birthday of modern health care reform, and the basics of the reform provisions that the statute includes.
1. Fast Track — Kaiser Health News reports that the 11th Circuit Court of Appeals has agreed to fast track the federal government’s appeal of a Florida district court ruling that invalidated the health care reform law.
2. Sebelius v. GOP — Politico reports that HHS Secretary Kathleen Sebelius is clashing with Republicans, arguing that the House’s continuing resolution bill would force HHS to stop making Medicare payments.
3. Medicaid Policy — At the Health Care Blog, health policy expert Harold Pollack discusses an ongoing debate that he has been having with Avik Roy of the National Review about the benefits and burdens of the Medicaid system. It gets personal.
4. Medicaid Pay-For-Performance — The Health Care Economist has a nice overview of existing Medicaid pay-for-performance models; a timely issue considering the ACA’s inclusion of p4p ideas.
5. Medicare Advantage — Marsha Gold at the Health Affairs Blog discusses the facts, fallacies, and the future of Medicare Advantage.
6. Transparency — The New England Journal of Medicine has a detailed piece discussing the challenges and potential effects of greater price transparency in health care.
A report was published last month that seriously calls into question the effectiveness of the FDA’s regulation of medical devices. Authored by Diana Zuckerman Ph.D. et al., in the Archives of Internal Medicine, the report investigates the two-pronged process that governs medical device regulation under the FDA.
The first prong, known as the premarket approval (PMA) pathway, requires a device company to prove that its medical device is safe and effective. PMA applies to Class III devices which are defined by regulation to include those devices that support or sustain human life, are of substantial importance in preventing impairment of human health, or which present a potential, unreasonable risk of illness or injury. Class III devices include heart valves, pacemakers, and artificial hips.
The second (and less stringent) prong is what is known as the 510(k) pathway. As the FDA states:
A 510(k) is a premarket submission made to FDA to demonstrate that the device to be marketed is at least as safe and effective, that is, substantially equivalent, to a legally marketed device . . . A legally marketed device . . . is a device that was legally marketed prior to May 28, 1976 (preamendments device), for which a PMA is not required . . . or a device which has been found [substantially equivalent] through the 510(k) process.
The upshot is that as long as the device manufacturer can demonstrate that their device is “substantially equivalent” to a “predicate device” that has presumably passed the more stringent PMA process, they are subject to far less exacting standards. Most notable is the fact that these iterations of devices approved through the 510(k) pathway do not require specific evidence of clinical safety and effectiveness; they can bootstrap off of the predicate.
Zuckerman’s study examined the recalls of medical devices and whether those devices were approved under the PMA or 510(k) process. The authors found that:
There were 113 recalls from 2005 through 2009 that the FDA determined could cause serious health problems or death. Only 21 of the 113 devices had been approved through the PMA process (19%). Eighty were cleared through the 510(k) process (71%), and an additional 8 were exempt from any FDA regulation (7%). Cardiovascular devices comprised the largest recall category, with 35 of the high-risk recalls (31%); two-thirds were cleared by the 510(k) process (66%; n = 23). Fifty-one percent of the high-risk recalls were in 5 other device categories: general hospital, anesthesiology, clinical chemistry,neurology, or ophthalmology.
The authors conclude that:
Most medical devices recalled for life-threatening or very serious hazards were originally cleared for market using the less stringent 510(k) process or were considered so low risk that they were exempt from review (78%). These findings suggest that reform of the regulatory process is needed to ensure the safety of medical devices.
Not surprisingly, the medical device industry doesn’t agree with Zuckerman’s findings. Stephen J. Ubl, the CEO of the Advanced Medical Technology Association, has pointed to “three recent studies [that] have all found that the 510(k) process has a remarkable safety record with extremely low recall rates–one study reported a rate of less than two-tenths of one percent.”
Aside from the issue of whether 510(k)-approved devices pose a greater risk of recall, health care professionals have underscored a more systemic problem relating to the paucity of evidence-based medicine supporting medical devices. Orthopedic surgeon Dr. Andrew Pearle told ABC News in a recent report that, ”[s]ince patients are exposed to new products through direct-to-patient marketing, they assume these products have been time-tested and well-established. But often there is little clinical data to support the marketing claims.”
