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When It Comes to Controlling Healthcare Costs, the Government Outperforms Private Industry

When I think of the federal government, “efficiency” is rarely the first thing on my mind. But when it comes to controlling healthcare costs, we need to consider the possibility that the federal government is better at this job than anyone else. Consider the fact that the United States dwarfs other countries in healthcare spending, despite having a more robust private insurance market than most of our peer countries. Consider this picture, from a recent Kaiser Family Foundation study. It shows a significant rise in private health spending over recent years, especially compared to growth in Medicare and Medicaid:

When It Comes to Controlling Healthcare Costs

There’s a lot behind these numbers, much more than I’m going to cover in this short post. But I thought many of you would find these figures interesting.

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Old Practices Die Hard

Photo Credit: Diagnosislife.com

Photo Credit: Diagnosislife.com

Below is a recent article in U.S. News and World Report, written by Niam Yaraghi  of the Brookings Institution, on why doctors continue to perform expensive and unnecessary tests like prostate cancer screening.

Unnecessary and harmful medical procures are a major source of waste in the U.S. health care system. Prostate-specific antigen-based screening (or PSA-based screening) for prostate cancer is an example of such procedures. According to the independent U.S. Preventive Services Task Force, “there is moderate certainty that the benefits of this procedure do not outweigh the harms.” Despite the task force’s discouragements, we spent $132.6 million to perform PSA-based prostate cancer screening on patients covered by Medicare in 2012.

If physicians are recommended not to perform this test, then why do they continue to do so? One can think of two obvious reasons. First, the scientific evidence on the benefits and harms of such tests is not yet exactly clear and thus clinicians have to rely on their own medical hunch rather than solid and irrefutable medical guidelines to make decisions. The second is the usual suspect: Physicians make money from doing these unnecessary tests. As long as physicians are compensated for volume rather than the value of their services, they will be financially inclined to perform as many tests as they can.

In a recent paper, Peter Ubel and David Asch offered additional psychological explanations for why it is difficult for clinicians to “‘de-innovate,’ or give up old practices, even when new evidence reveals that those practices offer little value.” They argued that physicians’ preconceptions lead them to scrutinize the studies that provide evidence against their initial beliefs and instead have a bias toward the studies that confirm their stand. For example, if you enjoy steak, then it is much easier for you to accept the studies which conclude eating cholesterol and saturated fat do not raise cholesterol levels in the blood. On the other hand, if you are a vegetarian, then you may look for the methodological shortcomings in such studies that can be used to discount their conclusions.

Moreover, physicians just like anyone else, are more likely to remember rare events. Many of us know someone who has won the lottery or hit the jackpot on their last trip to Vegas. Likewise, “a practicing breast surgeon might more easily recall a single heartrending example of a young patient who died of advanced breast cancer and who had failed to receive a screening mammogram, compared to hundreds of patients who did fine without mammography,” Ubel and Asch wrote.

Physicians may also incorrectly infer causality from correlated events. The authors of the study pointed to former New York Mayor Rudy Giuliani as a prime example of this; Giuliani credited a PSA-based screening with discovering a tumor and saving his life, “even though it is impossible to know whether Giuliani would have died of cancer if the tumor had not been discovered so early or might even have been better off without the test,” they noted.

The last reason for the reluctance of physicians and patients to give up the unnecessary tests, they argued, arises from the so-called “endowment effect.” In other words, “when things are taken away,” wrote Ubel and Asch, “people tend to place an even greater value on them than they would have otherwise.” The authors argued that patients gradually develop a sense of ownership over the medical tests and procedures that they received and thus “are largely convinced that screening tests have saved more lives, and at less harm, than a cautious view of the science would justify.”

To overcome the resistance to de-innovation, the authors first have recommended the task force’s guideline development committees be made up of medical experts from a wide variety of domains with different clinical expertise so that they can cancel out each other’s conformation bias.

(To read the rest of this article, please visit U.S. News and World Report.)

 

Posted in Health Policy | Tagged

Hookup or Hookah?

I have two teenage boys. So of course I’m worried about them skipping the dating scene and engaging in “hookups.” That seems to be what kids do these days. But now, do I also have to worry about them engaging in hookah?

