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Category: Health Policy

A Cure at Any Cost? Time to Shine a Light on Drug Pricing

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By CECI CONNOLLY and BOBBY CLARK

We are all are anxiously awaiting the approval and delivery of a cure to the novel coronavirus – or better yet, a vaccine.

Amid the race to develop a safe and effective vaccine, some may be inclined to give drug companies a pass on their well-established bad behavior related to pricing and market competition.

But that would be an awfully expensive mistake.

As the COVID-19 pandemic claims more lives and families’ livelihood, policymakers and the public must press drug makers for more information on the products they are developing. The country must be protected against price-gouging for therapies that could bring the pandemic to a halt.

Yes, we need America’s biopharmaceutical companies to develop a cure or vaccine so we can resume our normal lives. And yes, they should be compensated for their work.

But no, a cure should not come at any cost.

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Value-based care – no progress since 1997?

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By MATTHEW HOLT

Humana is out with a report saying that its Medicare Advantage members who are covered by value-based care (VBC) arrangements do better and cost less than either their Medicare Advantage members who aren’t or people in regular Medicare FFS. To us wonks this is motherhood, apple pie, etc, particularly as proportionately Humana is the insurer that relies the most on Medicare Advantage for its business and has one of the larger publicity machines behind its innovation group. Not to mention Humana has decent slugs of ownership of at-home doctors group Heal and the now publicly-traded capitated medical group Oak Street Health.

Humana has 4m Medicare advantage members with ~2/3rds of those in value-based care arrangements. The report has lots of data about how Humana makes everything better for those Medicare Advantage members and how VBC shows slightly better outcomes at a lower cost. But that wasn’t really what caught my eye. What did was their chart about how they pay their physicians/medical group

What it says on the surface is that of their Medicare Advantage members, 67% are in VBC arrangements. But that covers a wide range of different payment schemes. The 67% VBC schemes include:

  • Global capitation for everything 19%
  • Global cap for everything but not drugs 5%
  • FFS + care coordination payment + some shared savings 7%
  • FFS + some share savings 36%
  • FFS + some bonus 19%
  • FFS only 14%

What Humana doesn’t say is how much risk the middle group is at. Those are the 7% of PCP groups being paid “FFS + care coordination payment + some shared savings” and the 36% getting “FFS + some share savings.” My guess is not much. So they could have been put in the non-VBC group. But the interesting thing is the results.

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New Technologies Drive Cost Growth Over Time

By KEN TERRY

(This is the eighth and final installment in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

Medical technologies include drugs, devices, tests, and procedures. Considered as a whole, these technologies are the key driver of growth in health costs, according to Georgetown University professor Gregg Bloche and his associates.

Bloche, et al., view insurance coverage as the chief enabler of these technological innovations. In a 2017 Health Affairs Blog post, they said, “Drug and device developers, clinical researchers, and their financial backers anticipate coverage for new tests and treatments with little concern for whether they add substantial therapeutic value, and they make research and development decisions accordingly.”

In an interview, Bloche further explained, “If you’re a technology developer, you can reasonably anticipate that if your product achieves a low but significant health gain, insurers are going to be under pressure to pay for it.”

Insurers do cover most new drugs, although they may make it difficult for patients to access the ones that they deem to be low-value, notes Peter Neumann, director of the Center for the Evaluation of Value and Risk in Health at the Institute for Clinical Research and Health Policy Studies at Tufts Medical Center in Boston.

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Congress Is Getting the Transition to Alternative Payment Models Wrong

By TAYLOR CHRISTENSEN

Alternative payment models (APMs) are a hot topic these days, and everyone seems to agree that we need to transition toward them and away from fee for service (FFS). But how should we do it?

First, let’s think about this task as government policy makers would think about it.

They would probably start by saying, “We need to find a way to give incentives to providers and payers to try out these different APMs.” This would be fairly easy to do through Medicare, so they would create some Medicare APM programs and structure them in a way that makes the benefits of joining large enough that lots of providers will want to participate.

