qotd: OECD: Fiscal sustainability of health systems

OECD
September 2015
Fiscal Sustainability of Health Systems
Bridging Health and Finance Perspectives

From the Forward

This book provides a synthesis of the work developed by the OECD Senior
Budget and Health Officials Joint Network. Over the past four years,
this joint network has been an important forum to promote the dialogue
and mutual comprehension between Health and Finance Ministries. It has
provided a platform for budget and health officials to discuss together
possible solutions to fiscal sustainability challenges in health care.
It describes a wide range of responses by countries to the crisis - some
clearly beneficial, achieving better value for money, others less so,
reducing services across-the-board and potentially leading to poorer
health outcomes and financial hardship from increasing costs borne by
patients. This book presents a strong case for timely reforms of health
care systems, based on close collaboration between budget and health
officials.

From Chapter 1: Fiscal sustainability of health systems - Why is it an
issue, what can be done?

The main messages from this chapter are summarised below:

* Fiscal sustainability requires governments to mange public finances
credibly. Health systems are a key challenge to fiscal sustainability,
since rising costs, new treatment possibilities and demand for continued
improvements to the quality of care will exert pressure on public finances.

* Health expenditure has typically outpaced economies growth. Whilst
the global economic crisis moderated rapid growth in health spending,
this is expected to be temporary. Indeed, projections forecast health
expenditures to rise as a share of GDP.

* Spending on health has been largely driven by new technologies and
rising incomes, with demographic change and institutional
characteristics of health systems relevant but less important factors in
most countries.

* The implications of rising costs are particularly important for
public finances, since health care is predominantly funded from public
sources. Moreover, aging may lead to shortfalls in payroll taxes to
finance health.

* Policy makers have three broad ways to ensure fiscal sustainability
of health systems: raise more money for health, improve the efficiency
of government health spending, and reassess the boundaries between
public and private spending. Simpler blanket spending cuts can also
evidently address fiscal constraints, but are more likely to have
adverse effects.

* Health care is highly valued by populations and is a major
contributor to countries' economies. Therefore spending more on health
care is not automatically a problem, particularly if citizens are
willing to pay for this through higher taxes or cuts in other areas of
government spending. The challenge is to ensure any increase in spending
respects fiscal sustainability constraints, and delivers good value for
money.

Do not reduce population coverage, avoid across-the-board increases in
cost sharing

Looking first at population coverage, leaving certain population groups
to be voluntarily covered by private health insurance appears to be a
logical policy option from a fiscal perspective. Indeed, the theoretical
advantages of private health insurance are an expansion of individual
choice, greater innovation and flexibility, as well as reduced public
cost pressures. However, in practice the risks associated with private
health insurance are numerous, including higher administrative costs,
less bargaining power for insurers, pressure for tax incentives, and
risk selection leading to inequitable coverage gaps.

Given these issues, and coupled with strong social justice arguments,
universality of population coverage should be maintained. In terms of
cost coverage, blanket increases in cost-sharing and other forms of
out-of-pocket payments is also undesirable, since they can deter
health-seeking behaviour and can lead to people facing financial
hardship. Small, targeted co-payments that include exemptions could be
considered, but are unlikely to generate substantial revenues.

From the Conclusion of Chapter 1

Finally, it is also important to remember that more health spending is
not automatically a problem. Good health remains a critical part of
human development and an important contributor to economic growth.
Health care is also highly valued by society. Accommodating greater
health spending as a share of government budgets is therefore not
automatically a problem. The challenge is to ensure that any increase in
spending respects fiscal sustainability constraints, and that money is
effectively spent.

From Chapter 2: The challenge of budgeting for health care programmes

Meanings of "sustainability"

The United States currently spends a share of its GDP on health care
which would seem unthinkable and horrifying to policy makers in any
other country. It seems unnecessary and wasteful to many Americans. Yet
the US economy certainly has survived that level of spending. If the
United States can survive its much higher spending, why would that level
be "unsustainable" for other countries?

The most plausible way in which spending could be "unsustainable" would
be if political support for the expense could not be sustained.
Fundamentally, this means political support for redistribution. In all
modern economies, the average cost of medical care is now unaffordable
for a significant proportion of the population. All health care finance
systems accordingly redistribute not just from the healthy to the sick,
but from those with higher incomes to those with lower incomes. Systems
are funded roughly in proportion to ability to pay; if they are not,
then some people are likely to receive much less care. Therefore the
capacity to spend on health care for all citizens depends on the ability
to collect the necessary funds from the higher income strata within the
country.

As the United States is an extreme case that suggests doubts about
economic unsustainability arguments, it provides the clearest evidence
of the political sustainability problem. The United States faces the
most extreme redistribution challenge both because spending is so high,
making costs less affordable for individuals, and because incomes are
especially unequal, making average costs even more daunting for the
lower-income groups. In the United States, limits on redistribution work
not to make national health insurance unsustainable, but to prevent its
creation.

http://www.oecd-ilibrary.org/social-issues-migration-health/fiscal-sustainability-of-health-systems_9789264233386-en

***


Comment by Don McCanne

Because of ever-increasing health care costs, all nations are concerned
about the fiscal sustainability of their health care systems. The United
States has the highest costs - theoretically the least sustainable
system - thus this report should be useful for our policymakers since it
describes various approaches to sustainability by economically-developed
member nations of OECD, informing us on both beneficial and detrimental
policies.

This 264 page report is accessible, without charge, for reading - in
sections or in its entirety - at the link above. Be sure to keep the
link for future review or reference.

A major theme throughout this report is that sustainability is achieved
by close cooperation between Ministries of Health and Ministries of
Finance, that is, collaboration between government health and budget
officials. In one word: government.

Because of our high health care costs and our inordinate levels of
income inequality, we have a greater need for redistribution, yet,
compared to other economically-developed nations, our government
policies are relatively weak. As this report states, in the United
States, "limits on redistribution work not to make national health
insurance unsustainable, but to prevent its creation."

qotd: Lack of affordability is primary reason for not enrolling in exchange plans

The Commonwealth Fund
September 25, 2015
To Enroll or Not to Enroll? Why Many Americans Have Gained Insurance
Under the Affordable Care Act While Others Have Not
By Sara R. Collins, Munira Gunja, Michelle M. Doty, Sophie Beutel


Exhibit 2. Just under half of the adults who have visited the
marketplace enrolled in a marketplace plan or Medicaid

52% - Did not select a private plan or enroll in Medicaid

30% - Selected a private health plan

15% - Enrolled in Medicaid

2% - Don't know/refused


Exhibit 6. Among market-place visitors who didn't enroll, more than
half said they couldn't find an affordable plan

Can you tell me why you did not obtain a private health insurance plan
or Medicaid coverage when you visited the marketplace? Was it because…?

Percent of adults ages 19-64 who visited the marketplace but did not
select coverage

57% - Could not find a plan you could afford

51% - Obtained health insurance through another source

43% - Not eligible to enroll in Medicaid or for financial assistance

38% - Found the process of enrolling in a plan difficult or confusing

32% - Could not find a plan with the type of coverage you need

15% - Decided you did not need health insurance

14% - Did not know where to get help to sign up

23% - Some other reason

Affordability was a key reason people did not enroll in plans. More than
half (57%) of adults who visited the marketplaces but did not enroll
said they could not find a plan they could afford. Excluding the adults
who also said they gained coverage elsewhere, the majority of those who
did not enroll because they couldn't find affordable plans had lower
incomes. More than half (54%) had incomes in the range that made them
eligible for subsidies (i.e., from 100 percent to 400 percent of the
federal poverty level, or $11,670 to $46,680 in annual income for an
individual). Thirty percent had incomes under 100 percent of poverty. An
estimated 26 percent (and thus nearly all of those with incomes under
100 percent of poverty) were likely in the so-called Medicaid coverage
gap. That is, they were living in states that had not expanded
eligibility for Medicaid at the time of the survey and had incomes under
100 percent of poverty and thereby not eligible for marketplace
subsidies. About 11 percent had incomes that exceeded the threshold that
made them eligible for subsidies (i.e., 400 percent of poverty).

Many adults (43%) said they did not enroll because they were not
eligible for subsidized coverage or Medicaid. Again, excluding those who
gained coverage elsewhere, most people who gave this reason had lower
incomes: 50 percent had incomes that made them eligible for subsidies,
and 33 percent had incomes under 100 percent of poverty. An estimated 27
percent — most of those with incomes under 100 percent of poverty — were
likely in the Medicaid coverage gap. About 14 percent had incomes above
the threshold that made them eligible for subsidies.

Other adults who did not enroll were overwhelmed by the process. About
four of 10 adults (38%) who did not sign up for coverage said they found
the process of enrolling difficult or confusing.

http://www.commonwealthfund.org/publications/issue-briefs/2015/sep/to-enroll-or-not-to-enroll

***


Comment by Don McCanne

Is the Affordable Care Act a misnomer? Although half of the individuals
who visited the insurance exchanges and did not enroll obtained coverage
outside of the exchanges, the other half did not enroll because they
found the plans unaffordable.

Making health care affordable for everyone was the primary goal of
reform. It didn't happen. But it would if we were to enact a single
payer national health program.

qotd: Would single payer fix this physician’s problems?

The New York Times
September 21, 2015
The Upshot
Trapped in the System: A Sick Doctor's Story
By Aaron E. Carroll

It's true that the number of people with no insurance has gone down
significantly since the Affordable Care Act was passed. But that's only
one measure of access. In many other ways, access is still surprisingly
bad. I rarely use anecdotes to make my point, but in this column I'll
make an exception.