Dave Chokshi (@davechokshi) recently tweeted an image of trends in tobacco use among students. It shows a significant increase in the use of the e-cigarettes and hookahs. Here’s that picture:

Hookup or Hookah

I showed it to my sons, and they laughed. “No one uses E cigarettes or hookahs,” they told me. “They just smoke pot.”

Phew!

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More Like a Sludge Than a Nudge

Every once in a while, I post a picture of an effort to nudge people into better behavior. Sometimes, I post pictures of pretty horrendous nudges. In response to one of those posts, Lydia Ashton sent me this picture, of an absolutely, horrendously and horrifically designed “nudge.”

More Like a Sludge Than a NudgeFortunately, I have determined that if you stare at this for several hours, although you don’t understand the graphic any better than you did at the beginning, a strange calm will come over you, although that may just be the herniation of your brain as it pushes through your medulla oblongata in an effort to get away from the picture.

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Bundling Hospital Pay Without Bungling Patient Care

Bundling Hospital Pay Without Bungling Patient Care Pic

Photo Credit: nwadealpiggy.com

Paying someone to mow your lawn is a pretty straightforward affair. Ryan the lawn guy will look at the lawn size and maybe the hilliness of your yard and you’ll settle on a price for mowing and trimming it. When you decide to contract for Ryan’s services on a more regular basis, payment might get a little more complicated. If you pay Ryan every time he mows your lawn he might mow it more often than necessary. But that problem is easily addressed by paying him a fee to take care of your lawn for the entire growing season.

Paying a hospital to care for someone who had a stroke is not so straightforward. Imagine you are an insurance company and you decide to pay the hospital for each day the patient is in residence. With that kind of payment scheme the hospital visit might drag on indefinitely. Indeed several decades ago insurance companies in the United States primarily reimbursed hospitals on a “per diem” basis, cool kid lingo for per day. Incentivized by this reimbursement scheme, the length of stay in American hospitals was often surprisingly long for even relatively mild conditions. Think of the parallel to lawn care: pay per mowing and you can expect lots of mowings!

Healthcare payers have developed several methods to overcome this per diem/per mowing problem. I will explain these methods shortly, but first the bottom line. Figuring out how to pay for hospital care is a hell of a lot more complicated than figuring out how to pay your lawn service.

To combat the unintended consequences of per diem payment coverage, Medicare switched to per diagnosis payments in the 80s, and the insurance companies followed shortly thereafter. Under this DRG program, a hospital taking care of a patient with a severe stroke would receive appropriate payment for that diagnosis, while a hospital taking care of someone with mild pneumonia would receive a smaller payment appropriate for the typical costs of paying for that condition. Following the implementation of this type of prospective payment, length of stay in American hospitals plummeted. In response, much of medical care was shifted to post-acute care, to rehabilitation hospitals, for instance, for stroke patients, or to outpatient clinics for people with pneumonia. These non-hospital services were not covered by the diagnosis-based DRG payments, so healthcare providers had little incentive to practice parsimoniously once their patients left the hospital.

Enter bundled payments. In 2013, the Center for Medicare and Medicaid Services, henceforth CMS, launched its Bundled Payments for Care Improvement Initiatives, henceforth BPCI (in case your life needs more acronyms). In the BPCI, CMS identified 48 clinical conditions that qualify for bundled payments, meaning participating healthcare providers would receive payments designed to cover not only hospital care for the condition in question, but money to pay for all healthcare related services they receive for the next 30 days. Unsurprisingly, not all hospitals are eager to join this program. For starters, the hospitals have to be financially integrated with post hospital providers. If patients receiving stroke care at Our Lady of Acute Care Hospital receive post-acute care from a hodgepodge of rehabilitation facilities, many of which have no connection to the hospital, then coordinating payments will be a disaster. (To read the rest of this article, please visit Forbes.)

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What Happens When We Penalize Hospitals For Harming Patients?

Photo Credit: darkgovernment.com

Photo Credit: darkgovernment.com

I recently had surgery to relieve an impingement of my left hip. I suffered a complication of the procedure in the hospital where I received the surgery performed follow-up care to treat the complication. As I lay on the table receiving that second treatment I wondered – okay, I mainly wondered “are they really going to stick a needle there?!,” – but I also asked myself “how strange is it that when patients experience complications, hospitals are rewarded with money to perform additional procedures?”

