Relevant and even prescient commentary on news, politics and the economy.

Pentagon to Tap Leftover Military Pay Funding

“The Pentagon is planning to tap $1 billion in leftover funds from military pay and pension accounts to help President Donald Trump pay for his long-sought border wall, a top Senate Democrat said Thursday.

Sen. Dick Durbin, D-IL ‘It’s coming out of military pay and pensions. $1 billion. That’s the plan.

The funds are available because Army recruitment is down and a voluntary early military retirement program is being underutilized.’

The development comes as Pentagon officials are seeking to minimize the amount of wall money that would come from military construction projects that are so cherished by lawmakers.

‘Imagine the Democrats making that proposal — that for whatever our project is, we’re going to cut military pay and pensions.'”

Gee, did anyone ever think of tossing this into the VHA funding since the VA now has to pay for the Choice program which Trump said he will not fund.

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Again, Healthcare Cost Drivers Pharma, Doctors, and Hospitals

This should come as no surprise as I have written on the topic of Healthcare Costs and Its Drivers before. In particular, the overriding statistic from an earlier post was 50% of the increase in healthcare costs was due solely to price increases between 1996 and 2013 (JAMA, Factors Associated With . . . . Adjusting for inflation, “annual health care spending on inpatient, ambulatory, retail pharmaceutical, nursing facility, emergency department, and dental care increased from $1.2 trillion to $2.1 trillion or $933.5 billion between 1996 and 2013.” This was broken down into 5 fundamental factors contributing to rising healthcare costs.

– Increased US population size was associated with a 23.1% increase or $269.5 billion

– An aging population was associated with an 11.6% increase or $135.7 billion
– Changes in disease prevalence or incidence (inpatient, outpatient, ED) resulted in spending reductions of 2.4% or $28.2 billion
– Changes in service utilization (inpatient, dental) were not associated with a statistically significant change in spending
– Changes in service price and intensity were associated with a 50.0% increase or $583.5 billion.

Five fundamental factors (Population size, Population aging, Disease prevalence or incidence, Service Utilization, and Service Pricing) were collectively associated with a $933.5 billion increase in annual US health care spending between 1996 through 2013. Represented pictorially, stated objectively, and categorized numerically, I can not make it any more obvious.

Some Explanation

The change in disease prevalence or incidence was associated with a spending reduction of 2.4%, or $28.2 billion while the change in service utilization did not result in a statistically significant change in spending. Said another way, these two factors had little or no impact on the rising cost of healthcare.

The increased healthcare costs from 1996 to 2013 were largely related to Healthcare Service Price and Intensity and secondarily impacted by Population Growth and Population Aging in order of impact. The bar chart reflects all of the impact in changes.

So the aging tsunami of baby boomers has not hit yet and population growth has not greatly impacted the results of this study. In patient stays at hospitals are down as well as out patient use of facilities. The big issue is the change in pricing for inpatient hospital stays and pharmaceuticals. Hospital/clinic consolidations leads to the former even though insurance has been fighting for a reduction in stays. Pharmaceutical has instituted new pricing strategies which we have all read about in the news. Old drugs such as Humalog, Viovo, and the infamous Epipens as well as others are now more expensive. This study points to pricing for pharma and service as the issues.

An example?

There is a tendency to challenge the lifestyle practices of people who indulge in too much. One factor did come out in the increased cost of healthcare. The increase in annual diabetes spending between 1996 and 2013 was $64.4 billion of which $44.4 billion of this increase was pharmaceutical spending. Said another way, two-thirds of the increase in treating diabetes was due simply to the increased pricing of pharmaceutical companies.

And yes, there should be time spent on changing habits where it can be changed and providing the means to do so. However, in 1996 Eli Lilly’s Humalog was $21 per vial. By 2017, the price increased to $275 (700%) for a vial which equates to a one-month supply.

Why has the cost of Humalog increased? “The truth is the improvements in new formularies of old versions which are marginally different, and the clinical benefits of them over the older drugs have been zero.” Just like slapping “new and improved” on the labels of food products with a change of ingredients (which qualifies under USDA and FDA labeling regs)., pharmaceuticals can play the same game and they do.

As the article (“Eli Lilly Raised U.S. Prices Of Diabetes Drug 700 Percent Over 20 Years”) explains, “most patients do not pay the full cost/price of a drug up front and absorb their portion of the cost via an increase in monthly healthcare premiums.” This leads to pharmaceutical companies charging as much as the U.S. insurance companies will let them. Both parties profiting from increased prices. Perhaps Alex Azar the Secretary of Healthcare can explain it better as he was an officer of Eli Lilly when Humalog began its ascend?