I have ulcerative colitis, and have had it for many years. When it was
poorly controlled, I lived in constant fear of not being near a
bathroom. The half-hour commute to my job often necessitated a stop on
the way to work because I feared I would lose control of my bowels.

But a number of years ago, after I found that drug after drug didn't
work, my gastroenterologist suggested an older immunosuppressant. I'm a
doctor, and I recognized it as a drug often used to treat cancer. It
carried with it some significant side effects, most notably a small
chance of myelosuppression, in which your bone marrow shuts down and
produces too few blood cells.

That horrified my wife. But she didn't appreciate that this was, to me,
a small price to pay for the opportunity not to be constantly worried
about my proximity to a toilet. I weighed the benefits versus the harms.
I decided to give it a go.

The medicine changed my life. I have few, if any, symptoms anymore.

The medicine is old and it's generic. It costs about $80 for three
months even though I haven't met my deductible. But this story isn't
about money. This is about the nightmare of how hard it is for me to get
the drug.

Every three months, I run out of my medication. In order to get more, I
need a new prescription. In order to get the prescription, I need to
have lab testing to prove to my doctor that I don't have anemia. This
all sounds simple, and it's the same process every three months. But
it's never the same, and it's never easy.

Let's start with the lab testing. At various times, my insurance plan
(which is excellent, by the way) changes which laboratory facilities it
will cover fully. Often, these are not labs that are housed in the huge
health care system for which I work. I often have to go elsewhere to
have my blood drawn. If I change facilities, I have to get a new
prescription for the labs, since they can't share with one another.

Further, even though my lab orders are good for a year — and I need to
have them drawn basically forever — the labs recognize them for only six
months. So sometimes I have to get in touch with my doctor and get a new
lab order. Often, they send over the old order, because they think it's
good for a year, in which case I have to go back to them and ask for a
newly written one, because the lab won't recognize the
really-still-valid old one. Worse, they often just fax the order to the
lab itself, thinking they're helping me, so that I don't realize they
sent over an old one until I'm already there, and it's too late.

After I get that sorted out, I have my blood drawn and analyzed. But
because the laboratory and my doctor are in completely different health
care systems, the lab results won't show up in my doctor's electronic
database. I have to beg the lab to remember to fax over the results —
using paper — which it often fails to do.

My next step is to check if the pharmacy I use is still under contract
with my insurance plan. The medication I use needs to be ordered at a
mail-order pharmacy, because my insurance won't cover it at a local
facility. My insurance plan has changed its mail-order pharmacy of
choice more than once in the last few years, which necessitates that I
inform my physician about the change.

I also have to open a new account with the new pharmacy and give it my
payment information so that it can process everything once it has the
order from the doctor. I do this before getting the prescription called
in because I don't want anything to get slowed down. This is a good time
to explain that I can't do much else ahead of time because the pharmacy
and the insurance plan both know I have a three-month supply of the drug
and won't authorize me to get more too much in advance.

It's at this point that I try to get in touch with my doctor, previously
through a phone message, and more recently through an online site. If
I'm lucky, which usually isn't the case, the doctor will already have
the lab results. If not, I have to go back to the lab and beg it again
to fax over the results. If the doctor has the lab results, and they're
normal (they always are), a nurse will then call in the prescription.
This usually takes a few days.

Then the pharmacy will finally start to move. Even that is painful. Once
my drug was on "back order," and since it was the only pharmacy I was
permitted to go to, I just had to wait. It always takes at least a few
days for me to get the drug, though, because processing takes time. I
always, no matter how hard I try, run out of medicine before I get the
new bottle, during which I hold my breath and hope nothing goes wrong.

I do this four times a year. It's always a stressful time for me, and
stress isn't a good thing for a person with my disease.

This could be so much simpler. Why do I have to get a new prescription
for the lab testing every six months? Why can't I get this simple blood
test more conveniently? Why can't the electronic systems of the labs and
the clinical offices talk to each other? Why do I need a new
prescription for this medication every three months? Why can I use only
one pharmacy when the medication is generic and so inexpensive?

There is no bad guy here. I love the drug company that created this
medication. The price is more than reasonable. I love the doctor who
prescribed it to me. My insurance company has never refused to cover my
care, and has always been honest with me. The laboratory personnel are
professional and competent. It's the system — the way all these things
work, or fail to work, together — that's the issue.

The Affordable Care Act, which seems so complicated to so many, was
almost entirely about getting more people in the United States health
insurance. That was just a first step, arguably an easy one, and we're
still fighting about it. Reforming the ways in which we actually deliver
care and try to improve outcomes? That's so much more important, and we
barely talk about that at all. But that's what matters to the people who
use the system, and it's why so many of them are frustrated.

Because of my job, I probably know more about the health care system and
how it works than most people in the United States. Yet if this is how
much trouble I have navigating a simple refilling of my medication, I
don't know how the rest of America does it, especially those with much
more complicated issues than mine.

http://www.nytimes.com/2015/09/22/upshot/trapped-in-the-system-a-sick-doctors-story.html

***

The Incidental Economist
September 23, 2015
Answers to your questions about "Trapped in the System: A Sick Doctor's
Story"
By Aaron Carroll

I received more than my usual share of feedback from this week's Upshot
column. I thought I might answer some of the most common comments and
questions here:

1. If we only had a single payer system. That would fix this, right?

Well, I'm not sure. I understand your impulse, but that would only solve
some of the insurance problems. Medicare for all wouldn't make it so
that the lab, pharmacy, and doctor's office shared an information
system, or could even reliably share information. It wouldn't change the
fact that I need to jump through the order hoops, or the authorization
hoops. It might make things easier, but it wouldn't solve all of the
problems. Ask people who have Medicare (which is much closer to single
payer) if things are seamless. I doubt you'll get a universally positive
response.

http://theincidentaleconomist.com/wordpress/answers-to-your-questions-about-trapped-in-the-system-a-sick-doctors-story/

***


Comment by Don McCanne

Dr. Aaron Carroll's frank discussion of his chronic medical problem and
the nuisances he faces in interacting with our health care system struck
a chord with many - both for the empathy engendered because of his
medical condition, and especially for the crying shame that this
prominent physician has to go through hoops to make our health care
system work for him, suggesting that it might not work well for any of us.

Of the over 700 responses that he received, a common theme was that he
wouldn't have these problems if we had a single payer system. He
responds that he is not sure. He suggests that people on Medicare, as a
proxy for single payer, may find that their care is not so seamless
either. Well, he hasn't experienced Medicare as a patient since he is
still on his employer-sponsored plan, and he hasn't experienced Medicare
directly as a physician either since he is a pediatrician.

I think that I can help him on this. I am a family physician, now
retired from practice, and I never had the problems with my Medicare
patients that I had with my managed care patients - problems similar to
those he describes. I also have a few chronic disorders myself that
require interaction with the health care system. I am covered under the
traditional Medicare program with a Medigap supplement. I have had none
of the problems that Dr. Carroll describes, except for nuisance
requirements and limitations for my Part D drug coverage - but then Part
D, by design, is much more like the managed care coverage that creates
barriers to care (restrictive formularies, limited choice of pharmacies,
logistical hurdles in filling prescriptions, etc.).

He is correct that interoperability of computer systems remains a
problem, but that is a failure of George Bush and David Brailer in
insisting that interoperability issues be left to the private sector to
address. Players in the private sector strive for dominance and depend
on a lack of interoperability to keep competitors out. The government is
now encouraging improvements in interoperability, but how do you fix the
mess that has been created? At any rate, the prospects for improving
interoperability would be much greater under a single payer - improved
Medicare for all - than they are under our fragmented, competitive
multi-payer system.

Dr. Carroll says there is no bad guy here, but that "It's the system —
the way all these things work, or fail to work, together — that's the
issue." But that's the point. Having our entire health care delivery
system integrated under a well-designed single payer model would make
the system work far better for all of us - patients and physicians alike.

(Aaron Carroll is a professor of pediatrics at Indiana University School
of Medicine. He is a highly respected authority in health policy who
blogs in The New York Times, The Incidental Economist, and JAMA. He is
co-author of a widely-quoted study demonstrating that three-fifths of
physicians "support government legislation to establish national health
insurance.")

qotd: Canada’s NDP supports path to Pharmacare

CBC News
September 18, 2015
Tom Mulcair commits $2.6B to support pharmacare plan

A New Democratic government would use the purchasing power of the
federal government to negotiate lower prices for prescription drugs and
pass those savings on to the provinces and territories, NDP Leader Tom
Mulcair says.

The NDP plans to spend $2.6 billion over the next four years to "work
towards a plan to support universal comprehensive public drug coverage
for all Canadians," if it takes the Oct. 19 vote.

The party is not committing to implement full coverage by the end of its
first mandate, but Mulcair said he hopes to achieve average savings of
30 per cent in prescription drug costs through bulk buying.

Once in place, the plan would save the provinces and territories up to
$3 billion annually.

