Reform Rodeo

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.

Obama’s Plan for a Health Care Summit and the Unenthusiastic Response

Last week, President Obama announced plans to hold a bipartisan health care summit to push forward on health care reform and to give both sides an opportunity to discuss ideas for health reform legislation that will be able to garner enough votes for passage.  While President Obama and Democratic Congressional leaders want to use the health care proposals that have already passed in the House and in the Senate, Republicans say that they are unlikely to vote for a bill unless the current proposals are scrapped and the process is started afresh.  It seems like Americans, once again, may be left watching the theatrics of the health care reform debate without actually being the focal point of it.

Some conservative Congress members have already responded to the President’s invitation publicly to make their steadfast positions known.  Representative Eric Cantor (R-Va.) said this past week that he was not willing to discuss a “health reform package that spends money we don’t have.”  He added that “House Republicans have offered the only plan that will lower health care costs.”  If that is true, it is likely attributable to the fact that the House Republican bill would cover only 3 million uninsured Americans, compared to the Democratic House bill which would  insure an additional 36 million Americans.

On Monday night, House Minority Leader John A. Boehner (R-Oh.) joined Cantor in submitting a letter to White House Chief of Staff, Rahm Emanuel, which said that the Republicans were not willing to come to the table unless certain prerequisite questions were answered.  You can see the whole letter here.  In the letter, Cantor and Boehner express their non-support for reform that the American people themselves are not supporting; the basis for such being the recent Republican Senate win in Massachusetts.

Exactly what are the citizens of American thinking about health care reform anyway?  CNN reported on Tuesday that nearly two-thirds of Americans want Congress to persist in passing health care reform legislation.  The poll, an ABC News/Washington Post survey, also indicates that Americans blame both Democrats and Republicans on their unwillingness to compromise.  HHS Secretary Kathleen Sebelius herself is quoted as saying, “When people look up close at the personal activities of Congress they are confused and disgusted with the whole process and too afraid that whatever is going on can’t possibly be good for them or their families.”

Many believe that the idea for the health care summit was to address the back-door processes that led to American distrust and to make it all more transparent.  Still, there appear to be more differences between the conservative version of reform and the liberal version than points of reconciliation.  Though the prolonged tug-of-war between both sides does not seem like one that might be resolved in a day of convening, the summit is, perhaps, at least a start.

And, while the political contenders decide what to do about the summit, the health reform stalemate has presently-occurring repercussions. Many hospitals, which were holding on to the hope of reform, are now at the point where downsizing their health systems is thought to be the only step left.  Hospitals all around the country have been seeing more and more uninsured patients, and with no one to cover the full cost of services, the hospitals providing unreimbursed care are said to be further sinking into debt– and must therefore cut staff as well as services.  On the individual level, Americans are also finding it difficult to  keep up with the costs of health care, and while many forgo insurance, those that cannot due to chronic illness or necessity of care are finding the cost further prohibitive.

It would make sense, then, that Americans do want reform.  Andrew Rubin, Vice President for Medical Center Clinical Affairs for NYU Langone Medical Center and radio show host for HealthCare Connect, says that one of the underlying reasons why Americans are reluctant to give support for legislation is their lack of understanding of what is happening, not because they do not want to see change.  Let’s hope that the proposed health care summit will be used to clarify issues for Americans who do need and want health care, instead of for just another political brouhaha.

House Subcommittee Hearing Scheduled Today: The End of “Pay to Go Away” Deals Between Drugmakers?

Photo by thinkpanama via Flickr

A House Energy and Commerce subcommittee hearing was scheduled for today regarding the practice of brand-name pharmaceutical companies paying generic drugmakers to delay the launch of their drugs.  These agreements, sometimes known as “pay to go away” arrangements, allow the brand-name pharmaceutical companies to benefit by keeping the cheaper generic drugs off the market for a period of time,  and essentially holding a monopoly on the drug for longer.  The generic drug company also benefits, as they are paid to simply delay their drug’s entrance into the market.

The Wall Street Journal reported that the FTC has fought these payments for years, Democrats have discussed passing legislation to forbid such deals, and President Obama has promised to stop the arrangements in his budget.  Senator Herb Kohl (D-Wis.) introduced a bill in February to abolish these deals and Rep. Bobby Rush (D-Ill.) introduced a comparable bill in the House last week.

The WSJ states that generic drugs can cost as little as a quarter of the brand-name drug, which can ultimately save billions of dollars in drug costs.  Eliminating the deals that keep the generic drugs off the market would therefore create significant savings to the country’s health care system.  Scott Hemphill, associate Professor at Columbia Law School, told the WSJ that ten brand-name drugs with about $17 billion in annual sales are now protected by the agreements, including Pfizer’s Lipitor.  Pfizer said that this was not the case.