Another Study via Health Affairs

A shorter time period extending one year longer than the Jama study, the Health Affairs study supports what is being said in the JAMA study. According to data from the Henry J. Kaiser Family Foundation, total health spending on the privately insured in the United States increased in real terms by nearly 20 percent from 2007 to 2014.

A more recent study funded by the Commonwealth Fund and published by Health Affairs examined other costs impacting healthcare. Commonwealth Fund supported researchers recently analyzed hospital and physician prices for inpatient and hospital-based outpatient services as well as for four high-volume services: cesarean section, vaginal delivery, hospital-based outpatient colonoscopy, and knee replacement. Its findings were as follows:

– From 2007 to 2014, hospital-prices for inpatient care grew 42 percent compared to 18 percent for physician-prices for inpatient hospital care
– For hospital-based outpatient care, hospital-prices rose 25 percent compared to 6 percent for physician-prices
– There was no difference in results between hospitals directly employing physicians and indirectly employing physicians
– Hospital prices accounted for over 60 percent of the total price of hospital-based care.
– Hospital prices accounted for most of the cost of the four high-volume services included in the study. The hospital component ranged from 61 percent for vaginal deliveries to 84 percent for knee replacements.

Sound familiar? The JAMA study looked at both in and out patient costs/prices associated with hospital services and said they were up. The Health Affairs study looks at in patient services for four high volume inpatient services stating they have increased significantly from 2007 to 2014.

What the Health Affairs study Showed

The Health Affairs study also presents a comparison of hospital pricing growth rates as compared to physician pricing growth rates. The study is only a few weeks old and I am surprised I am able to access as much information as I have. While Health Affairs admits the study is a start and more work differentiating other aspects must be done, the study suggests there are significant growth in the bargaining leverage of hospitals as compared to physicians.

If you recall Rusty “Tom” and I engaged in a number of different conversations on healthcare with one of them being hospital consolidations (2013). It is a power grab, as Rusty pointed out, for more market segment and pricing control with those having name-recognition gaining the most. Maggie Mahar also referenced the same issue.

In my own commentary On the Horizon After Obamacare (2014): As it stands and even with its faults, the ACA is a viable solution to many of the issues faced by the uninsured and under-insured; but in itself, it only addresses the delivery-half of the healthcare problem. The other half of the problem rests with the industry delivering the healthcare and the control of pricing through the inherent monopolistic power coming and pushing the industry into greater integration of delivery. As Longman and Hewitt posit,

“the message from Department of Health and Human Services stresses the vast savings possible through a less ‘fragmented and integrated’ health care delivery system. With this vision in mind, HHS officials have been encouraging health care providers to merge into so-called accountable care organizations, or ACOs”; “while on the other side of the Mall, ‘pronouncements from the FTC are about the need to counter the record numbers of hospitals and doctors’ practices merging and using their resulting monopoly power to drive up prices.”

Two different messages from government, greater efficiencies in healthcare through consolidations as ACOs versus monopolistic pricing control in healthcare by large hospital and pharmaceutical corporations an unintended result. There is large amounts of inefficiencies, waste, and rent-taking in healthcare as well as in Medicare which is touted as the go-to by politicians and advocates of it. Lets not make a similar mistake, the creation of any forthcoming healthcare system must first address the costs of healthcare and then the delivery of it not ignoring the quality of the product and its outcome after treatment. Again Maggie Mahar was big on promoting this result emanating from any new system.

While Physician fees grew at a compounded annual rate of 6% for baby deliveries and 1% for office visits between 2003 and 2010, hospitals fees during a similar period grew at 17%.

A measurement of the competitiveness of a hospital within a certain area of the country is done utilizing the Herfindahl-Hirschman Index (HHI). It has been used to measure competition in and around cities. The results of the HHI revealed an increase in the concentration of hospitals from mergers and acquisitions, going from moderately concentrated in 1990 with an HHI numeric of 1570, to more concentrated in 2009 with a HHI of 2500, and with some cities purely monopolistic at 10,000.

Rigorous action by the FTC would certainly go a long way in improving compositeness; however, the FTC has been purposely understaffed by cutting its funding. In place at the FTC is a staff 22 lawyers and economists to monitor a $3 trillion healthcare industry. It is too understaffed to take on such a large industry which would overwhelm it with legalese and paper. Maybe in the next election will bring forth the right person to take on healthcare.