Health care is a provincial and territorial responsibility, so an NDP
government would have to negotiate precise arrangements with the other
various governments. It would not have the power to impose a free
coverage scheme. Some provinces, however, have been pushing for such a
scheme for some time.

http://www.cbc.ca/news/politics/canada-election-2015-mulcair-seniors-medication-prices-1.3234173

***

OECD

In US dollars, adjusted for price differences (PPP)

Total health expenditure, per capita:

$8,713 - United States (Ranks highest of 34 countries listed)

$4,351 - Canada (Ranks tenth of 34 countries listed)

$3,453 - OECD average

Expenditure on pharmaceuticals, per capita:

$1,034 - United States (Ranks highest of 31 countries listed)

$761 - Canada (Ranks second of 31 countries listed)

$517 - OECD average

http://www.compareyourcountry.org/health?cr=oecd&cr1=oecd&lg=en&page=2

***

Pharmaceutical Policy Research Collaboration, University of British Columbia
July 15, 2015
Pharmacare 2020
By Steven G. Morgan, PhD, Danielle Martin, MD, CCFP, MPP, Marc-André
Gagnon, PhD, Barbara Mintzes, PhD, Jamie R. Daw, MSc, Joel Lexchin, MD, MSc

We are pleased to present this report, Pharmacare 2020, which is the
culmination of many years of research and collaboration involving
academics, health professionals, policy-makers, and public interest groups.

The vision is of a public drug plan that follows four policy
recommendations:

1. Provide universal coverage of selected medicines at little or no
direct cost to patients through Pharmacare.

2. Select and finance medically necessary prescription drugs at a
population level without needs-based charges — such as deductibles,
coinsurance, or risk-rated premiums — on individuals or other plan
sponsors (e.g., businesses).

3. Establish a publicly accountable body to manage Pharmacare, one that
integrates the best available data and evidence into decisions
concerning drug coverage, drug prescribing, and patient follow-up.

4. Establish Pharmacare as a single-payer system with a publicly
accountable management agency to secure the best health outcomes for
Canadians from a transparent drug budget.

Canada has been waiting for Pharmacare since the 1960s. The vision is
now clear. Thus, the task turns to the art and science of program
development and implementation. This will be difficult and will require
political leadership and inter-jurisdictional collaboration — but it is
not impossible, as Canadian Medicare has shown. This led to our fifth
policy recommendation:

5. Fully implement Pharmacare — a public drug plan that is universal,
comprehensive, evidence-based, and sustainable — by 2020.

http://pharmacare2020.ca/assets/pdf/The_Future_of_Drug_Coverage_in_Canada.pdf

***



Comment by Don McCanne

The United States and Canada were following the same health care cost
trajectory until Canada established single payer systems in each of
their provinces. They elected not to cover pharmaceuticals. The OECD
data demonstrate that this omission was a mistake.

The total health expenditure trajectories diverted, with the United
States continuing to hold first place and Canada declining to tenth
place amongst 34 OECD nations. But in pharmaceutical expenditures,
Canada is second of 31 OECD nations, with per capita drug expenditures
exceeded only by the United States.

Drug costs have become intolerable - now 17.5% of their health care
spending (calculation using the OECD numbers). Although there has long
been much interest in establishing a universal drug program in Canada,
the efforts have intensified - culminating in the Pharmacare 2020 report
prepared by some of Canada's more gifted policy experts. The report
makes a compelling case for establishing a Pharmacare program.

The concept has gained traction. Canada's New Democratic Party (NDP),
led by Tom Mulcair, has now committed to taking major steps toward
making Pharmacare a reality. The three major parties - Conservative,
NDP, and Liberal - are very close in the projected results for their
election to be held October 19. Whether or not NDP wins, at least
Pharmacare is now part of the national political discourse in Canada.

And the United States?

qotd: It’s the deductibles, stupid!

Kaiser Family Foundation
News Release
September 22, 2015
Employer Family Health Premiums Rise 4 Percent to $17,545 in 2015,
Extending a Decade-Long Trend of Relatively Moderate Increases

Single and family premiums for employer-sponsored health insurance rose
an average of 4 percent this year, continuing a decade-long period of
moderate growth, according to the Kaiser Family Foundation/Health
Research & Educational Trust (HRET) 2015 Employer Health Benefits Survey
released today.

The average annual premium for single coverage is $6,251, of which
workers on average pay $1,071. The average family premium is $17,545,
with workers on average contributing $4,955.

The survey also finds that 81 percent of covered workers are in plans
with a general annual deductible, which average $1,318 for single
coverage this year. Covered workers in smaller firms (three to 199
workers) face an average deductible of $1,836 this year. That's 66
percent more than the $1,105 average deductible facing covered workers
at large firms (at least 200 workers).

Since 2010, both the share of workers with deductibles and the size of
those deductibles have increased sharply. These two trends together
result in a 67 percent increase in deductibles since 2010, much faster
than the rise in single premiums (24%) and about seven times the rise in
workers' wages (10%) and general inflation (9%).

"With deductibles rising so much faster than premiums and wages, it's no
surprise that consumers have not felt the slowdown in health spending,"
Foundation President and CEO Drew Altman said.

http://kff.org/health-costs/press-release/employer-family-health-premiums-rise-4-percent-to-17545-in-2015-extending-a-decade-long-trend-of-relatively-moderate-increases/

***


Comment by Don McCanne

For Quote of the Day subscribers who go straight to the comment (and
many of you do), today's message is presented instantly in a single
visual - merely click on the link above and check out the graph
accompanying the news release.

In words, the graph shows that, for the past five years, inflation is
flat, workers earnings are flat, employer-sponsored health insurance
premiums are continuing to increase, and health insurance deductibles
are skyrocketing!

That explains why so many patients with "good" employer-sponsored health
plans feel that health care costs are out of control, even though we're
told they're not - their deductibles have increased at seven times the
rate of increase in their wages!

We have the wrong model of health care financing in the United States.
We need single payer.

qotd: Rent seeking by drug barons

The New York Times
September 20, 2015
Drug Goes From $13.50 a Tablet to $750, Overnight
By Andrew Pollack

Specialists in infectious disease are protesting a gigantic overnight
increase in the price of a 62-year-old drug that is the standard of care
for treating a life-threatening parasitic infection (toxoplasmosis).

The drug, called Daraprim, was acquired in August by Turing
Pharmaceuticals, a start-up run by a former hedge fund manager. Turing
immediately raised the price to $750 a tablet from $13.50, bringing the
annual cost of treatment for some patients to hundreds of thousands of
dollars.

Turing's price increase is not an isolated example. While most of the
attention on pharmaceutical prices has been on new drugs for diseases
like cancer, hepatitis C and high cholesterol, there is also growing
concern about huge price increases on older drugs, some of them generic,
that have long been mainstays of treatment.

Although some price increases have been caused by shortages, others have
resulted from a business strategy of buying old neglected drugs and
turning them into high-priced "specialty drugs."

Cycloserine, a drug used to treat dangerous multidrug-resistant
tuberculosis, was just increased in price to $10,800 for 30 pills from
$500 after its acquisition by Rodelis Therapeutics.

Doxycycline, an antibiotic, went from $20 a bottle in October 2013 to
$1,849 by April 2014, according to the two lawmakers.

Martin Shkreli, the founder and chief executive of Turing, said that the
drug is so rarely used that the impact on the health system would be
minuscule and that Turing would use the money it earns to develop better
treatments for toxoplasmosis, with fewer side effects.

"This isn't the greedy drug company trying to gouge patients, it is us
trying to stay in business," Mr. Shkreli said.

This is not the first time the 32-year-old Mr. Shkreli, who has a
reputation for both brilliance and brashness, has been the center of
controversy. He started MSMB Capital, a hedge fund company, in his 20s
and drew attention for urging the Food and Drug Administration not to
approve certain drugs made by companies whose stock he was shorting.

In 2011, Mr. Shkreli started Retrophin, which also acquired old
neglected drugs and sharply raised their prices. Retrophin's board fired
Mr. Shkreli a year ago. Last month, it filed a complaint in Federal
District Court in Manhattan, accusing him of using Retrophin as a
personal piggy bank to pay back angry investors in his hedge fund.

Daraprim, which is also used to treat malaria, was approved by the
F.D.A. in 1953 and has long been made by GlaxoSmithKline. Glaxo sold
United States marketing rights to CorePharma in 2010. Last year, Impax
Laboratories agreed to buy Core and affiliated companies for $700
million. In August, Impax sold Daraprim to Turing for $55 million, a
deal announced the same day Turing said it had raised $90 million from
Mr. Shkreli and other investors in its first round of financing.

Daraprim cost only about $1 a tablet several years ago, but the drug's
price rose sharply after CorePharma acquired it.

With the price now high, other companies could conceivably make generic
copies, since patents have long expired. One factor that could
discourage that option is that Daraprim's distribution is now tightly
controlled, making it harder for generic companies to get the samples
they need for the required testing.

The switch from drugstores to controlled distribution was made in June
by Impax, not by Turing. Still, controlled distribution was a strategy
Mr. Shkreli talked about at his previous company as a way to thwart
generics.

http://www.nytimes.com/2015/09/21/business/a-huge-overnight-increase-in-a-drugs-price-raises-protests.html

***

W. W. Norton and Company
The Price of Inequality
By Joseph E. Stiglitz

The term "rent" was originally used to describe the returns to land,
since the owner of the land receives these payments by virtue of his
ownership and not because of anything he does. This stands in contrast
to the situation of workers, for example, whose wages are compensation
for the effort they provide. The term "rent" then was extended to
include monopoly profits, or monopoly rents, the income that one
receives simply from the control of a monopoly. Eventually the term was
expanded still further to include the returns on similar ownership claims.

