Debate Rages Over Obamacare, Medical Costs

msn moneyWhen Dr. Jeffrey Rice needed to schedule outpatient foot surgery for his son three years ago, he called the recommended facility to find out what it would cost. The estimate was so high — $15,000 to $25,000 — that Rice asked the surgeon for a second option. The cost for the same one-hour procedure at an outpatient surgery center in a slightly more convenient location: $1,500.
Rice’s experience isn’t an anomaly. Costs for identical medical procedures can vary by thousands of dollars from clinic to clinic, city to city and state to state, according to federal data and other sources.
With the next phase of the Affordable Care Act kicking in Oct. 1, when individuals can begin enrolling in state-run health exchanges, debate rages over whether health care reform will do anything to rectify such pricing disparities or help lower costs.
The 2010 law, widely known as Obamacare, is meant to address the availability and cost of health insurance, not necessarily the cost of specific services. Still, supporters believe that because it paves the way for universal health care coverage, the resulting larger pool of insured patients should lower costs in the long run… (Read more and view comments here)

Warning to Orthopedic Hospitals: Your Fees Are No Match for Reference Pricing

articifical knee
Until recently, hospitals in California had little reason to reduce the fees they charged for procedures like knee and hip replacement. Insurance companies might come their way, trying hard to bargain down their rates. But the hospitals knew that if enough of them said “no” to these lower fees, insurance companies would be left with very small provider networks, and would therefore have a hard time attracting customers.
But that changed in 2011, when the California Public Employees’ Retirement System (CalPERS) adopted a program of “reference pricing,” a policy that wasrecently shown to reduce the price of these procedures by more than 25%.
Here is how the program worked. California public employees were told they could use any hospital, and any orthopedic surgeon, they wanted to, but with the understanding that their insurance would cover only $30,000 of hospital expenses for their hip or knee replacement procedures. So if a patient chose a hospital that charged $40,000 for such a procedure, that patient would be financially responsible for that extra $10,000. The results of this program were dramatic… (Read more and view comments at Forbes)

State Mandates Online Health Care Price

nc hieThe hospital price transparency bill that was signed into effect on August 21 has elicited criticism from the Duke health community.
House Bill 834 mandates that hospitals and medical care agencies in North Carolina—including Duke University Medical Center—provide pricing information on 140 of the most common health care procedures to the Department of Health and Human Services. The DHHS will require information from hospitals on the exact pricing of the 100 most common in-patient treatments, 20 surgical procedures and 20 imaging services. The information will be made available to the public online.
The bill is intended to protect patients’ rights and help them make informed financial decisions regarding health care treatments, according to a press release from Gov. Pat McCrory’s office. Before the law passed, for example, hospitals could file a lien on a patient’s residence in order to collect unpaid medical bills in some situations, but now the practice is banned… (Read more here)

Surgery Prices Online?

oklahoma-surgery-pricingThe Surgery Center of Oklahoma’s decision to publicly post prices for common procedures could prompt other hospitals and medical facilities to follow suit.

Want to know how much it will cost to repair your torn Achilles tendon? At the Surgery Center of Oklahoma, you won’t run into a wall of bureaucracy trying to find out: The price for that procedure ($5,730) and other common surgeries is posted online.
The surgery center is at the forefront of what many observers say is the beginning of a sea change in the health care industry: telling patients up-front how much their operation or treatment will cost.
Consumers will insist on knowing the costs of medical procedures as they pay more out of pocket for their health care and as the Affordable Care Act, or Obamacare, requires all individuals to carry some minimum health insurance or pay a tax, experts say.
“There will be incredible demand and outcry from consumers if they don’t receive this transparency in pricing,” Dr. Keith Smith, co-founder of the Surgery Center of Oklahoma, told MSN News.
“I think you’re going to see websites pop up like Priceline where you enter your ZIP code and enter your desired procedure.”
“There are an increasing number of patients with high-deductible plans and those patients are going to ask questions before they will go to some of these places,” said Dr. Peter Ubel, a professor of public policy at Duke University…. (Read more here)

Procedures and Prices: Both Contribute to Health Care Spending Increases

For very good reason, there has been lots of attention on healthcare prices in the United States lately. We spend more on healthcare in this country than anywhere else in the world, and we also charge higher prices for the healthcare we offer. Physicians in the United States make much more than their counterparts elsewhere in the world. Pharmaceutical companies know that the US market is where they are going to make a good share of their profits, because they can’t charge the same high prices elsewhere that they do in the United States.
But keep in mind: we spend more on health care from year to year not just because of high prices, but also because we provide more healthcare services to more people. The relative contribution of prices and procedures is nicely summarized in this figure, reproduced from an article in the Annals of Internal Medicine:

If we want to get healthcare costs under control, we can’t focus on price alone.
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Should We Care About Hospital Prices?

have been writing quite a bit about healthcare price transparency lately. And so have a lot of other people. Many of us have been pointing to insane variation in how much hospitals charge for their services. Walk across the street, and you might see the price of a routine healthcare service rise two or threefold.
But of course what hospitals say they charge for services, and what theyreceive for those services, are usually very different things. And these data, posted a while ago on the Washington Post website, perfectly illustrate that issue:

The column on the left represents a hospital in Miami which charges substantially more for its services than a neighboring hospital, only several blocks away. A near doubling of the cost of caring for a heart attack, for example. Just the kind of price disparity that makes people angry. And yet it’s the hospital on the right that receives more money, on average, for each of these services.
What is going on here? …(Read more and view comments at Forbes)


Expanding the Role of Non-Physicians in Primary Care

I’m back to blogging again, and thought I’d return to a topic I have blogged about recently: expanding the role of non-physicians in primary care. A very talented journalist in North Carolina, Jason deBruyn, wrote a nice piece which I am indenting below, laying out some of the controversies.