Resources

Hospital Prices Grew Substantially Faster Than Physician Prices For Hospital-Based Care In 2007–14, Zack Cooper, Stuart Craig, Martin Gaynor, Nir J. Harish, Harlan M. Krumholz, and John Van Reenen, HealthAffairs, February 2019

Hospital Care Prices Rose Faster Than the Cost of Physician Services, Zack Cooper, February, 2019

After Obamacare Phillip Longman and Paul S. Hewitt, Washington Monthly, January – February 2014

by run75441 (Bill H)

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The Ethics of Clinical Trials

(Dan here…lifted from Robert’s Stochastic Thoughts)

The Ethics of Clinical Trials

In a clinical trial the therapy is decided by a pseudo random number generator. How can this be ethical ? People are treated differently for no reason related to different interests different values and priorities or even different merit (assuming merit can differ).There is a utilitarian rational for clinical trials. Through such trials doctors learn, and that knowledge is useful to future patients. But this rationale is utterly rejected as ethically unacceptable, because it was used to justify depraved experiments.

I think the current discussion of the ethics of clinical trials is based on a mixture which is partly consequentialist and partly deontological, and that it is incoherent, because people feel the need to claim it is totally both, while the two are inevitably in conflict.

So it is asserted that physicians must act in the interest of the patient – each and every patient. It is also argued that clinical trials are morally acceptable. This does not make sense.

 

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Healthcare News

Massachusetts ACA Enrollment Exceeds Last Year, Charles Gaba, ACA Signups Blog

Massachusetts: (January 14, 2018) saw an increased 285,000 signups for healthcare for 2019 which is up 6.6% YOY and with 9 days left until the ACA signup deadline. This comes even though Republicans and Trump have been sabotaging the ACA. Even more impressive, 97.2% (90% National Average) of enrollees have paid their 1st month fees.

Republicans and Trump Implement the CSR again, Ban Silver Loading, and then Kill the CSR in 2021, Andrew Sprung, xpostfactoid blog

The Trump administration has called for an appropriation to fund CSR the old way — by reimbursing insurers directly for providing it. This comes after President Trump revoked the CSR subsidy used to help pay for deductibles, copayments, and coinsurance. When the CSR was revoked, ACA companies loaded the costs solely into the Silver plans in which they were used and resulted in Bronze and Gold plans to become less costly. Income-based ACA premium subsidies are based on a silver benchmark and silver loading generated major discounts in bronze and gold plans.

“For the first half of 2018: 16% percent of enrollees were enrolled in a plan with zero premiums after application of advance payments of the premium tax credit, 19 percent of enrollees paid a premium of less than 5 percent of the total plan premium.” This is largely the result of Silver plan loading, which created $0 premium bronze plans widely available and less costly gold plans which doubled in enrollments in 2018. There was also an increased enrollment of approximately 300,000 enrollees in 2018 with the likelihood of a 2-3 million boost in subsequent years.

So what is the issue? CMS released the annual Notice of Benefit and Payment Parameters (NBPP) January 17th. In its efforts to kill the ACA, CMS is calling for an elimination of Silver loading in 2021. Given the lowered cost of various plans resulting from Silver loading, Democrats should not be willing to sacrifice the silver loading windfall without trading it for a less haphazard boost to marketplace funding.

As xpostfactoid blog suggests, perhaps a cap on premiums as a percentage of income for all enrollees up to 600% FPL and improved subsidies for the 200 – 400%FPL.

Healthcare Job Growth Outpaces Nearly Every Sector in 2018, MedPage Today, John Commins

For 2018, healthcare created a total of 346,000 jobs or nearly 29,000 new jobs each month which is up from 284,000 jobs created in 2017. The 2018 figure includes 219,000 new jobs in ambulatory services and 107,000 new hospital jobs.
Healthcare job growth outpaced nearly every other major sector of the economy in 2018, including food services (261,000), construction (280,000), manufacturing (284,000), and retail sales (92,000).

The new data is in line with Bureau of Labor Statistics projections that healthcare sector employment will grow 18% from 2016 to 2026, much faster than the average for all occupations, adding about 2.4 million new jobs.

The VA’s Choice Program Meant to Eventually Replace the VA Gave Companies Billions and Vets Longer Waits, Isaac Arnsdorf & Jon Greenberg, Politifact

As a short-term response to a crisis, the VA paid contractors at least $295 every time it authorized private care for a veteran. The fee was high because the VA hurriedly launched the Choice Program to meet a ninety-day deadline from Congress in response to an Arizona VA facility not responding quick enough to veteran’s needs for healthcare and resulting in deaths.

Four years later, the fee never subsided — it went up to as much as $318 per referral.

Since 2014, 1.9 million former service members have received private medical care through Choice. It was supposed to give veterans a way around long wait times in the VA or travel long distances to be seen. But their average waits using the Choice Program were still longer than allowed by law, according to examinations by the VA inspector general and the Government Accountability Office. The watchdogs also found widespread blunders, such as booking a veteran in Idaho with a doctor in New York and telling a Florida veteran to see a specialist in California. Once, the VA referred a veteran to the Choice Program to see a urologist, but instead he got an appointment with a neurologist.

