Via Brian D. Earp:
As (or if) we pursue alternative payment models, how much pain will health care providers feel over the next decade? Some eloquent health economist considers the question.
For American observers of the health care sector, the coming decade is apt to be one of the most fascinating in memory, as corporate, financial, and managerial muscle begins to penetrate hitherto tranquil health care markets, and as the competitive scramble for the health care dollar unfolds. Health care providers undoubtedly will be uncomfortable. The question is: How much discomfort is enough and how much is too much?
Tricked you. That’s the (yes, eloquent) Uwe Reinhardt, but from a paper published in 1982. It holds up remarkably well nearly 35 years later. I bet it’s got at least another 15 years of relevance in it.
If you’re interested in health care employment and markets, the paper — “Table Manners at the Health Care Feast” — is worth your time. Before now, you couldn’t find it online; I’ve hosted the version Uwe sent me right here.
At a time when health care spending seems only to go up, an initiative in California has slashed the prices of many common procedures.
The California Public Employees’ Retirement System (Calpers) started paying hospitals differently for 450,000 of its members beginning in 2011. It set a maximum contribution it would make toward what a hospital was paid for knee and hip replacement surgery, colonoscopies,cataract removal surgery and several other elective procedures. Under the new approach, called reference pricing, patients who wished to get a procedure at a higher-priced hospital paid the difference themselves.
For example, in 2011 the Calpers maximum contribution for a knee or hip replacement surgery was set at $30,000. A Calpers patient receiving knee or hip replacement surgery at or below this reference price paid the usual cost-sharing: 20 percent of the cost, up to a maximum of $3,000. But a patient electing to use a hospital that charged, say, $40,000 paid the usual cost-sharing in addition to the $10,000 above the reference price.
As Calpers initiated the new approach, 41 of the several hundred hospitals in California could provide knee and hip replacement procedures at or below $30,000 and with acceptable quality, as measured by things like low readmission rates and high rates of use of guideline infection controls. Some hospitals charged more than $100,000 for the procedures.
The results of knee and hip replacement surgery reference pricing were striking, as were those for cataract removal, arthroscopy and colonoscopy. In a series of studies, James Robinson and Timothy Brown, University of California, Berkeley, health economists, found that under reference pricing, Calpers patients flocked to lower-priced hospitals and outpatient surgical centers. Prices and total spending for the procedures plummeted.
For knee and hip replacements, lower-priced hospitals saw their market share increase by 28 percent. As higher-priced ones lost market share, many chose to reduce their prices. Prices for the procedures fell by an average of more than 20 percent, saving Calpers and its patients $6 million over two years.
Under reference pricing for cataract removal surgery, the average price paid also dropped by nearly 20 percent, saving $1.3 million over two years. For colonoscopies, $7 million was saved — a 28 percent drop. And for knee or shoulder arthroscopy, prices fell by about 17 percent. For these procedures, Calpers reduced patient cost-sharing if they chose a free-standing, outpatient surgical center, as opposed to a much more expensive hospital.
During the period of time Calpers saw 20 percent price declines for reference-priced services, typical health care prices paid by employer-sponsored plans rose by about 5.5 percent.
Despite the success of the effort by Calpers, reference pricing is not a full solution to rampant health care spending growth. Because it relies on encouraging patients to visit lower-priced hospitals and surgical centers, it works only with procedures for which patients can reasonably shop around.
This excludes care over which patients have little control, such as that provided in emergencies or while they are already hospitalized or incapacitated. One study estimated that about 40 percent of health care spending is for services for which patients could shop.
But there is another reason reference pricing is hard to install broadly. It requires patients to have ready access to comprehensible price and quality information. Such transparency is not commonplace. Even when this information is available, consumers with cognitive impairments or who are overwhelmed with illness and other demands would have trouble making the best use of it.
Some consumers might prefer to delegate to insurers the decisions about where to obtain care. In narrow network plans, for instance, insurers select high-quality hospitals and negotiate the best price; patients pay the same amount out of pocket no matter which hospital they visit within the network. Reference pricing shifts some of the burden of figuring out where to obtain care from insurers to consumers. On the other hand, compared with narrow network models, it preserves broader choice for the consumer.
Reference pricing also requires sufficient competition among hospitals. If the number of hospitals is too low, patients will not have a choice about where to receive care, and hospitals will not have an incentive to reduce prices. Assessing the degree of competition, quality and choice for the purposes of establishing and updating reference prices imposes an administrative cost that should be weighed against any savings.
For this reason, some large employers are contracting with regional “centers of excellence,” such as the Cleveland Clinic, to which patients can be referred even if there is limited hospital choice in their hometowns.