The FDA believes there is enough of an issue to warrant a reevaluation of the 510(k) process. This past January the FDA announced that it will be revisiting the 510(k) process. A press release describes the key actions to include:
- Streamlining the “de novo” review process for certain innovative, lower-risk medical devices,
- Clarifying when clinical data should be submitted in a premarket submission, guidance that will increase the efficiency and transparency of the review process,
- Establishing a new Center Science Council of senior FDA experts to assure timely and consistent science-based decision making.
Meanwhile, individuals with recalled artificial hips manufactured by DePuy Orthopaedics are determining whether to undergo a new operation to replace the recalled equipment. Somewhat ironically, DePuy just unveiled a new line of artificial hips last month that also received approval through the fast-tracked 510(k) pathway.
1. NPR has a story about the Obama Administration’s move to accept a bipartisan proposal that will allow states to opt-out of some of the ACA regulations if they can provide a suitable alternative.
2. Respectful Insolence has a detailed story about Bruesewitz v. Wyeth — a SCOTUS decision that recently upheld the federal law that preempts design defect suits against vaccine manufacturers, instead channeling the complaints into a Vaccine Court that awards damages from an industry-sponsored fund.
3. The Healthcare Economist has a review of a Robert Wood Johnson article on the ACA’s various Value-Based Purchasing provisions.
4. Bradley Herring at the NEJM has a an economic perspective on the individual mandate’s severability from the ACA.
5. The Wall Street Journal has a piece about governors’ struggle with Medicaid budgets, and the strategies they are implementing to deal with ballooning costs.
1. Medicaid in Arizona: Kevin Sack of the New York Times discusses Arizona’s planned removal of a quarter of a million Medicaid patients from their rolls; Secretary Sebelius has signed off.
2. Essential Benefits: Ian Spatz at the Health Affairs Blog continues the discussion of the controversial determination of essential benefits under the health reform statute.
3. Integration and Prices: Maggie Mahar at Health Beat has a piece on the concern about price increases due to integration by accountable care organizations and other similar entities.
4. Clinical Practice Guidelines: David Williams at KevinMD.com details a recent survey which appeared to find more public support for arguments against treatment guidelines as opposed to arguments in favor of the guidelines.
5. Individual Mandate: Bob Laszewski at Health Care Policy and Marketplace Review posits alternatives to the individual mandate.
1. 10 Most Wanted: Taking a page out of the FBI’s playbook, HHS’s Office of Inspector General is now publishing a top ten list — with pictures – of the most wanted health care fraud and abuse fugitives.
1. Straight to the Source: Jonathan Cohn discusses what Richard Foster — the chief federal actuary for Medicare — thinks about the chances that health care reform will hold down costs.
2. Individual Mandate Mandatory? NPR has a story investigating whether health reform could be implemented without the individual mandate.
3. Dartmouth Research Questioned: Maggie Mahar discusses a recent Institute of Medicine report which posits that in some circumstances, an increase in health care spending may lead to better outcomes.
4. Value-Based Purchasing: The Health Care Economist has an interesting post detailing Oregon’s experience with value-based purchasing.
1. Maggie Mahar at Health Beat discusses a new report published in the NEJM that supports the importance of the individual mandate in combating adverse selection.
2. At the Health Care Blog, Paul Levy writes sardonically about the accountability of accountable care organizations.
2a. On a less sardonic note, Chris Fleming gives an overview of Health Affairs’ special issue covering ACOs.
2b. Thomas Greaney writes in the NEJM about how the federal government’s can help ACOs navigate an already concentrated health care landscape.
3. The Hill reports on the essential items and services that health insurers will have to provide when offering their products in the new exchanges.
4. David Kibbe and Brian Klepper document the federal government’s initiatives in giving the HIT market a much needed shot-in-the-arm.
5. The Commonwealth Fund’s Melinda Abram’s discusses one of the most important facets of health care reform: how the ACA will bolster primary care.