While it was true officials at the Phoenix VA were covering up long wait times, the inspector general eventually concluded that no deaths were attributable to the delays. However, critics seized on this scandal to demand that veterans get access to private medical care. As a safety valve for veterans, the Choice program is an alternative provided the quality of outcomes is there. My own experience with the VA has not been bad nor did my appointments take months. On the other hand, there are times I end up at clinics or the ED when I can not see my PCD.

An IG of the Choice program found the VA overpaid by $140 million besides other issues with the program.

Access to VA Health Services Now Better Than Private Hospitals? Nicole Lou, MedPage Today

Researchers find some wait times generally improved since 2014.

In 2014, the average wait for a new VA appointment in primary care, dermatology, cardiology, or orthopedics was 22.5 days, compared with 18.7 days in private sector facilities (P=0.20). Although these wait times were statistically no different in general, there was a longer wait for an orthopedics appointment in the VA that year (23.9 days vs 9.9 days for private sector.

The study, published in JAMA Network Open, found that wait times in 2017 favored VA medical centers (17.7 days vs 29.8 days for private sector facilities). This was observed for primary care, dermatology, and cardiology appointments — but not orthopedics, which continued to produce appointment lags in the VA system (20.9 days vs 12.4 days), the authors stated.

As resources in the VA are increasingly diverted to purchase care in the community, it remains to be seen if access to healthcare services can be maintained while access in the private sector continues to deteriorate, adding that virtual care may be one way to improve access given the non-infinite supply of face-to-face appointments.”

Fee-for-Service Must Go Says Ex-Vermont Governor Howard Dean, Joyce Frieden, MedPage Today

Dean, an internist and former Democratic governor of Vermont: “Under the current system, you only make money if people get really sick. Every financial incentive we have in American healthcare is to spend as much as we possibly can.

“We’re not getting paid for keeping people healthy in our system. I don’t believe that doctors think it’s a wonderful idea to have people get sick. But incentives work in every system … and monetary incentives always work in human beings. If you keep the incentive system the way it is, you have a distorted system that works against good health.”

As for universal care in the U.S., I’m not necessarily opposed to Medicare for All, but the problem is it’s a fee-for-service system so we’d have to fix that. The only way you can really save money is with capitated care.”

by run75441 (Bill H)

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The Ethics of Clinical Trials

In a clinical trial the therapy is decided by a pseudo random number generator. How can this be ethical ? People are treated differently for no reason related to different interests different values and priorities or even different merit (assuming merit can differ).

There is a utilitarian rational for clinical trials. Through such trials doctors learn, and that knowledge is useful to future patients. But this rationale is utterly rejected as ethically unacceptable, because it was used to justify depraved experiments.

I think the current discussion of the ethics of clinical trials is based on a mixture which is partly consequentialist and partly deontological, and that it is incoherent, because people feel the need to claim it is totally both, while the two are inevitably in conflict.

So it is asserted that physicians must act in the interest of the patient – each and every patient. It is also argued that clinical trials are morally acceptable. This does not make sense.

It is only possible if the expected welfare of the patients is identical under the two treatments over which one randomizes. Any difference, no matter how tiny, in expected welfare would compel the use of only the current standard therapy, or of only the new experimental therapy.

I think the failed effort to avoid this is to reject the concept of expected welfare. It is argued that it is OK to do one or the other because one does not know which is better for the patient.

It would be OK if one were to say all probabilities must be rounded to 0, 1 or 0.5 so we don’t know means each is exactly equally likely. However, this approach would make life strange and brief. In particular it would rule out general anesthesia for any procedure not necessary to save a life. The chance of death is very low but demonstrably not zero. Don’t operate unless you would operate with a 50% chance of killing the patient would rule out almost all surgery. We must make choices under uncertainty and can’t pretend that all uncertainty is the same and survive for long.

Consider 2 examples:

1. There are 2 treatments, and, with best estimates, with treatment A the probability that the patient lives is 50% and with treatment B the probability is 30%.

2. There are 2 treatments, and, with best estimates, with treatment C the probability that the patient lives is 50% and with treatment D the probability is 30%.

According to current medical ethics, one must provide treatment A not treatment B but one may chose treatment D or treatment C. This always is based on the assertion that the interests of the patient is all that matters. Yet I have assumed that, for the patient, the two pairs of choices are identical. This can’t make sense.