Since 2001, the FTC has filed six suits to stop these deals, with little success.  However, in February, FTC Commissioner Jon Leibowitz said that he believed Obama’s administration was going take action to stop the “pay to go away” deals.  According to Medical News Today:

Leibowitz said “The new administration does seem to recognize that this is a real problem.”  He added that “fixing it … would actually help pay for health care reform.” Leibowitz said FTC will take a two-pronged approach to stopping “pay-for-delay” settlements. First, the agency will challenge the most anti-competitive settlements in court, and secondly, it will support legislation against such deals. Leibowitz said he expects the Obama Department of Justice to be “much more supportive” of legal challenges to the settlements than the Bush administration. He added that it also is possible “the-pay-for delay settlement issue or problem will get resolved in health care reform, and … if that happens, then it will presumably get resolved more expeditiously.”

More Employers Are Adopting Consumer-Directed Health Plans

Photo by liewcf via Flickr

As the cost of health care increases and employers continue to struggle in the bleak economy, many employers are said to be faced with a decision: whether to opt-out of their existing health plans, either by eliminating health benefits for their employees or finding a more cost-friendly alternative. CNN reports that more employers are offering consumer-directed health plans as what is considered a cost-friendly alternative.

CNN states:

More than 51% of U.S. employers now offer a consumer-directed health plan (CDHP), up from 47% last year, according to the latest survey of 489 large U.S. employers from Watson Wyatt, a consulting firm that specializes in employee benefits.

A CDHP is a way of lowering health plan costs of employers by shifting the costs of medical care to individual employees.  The article reports:

Consumer-directed health plans (CDHPs) are typically lower premium but higher deductible health plans. They feature a kind of savings or spending account that helps employees pay their out-of-pocket expenses for covered services, or services that are not covered by a traditional plan.

One form of popular CDHP is Catastrophic Health Insurance– in these plans, often taken out in conjunction  with a tax exempt Health Savings Account (HSA). Under IRS rules, according to Insurance.com “the total out-of-pocket maximum (which includes the deductible and co-payments) for these HSA-linked catastrophic health plans is $5,600 for singles, and $11,200 for families.” In addition, Insurance.com states

Certain pre-existing conditions, such as diabetes and mental health disorders, might mean you can’t qualify for an individual catastrophic health plan without prior qualifying group coverage, or at least that you can’t get coverage for those pre-existing conditions.

Finally, many CDHPs have “lifetime caps” of somewhere between 1 and 5 million dollars. When medical bills surpass these amounts the insurance company is no longer liable.

As the cost of health benefits and health care continues to increase, alternatives to the traditional cost-sharing relationship between the employer and employee are being examined– and understandably so. As for the relative merit of CDHPs and their “catastrophic” brethren, perhaps it depends upon which lens one looks through.

Proponents of CDHPs often cite the increased value in cost conscious “out of pocket” consumer health care choices and the positive affect this “true market” driven approach may have on the cost and quality of care; but the reality of the basis for consumer choice, as Frank Pasquale noted on this blog, is that “brand power has a lot more to do with choices here than objective assessment of outcomes.” In addition, as Professor Pasquale points out, Partners Health in Massachusetts was able to use its power, (market, brand, and sundry), in order to demand “reimbursements up to 30% over what other hospitals receive for identical procedures. Their market share has steadily increased as well, allowing them to stockpile the resources necessary to enter into new markets and threaten the viability of cheaper community hospitals.”

If CDHPs are viewed through the “better than nothing” lens, they obviously have some appeal (But See immediately above); if viewed through the “universal coverage” lens they obviously leave something to be desired. Having said all that, CDHPs may not be a best alternative, but they are becoming– in a woefully ironic twist of the word– a more “popular” alternative.

Medical Imaging: Why Are We Spending So Much?

Photo by Raziel via Wikimedia Commons

The NY Times article “Good or Useless, Medical Scans Cost the Same” states that the use of outdated medical imaging machines and the growing number of unnecessary scans performed each year are contributing to excessive medical imaging costs.  The article reports that the cost of medical imaging has reached $100 billion a year in the United States, with over 95 million high-tech scans being performed annually.  However, an astounding number of these scans have been shown to be either unnecessary or useless; the result is a waste of resources, patients’ time, and money, and the creation of untold needless worry.   According to a recent study by America’s Health Insurance Plans, the number of medical imaging tests increased by 40 percent from 2000-2005 and it is estimated that one third of these tests are inappropriate, costing the country between $3-7 billion a year.

It is not only the sheer number of medical imaging tests (necessary and unnecessary), such as MRIs, CT scans, and PET scans, that is contributing to the overall cost of medical imaging.  Other factors adding to the fact that insurers’ expenditures on medical imaging are growing at 18-20% annually are the use of older imaging machines, the growing trend of physicians who have ownership interests in imaging machines, and radiologists’ high compensation.

Currently, imaging centers are not required to, but may choose to, become accredited by The American College of Radiology.   Therefore, the age of an imaging machine is not regulated and older machines may produce blurry or poor scans.  This leads to repeat tests and misdiagnoses, which can result in an illness remaining undetected or even unnecessary surgery, as is depicted in the NY Times article.

In the current system, compensation is not based on the quality of the scan and therefore there is no incentive for the facility or physician to purchase a new and very costly imaging machine.  As the Wall St. Journal Health Blog points out radiologists read the scans and the insurer who pays for the scan never sees it to determine its quality. Read more