Not all rent seeking uses government to extract money from ordinary
citizens. The private sector can excel on its own, extracting rents from
the public, for instance, through monopolistic practices and exploiting
those who are less informed and educated, exemplified by the banks'
predatory lending. CEOs can use their control of the corporation to
garner for themselves a larger fraction of the firms' revenues. Here,
though, the government too plays a role, by not doing what it should: by
not stopping these activities, by not making them illegal, or by not
enforcing laws that exist.

http://books.wwnorton.com/books/detail.aspx?id=4294967848

***


Comment by Don McCanne

The pharmaceutical industry has run amok, and we are all suffering as a
result. We are paying higher taxes and higher insurance premiums to
create "rents" for the likes of Martin Shkreli. (You'll understand what
this means if you simply read the excerpts above.)

We should all be outraged, not only with the barons in the
pharmaceutical industry, but even more with our own government, which,
as Joseph Stiglitz tells us, is "not doing what it should."

One of our candidates for president says that he "can't do it alone. We
have got to do it together through a strong grassroots movement. We have
got to think big."

Start thinking big.

(PNHP does not endorse any political candidates nor their political
parties, though some candidates do endorse policies advanced by PNHP.)

qotd: Community health centers seeing more underinsured patients

MPR News
September 16, 2015
At community clinics, underinsured replace uninsured
By Mark Zdechlik

A few years ago, community health clinics routinely offered care to
people with no health insurance. Today, offering care to people who have
insurance — but still can't afford care — is becoming more common.

At the Sawtooth Mountain Clinic in Grand Marais, Minn., more people
coming through the doors have a health plan, as required under the
Affordable Care Act. But the plans with the lowest monthly premiums tend
to have high deductibles.

Clinic CEO Rita Plourde said that for many clients, the problem now is
being underinsured. They have health insurance but cannot afford the
out-of-pocket costs.

In Coon Rapids, Nucleus Clinic gets some referrals from conventional
clinics when patients are having difficulty with out-of-pocket expenses.
Becky Fink, who runs the community reproductive health clinic, said that
many patients with a high deductible health plan find it less expensive
to bypass the insurance and pay cash.

Fink expects the growing demand for subsidized clinic services from
people enrolled in health plans will continue despite the signature
promise of Obamacare.

It's frustrating to see insured people who can't afford to pay for
health care, Fink said. People need to know that the Affordable Care Act
is pushing more people toward community health centers, she said, not
decreasing the need for them.

http://www.mprnews.org/story/2015/09/16/underinsured-community-clinics

***


Comment by Don McCanne

As we celebrate the successes of the Affordable Care Act, it is sobering
to realize that the increasing prevalence of underinsurance is leaving
many patients dependent on community health centers, much as they were
before, when they were uninsured.

It is fortunate that our legislators, led by Sen. Bernie Sanders,
recognized that there would still be a great need for community health
centers and insisted on authorizing funding for these centers.

But wouldn't it be even better if everyone had comprehensive first
dollar coverage? The clinics would no longer be geared to take care of
mostly low-income patients but rather would be transformed into centers
that could appeal to all of us, including specialists who would then
welcome referrals from these centers.

All we need to do is to enact a well-designed single payer national
health program, and the improvements would automatically follow.

qotd: Paxil: Same data, opposite conclusion

BMJ
September 16, 2015
Restoring Study 329: efficacy and harms of paroxetine and imipramine in
treatment of major depression in adolescence
By Joanna Le Noury, John M Nardo, David Healy, Jon Jureidini, Melissa
Raven, Catalin Tufanaru, Elia Abi-Jaoude

From the Introduction

In 2013, in the face of the selective reporting of outcomes of
randomised controlled trials, an international group of researchers
called on funders and investigators of abandoned (unpublished) or
misreported trials to publish undisclosed outcomes or correct misleading
publications. This initiative was called "restoring invisible and
abandoned trials" (RIAT). The researchers identified many trials
requiring restoration and emailed the funders, asking them to signal
their intention to publish the unpublished trials or publish corrected
versions of misreported trials. If funders and investigators failed to
undertake to correct a trial that had been identified as unpublished or
misreported, independent groups were encouraged to publish an accurate
representation of the clinical trial based on the relevant regulatory
information.

The current article represents a RIAT publication of Study 329. The
original study was funded by SmithKline Beecham (SKB; subsequently
GlaxoSmithKline, GSK). We acknowledge the work of the original
investigators. This double blinded randomised controlled trial to
evaluate the efficacy and safety of paroxetine (Paxil) and imipramine
(Toafranil) compared with placebo for adolescents diagnosed with major
depression was reported in the Journal of the American Academy of Child
and Adolescent Psychiatry (JAACAP) in 2001, with Martin Keller as the
primary author. The RIAT researchers identified Study 329 as an example
of a misreported trial in need of restoration. The article by Keller and
colleagues, which was largely ghostwritten, claimed efficacy and safety
for paroxetine that was at odds with the data. This is problematic
because the article has been influential in the literature supporting
the use of antidepressants in adolescents.

On 14 June 2013, the RIAT researchers asked GSK whether it had any
intention to restore any of the trials it sponsored, including Study
329. GSK did not signal any intent to publish a corrected version of any
of its trials. In later correspondence, GSK stated that the study by
Keller and colleagues "accurately reflects the honestly-held views of
the clinical investigator authors" and that GSK did "not agree that the
article is false, fraudulent or misleading."

Study 329 was a multicentre eight week double blind randomised
controlled trial (acute phase), followed by a six month continuation
phase. SKB's stated primary objective was to examine the efficacy and
safety of imipramine and paroxetine compared with placebo in the
treatment of adolescents with unipolar major depression. Secondary
objectives were to identify predictors of treatment outcomes across
clinical subtypes; to provide information on the safety profile of
paroxetine and imipramine when these drugs were given for "an extended
period of time"; and to estimate the rate of relapse among patients who
responded to imipramine, paroxetine, and placebo and were maintained on
treatment. Study enrolment took place between April 1994 and March 1997.

Conclusion and implications for research and policy

Contrary to the original report by Keller and colleagues, our reanalysis
of Study 329 showed no advantage of paroxetine or imipramine over
placebo in adolescents with symptoms of depression on any of the
prespecified variables. The extent of the clinically significant
increases in adverse events in the paroxetine and imipramine arms,
including serious, severe, and suicide related adverse events, became
apparent only when the data were made available for reanalysis.
Researchers and clinicians should recognise the potential biases in
published research, including the potential barriers to accurate
reporting of harms that we have identified. Regulatory authorities
should mandate accessibility of data and protocols.

As with most scientific papers, Keller and colleagues convey an
impression that "the data have spoken." This authoritative stance is
possible only in the absence of access to the data. When the data become
accessible to others, it becomes clear that scientific authorship is
provisional rather than authoritative.


What is already known on this topic

* There is a lack of access to data from most clinical randomised
controlled trials, making it difficult to detect biased reporting

* In the absence of access to primary data, misleading conclusions in
publications of those trials can seem definitive

* SmithKline Beecham's Study 329, an influential trial that reported
that paroxetine was safe and effective for adolescents, is one such study

What this study adds

* On the basis of access to the original data from Study 329, we report
a reanalysis that concludes that paroxetine was ineffective and unsafe
in this study

* Access to primary data makes clear the many ways in which data can be
analysed and represented, showing the importance of access to data and
the value of reanalysis of trials

* There are important implications for clinical practice, research,
regulation of trials, licensing of drugs, and the sociology and
philosophy of science

* Our reanalysis required development of methods that could be adapted
for future reanalyses of randomised controlled trials

http://www.bmj.com/content/351/bmj.h4320

***


Comment by Don McCanne

Although questions and concerns have already been raised about the
SmithKline Beecham study of the use of Paxil in adolescents, this study
provides definitive answers in that it is a reanalysis of the full
original data set that had not previously been released. Contrary to the
original, ghostwritten published report that concluded that Paxil was
safe and effective for depression in adolescents, this meticulous
reanalysis of the same data led to the conclusion that Paxil is actually
ineffective and harmful.

The research and marketing abuses of the pharmaceutical industry abound,
now compounded by price gouging behavior. Donald Light and his
colleagues have previously discussed the institutional corruption of
pharmaceuticals:

http://www.pnhp.org/news/2013/july/institutional-corruption-of-pharmaceuticals

There is a crying need for much greater government oversight, but it
likely will not come from an administration that allowed this industry
to assist in writing the Affordable Care Act. Citizen involvement in
electoral politics does matter, or at least it should. But nothing will
happen if we can't hear the outrage that should be expressed over this.

qotd: Census Bureau - 33 million uninsured is good news?

U.S. Census Bureau
September 2015
Health Insurance Coverage in the United States: 2014
By Jessica C. Smith and Carla Medalia

• The uninsured rate decreased between 2013 and 2014 by 2.9 percentage
points. In 2014, the percentage of people without health insurance
coverage for the entire calendar year was 10.4 percent, or 33.0 million,
lower than the rate and number of uninsured in 2013 (13.3 percent or
41.8 million).

• The percentage of people with health insurance coverage for all or
part of 2014 was 89.6 percent, higher than the rate in 2013 (86.7 percent).

• Between 2013 and 2014, the increase in the percentage of the
population covered by health insurance was due to an increase in the
rates of both private and government coverage. The rate of private
coverage increased by 1.8 percentage points to 66.0 percent in 2014 (up
from 64.1 percent in 2013), and the government coverage rate increased
by 2.0 percentage points to 36.5 percent (up from 34.6 percent in 2013).