In the first case there is an unobservable difference between patients of type 1 or type 2 where if they are type 2, then treatment A kills them on the spot. 10% of people are of type 2 (as learned from decades of painful experience). If someone is of type 1, their chance of surviving with treatment A is 5/9. In contrast with treatment B all have a 30% chance of living. With decades of painful experience it is known with essentially complete certainty that the probabilities are 50% and 30%.

In the second case, there aren’t two types, but the evidence on treatment C is preliminary based on a small (phase II) trial. The fraction who survived in the trial was 50% but the 95% confidence interval is 20% to 80%. The null that the true chance is 30% is not rejected at standard confidence intervals. By standard reasoning it is time for a phase III trial with randomization.

In each case, we know that giving A not B might cause a patient to die who would otherwise live and our best estimate of the probabilities of survival are higher with A than with B and higher with C than with D.

I think the difference is that one learns something by randomizing and giving half of the patients D and that this outweighs the expected deaths due to the randomization.

I think it is possible to believe people have a right to care, and also conduct randomized trials, if one says there must be a standard of care, and all people have right to that. That one may deviate if the weight of evidence suggests that an experimental therapy is better, but that such deviation is a matter of utilitarian total expected welfare maximization not individual rights which trump average interests.

But it is not easy or comfortable to believe this, so I think that doctors have decided to rely on statistics but reject the very concept of probability. The logical inconsistency might cause some discomfort. It would cause more if the concept of probability weren’t so utterly alien to normal human thought. But in any case the tension between believing in rights and believing those rights don’t always trump utilitarian calculations clearly causes more discomfort.

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The Price of Naltrexone

In The New York Times Abby Goodnough wrote
” she got a Vivitrol (naltrexone) shot but it was so expensive — her co-payment was $600 — that she never got another” !!!

This is insane. Naltrexone is an opioid antagonist. It prevents opioids from causing a high (and relieving pain and suppressing coughing and breathing). In no way is it conceivably a drug of abuse. But opioid addicts who wish to cut off all effects of opioids have to pay for their Naltrexone.

Also (as explained in the excellent article) some of the same people who oppose the use of methadone and buprenorphine oppose naltrexone too. I have never understood their logic. I am sure it is based on a moralistic belief that there are no simple easy solutions. It isn’t even “no pain no gain” as cold turkey withdrawal while using naltexone is just as horrible as any other cold turkey withdrawal. Pointless speculation after the jummp.

But for now two practical proposals. Everyone who wants naltrexone for any reason should be given naltrexone (given no co-pay). I think this is obvious. Now somehow a drug which has been around practically forever is expensive, but the cost of paying off the pharmaceutical company whatever they demand for such a program (which will be great for them) is trivial compared to the costs of the opioid epidemic.

I should have provided a link to the Wiki on Naltrexone. Note the cost (retail) of oral Naltrexone is $0.74 a day — providing one a day to every addict and anyone who wanted to pretend to be an addict would cost hundreds of millions a year. This is a completely insignificant sum for the US government, so it should be done immediately. Delayed release Naltrexone is expensive (prescribing it with a $600 copay is bad practice of medicine). Here a technological improvement has made it possible for doctors to give the patients a better, but expensive option, which they don’t take.

I also have an impractical proposal that Naltrexone should be available over the counter — it can’t be abused and the reported side effects are the reported symptoms of being a person. However, I know this proposal is impractical.

My second practical proposal is phased drug assisted therapy. I think it should be
1) whatever you want for a week provided you don’t want a lethal dose (you want heroin — here’s your heorin)
2) second week whatever you want provided you take your methadone under our supervision. All the heroin you want will be none (it doesn’t do anything for someone full of methadone).
3) third week, 50% methadone 50% buprenorphine.
4) fourth week buprenorhine
5) fifth week 50% buprenorphine 50% naltrexone
6) 6th week through death do us part naltrexone.

Why not ?

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ACA Enrollment for 2019 Followup

To add to Robert Waldman’s post on ACA enrollment, here is the chart as taken from Andrew Sprung’s Blog (Expostfactoid) on the ACA. This is data Charles Gaba had gathered and Andrew rearranged. Note non-expansion Medicaid states did better than expansion states in enrollment.

Why is that true? The states marked in yellow on the left are expansion states.

Without getting into the data and explaining Andrew’s findings, it is interesting the difference in each state experienced from application of carrots (generously subsidized health plans) and sticks (the individual mandate) on ACA marketplace enrollment.

1. The relative enrollment resilience in non-expansion states points toward the power of really affordable comprehensive insurance.
2. The steep enrollment drop in expansion states perhaps shows the impact of mandate repeal.
3. The superior performance of SBEs (State Based Exchanges) indicates that active insurance market oversight, investment in outreach and enrollment assistance, and a governmental will to make the marketplace work has a significant impact.