And for the sake of uniform provider incentives, they would also want to encourage private insurer-provider diads to start using APMs, preferably ones as similar to the Medicare APM programs as possible. And so they would probably have to offer private insurers and/or providers money to do so.

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Hospitals Must Give Up Power to Save Healthcare

By KEN TERRY

(This is the sixth in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

As hospital systems become larger and employ more physicians, healthcare prices will continue to rise and independent doctors will find it harder to remain independent. Hospitals will never fully embrace value-based care as long as it threatens their primary business model, which is to fill beds and generate outpatient revenues. To create a viable, sustainable healthcare system, the market power of hospitals must be eliminated.

Federal antitrust policy is not adequate to handle this task. Even if the Federal Trade Commission had more latitude to deal with mergers among not-for-profit entities, the industry is already so consolidated that the FTC would have to break up health systems involving thousands of hospitals. Such a gargantuan effort would be practically and legally unfeasible.

All-payer Systems

 The government could curtail health systems’ market power without breaking them up. For example, either states or the federal government could adopt “all-payer” models similar to those in Maryland and West Virginia. Under the Maryland model introduced 40 years ago, every insurer, including Medicare, Medicaid, and private health plans, pays uniform hospital rates negotiated between the state and the hospitals.

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THCB Gang Episode 24!

Episode 24 of “The THCB Gang” was live-streamed on Thursday, September 10th! Watch it below!

Joining Matthew Holt (@boltyboy) were some of our regulars: WTF Health Host Jessica DaMassa (@jessdamassa), patient & entrepreneur Robin Farmanfarmaian (@Robinff3), writer Kim Bellard (@kimbbellard), policy & tech expert Vince Kuraitis (@VinceKuraitis), and guest Mike Magee, a medical historian & health economist (@drmikemagee). The conversation was incredibly wide-ranging and one of the best we’ve had in a while–not the least because Mike Magee gave us a great base with how our non -health system somehow did actually act as a cohesive force in society before tech, then COVID19 broke it up!

If you’d rather listen to the episode, the audio is preserved as a weekly podcast available on our iTunes & Spotify channels — Zoya Khan

To Avoid Pay Cuts, Doctors Must Reduce Waste

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By KEN TERRY

(This is the fifth in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

Real healthcare reform depends on an effective plan to reduce cost growth. To achieve this goal, it makes a whole lot more sense to cut waste than to limit access to necessary services or slash provider payments to the bone, noted Donald Berwick, MD, a former acting CMS administrator, and Andrew D. Hackbarth, a RAND Corp. researcher, in a 2012 JAMA article. In their telling, a significant reduction in waste would allow us to bend the cost curve without hurting healthcare quality or access.

Berwick shared with me that he doesn’t know how much unnecessary care physicians or hospitals could safely eliminate. “Some of it is marbled into the daily activities of healthcare organizations,” he said. “There would have to be systemic changes to get it done. But it’s a matter of will. With enough will, a lot of it could be eliminated. And when you’re talking about $1 trillion [worth of waste], even if you get 10% of it, that’s a tremendous amount that could be applied to other activities.”

Risk-based contracts, whether shared savings or capitation, can incentivize physicians to reduce waste. From the viewpoint of long-suffering primary care physicians, value-based-care agreements that let them share in the savings they generate are a godsend. Of course, not all primary care doctors are willing to take financial risk or change their practice patterns. But if maintaining their current income depends on it, most physicians will embrace change.

Specialists, too, can benefit by embracing the new paradigm. If they’re mainly being paid fee for service, they’ll have to forgo a lot of lucrative tests and procedures. But they can still keep their incomes up by delivering more-appropriate procedures and tests to a larger patient population.