Filed under: Drugs & Medical Devices, Physician Compensation
The Wall Street Journal recently published a report that outlines the extensive financial benefits that surgeons are receiving for spinal fusion surgeries. The “bounty” — a term used by the WSJ — comes from Medicare reimbursement as well as royalties for the intellectual property contributed by the surgeons to the spinal fusion procedures. Presumably the surgeons also receive money from speaking and training fees.
In short, spinal fusion is a surgical procedure whereby two or more vertebrae are fused together. The fusion is accomplished by creating a bridge between the vertebrae that is usually constructed out of bone taken from other parts of the body. The bone is inserted between the vertebrae, and is secured by rods, screws, and plates. This reduces the movement of each vertebrae that is connected to the bridge, thereby relieving stress on the injured vertebrae, disks, and nerves. Spinal fusion may be a necessary treatment in the face of trauma or debilitating diseases affecting the spine, such as scoliosis. However, the application of spinal fusion to treat certain types of back pain has been questioned.
In light of the dearth of comparative effectiveness research regarding nearly all surgical procedures, why then is spinal fusion so controversial? There appear to be two factors: the high price of the surgery, and the strong ties between the surgeons performing the spinal fusions and the medical device manufacturers that produce the hardware used in the procedure.
In particular, the royalty payments are staggering. In the first three quarters of 2010, the WSJ reports that each of five spinal surgeons at Norton Hospital in Louisville Kentucky received more than $1.3 million from Medtronic — the leading manufacturer of spinal fusion devices. Norton Hospital — and its surgeons — are certainly not alone in profiting from the procedures.
Though the device manufacturers like Medtronic pay out large sums to physicians that develop, utilize, and promote spinal fusion treatments, the manufacturers clearly come out ahead after taking into account the price they charge hospitals for the spinal fusion devices. Not surprisingly, this money often comes from Medicare reimbursement. According to the WSJ’s analysis of Medicare claims, spinal fusion went from costing Medicare $343 million in 1997 to $2.24 billion in 2008. And as the Journal points out, the screws used in spinal fusion implants can cost between $1,000 to $2,000 a piece for reimbursement but actually turn out to cost less than $100 to make. Spinal surgeon Charles Rosen is quoted as stating that “You can easily put in $30,000 worth of hardware in a person during a fusion surgery.” A Los Angeles Times report in 2010 found that complex spinal fusion surgeries can end up costing $80,888 in hospital charges as compared to $23,724 for spinal decompression surgery — the latter referring to a group of procedures that can relieve painful pressure on the spine, but without the extensive implantation required by spinal fusion.
Nevertheless, it is true that there there are many expensive surgical procedures wherein the value to the patient justifies the high price. But it is more than the wise allocation of resources that is at issue. In the Journal of the American Medical Association’s April 2010 issue, Dr. Eugene Carragee M.D., professor of spinal disease and orthopaedic surgery at Stanford University School of Medicine summarized the clinical difficulties facing complex spinal fusion surgery, especially in older individuals:
…the complex reconstruction of spinal deformity in older patients remains a difficult and dangerous enterprise. Complication rates have declined but remain concerning (30%-40%) and the reoperation rates, in a population for whom there is a high risk of both medical and anesthetic complications with additional surgery, remains at 10% to 20% in the most optimistic reports. Moreover, despite these major interventions, this approach is still not effective in 30% to 40% of patients.
When asked about the need for spinal fusion surgeries, Dr. Steven Glassman — one of the Norton Hospital surgeons that has received millions to implant spinal fusion devices — stated that he and his colleagues were “leaders among spine surgeons nationally in comparative effectiveness research.” This is a troubling statement, precisely because of the significant royalty agreements between Dr. Glassman and Medtronic that are described in the WSJ report. Dr. Glassman is therefore incentivized — at least economically speaking — to interpret research findings in such a way that maximizes the contexts in which spinal fusion surgery can be recommended.