Since 2008, Medicare has been denying payment to hospitals to treatments they provide as a result of preventable complications. For example, when patients are immobilized from illness or disability, they sometimes develop pressure ulcers – their skin breaks down where the weight of their body meets the bed or wheelchair. Pressure ulcers are a big deal. A red spot on a patient’s backside can quickly turn into a sore, then into an ever expanding mass of tissue damage and infection. Christopher Reeve, the actor paralyzed after a horseback riding injury, died from complications of a pressure ulcer.

Pressure ulcers can almost always be avoided by appropriate nursing care. If patients are turned regularly with appropriate bedding and wheelchairs, no single spot will take the brunt of their weight 24 hours a day, and therefore no pressure ulcers will develop. In recognition of the preventability of pressure ulcers, Medicare no longer reimburses hospitals for the services they provide to treat such problems. The same goes for catheter associated urinary tract infections, which I’ve written about before, as well as catheter associated blood stream infections and injurious patient falls.

Medicare’s non-reimbursement strategy makes a great deal of sense. At a minimum, it will save the program money. But will the program have additional benefits? Specifically, now that hospitals are no longer financially rewarded for causing these complications, will this reduce the incidence of these avoidable events? (To read the rest of this article, please visit Forbes.)

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Cost of Treating Hepatitis C Is Soaring

Here is a fascinating picture from the Wall Street Journal, showing how much Medicare has been spending on hepatitis C treatments lately. You can see that the cost is rising dramatically:

Cost of Hepatitus C Soaring

Keep in mind, however, that the new and expensive hepatitis C treatments currently on the market will dramatically reduce costs in the future, because they are curing people of this chronic disease, and therefore preventing liver failure and even liver transplantation. In other words –money well spent!

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The Question Isn’t Whether We Are Overdiagnosing Cancer, But How Much

The Question Isn’t Whether We Are Overdiagnosing Cancer But How MuchMedical experts now agree that as a result of aggressive screening programs, we have an epidemic of cancer overdiagnosis in the United States. With mammograms finding tiny cancers and PSA tests discovering unpalpable prostate cancers, we are now unearthing some cancers too early for our own good.

What do experts mean by “overdiagnosis,” you ask? First, overdiagnosis is not the same as a misdiagnosis. If a pathologist looks under a microscope and classifies a group of benign cells as being cancerous, that is a misdiagnosis. Such misdiagnoses are an important consequence of cancer screening, causing patients to experience unnecessary anxiety and to undergo unnecessary treatments. Because no pathologist is perfect, aggressive screening programs will, by definition, lead to increases in such misdiagnoses. But these misdiagnoses do not qualify as overdiagnoses, the way experts use the term.

Second, overdiagnosis is not the same as a false positive test result. When a mammogram reveals a suspicious shadow, or when a PSA test is elevated, physicians usually follow up with additional tests, often culminating in a biopsy of the suspected lesion. When that testing reveals that no cancer is present, the screening test (the mammogram or the PSA test) is said to have created a “false positive,” result. It sent out a false alarm. Once again, false alarms are an important side effect of cancer screening. And more aggressive screening programs (yearly mammograms rather than every other year, for example) will necessarily lead to an increase in false positive test results. By some estimates, women beginning annual mammograms at age 40 will face a 50% lifetime risk of a false positive test. In other words, this is a burden of screening that we need to keep in mind when deciding how aggressively to look for a cancer. But false positives are not the same thing as overdiagnoses.

So what does it mean to overdiagnose cancer?

According to cancer epidemiologist Ruth Etzioni: “Overdiagnosis occurs when screening detects a tumor that would not have presented clinically in the absence of screening.” For example, if a mammogram reveals a tiny breast cancer in a 103-year-old woman, a cancer that if left alone would not grow large enough to cause symptoms (much less death) for another decade, that mammogram would probably have overdiagnosed her cancer—if she had never had that mammogram, she would have lived the rest of her life (maybe to 104 or 107-years-old) blissfully unaware that a small breast cancer was growing inside her body.