Findings:

Twelve states running their own exchanges have all expanded Medicaid. Enrollment in those states is likely to remain flat this year and will outperform the HealthCare.gov states the same as in 2017 and 2018. Impressive given the lack of the 100-138% FPL income strata. Idaho just expanded its plan and has underperformed to date. The enrollment gap between State and Federal Exchanges (SBE vs. FFE) points to the importance of enrollment assistance and outreach. CMS decreased time and funding FFE states. State Based Exchanges have advertising, outreach budgets, and mostly continued the effort. They were not blindsided by Trump and the CMS,

As I read some more, I will expand this farther. Just back from Christmas holiday and catching up.

by run75441 (Bill H)

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The High Cost of End-of-Life Healthcare – Myth?

American Journal of Public Health: “The Myth Regarding the High Cost of End-of-Life Care” December 2015, Melissa D. Aldridge, PhD, MBA and Amy S. Kelley, MD, MSHS

There has been a lot of talk and presentation on End of Life care and its high costs. “The Myth Regarding the High Cost of End of Life Care” reviews those costs and expands the topic beyond End of Life to all the population with chronic conditions and functional limitations.

FIGURE 1
Estimated overlap between the population with the highest health care costs and the population at the end of life (United States, 2011). Source. Total population and health care costs were obtained from 2011 Medical Expenditure Panel Survey data and adjusted to include the nursing home population. The distribution of total costs for the end-of-life population was estimated from Health and Retirement Study data linked to Medicare claims data, adjusted to include non-Medicare payers, and adjusted to 2011 dollars utilizing BLS Consumer Price Index.

US population distribution of health care expenditures exhibits a significant “tail” (fat tail) segment of the population with extremely high costs. The study identified 18.2 million individuals in the top 5% of total annual health care spending. These individuals incurred average annual health care expenditures of $17,500 or more per person and accounted for $976 billion in health care costs overall. Of these estimated 18.2 million individuals (5% of the population) who generated the highest annual costs, only 11% of the population (2 million individuals) are in the last year of life (Figure 1). Longitudinal analyses of spending reveal the population of 18.2 million with the highest annual health care costs can be divided into 3 broad illness trajectories:

– Individuals who have high health care costs because it is their last year of life (population at the end of life),

– Individuals who experience a significant health event during a given year but who return to stable health (population with a discrete high-cost event), and

– Individuals who persistently generate high annual health care costs owing to chronic conditions, functional limitations, or other conditions. These individuals are not in the last year of life and live for several years generating high health care expenses (population with persistent high costs).

TABLE 1
Melissa Aldridge and Amy Kelley: The identification of the appropriate target population for high-quality, cost-saving interventions is critical given the substantial variation in the size of different target populations, the costs generated by different populations, and the proportion of the target population likely to be affected by a specific intervention. Using data regarding the population with chronic conditions and functional limitations and the studies author’s estimates with respect to the population at the end of life, a hypothetical intervention and 3 potential target populations can be determined: individuals with chronic conditions and functional limitations, older adults with chronic conditions and functional limitations, and individuals at the end of life. The authors assuming the percentage of the target population affected by the intervention is 50% and the potential reduction in costs is 10%, a comparison between-intervention cost savings can be made.

Putting to rest a meme; Many proposals to reduce health care costs in the United States target the high cost of end-of-life care. Yet at the population level, the cost of caring for individuals in their last year of life accounts for only 13% of total annual health care spending. Many believe or expect the majority of decedents in the highest cost group are in the last year of life; however, the majority of individuals in the group are not in their last year of life. Specifically, there is approximately 11% of the individuals in the highest cost group in the last year of life. Efforts to improve the quality of care for this group of 2 million are warranted; however, expecting such interventions to those in the last year of life to have a large impact on overall health care costs is misguided. Not only is this group small, but the window of time for a significant impact on costs is limited by the patients’ life expectancy.

If healthcare was to target those with chronic illness and functional limitations, the impact is 4 to 5 times greater than targeting those at end of life illness (Table 1).

Reference: American Journal of Public Health: “The Myth Regarding the High Cost of End-of-Life Care” December 2015, Melissa D. Aldridge, PhD, MBA and Amy S. Kelley, MD, MSHS

by run75441 (Bill H)

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Heads Up on Out of Network ER Doctors, etc. in 2019

Last December 2017, Envision Healthcare Corporation paid an approximate $30 million to settle allegations for subsidiary EmCare doctors getting bonus payments for admitting patients to hospitals when it was not necessary.