• Between 2013 and 2014, the greatest changes in coverage rates were the
increases in direct-purchase health insurance and Medicaid. The largest
percentage-point change in coverage was for direct-purchase, which
increased by 3.2 percentage points to cover 14.6 percent of people for
some or all of 2014 (up from 11.4 percent in 2013). The percentage of
people with Medicaid coverage during all or part of the year increased
by 2.0 percentage points to 19.5 percent in 2014 (compared with 17.5
percent in 2013).

http://www.census.gov/content/dam/Census/library/publications/2015/demo/p60-253.pdf

***

Physicians for a National Health Program
September 16, 2015
More Americans gain health coverage, but many can't afford to use it:
doctors group

"The Census Bureau's official estimate that 33 million Americans lacked
health insurance in 2014 reflects a significant and welcome drop from
the 42 million it reported as uninsured in 2013," said Dr. Robert Zarr,
president of Physicians for a National Health Program, today. "But the
number of people who remain without coverage is still intolerably high.
And the Census Bureau report leaves entirely unmentioned the millions of
people who have health insurance but who can't afford to use it because
of high deductibles and copays."

"How is it possible that in 2015 one of the richest countries in the
world still does not guarantee every resident the right to health care?"
Zarr continued. "This question would not be necessary if we had a health
care system worthy of the name – single-payer national health insurance,
or an improved and expanded Medicare for All."

http://www.pnhp.org/news/2015/september/more-americans-gain-health-coverage-but-many-can't-afford-to-use-it-doctors-grou

***


Comment by Don McCanne

The good news in this annual Census Bureau report is that there were
significant increases in the numbers insured as a result of
implementation of the Affordable Care Act - primarily in direct-purchase
due to the mandate and in expansion of the Medicaid program. The bad
news is that 33 million remain uninsured and, though not in the Census
report, tens of millions are under-insured.

Our current national policies will continue to leave about 30 million
people without insurance, and financial hardship due to under-insurance
is expected to increase. We can anticipate more unnecessary suffering,
hardship, and premature deaths.

PNHP President Robert Zarr said it, "How is it possible that in 2015 one
of the richest countries in the world still does not guarantee every
resident the right to health care? This question would not be necessary
if we had a health care system worthy of the name – single-payer
national health insurance, or an improved and expanded Medicare for All."

qotd: Medicare yet to save money through ACOs

Kaiser Health News
September 14, 2015
Medicare Yet To Save Money Through Heralded Medical Payment Model
By Jordan Rau and Jenny Gold

A high-profile Medicare experiment pushing doctors and hospitals to join
together to operate more efficiently has yet to save the government
money, with nearly half of the groups costing more than the government
estimated their patients would normally cost, federal records show.

The Centers for Medicare & Medicaid Services offers the lure of bonuses
to health care practitioners who band together as accountable care
organizations, or ACOs, to take care of patients. The financial
incentives are intended to encourage these doctors, hospitals, nursing
homes and other institutions to keep patients healthy rather than
primarily treat illnesses, which is what Medicare payments traditionally
have rewarded. ACOs that save a substantial amount get to keep a share
of the savings as a bonus.

The Obama administration touts ACOs as one of the most promising reforms
in the 2010 federal health care law. The administration set a goal that
by the end of 2018, half of Medicare spending currently based on the
volume of procedures a doctor or hospital performs will instead be
linked to quality and frugality. But so far the ACO program generally
has been a one-way street, with most doctors and hospitals happy to
accept bonuses while declining to be on the hook for a share of any
excessive costs run up by their patients.

Last year, Medicare paid $60 billion to 353 ACOs to take care of nearly
6 million Medicare beneficiaries. Some ACOs made significant strides in
reducing use of hospitals and other costly resources. But patients at 45
percent of groups cost Medicare more than the government had projected
based on their patients' historic costs, records show. After paying
bonuses to the strong performers, the ACO program resulted in a net loss
of nearly $3 million to the Medicare trust fund, government records show.

Last year, 196 ACOs saved Medicare money, while 157 ACOs cost more than
expected. Medicare ultimately did not realize any savings because it
paid out bonuses to 97 ACOs, but only three of the costly ACOs had to
repay Medicare for losses their patients incurred.

Jeff Goldsmith, a health industry analyst and professor at the
University of Virginia who is a longtime ACO critic, said the ACO model
is flawed. Consumers do not actively opt to participate in the ACOs and
do not share in any savings, so they lack financial incentives to help
keep costs down, he said. ACOs also have limited leverage to control the
costs incurred by highly paid specialists such as surgeons and
cardiologists. Patients in ACOS can still go to any doctor who accepts
Medicare's regular method of paying, in which they receive a set fee
based on the nature of the service without regard to its outcome.

"Faux managed care is actually harder to do than real managed care,"
Goldsmith said. The ACO program, he said, "has a bad enough reputation
in the provider community that is not going to grow sufficiently to
replace regular Medicare."

http://khn.org/news/medicare-yet-to-save-money-through-heralded-medical-payment-model/

***


Comment by Don McCanne

Although the Obama administration continues to tout the successes of
Medicare accountable care organizations (ACOs), according to this
article using government data, the ACO program resulted in a net loss of
nearly $3 million to the Medicare trust fund. Thus their headline:
"Medicare Yet To Save Money Through Heralded Medical Payment Model"

Compared to what the nation spends on health care, $3 million is not a
significant loss. The real tragedy here is that the Centers for Medicare
& Medicaid Services (CMS) continues to move forward with this program as
the be-all and end-all when it has already been proven to be a miserable
failure as a means of significantly reducing health care spending.

Compare the $3 million loss with this program to the approximately $400
billion administrative savings that we could have under a single payer
national health program - savings that could be used to actually improve
quality and access in our health care system. In more visual numbers, we
are comparing an excess spending on the Medicare ACO program of
$3,000,000 with a single payer savings on administrative costs of about
$400,000,000,000.

We should continue to encourage the ongoing efforts of those dedicated
individuals in the health care delivery system who are improving quality
and efficiency. But regarding financing, we should quit wasting our time
and resources with the flawed Medicare ACO model and move forward with
financing reform that really does work - a single payer national health
program.

qotd: CMS’s low expectations for ACOs, though not admitting it

The New England Journal of Medicine
September 10, 2015
Medicare's Vision for Delivery-System Reform — The Role of ACOs
By Hoangmai H. Pham, M.D., M.P.H., John Pilotte, M.H.S., Rahul Rajkumar,
M.D., J.D., Elizabeth Richter, M.A., Sean Cavanaugh, M.P.H., and Patrick
H. Conway, M.D. (all from the Centers for Medicare and Medicaid Services)

Earlier this year, the Department of Health and Human Services announced
the goals of tying 30% of Medicare payments to alternative payment
models by the end of 2016 and 50% by the end of 2018. That move was
reinforced by the Medicare Access and CHIP Reauthorization Act of 2015,
which replaced the sustainable growth rate formula for calculating
physician payments with a Merit-based Incentive Payment System (MIPS)
that consolidates and incorporates key components of the Physician
Quality Reporting System, the Physician Value-Based Payment Modifier,
and the Medicare Electronic Health Records Incentive program for
eligible professionals. The MIPS will adjust payment rates on the basis
of physicians' performance on quality measures, resource use, clinical
practice improvement activities, and meaningful use of electronic health
records. Eligible professionals participating in eligible alternative
payment models could receive a 5% lump-sum incentive payment each year
from 2019 through 2024. If they meet program criteria, accountable care
organizations (ACOs) could thus be central to Medicare's strategy for
delivery-system reform.

Three principles guide CMS as we seek to further improve ACO policies
and programs.

First is the importance of maintaining an ongoing test bed of ACO models
through the Center for Medicare and Medicaid Innovation.

The second principle is that a concrete strategy for expanding
successful models should be based on our testing experience.

The third principle is that ACO initiatives require multiple, distinct
"tracks" to engage different types of beneficiaries and providers.
Understanding the market's diversity led to the conclusion that
experienced ACOs willing to take financial-performance risks could be
allowed to handle more flexible payment structures such as capitation or
specific payment waivers but that less-experienced ACOs may take longer
than anticipated to establish core capabilities in coordinating care for
a population. Those organizations need protection from
financial-performance risk during the development phase and, sometimes,
direct capital support such as through the ACO Investment Model.

It's also important to understand what factors do not drive the CMS
approach to ACO policies. Our programs are not premised on the
expectation that ACOs should evolve into Medicare Advantage health
plans. Medicare beneficiaries are the ones who decide to enroll in
Medicare Advantage or remain in traditional Medicare. Some now also
proactively select an ACO as part of traditional Medicare. We believe
that all beneficiaries deserve access to high-quality, coordinated care
regardless of which program they choose and that provider organizations
should decide which lines of business are most appropriate for them.
Some may choose to serve patients as both an ACO and a health plan;
others may choose one path or the other or take advantage of other
alternative payment models such as bundled payments. We are therefore
striving to maintain comparable business cases for ACO initiatives and
Medicare Advantage, but some disparities in program requirements will
persist because of statutory provisions and other factors inherent in
the programs (for example, actuarial approaches must acknowledge that a
health plan can choose the counties where it offers a Medicare Advantage
product, but an ACO is constrained by the bricks and mortar of its
available providers and facilities and cannot easily change location).

CMS policies are also not premised on the expectation that for an ACO
program to be successful, all ACOs in it must succeed financially.
Design elements certainly shape the potential for ACOs to earn shared
savings, but ACOs also vary widely in their capabilities and decisions
regarding staffing, infrastructure, and specific interventions. We judge
the performance of initiatives on the basis of whether our policies
appropriately reward good quality of care and savings to Medicare —
results that might be achieved only by the most prepared subset of ACOs.
We believe it's important that with experience, ACOs be able to settle
into the payment arrangements that best match their readiness and
appetite for risk.