To combat these conflict of interest claims, Medtronic claims that it refrains from paying out royalties to the collaborating surgeons on the devices they personally use in their patients. This would appear to reduce the incentive for Dr. Glassman to personally churn out spinal fusion operations in the hope that he will get royalties for those instances where he implants hardware in which he holds a royalty agreement with Medtronic. This certainly helps to combat violations of the Federal Anti-Kickback Statute, which prohibits Medtronic from inducing surgeons to purchase their devices. But this policy does little to curb the general conflicts of interest of the general spinal surgery community when determining whether to recommend complex spinal fusion surgery. Even if a contributing surgeon does not receive royalty payments for the specific surgeries where his manual contributions are utilized, they still have an incentive to keep Medtronic “happy” by increasing demand for the spinal fusion hardware. And certainly one can envision a scenario in which a surgeon so situated might suggest such a surgery but then refer the procedure itself to a colleague, thereby allowing the royalty payments to flow unencumbered by the guise of propriety. What does appear certain is that demand for complex spinal fusion operations has increased. Citing a study by Deyo and colleagues in the same JAMA issue, Dr. Carragee points out that:
…the rate of spinal stenosis surgery in the Medicare population has remained more or less stable, but the rate of complex surgery for this disease has increased from negligible levels in 2002 to nearly 15% of all spinal stenosis surgeries in 2007. These more complex surgeries are also reported to be independently associated with increased perioperative mortality, major complications, rehospitalization, and cost.
The findings do not provide explanations for the increase in complex surgery that has occurred during the past 6 years. Ideally, because the complex surgical techniques are used to treat complex deformities, the data should show that patients undergoing these procedures usually have these complex deformities. The diagnoses reported, however, do not support this “ideal” explanation; 50% of these new complex fusion operations were performed in patients with spinal stenosis alone and no deformity. Spinal stenosis with scoliosis by coding, accounted for only 6% of the complex fusions performed.
In other words, there has been an increase in the rate of a complex surgical procedures prone to severe complications, but with no concomitant increase in the rate of the severe conditions that would ostensibly warrant such surgery. Regardless, this demand pays dividends in the royalty agreements that the surgeons receive when the U.S. spinal surgery community implant the hardware that the contributing surgeons developed– and dividends to the manufacturer.
Currently, there appears to be little, if any, countervailing force that militates against the doctors recommending this complex and expensive procedure. By conducting the complex fusion operation, the surgeon and the hospital both make money through the handsome reimbursement from Medicare and private insurance, while Medtronic is handsomely paid by selling more devices. Those hurt, financially speaking, are the taxpayers in terms of Medicare, and those insureds in private plans whose premiums have risen because of the increased costs of this procedure. Private insurance plans are unable to combat this, as any limit on spinal fusion surgery will be framed as corporate greed coming at the expense of treatment. This is precisely what has occurred after Blue Cross and Blue Shield of North Carolina announced that it would place tighter restrictions on spinal fusion surgery. In response to the restrictions, Dr. John Wilson, a neurosurgeon at Wake Forest University Baptist Medical Center and president of the North Carolina Neurological Society stated that “If this intrusion into the physician-patient relationship goes unchallenged, other insurers will follow suit…It will be a progression of ever-more restrictive policies that will handcuff us as we try to treat patients.” Dr. Wilson was one of nine physicians to write a letter to Blue Cross urging the insurer to alter the new rules. Interestingly, the letter repeatedly supports its position by citing the studies of Dr. Daniel Resnick, a spine surgeon who is listed by the Congress of Neurological Surgeons as receiving grant money from Medtronic.
1. ProPublica details the incessant problem that medical schools face in preventing their faculty from accepting money in exchange for speaking on behalf of pharmaceutical companies. As previously noted on this blog, these conflicts of interests are in addition to those conflicts found in spinal surgery and cardiac stenting.
2. For the New England Journal of Medicine, Michael E. Porter introduces two recently published papers that explore the concept of value in health care.
3. The Commonwealth Fund provides a summary of a briefing on the ACA’s initiatives to reform primary care. A full video of the briefing (which was co-hosted with the Alliance for Health Reform), as well as a podcast of the audio, can be found here.
4. The Health Care Blog has a nice bulleted Year in Review for Health Information Technology (HIT), including topics such as the HITECH Act, E-prescribing, EHRs, and Health Information Exchanges.
5. The New York Times discusses a new Medicare rule that will cover the costs of voluntary end-of-life treatment planning.