History:

A subsidiary of Envision, EmCare is a provider of physician services to emergency departments, inpatient services for hospitals, acute care surgery, trauma and general surgery, women’s and children’s services, radiology / teleradiology programs and anesthesiology services. If you have ever been hospitalized, Radiology is one service which always seems to have someone other than the hospital billing you. One study of billing practices of 194 hospitals in which EmCare handled billing and was out-of-network; the average out-of-network billing rate was 62% higher than the national average of 26%. When EmCare’s billing was compared to that of a competitor TeamHealth, the latter’s billing in other hospitals was less and there was a smaller increase in out-of-network service billing.

If you remember a while back, Rusty and I would discuss the ongoing consolidation of hospitals, clinics, and pharmacies. The reasoning behind the consolidation was to have enough market clout when negotiating with insurance and Medicare. Having a larger presence and being able to set pricing nationally and regionally is a big factor in the rising cost of healthcare.

Envision is the biggest player in staffing ERs and Anesthesiology departments with 6% of the $41 billion emergency department and hospital-based physician staffing and 7% of the $20 billion anesthesiologist staffing. Two-thirds of all Emergency Departments (ED) do some type of outsourcing even if it is short term.

Present:

United Healthcare insurance is pitted against Envision’s practice of over pricing for it’s 25,000 emergency doctors, anesthesiologists and other hospital-based clinicians charge to patients and pass through. The disagreement over pricing and how it is paid for by insurance as billed by 3rd party providers will spill over into patients being billed more frequently for higher prices not accepted by insurance.

UnitedHealthcare’s 27 million privately insured patients could face expensive and unexpected doctor bills as of 2019 if Envision doctors become out-of-network for United Healthcare. According to the research group NORC at the University of Chicago more than half of Americans have received an unexpected medical bill. In another study by economists from the Federal Trade Commission in 2017, 1 in 5 emergency-room admissions resulted in a surprise out-of-network bill.

While the ACA increased the numbers of people insured, approximately 20% of people have problems paying medical bills largely because healthcare is still rising faster than most other costs and income. One source of increased costs has been the billing from out-of-network doctors billing patients utilizing in-network facilities such as hospital Emergency Departments. NEJM recently published a Yale Study by Zack Cooper, Ph.D., and Fiona Scott Morton, Ph.D. (Out-of-Network Emergency-Physician Bills — An Unwelcome Surprise) reported on the increased occurrence of surprise-billing for out-of-network services.

Patients typically do not choose to use out-of-networks doctors or facilities. They will choose an in-network facility and expect an in-network doctor(s) to care for them. Healthcare insurance expects its buyers to use in-network services or pay a penalty for not doing so. When one arrives at an in-network Emergency Department, they expect to be cared for by an in-network doctor. I have yet to hear a doctor on duty offering up he or she is not employed by the hospital but instead by a third party. The patient is not aware of in-network or out-of-network issues until they get the bill. The market place is not working for the customer and the doctor still gets the business regardless of the price and there is no competition from other facilities or in negotiated pricing due to having insurance. The third party employer knows this issue as well as the hospital. The only fool in the room is the patient waiting to be cared for and be used. Insurance will pay a portion of the cost or negotiate with the hospital for a price. The third party company employing the doctor may yet charge the patient for the balance of the costs associated with the doctor and at a higher percentage than normal. The uncovered and unexpected higher cost is the rub.

The authors of the Yale study analyzed the claim’s data of a large commercial insurance company insuring tens of millions of people, focusing on ED visits for people under 65 years of age, occurring between January 2014 and September 2015, and at hospitals registered with the American Hospital Association. They chose hospitals with over 500 ED visits and identified the Hospital Referral Region (HRR). Utilizing the breakdown criteria yielded “more than 2.2 million ED visits Broken in 294 of the 306 HRRs, covering all 50 states, and capturing more than $7 billion in spending.” The map of the United States (above) is a pictorial representation of the data.

Summarizing their finding and estimating cost impact, Yale: “of the 99.35% of ED visits occurring at in-network facilities, 22% involved out-of-network physicians. The greater than 1 in five ratio (22%) masks a significant geographic variation in surprise-billing occurrence to patients among HRRs. 89% and 62% of surprise-billing rates occur in McAllen, Texas and St. Petersburg, Florida as compared to Boulder, Colorado and South Bend, Indiana with the surprise-billing rate there near zero.”

Envision questions the validity of the study and blames United Healthcare for not paying the billing and claiming insurance is the problem. Insurance coverage is a problem; but, it is not of the same magnitude when one starts to look at the increase in costs of $1 trillion from 1996 to 2013 of which 50% was due solely to price increases.