Finally, although CMS has implemented policies to promote improvement in
ACO performance, we don't believe that all ACOs can consistently improve
on their spending performance over the long run or that it would be
ideal for beneficiaries if spending continually declined. There are
challenges, however, in setting national policies given large geographic
disparities in practice patterns, Medicare spending, and beneficiary
needs. We're therefore emphasizing rewarding improvement in spending
performance in these early years of ACO initiatives and aim to exercise
sound judgment regarding the appropriate pace and approach to setting
spending benchmarks over the long term. Ideally, our strategy would
gradually shift from rewarding only spending reductions to also
rewarding absolute spending levels, as in the Next Generation ACO Model,
while considering the level of ACO penetration in Medicare and the
degree of spending improvement — and do so without imparting sudden
shocks to health care markets or exacerbating inequities.

We look forward to finding more strategies to help ACOs succeed faster,
spur participation in more communities, combine multiple payment
approaches for providers, and strengthen the business case for ACOs.
Providers should compare ACO earnings not with what they could earn in
today's fee-for-service payment environment but with what they could
expect to earn in the future if they didn't participate in such
alternative payment models. Although the challenges are protean, so are
the opportunities, and we look forward to continued partnership with
patients and providers.

http://www.nejm.org/doi/full/10.1056/NEJMp1507319

***


Comment by Don McCanne

We are moving full steam ahead with delivery reform through alternative
payment models in which accountable care organizations (ACOs) are
anticipated to play a major role. That is why it is important to read
and understand the vision that our CMS bureaucrats have for the future
of Medicare.

A quick read indicates that we are well on our way to pretending that we
are paying for value rather than volume through ACOs. But a careful read
of the full, unedited article suggests that CMS has really low
expectations for ACOs, even though their rhetoric does not suggest that.

We are headed in the wrong direction. We need a single payer national
health program if we expect to increase efficiency and value in our
delivery of heath care.

The way our CMS bureaucrats are clogging up our Medicare program should
make us consider using all caps for "improved," as in "IMPROVED Medicare
for All." Or just simply call it "single payer" - that's a more precise
label anyway.

qotd: Safety-net hospitals are inappropriately penalized by P4P programs

Annals of Internal Medicine
September 7, 2015
The Financial Effect of Value-Based Purchasing and the Hospital
Readmissions Reduction Program on Safety-Net Hospitals in 2014
By Matlin Gilman, BA; Jason M. Hockenberry, PhD; E. Kathleen Adams, PhD;
Arnold S. Milstein, MD; Ira B. Wilson, MD, MSc; and Edmund R. Becker, PhD

Background:

Medicare's value-based purchasing (VBP) and the Hospital Readmissions
Reduction Program (HRRP) could disproportionately affect safety-net
hospitals.

Measurements:

Safety-net hospitals were defined as being in the top quartile of the
Medicare disproportionate share hospital (DSH) patient percentage and
Medicare uncompensated care (UCC) payments per bed. The differences in
penalties in both total dollars and dollars per bed between safety-net
hospitals and other hospitals were estimated with the use of bivariate
and graphical regression methods.

Results:

Safety-net hospitals in the top quartile of each measure were more
likely to be penalized under VBP than other hospitals (62.9% vs. 51.0%
under the DSH definition and 60.3% vs. 51.5% under the UCC per-bed
definition). This was also the case under the HRRP (80.8% vs. 69.0% and
81.9% vs. 68.7%, respectively). Safety-net hospitals also had larger
payment penalties ($115 900 vs. $66 600 and $150 100 vs. $54 900,
respectively). On a per-bed basis, this translated to $436 versus $332
and $491 versus $314, respectively. Sensitivity analysis setting the
cutoff at the top decile rather than the top quartile decile led to
similar conclusions with somewhat larger differences between safety-net
and other hospitals. The quadratic fit of the data indicated that the
larger effect of these penalties is in the middle of the distribution of
the DSH and UCC measures.

From the Discussion

Although the payment penalties that safety-net hospitals are receiving
under VBP and the HRRP were usually small, supplemental analysis reveals
that approximately 1 in every 10 safety-net hospitals in the top
quartile of DSH definition are receiving payment rate reductions
totaling 1.0% or greater in 2014. Because safety-net hospitals are known
to have had historically low margins even before the 2008 economic
recession, losing 1.0% or more of Medicare inpatient payments could have
a significant effect on these hospitals' financial conditions for 2
reasons. First, if they were to receive persistent annual reductions in
payment rate despite quality improvement efforts, the accumulation of
these small penalties on overall financial position would further
disadvantage these hospitals. Second, the transition from DSH to the
Medicare UCC payments mandated under the ACA will mean less revenue as
the proportion of uninsured patients decreases and mandated reduction in
the total pool of funds increases. As such, it is not clear that these
reductions will be fully offset from revenue by newly insured patients
covered by the ACA's insurance expansion, given earlier evidence from
insurance expansions in Massachusetts. When safety-net hospitals close,
patients in these communities are negatively affected, and close
monitoring of the financial condition of these institutions is warranted
as the stakes in VBP and the HRRP increase.

http://annals.org/article.aspx?articleid=2434617

***

Annals of Internal Medicine
September 7, 2015
Editorial
Collateral Damage: Pay-for-Performance Initiatives and Safety-Net Hospitals
By Steffie Woolhandler, MD, MPH and David U. Himmelstein, MD

In this issue, Gilman and colleagues document a side effect of
Medicare's pay-for-performance (P4P) initiatives: They divert money from
underresourced safety-net hospitals that are mainstays of care in many
minority communities to hospitals serving more affluent patients.

Medicare's P4P program, which does not adjust for patients'
socioeconomic status, assumes that bonuses and penalties will prod
substandard providers to improve or see their patients migrate to
higher-quality options. However, when quality problems are due to a
hospital's financial distress and patients cannot go elsewhere,
penalizing low scorers may well punish patients and exacerbate quality
disparities. Prescribing a starvation diet for safety-net hospitals that
are strapped for cash and are quality challenged makes no sense unless
the goal is to close them.

Are P4P's benefits worth the risk? The evidence is surprisingly slim. A
few small, randomized, controlled trials in outpatient settings have
shown improvement on surrogate measures, but most have found no
improvement, and none have demonstrated reductions in death or
disability rates.

Safety-net providers spend less on administration and may lack the
administrative resources to keep up in the gaming arms race — the health
care equivalent of teaching to the test. Expensive computer systems and
consultants facilitate aggressive upcoding and meticulous documentation
of comorbid conditions that can exaggerate patients' severity of illness
and inflate risk-adjusted quality scores. Costly administrative efforts
can also ferret out exceptions and ensure that boxes are checked (for
example, "Yes, we counseled against smoking"), increasing
process-of-care scores, regardless of whether they improve care.

Tethering physicians' rewards to box checking and redundant
documentation risks both substituting insurers' priorities for patients'
goals and demoralizing physicians. Pay for performance can crowd out
intrinsic motivation that keeps us doing good work even when no one is
looking.

Paying for quality has strong intuitive appeal. However, as with other
medical interventions, intuition may mislead, and adopting everywhere
policies that have been proven nowhere puts millions at risk for
unintended side effects.

http://annals.org/article.aspx?articleid=2434618

***


Comment by Don McCanne

Now that the Affordable Care Act has withstood constitutional challenges
and five years of implementation, attention has turned to efforts to
improve quality while controlling costs - paying for quality rather than
volume through various pay-for-performance schemes (P4P) including
Medicare's value-based purchasing (VBP) and the Hospital Readmissions
Reduction Program (HRRP). Those closely following the reform process
realize that such efforts to date have provided only negligible, if any,
improvements in quality and cost containment.

Today's report shows that these programs also can have adverse
consequences. Because of factors such as chronic underfunding, high
pressures placed on clinical and administrative staff, and patient
populations that are less capable of interacting efficiently with the
health care system, safety-net hospitals do not and are not expected to
perform well on these measures. As a result, these underfunded
institutions suffer further financial penalties which can only compound
their difficulties in trying to meet the needs of the vulnerable
populations they serve.

The lesson here is that we are diverting our resources and talent to
efforts that will fall far short of our goals on quality and
affordability, primarily because we passively accept the fact that our
dysfunctional system under the Affordable Care Act is here to stay.
Instead we should be working on introducing a system that actually will
meet our goals, not only for quality and affordability, but also for
universality, efficiency, comprehensiveness, accessibility, and,
especially, equity - a single payer national health program.

qotd: Misdirection in physician payment reform

Health Affairs Blog
September 3, 2015
Physician Payment Reform In A Post-SGR World: Challenges Remain
By John O'Shea

On April 16, 2015 President Barack Obama signed the Medicare Access and
CHIP Reauthorization Act (MACRA) which, among other things, finally
repeals the Sustainable Growth Rate (SGR) mechanism of updating fees to
the Physician Fee Schedule (PFS).

The passage of MACRA, however, raises new questions about where the U.S.
health care system is headed in the post-SGR world of payment and
delivery reform.

Reasons For Caution

These policy changes and announcements follow widespread calls to move
from the current volume-based fee-for-service (FFS) payment system to a
value-based system that pays for patient outcomes rather than individual
services. Value-based health care should be the goal of any health
reform initiative. However, even with SGR out of the way, there are
major challenges to achieving that goal, including the lack of an
agreed-upon, patient-centered definition of value; a shortage of
meaningful performance metrics; and a deficiency of accounting systems
capable of reflecting the true cost of delivering care.