Another concern is that reference pricing could encourage lower quality, as health care organizations cut costs to reduce prices. Analysis by Mr. Robinson and colleagues did not find adverse effects of reference pricing, however. “Significant reductions in cost with no change in quality: That’s called improved value,” he said.
At its July 15th meeting on obeticholic acid, members of the Comparative Effectiveness Public Advisory Council (CEPAC), myself included, were publicly criticized by patient advocates. It was painful to hear our efforts erroneously characterized as misguided, our motivations as corrupt, and our views as distorted. Much of what was said reflected misunderstandings about CEPAC and its parent organization, the Institute for Clinical and Economic Review (ICER).
Today, in a post on its website, ICER fired back, dispelling some of the more widely circulated myths about its work. I recommend you read the whole thing, but if you’re pressed for time, what follows is a summary of just some of its content.
Myth: ICER was founded by, is largely funded by, and does the bidding of health insurers.
Truth: Nope. ICER’s funding is publicly available.
Today, ICER receives 70% of its funding from non-profit philanthropic foundations, the largest source being the Laura and John Arnold Foundation, and no funder influences our research findings or even what drugs we choose to evaluate. Non-profit foundation support is used to support all of ICER’s reports and public meetings. For an annual Policy Summit meeting and evidence policy webinar program, ICER receives funding equivalent to 17% of overall support from pharmaceutical companies and only 9% from health insurers. Support from state contracts contributes the remaining 5% of overall funding.
Myth: ICER ignores patients’ perspective.
Truth: Nope. Not only does the organization invite patients to participate in its deliberative process, patients’ point of view is explicitly part of its publicly available assessment framework.
The ICER framework also includes categories called “additional benefits” and “contextual considerations” that are meant to be able to capture elements of value of importance to patients and their families that might not be included in the “clinical” literature. Issues such as whether patients have had any other reasonable treatment options in the past, sites of care, ease of administration, impact on work and family life – all are given a formal place in the ICER framework and our reports have sections filled with the insights (and data when possible) provided directly by patients and patient groups.
Myth: ICER’s use of quality-adjusted life years (QALYs) devalues the lives of people with serious conditions.
Truth: Nope. This point of view reflects a deep misunderstanding of how QALYs enter into ICER’s methodology, as well as a lack of knowledge of the additional steps ICER takes to safeguard its analysis — as best it can — from known problems with QALYs.
[T]he QALY measures relative improvement from wherever patients start out. If the treatment is one to help patients who have a stroke achieve better functioning, the improvement in quality of life is not discounted in any way just because patients start out with a lower quality of life than someone in perfect health. In fact, starting out with a lower quality of life, whether through a serious illness or disability, offers more “room” for improvement, giving treatments for patients with serious conditions more opportunity to show improvement compared to treatments for patients whose baseline condition is already near perfect health.
Myth: ICER wants to shift money away from caring for patients and toward other uses, like fixing potholes.
Truth: Nope. ICER has no such motivation. It offers public forums to transparently discuss the trade-offs inherent in allocating resources. As such, one cannot ignore that we also use resources to fund highly valued things like education, public safety, national defense, and, yes, fixing potholes.
This is one of the more remarkable and malicious mischaracterizations of our intentions. […] If the shared hope is to be able to provide innovative drugs for all patients with serious illness, and to be able to also afford good education for our children and other services, then we believe that transparent discussions about whether prices for drugs and other health care services are reasonably aligned with the value they bring to patients are an important way to help us get there.
Myth: The only outcome of ICER’s work is to help insurers restrict coverage to the best (if expensive) medications.
Truth: Nope. First of all, insurers will act to restrict coverage of expensive medications (e.g., through tiered formularies, step therapy, prior authorizations, etc.) whether ICER exists or not. But, without ICER and similar organizations, they’re more likely to do so in a manner that only reflects price, and not patient benefits. Second, ICER does not always find that drugs are of low value (at current prices). Some are high value, and ICER says so.
ICER’s purpose is to stimulate a public discussion of these questions, and we do not believe that the right answer is to restrict access to innovative medicines for patients who are likely to benefit. Patients already suffer restrictions to access when drug prices are too high for them to afford, and our goal is to provide a way to get to a “win-win-win” outcome where price is aligned with value, access is broad, clinical use targeted and appropriate, and new investments in future innovation assured.
Much more at the link, including a defense of the charge that ICER’s work will stifle innovation. You should read it all.
From my mom, via email:
In a recent investigation, the Government Accountability Office (GAO) identified several serious deficiencies in CMS’s oversight and enforcement of network requirements for Medicare Advantage plans, and strongly recommended greater scrutiny of the plans’ networks. The GAO found that CMS reviews less than 1 percent of all networks and does little to assess the accuracy of the network data submitted by the plan. The GAO report found that CMS relies primarily upon complaints from beneficiaries and their caregivers to identify any problems with networks and does not assess whether plans that are renewing their current contracts continue to meet the network requirements.