Additional Costs?:

And yes there are “potential” extra costs for patients who are treated by an out-of-network ER physician or any out-of-network service. In one hospital I was in, Radiology was out of network as well as one surgeon. Both negotiated a rate with United Healthcare. Then too, this was written into the ESI policy. I had no choice in doing in-network as I came through the ER each time and was too ill to decide and/or go to another hospital.

In a Kaiser/New York Times Survey: Among the insured with problem medical bills, a quarter (26%) said they received unexpected claim denials and about a third (32%) say they received care from an out-of-network provider that their insurance wouldn’t cover. The out-of-network charges were a surprise for a large majority: 69 percent were unaware that the provider was not in their plan’s network when they received the care.

The same NEJM/Yale study which had looked ay frequency of surprise Out-of-Network Emergency-Physician Bills also looked at the costs of the bill and what was left over for patients to pay. On average, in-network emergency-physician claims were paid at 297% of Medicare rates. For reference in the Yale study, the authors used other medical disciplines as a benchmark. Orthopedists are paid at 178.6% of Medicare rates for knee replacements and internists are paid at 158.5% of Medicare rates for routine office visits. The Yale study showed out of-network emergency physicians charged an average of 798% of Medicare rates resulting in a calculated, potential, and additional cost for patients. The difference between the out-of-network emergency physician charge and 297% of the Medicare rate for the same services in the patient’s location could be billed for an average balance of $622.55 (unless their insurer paid the difference). It is also important to note that the potential balance bills can be extremely high; the maximum potential balance bill faced by a patient included in our data set was $19,603.

The suggested solution from the study was for states to require hospitals to sell a bundled ED care package that includes both facility and professional fees. In practice, that would mean that the hospital would negotiate prices for physician services with insurers and then apply these negotiated rates for certain designated specialties. The hospital would then be the buyer of physician services and the seller of combined physician and facility services. If physicians considered the hospital’s payment rates too low, they could choose to work at another hospital.

The hospital, doctors, and the insurance companies would compete for the best package to service the patients utilizing them. In the end, this is a stopgap measure until healthcare costs can be brought under control in a better manner.

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Increase in Uninsured Children

I get the alerts from Georgetown University Center for Children and Families weekly. The news much of the time is a reflection of the number of attacks on families and children who have lesser means to provide for healthcare themselves and depend upon Medicaid, ACA, and CHIPS for care. Since the election of Trump, McConnell and Ryan have been strutting around like the cocks on the walk demonstrating their machismo as they hold women, children and families hostage. Tough guys both and it is easy to threaten women and children.

For the first time in a decade, the number of uninsured children rose in the US. It is not much of a surprise to me as Republicans made it miserable for many in states which did not expand Medicaid, held CHIPS hostage, and threatened those applied to become citizens with denial if they used the nation’s healthcare.

Some Stats:

The Georgetown University Center for Children and Families:

– An estimated 276,000 more children were uninsured in 2017 than in 2016
– Three-quarters of the children who lost coverage between 2016 and 2017 live in non-expansion Medicaid coverage states for parents and low-income adults. The uninsured rates for children increased at almost triple the rate in non-expansion states compared to Medicaid expansion states.
– Nine states experienced statistically significant increases in their rate of uninsured children (SD, UT, TX, GA, SC, FL, OH, TN, MA).
– Texas is #1 again. Texas has the largest share of children without health coverage with more than one in five uninsured children in the U.S. residing in the state.
– States with larger American Indian/ Alaska Native populations tend to have higher uninsured rates for children than the national average.

Some History:

The funding for CHIP expired September 2017 and Republicans and Trump were playing cat and mouse with Democrats to extend it while they looked for ways to repeal the ACA or weaken it. As Joan Aker the Executive Director of the Center for Children and Families stated;

“The majority of uninsured children are already eligible for Medicaid or CHIP but are not currently enrolled. The name of the game here is to make sure that families are aware that their child has a path to coverage and that these kids get enrolled and stay enrolled.”

2017 was tumultuous for families dependent on Medicaid, CHIPs, and the ACA. Added to this was Trump’s hostility towards immigrant families. 25% of the children living in the United States have a parent who is an immigrant. For “mixed status” families, the fear of interacting with the government deters them from enrolling their children in government sponsored health coverage.

Conclusion:

Again, Joan Akers of the Center for Children and Families: “The nation is going backwards on insuring kids and it is likely to get worse.”

If we can get the Democrats in the House off their butt and start to represent “their constituents” as determined by the founding fathers who designed the House to represent the population, we may be able to put in place the foundation for future healthcare gains. Instead, we have the House Representatives playing the secret ballot game for House Speaker with a promise of a Dean Wormer double-secret ballot come January.

Under Trump, Number Of Uninsured Kids Rose For First Time This Decade

by run75441 (Bill H)

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