Policymakers and others involved in payment reform should also remain
acutely aware that the multitude of reporting requirements associated
with participation in APMs will add substantially to the already heavy
administrative burden on physician practices.

Alternative Payment Models

The future course of payment reform currently centers on efforts to make
fee-for-service increasingly less attractive than participation in an
alternative payment model (APM). However, moving providers out of FFS
assumes that they have a viable place to go. At this point, it is not
clear that they do.

Value-based purchasing (VBP), the concept behind APMs includes a broad
set of performance-based payment strategies that attempt to use
financial incentives to influence provider performance.

MACRA provides for a significantly modified FFS payment system, the
Merit-Based Incentive Payment System (MIPS), which is essentially a P4P
program. In addition, the legislation encourages the development and
implementation of APMs and offers incentives for providers to move into
these models.

Although there are a number of individual examples of successful
initiatives, the overall early results, as well as possible conceptual
flaws, make the long term viability of these models uncertain.

Pay For Performance

Although P4P programs are among the oldest APMs, the success of these
models is impeded by serious gaps in the current quality measurement
system. According to a 2014 RAND report that looked at 49 studies
examining the effect of P4P on process and intermediate outcome
measures, the overall results of the studies were mixed, and any
identified effects were relatively small.

A basic flaw in the design of existing P4P models is the reality that
meaningful patient-centered outcome measures remain elusive.

Accountable Care Organizations

Accountable Care Organizations (ACOs) are health care organizations that
tie provider reimbursements to quality and cost metrics related to the
total care of an assigned population of patients.

Although ACOs are still relatively new, their ability to generate
savings to share with participants is so far not encouraging, as shown
by the early results among the most experienced providers in the Pioneer
ACO program.

Even the most inefficient system has a finite amount of waste; although
it may be relatively easy to address "low hanging fruit" early on,
achieving sustained savings over time will prove increasingly difficult.

Bundled Payments

In the Bundled Payment model, a single payment is made for services
delivered during an episode of care related to a medical condition or
procedure.

Although the cost of each bundle may be reduced, without any control
over the volume of bundles provided, overall spending may not go down.
Bundled payments also need accurate risk adjustment to avoid both the
underuse of appropriate care services as well as the tendency to "cherry
pick" low-cost patients.

Patient-Centered Medical Homes

Although early limited evaluations and anecdotal experience with the
Patient-Centered Medical Home model have suggested the promise of cost
savings and higher patient and provider satisfaction, results from a
large multipayer medical home pilot was associated with limited
improvements in quality and no reduction in hospital usage, emergency
department visits, ambulatory care services, or total costs over three
years.

Impact On The Practice Of Medicine

By and large, physicians not only want to provide the best quality
health care to their patients, they also want to know they are doing so.
But physicians currently labor under an increasingly burdensome and
often meaningless number of reporting requirements that take time away
from patients and fail to help them improve the quality of their care.

According to a commentary in The New England Journal of Medicine in
2014, "the quality-measurement enterprise in U.S. health care is
troubled." Physicians, hospitals, and health plans view measurement as
burdensome, expensive, inaccurate, and indifferent to the complexity of
care delivery. The measures also fail to give patients the information
they need to make good decisions.

The recent CMS report that 40 percent of Medicare providers will face
1.5 percent cuts for failing to submit data to the Physician Quality
Reporting System underscores the fact that many providers, especially
those who see few Medicare patients, likely view the cuts as a cost of
business to avoid the administrative hassle.

Yet, in spite of these cautionary signs, public and private payers are
tying larger amounts of provider payments to a growing number of largely
meaningless measures, as if doubling down will somehow fix the problem.

Given the plethora of payment and delivery reform initiatives currently
underway or in development, there is relatively little discussion about
the long-term goal of payment reform or the impact of these initiatives
on the practice of medicine. There are at least two areas of particular
concern: the administrative burden on physicians, and the push toward
greater consolidation.

Nearly half (46 percent) of doctors reported that they felt burnout in
2014, and a main reason cited was increasing administrative burden,
including the multitude of reporting requirements. These findings cannot
be dismissed, since burnout has been positively linked to increases in
medical errors and has been cited as a reason why doctors leave practice.

Another consequence of both the administrative burden and financial risk
of participation in APMs is likely to be an increase in the already
considerable trend toward practice consolidation. This trend has been
shown to increase health care spending without increasing quality or
efficiency and runs counter to the goals of APMs. Many small,
independent practices will lack the resources needed to comply with the
myriad of reporting requirements involved in APM participation; they are
also less likely to be able to absorb the potential losses in a model
that involves down-side financial risk.

Moving Forward On Physician Payment Reform

The Administration's aims regarding value-based payments and the
expanded use of APMs come with very little detail on how they will be
realized; thus, it is difficult to comment other than to say that given
the current state of performance measurement and the early results from
existing APMs, the timeline seems overly aggressive.

Although the pursuit of better value in health care is a laudable aim
and should continue, setting goals and establishing timelines is not
enough. Linking more and more physician income to meaningless quality
measures or mandating participation in undeveloped APMs will do little
more than add to the already considerable non-clinical burden that
physicians face and may force many physicians to abandon private
practice in favor of employment, thereby accelerating the current trend
toward consolidation. Worse yet, physicians may choose to leave practice
altogether.


(John O'Shea, MD, is a practicing surgeon and Senior Fellow in the
Center for Health Policy Studies at the Heritage Foundation in
Washington, DC. He served as a senior health policy advisor to the U.S.
House Committee on Energy and Commerce, where he helped draft the
Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) that
replaced the Sustainable Growth Rate (SGR) formula for reimbursing
physician services in the Medicare program.)

http://healthaffairs.org/blog/2015/09/03/physician-payment-reform-in-a-post-sgr-world-challenges-remain/

***


Comment by Don McCanne

It is indeed a rare event when we can agree with a health policy fellow
from the Heritage Foundation. John O'Shea has spelled out the
deficiencies and potential harms of the current directions in physician
payment reform.

The goal is to drive quality and control costs. Although Dr. O'Shea does
not tell us how he would do that, it is likely that he would disagree
with our approach. We would adopt a single payer national health program
which, by design, increases quality while improving value in our health
care spending.

qotd: Laissez faire health care pricing

National Bureau of Economic Research
August 2015
NBER Working Paper 21501
Health Care Spending: Historical Trends and New Directions
By Alice Chen and Dana Goldman

Over the last five decades, broad changes in the US health care system
have dramatically influenced growth in health care expenditures. These
structural changes have also influenced the trajectory of the health
economics research.

From the Conclusion

Chandra & Skinner (2012) categorize technological progress in health
care based on its impact on cost and health: (1) high-efficiency,
low-cost innovations; (2) costly innovations with high efficiency for
particular subgroups; and (3) costly innovations with uncertain
efficiency. The first two lead to large improvements in life expectancy,
but they are not to be blamed for the rise in health spending relative
to other nations. It is the third category that has been uniquely
abundant in the US.

There is question of whether efforts to control technology will induce a
harmful reduction in innovation, with personalized medicine – currently
showing great promise but also great expense – being a notable example.
We clearly need a better understanding of what precisely constitutes
innovation, how it diffuses, and whether it can be harnessed to slow
spending growth in a way that is socially desirable. Given the successes
of the past half century, this seems well within the realm of possibility.

http://www.nber.org/papers/w21501

***

Health Affairs Blog
September 1, 2015
The Value And Limits Of Economic Evaluation In Policy Analysis
By Victoria Phillips

Health care resources, no matter how represented, are ultimately finite.
Trade-offs occur as spending in one area means that those same resources
are unavailable to fund another program. In spite of this, U.S.
policymakers remain reluctant to engage in conversations that even hint
at "rationing." This reluctance is evidenced by the fact that the
Patient-Centered Outcomes Research Initiative (PCORI) is legislatively
forbidden to include cost-effectiveness ratios in its comparative
effectiveness evaluations.

Diametrically opposed to the U.S. system, most other countries embrace
cost-effectiveness, whereby competing programs are evaluated in terms of
costs and the health gains they produce.

The U.S. reluctance to embrace cost-effectiveness analyses as a policy
tool is misguided, particularly as concerns about the level and
distribution of health care spending remain front and center. Foremost,
it means missed opportunities to lead much-needed discussions about the
inherent trade-offs in health care investments.

Following the model of the clinical literature, policy researchers,
analysts, and foundations should become familiar with economic
evaluation tools and integrate them into their work and reports as a
matter of course.

Cost-effectiveness analyses generally identify what must be paid to
generate a health gain. If the focus of an intervention is extending
life, results are reported as the cost per life-year gained. Little
appreciated is the notion that these analyses describe the cost and
health benefit produced. Only in limited circumstances, for example when
an intervention is cost-saving, do they prescribe that a particular
investment be made.

Extending life is one type of health gain, while improving quality is
another. Quality changes can be paramount in populations affected by
chronic conditions. The quality-adjusted life-year (QALY) is an outcome
measure developed by economists in the 1970s, which adjusts survival
gains by quality of life provided over the life-years.

At present the U.S. economic evaluation literature uses both QALYs as a
standard outcome measure and an informal cost-effectiveness ratio of
$100,000 per QALY gained.

PCORI, however, continues to focus on outcomes alone, including QALYs.