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Why Health Systems Employ Doctors: Money and Control

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By KEN TERRY

(This is the third in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

The American Medical Association (AMA) last year announced that, for the first time, more physicians were employed than were independent. While many of these doctors were employed by private practices, the AMA said, about 35% of them worked directly for a hospital or for a hospital-owned practice.25

This estimate was lower than that of other surveys. According to research conducted by the Physicians Advocacy Institute (PAI) and Avalere Health, a consulting firm, 44% of physicians were employed by hospitals in January 2018, compared to 25% in July 2012. More than half of U.S. physicians now work for or contract with fewer than 700 healthcare systems across the country, according to a new study in Health Affairs.

Many of the physicians employed by hospitals and health systems formerly were in private practice. They sold their practices to hospitals because of increasing overhead, dwindling reimbursement, and the rising administrative burdens of ownership, according to Jackson Healthcare, a physician recruiting firm.

The many negative factors affecting primary care also have impelled a growing number of primary care physicians to seek employment in recent years. In 2018, 47% of general internists, 57% of family physicians and 56% of pediatricians were employed. There is evidence that this trend may be exacerbating the primary care shortage because employed doctors see fewer patients per day, on average, than do those in private practice.

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Slow Walking to Value Based Care: Why Fee for Service Still Rules

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By KEN TERRY

(This is the second in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

In January 2015, then Health and Human Services Secretary Sylvia Burwell announced lofty goals for the government’s value-based payment program. By the end of 2016, she said, 85% of all payments in the traditional Medicare program would be tied to quality or value, and 90% would be value-based by the end of 2018.

The government planned to tie 30% of Medicare payments to alternative payment models by 2017, according to Burwell, and hoped to reach the 50% mark by 2018. In March 2016, HHS said it had reached the 30% goal a year ahead of schedule, mainly because of the Medicare Shared Savings Program (MSSP).

More recent data on the value-based-care movement comes from the Health Care Payment & Learning Action Network (LAN), a public-private partnership launched in 2015 by the Department of Health and Human Services. The LAN reported in October 2018 that public and private payers covering 226 million lives, or 77% of insured Americans, had tied 34% of their payments to value-based care. According to the organization, only 23% of total payments had been value-based in 2016.A deeper analysis of the LAN data, however, shows that the vast majority of value-based payments—both in Medicare and in the larger healthcare system—were still limited to pay for performance, upside-only shared savings, and care management fees paid to patient-centered medical homes.

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Physicians Should Lead on Healthcare Reform

By KEN TERRY

(This is the first in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

Even before COVID-19, healthcare reform seemed to be stuck between a rock and a hard place, but there is a rational way forward. This approach, which I call “physician-led healthcare reform,” would engage doctors in building a healthcare system that was safe, effective, patient-centered, timely, efficient, and equitable, to use the Institute of Medicine’s set of foundational goals in its landmark book, Crossing the Quality Chasm: a New Health System for the 21st Century.Primary care physicians, rather than hospitals, would be in charge of the system, and they’d work closely with specialists and other healthcare professionals to produce the best patient outcomes at the lowest cost.

It would take a decade or more to restructure the healthcare system so that this goal could be achieved. Similarly, the transition to a single-payer insurance system needs to be accomplished gradually—although the pandemic might accelerate that timetable. Most people are not yet ready to abandon employer-sponsored insurance, and there’s still a lot of distrust of the government. Providers are more likely to accept changes in how they’re paid over time than all of a sudden. Additional benefits can also be brought online slowly. Ideally, we could transform healthcare financing over a 10-year period while rebuilding the care delivery system at the same time.

That is why implementing Medicare for America—a reform plan devised by the Center for American Progress and embodied in a current House bill–makes more sense than going directly to Medicare for All: it changes the system incrementally while achieving universal coverage fairly quickly. Medicare for America would do this by enrolling the uninsured, people who purchase individual insurance, and those now in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). People would also be enrolled automatically at birth. Companies could enroll their employees in Medicare for America, and employees could opt out of employer-sponsored plans and enroll in the public plan.

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