The example of this hypothetical 103-year-old woman is obviously an extreme one, meant to illustrate what experts mean by overdiagnosis. But it makes one thing clear. Cancer overdiagnoses are cases of real and true cancer. In this hypothetical case, for example, the tumor in this woman’s breast really was malignant. The mammogram did not lead to a misdiagnosis or to a false alarm. Instead, the mammogram discovered a cancer that, while real, would not have ever influenced this woman’s life. In her case, in fact, the diagnosis of this cancer would only act to harm this woman, by causing anxiety and potentially by leading to harmful treatments. (To read the rest of this article, please visit Forbes.)

Posted in Medical Decision Making | Tagged , ,

Don’t Be Afraid to Team Up with Your Doctor about Healthcare Costs

Los Angeles TimesHere is a fine story in the Los Angeles Times written by about the importance of talking with your doctor about your out of pocket medical costs.

Despite high medical costs topping Americans’ list of financial concerns, many of us have a hard time telling our doctors that the care they’re prescribing may break the bank.

As part of a recent awareness campaign called “I Wish My Doctor Knew,” the online health social network Inspire asked patients and caregivers what medical concerns they wish doctors better understood.

In more than 700 responses, about 20% dealt with insurance coverage, disability insurance coverage paperwork, and out-of-pocket medical costs.

“What we see every day in our online community, and through this campaign, is that patients don’t discuss fully with their doctors the financial toll of [their] disease,” said John Novack, Inspire’s communications director. “Many patients seem reluctant to bring it up at all … yet it’s a very real hardship and it certainly affects their quality of life.”

Ellen Robin of Oceanside, Calif., can relate. The 59-year-old healthcare contract manager has a chronic condition that led to a heart attack six years ago.

Since then, she says, she has collected a cabinet full of prescription drugs worth thousands of dollars. She abandoned most after her doctor told her to stop them — either because they didn’t work or caused unbearable side effects.

“Every time I get a prescription, I pay my co-pay of $30 or more,” she says. After a week or two, many times she’d have a bad reaction and her doctor would advise her to just stop taking it. “It’s a waste.”

Still, letting her doctor know didn’t come easy. “I do have anxiety about talking money with him,” Robin says.

She’s not alone. The financial strain of medical expenses is a tough conversation for many patients to initiate — despite the fact that high costs prevent millions of people from getting needed care.

A report by Families USA, a Washington healthcare advocacy organization, found that just over 1 in 4 adults with private insurance policies last year went without needed medical care because they could not afford tests, treatments, follow-up care and drugs.

One of the biggest causes of “not taking the medicines their doctor prescribed — or getting the tests their doctor ordered — is that patients can’t afford it,” says Duke University professor Dr. Peter Ubel.

“This deserves priority in the doctor-patient encounter,” Ubel says.

Experts offer a few recommendations for broaching the subject of money with your doctors.

(To read the rest of this article, please visit the Los Angeles Times.)

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These Americans Are Rich – Should We Celebrate?

Expensive medicineAmerican manufacturing has declined precipitously in the past few decades. Companies that were once the source of fabulous wealth for Americans – the U.S. Steel profits that enriched the Carnegie family, the Ford Motor F -1.29% Company profits that enriched its eponymous family – are now struggling to keep up with foreign competitors.

Thank God for American pharmaceutical companies, which are a rare source of wealth in United States. The CEO of Eli Lilly , John Lechleiter, made $11.2 million in take-home pay in 2013. That was dwarfed by the $18.1 million pay package of Richard Gonzalez of AbbVie ABBV +0.24%, which still couldn’t compete with the $20.5 million that Miles White made running AbbVie’s former parent company, Abbott. And Pharma isn’t just a source of hefty c-suite income. Senior chemists at pharmaceutical companies bring in a median salary of $76,000 while senior biostatisticians make around $135,000. Drive through beautiful suburban neighborhoods in Jersey, Indianapolis, and Raleigh-Durham, and you are witnessing the benefits of this thriving industry.

I’m really glad the American pharmaceutical industry is a success. So why did a recent conversation I had with a retired pharmaceutical executive end with him storming away after proclaiming: “I’m sure glad you’re not a member of Congress!”?

Let me explain. (To read the rest of this article, please visit Forbes.)

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