Debate settles in on costs versus quality of care
Jason deBruyn
Staff Writer- Triangle Business Journal
Email  | Twitter
RALEIGH – Health care economists largely agree that expanding the role of nurse practitioners in primary care would likely decrease overall health care costs.
But it could also reduce the level of care that patients receive because nurse practitioners do not go through the same lengthy schooling and residency training as do medical doctors.
As the nation continues to search for ways to reduce health care spending, considering the cost-benefit of costs vs. level of care becomes a factor in the equation.
Physicians argue that their time in medical school and residency better prepare them to catch a rare case if they notice something unusual about a patient. That might be true, but the overwhelming majority of primary care visits are for patients with diabetes, high blood pressure, or other relatively routine issues. For a vast majority of these cases, nurse practitioners are equipped and trained to provide the proper care.
Dr. Peter Ubel, a medical doctor, behavioral scientist and a professor of public policy at Duke University, says the same debate can be kicked up a food chain one level. Thyroid specialists, for example, would be better equipped than primary care physicians to catch a rare or specific thyroid illness, but for the majority of patients, primary care physicians can properly diagnose a patient and refer her or him to a specialist if needed – and do it at a lower cost.
By presenting to primary care physicians, instead of more expensive specialists, patients receive care that is good enough but at less cost. Nurse practitioners make that same argument one step down, saying they can provide care that is good enough and refer to doctors and specialists as needed.
“For many primary care visits, you don’t need four years of medical school and three years of residency,” Ubel says. “We could save a lot of money with very little medical harm.”
Many states have reduced regulations on nurse practitioners, allowing them to fill in primary care gaps. There is no published study that analyzes health outcomes in states with strict nurse regulations against states with looser nurse regulations, partly because eliminating all other variables is nearly impossible.
Looking purely at the economics, however, reveals probable savings. By using Texas as a model, Ray Perryman, nationally known economist and CEO of the Waco, Texas-based Perryman Group, estimates immediate savings of $16 billion in the health care market by greater use of nurse practitioners and other advanced practice nurses.
Elsewhere, a group led by Robin Newhouse, a registered nurse and chairwoman of the Organizational Systems and Adult Health at the University of Maryland School of Nursing, found consistent evidence that cost-related outcomes such as length of stay, emergency visits, and hospitalizations for nurse practitioner care are equivalent to those of physicians.
Cost-effectiveness starts with academic preparation. With less schooling and residency training, the American Association of Colleges of Nursing has long estimated that the preparation costs for nurse practitioners are between 20 percent and 25 percent that of physicians. In 2009, for example, the total tuition cost for nurse practitioner preparation was less than the cost of one-year tuition for medical preparation, according to the association.
Similarly, the association reports lower salaries for nurse practitioners. Using data from the American Medical Group Association, total compensation for primary care physicians ranged from $208,658 for a family physician to $219,500 for internal medicine. By contrast, the average full-time salary for nurse practitioners across all types of practice was $97,345, according to AANP.
Especially as more people begin buying health insurance next year under the Affordable Care Act, gaps in primary care could grow larger. Physician shortages, particularly in the field of primary care and in rural areas, have been widely predicted for two years now.
“The economic pressures are growing so much that we are at a stage that we are more willing to expand the role of nurse practitioners and advance practice nurses,” says Ubel. “(For primary care,) it’s better to see a nurse practitioner next week, than wait three or four weeks to see a primary care physician.”

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Will Obamacare Reduce the Crazy Variation in Hospital Prices?

If you have been paying attention to US healthcare policy debates lately, you know that hospitals have a price problem. Walk across the street from one hospital to a competitor hospital, and you could easily find yourself facing a $30,000 increase in your medical bills. At one extreme for instance recent information shows that replacing your hip with a surgical implant might cost anywhere from $5000 to more than $200,000, depending upon which hospital you go to for your procedure.
The good news is this: Obamacare will largely eliminate these price variations, by increasing the proportion of Americans with health insurance, thereby leading our insurance providers to negotiate more reasonable prices from hospitals.
Not sure that anything good can come out of Obamacare? Let’s look a bit more closely at the recent hoo-hah about hospital pricing… (Read more and view comments at Forbes)

Hospital Pricing Insanity

Once again, lots of reports in the news about crazy variation in hospital prices in the United States, with thousands or tens of thousands of dollars difference in the price of services from one hospital to its neighbor across the street. Marketplace did a nice report on this issue recently, including an interview with yours truly. I thought you might like checking it out.