Curing Hepatitis C, Social Values, And Rationing

While cost-effectiveness analysis offers a solid starting point for
discussions about health care trade-offs and spending prioritization,
there are clear limits to its contributions in decision-making. New,
potent, and expensive drugs are a case in point as they increasingly
pose challenges for health systems and payers.

The new drug Harvoni offers a cure for Hepatitis C. This condition was
previously treated with Interferon costing $15,000 per course, while the
new regimen costs approximately $84,000. The budgetary implications of
providing it are game-changing, with California alone estimating a total
for Medicaid of $18 billion out of a $64 billion budget.

Such breakthroughs end the pretense that the U.S. does not need to
confront rationing. Further, as the chance is minimal that Harvoni will
be cost effective by any standard, determining whether to fund it falls
outside the cost-effectiveness domain. It will involve some stark
choices, ultimately reflecting social values, which the public seems
woefully unprepared to make.

Policy analysts can lay the groundwork now for these more complex
discussions by incorporating cost-effectiveness and the language of
trade-offs into their work. This includes embedding these concepts into
research, briefs, commentaries, and policy discussions, along with
helping edge PCORI in a similar direction.

http://healthaffairs.org/blog/2015/09/01/the-value-and-limits-of-economic-evaluation-in-policy-analysis/

***


Comment by Don McCanne

Although there are many factors contributing to the increases in health
care spending, the advances in technology such as new drugs, innovative
surgical procedures, advances in imaging, and now, the potential of
pharmacogenetics in personalized medicine, are playing an increasing
role in driving up health care costs.

The entrepreneurial drive in health care seems to be expanding as a
manifestation of the more general trend of mega-wealth seeking behavior.
The outrageous overpricing of the drugs for hepatitis C is but one
example of this behavior. But just think of the potential for
pharmacogenetics and personalized health care - seven digit pricing
would not be beyond the aspirations of the next generation entrepreneurs
in the medical-industrial complex.

It is now commonplace for prices to be based not on costs but rather on
value attained. Since a quality adjusted life year (QALY) is currently
considered to have a value of $100,000, it does not take much
imagination for these entrepreneurs to assign a price of $1,000,000 to
personalized medicine interventions that add ten QALYs to an
individual's life. Though these numbers look preposterous now, the new
prices we are already seeing indicate that we are headed in that direction.

The United States is unique in having a laissez faire attitude toward
pricing in health care. All other nations use some sort of public
control of pricing. Although our government does play a limited role
through public programs such as Medicare and Medicaid, in general we
tend to rely on market forces when markets are mostly about getting the
highest prices the consumers will bear.

We can no longer sit back and watch more and more of us being priced out
of health care. Although as a nation we are ready to accept comparing
the effectiveness of various approaches in health care, we now have to
make the decision that evaluations must also include cost-effectiveness
analyses. Federal law currently prohibits cost evaluations under the
Patient-Centered Outcomes Research Initiative (PCORI). That prohibition
must be lifted.

Under a single payer national health program, abusive pricing would not
be tolerated. Opponents say that government efforts to moderate pricing
would stifle innovation and research. Nonsense. There is no way that the
medical-industrial entrepreneurs would walk away from trying to get as
large of a share as they can of the $3 trillion that we are spending on
health care.

qotd: Laissez faire health care pricing

National Bureau of Economic Research
August 2015
NBER Working Paper 21501
Health Care Spending: Historical Trends and New Directions
By Alice Chen and Dana Goldman

Over the last five decades, broad changes in the US health care system
have dramatically influenced growth in health care expenditures. These
structural changes have also influenced the trajectory of the health
economics research.

From the Conclusion

Chandra & Skinner (2012) categorize technological progress in health
care based on its impact on cost and health: (1) high-efficiency,
low-cost innovations; (2) costly innovations with high efficiency for
particular subgroups; and (3) costly innovations with uncertain
efficiency. The first two lead to large improvements in life expectancy,
but they are not to be blamed for the rise in health spending relative
to other nations. It is the third category that has been uniquely
abundant in the US.

There is question of whether efforts to control technology will induce a
harmful reduction in innovation, with personalized medicine – currently
showing great promise but also great expense – being a notable example.
We clearly need a better understanding of what precisely constitutes
innovation, how it diffuses, and whether it can be harnessed to slow
spending growth in a way that is socially desirable. Given the successes
of the past half century, this seems well within the realm of possibility.

http://www.nber.org/papers/w21501

***

Health Affairs Blog
September 1, 2015
The Value And Limits Of Economic Evaluation In Policy Analysis
By Victoria Phillips

Health care resources, no matter how represented, are ultimately finite.
Trade-offs occur as spending in one area means that those same resources
are unavailable to fund another program. In spite of this, U.S.
policymakers remain reluctant to engage in conversations that even hint
at "rationing." This reluctance is evidenced by the fact that the
Patient-Centered Outcomes Research Initiative (PCORI) is legislatively
forbidden to include cost-effectiveness ratios in its comparative
effectiveness evaluations.

Diametrically opposed to the U.S. system, most other countries embrace
cost-effectiveness, whereby competing programs are evaluated in terms of
costs and the health gains they produce.

The U.S. reluctance to embrace cost-effectiveness analyses as a policy
tool is misguided, particularly as concerns about the level and
distribution of health care spending remain front and center. Foremost,
it means missed opportunities to lead much-needed discussions about the
inherent trade-offs in health care investments.

Following the model of the clinical literature, policy researchers,
analysts, and foundations should become familiar with economic
evaluation tools and integrate them into their work and reports as a
matter of course.

Cost-effectiveness analyses generally identify what must be paid to
generate a health gain. If the focus of an intervention is extending
life, results are reported as the cost per life-year gained. Little
appreciated is the notion that these analyses describe the cost and
health benefit produced. Only in limited circumstances, for example when
an intervention is cost-saving, do they prescribe that a particular
investment be made.

Extending life is one type of health gain, while improving quality is
another. Quality changes can be paramount in populations affected by
chronic conditions. The quality-adjusted life-year (QALY) is an outcome
measure developed by economists in the 1970s, which adjusts survival
gains by quality of life provided over the life-years.

At present the U.S. economic evaluation literature uses both QALYs as a
standard outcome measure and an informal cost-effectiveness ratio of
$100,000 per QALY gained.

PCORI, however, continues to focus on outcomes alone, including QALYs.

Curing Hepatitis C, Social Values, And Rationing

While cost-effectiveness analysis offers a solid starting point for
discussions about health care trade-offs and spending prioritization,
there are clear limits to its contributions in decision-making. New,
potent, and expensive drugs are a case in point as they increasingly
pose challenges for health systems and payers.

The new drug Harvoni offers a cure for Hepatitis C. This condition was
previously treated with Interferon costing $15,000 per course, while the
new regimen costs approximately $84,000. The budgetary implications of
providing it are game-changing, with California alone estimating a total
for Medicaid of $18 billion out of a $64 billion budget.

Such breakthroughs end the pretense that the U.S. does not need to
confront rationing. Further, as the chance is minimal that Harvoni will
be cost effective by any standard, determining whether to fund it falls
outside the cost-effectiveness domain. It will involve some stark
choices, ultimately reflecting social values, which the public seems
woefully unprepared to make.

Policy analysts can lay the groundwork now for these more complex
discussions by incorporating cost-effectiveness and the language of
trade-offs into their work. This includes embedding these concepts into
research, briefs, commentaries, and policy discussions, along with
helping edge PCORI in a similar direction.

http://healthaffairs.org/blog/2015/09/01/the-value-and-limits-of-economic-evaluation-in-policy-analysis/

***


Comment by Don McCanne

Although there are many factors contributing to the increases in health
care spending, the advances in technology such as new drugs, innovative
surgical procedures, advances in imaging, and now, the potential of
pharmacogenetics in personalized medicine, are playing an increasing
role in driving up health care costs.

The entrepreneurial drive in health care seems to be expanding as a
manifestation of the more general trend of mega-wealth seeking behavior.
The outrageous overpricing of the drugs for hepatitis C is but one
example of this behavior. But just think of the potential for
pharmacogenetics and personalized health care - seven digit pricing
would not be beyond the aspirations of the next generation entrepreneurs
in the medical-industrial complex.

It is now commonplace for prices to be based not on costs but rather on
value attained. Since a quality adjusted life year (QALY) is currently
considered to have a value of $100,000, it does not take much
imagination for these entrepreneurs to assign a price of $1,000,000 to
personalized medicine interventions that add ten QALYs to an
individual's life. Though these numbers look preposterous now, the new
prices we are already seeing indicate that we are headed in that direction.

The United States is unique in having a laissez faire attitude toward
pricing in health care. All other nations use some sort of public
control of pricing. Although our government does play a limited role
through public programs such as Medicare and Medicaid, in general we
tend to rely on market forces when markets are mostly about getting the
highest prices the consumers will bear.

We can no longer sit back and watch more and more of us being priced out
of health care. Although as a nation we are ready to accept comparing
the effectiveness of various approaches in health care, we now have to
make the decision that evaluations must also include cost-effectiveness
analyses. Federal law currently prohibits cost evaluations under the
Patient-Centered Outcomes Research Initiative (PCORI). That prohibition
must be lifted.

Under a single payer national health program, abusive pricing would not
be tolerated. Opponents say that government efforts to moderate pricing
would stifle innovation and research. Nonsense. There is no way that the
medical-industrial entrepreneurs would walk away from trying to get as
large of a share as they can of the $3 trillion that we are spending on
health care.