That’s from a recent Kaiser Family Foundation analysis of Medicare Advantage plan networks. Lots of data and charts in the report at the link.
The following originally appeared on The Upshot (copyright 2016, The New York Times Company).
My dental hygienist complimented me on the health of my teeth and gums. Then she said something that you, too, have undoubtedly heard while sitting back in the dentist chair.
“Would you like bitewing X-rays? It’s been a year since your last ones. Your insurance will cover them annually.”
The easy answer was: “Yes. Bring on the bitewings!” They are, after all, painless, don’t take much time, and, as I was reminded, would not cost me a penny because they are covered by my insurance.
But the easy answer isn’t necessarily the right one. Do I need bitewing X-rays every year?
The American Dental Association says I don’t, and you may not either. Adults without apparent dental problems do not need dental X-rays of any kind every year, the A.D.A. says. Adults who properly care for their teeth and have no symptoms of oral disease or cavities can go two to three years between bitewing X-rays, according to the A.D.A.
Adults with a high risk of cavities (like those with a history of them) should receive them at least every 18 months, and possibly more frequently, depending on the condition of teeth and gums.
The interval between X-rays is determined by the rate at which cavities develop. Typically, it takes about two years or more for cavities to penetrate adult teeth enamel. The rate is faster for children, so the recommended bitewing intervals are shorter for them.
However, children with adequately spaced primary (baby) teeth and no cavities do not need any dental X-rays. Older children with a low propensity for cavities can go 18 months to three years between bitewing X-rays. Those at the highest risk may need them more frequently.
Bitewing and other dental X-rays have their place; there is risk in not taking them. Sometimes decay can spread quickly. The X-rays help dentists see cavities, gum disease, the position of teeth still below the gum line and other dental conditions not visible with the naked eye. Other kinds of dental and orthodontic imaging — like full-mouth, full-head, panographs or 3-D cone-beam computed tomography — reveal more.
But dentists tend to overuse them. Jay W. Friedman, a dentist who advises Consumer Reports on dental issues, has been warning of overuse of dental imaging since the 1970s. “Many patients of all ages receive bitewing X-rays far more frequently than necessary or recommended,” he said. “And adults in good dental health can go a decade between full-mouth X-rays.”
Other X-rays used for orthodontic treatments, wisdom tooth extraction and implants — like cephalographs (side-view X-ray of the skull and jaws) or 3-D cone-beam computed tomography — are not needed on a routine basis, according to Dr. Friedman. One study found that although X-ray images increase orthodontists’ confidence in their diagnoses and treatment plans, the vast majority of the plans are formed before viewing them.
All X-rays can be harmful, though the radiation dose of bitewings isrelatively low. Of all the medical radiation patients receive, dental X-rays account for less than 3 percent. But the harm from radiation is cumulative. Every X-ray adds to the risk of damage that can lead to cancer.
An unnecessary bitewing or other dental X-ray is an unnecessary harm. And a cone-beam C.T. scan confers the same radiation dose as six traditional dental X-rays, with only limited evidence of greater diagnostic or treatment value over imaging with lower radiation.
Though dental X-rays blast a relatively low dose of radiation — as compared with other medical imaging — one study of over 2,700 patients appeared to find a link to an increased risk of intracranial meningioma, the most common form of brain tumor (when radiation exposure from X-rays was greater than in the current era). Patients with a tumor were twice as likely as patients without one to have had a bitewing X-ray.
A limitation of the study is that its findings were based on patient recall of dental X-rays, not more objective medical data, which is not available. However, the study is consistent with earlier and smaller ones that documented increased risk of tumors associated with dental X-rays.
Though your insurance may cover annual bitewings, they’re not free. The prices insurers or uninsured patients pay vary, but a full set of bitewingstypically runs about $60. That’s as much as the price of a cleaning at many dental offices. So, when dentists take bitewings at routine visits, they may be doubling their revenue. Other types of dental X-rays can cost more. For some people, it’s a needless expense that comes with needless risk.
My answer to my hygienist’s offer of annual bitewing X-rays: “No thanks. Let’s wait a couple of more years.”
Via Tom Gara who wrote, “This is definitely the deepest and most metaphysical question posed by NYC subway ticket machines.”
Via CGP Grey: Chihuahua or muffin?
Via karen zak: Sheepdog or mop?
Via Christopher Ingraham: Puppy or bagel?
- The Next PDUFA: New Performance and Procedural Goals, RAPS.org
- FDA Sanctions Off-Label Drug Promotion, Health Affairs blog
What is this post about? Look here.