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Everything you always wanted to know about the Health Care system. But were afraid to ask.
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Why the Affordable Part Didn’t Work

Tue, 12/06/2016 - 01:27

On March 23, 2010, Congress passed the “Patient Protection and Affordable Care Act”. It soon became known as the “Affordable Care Act aka ACA” before being labeled “Obamacare”.

Its aims were two: to reduce costs and cover everyone. In the 79 months since passage, it remains arguably the most divisive public policy platform since FDR’s New Deal in the ‘30s and Lyndon Johnson’s Great Society in the 60s. Per Kaiser Family Foundation’s Tracking polls since its passage, the public’s view about the ACA remains split: half think it’s an overreach by the federal government that has resulted in sky-rocketing health insurance premiums across the board, and the other half believe expansion of insurance coverage for 25 million justifies the effort. Each side cherry-picks elements of the law they like and decry parts they despise.

But all concede the law has not addressed affordability as originally intended. News about insurance premium spikes, has dogged the ACA since its passage lending to critics’ conclusions that the law was fundamentally flawed and had to go.

In 2009, I facilitated several meetings for the White House Office of Health Reform seeking industry input into reform legislation.

The context and timing were key: since 2000, health spending had increased 6% annually. At least 15% of employers had dropped employer sponsored health insurance coverage and the rest were searching for ways to cut costs. The ranks of the uninsured had swelled to 60 million, or 16% of the population. Their costs were being absorbed in the mark-ups being paid by employers and individuals with coverage—a hidden tax.

To slow the health cost spiral, the strategy was simple: by insuring more Americans, medical problems could be addressed sooner before they become acute and expensive. Through government regulation, competition between health insurers would spark innovative ways to coordinate care and reduce costs. Mandates for employers and individuals to purchase coverage aimed to maintain the private insurance market and spread actuarial risks from the newly insured. And Medicare would use its muscle to change incentives for providers—doctors, hospitals and post-acute providers—from piece-work to outcomes and cost savings. Thus, the hidden tax would disappear over time and annual health cost increases would slow down. That was the plan. The rub: how to make sure insurance premiums were affordable so the uninsured would buy coverage and those already insured would not drop there’s. The context for affordable care became affordable insurance coverage as the health exchanges began their second enrollment cycle in October, 2014 and premiums for year one plans increased double digits.

Think tanks left and right and the Society of Actuaries grappled with how to define affordability deciding that if a premium exceeded 9.5% of an individual’s income, it was unaffordable. That would trigger a penalty for the employer and allow the individual to buy insurance in their state insurance exchange. (it’s 9.66% this year).

The rest is history: the ranks of the uninsured dropped to 10%. Access to health insurance went up but premiums went up faster for everyone. The marketplaces faltered and spikes in insurance premiums have been problematic. Health insurers, hit with a new excise tax and strict limitations on plan design with guaranteed issue, simply added these costs to already escalating drug costs, medical inflation and increased utilization by the aging population. They raised their premiums or in some cases stopped selling policies in markets or segments that were unprofitable. Perfectly legal and understandable. And thus, affordability began to slip away.

Forecasts are for aggregate health spending to increase 5% annually for the next decade. That means affordability will become a bigger issue in our health system. Academics say health costs that are 2% or more above our GDP are destabilizing to our entire economy: in the next 2-3 years, our GDP is not expected to grow more than 3% annually so you do the math. And as the ACA’s replacement debate next month pits budget hawks against team-Trump promises to leave Medicare alone, something’s gotta give. The CBO forecasts that repeal of the ACA will increase the federal budget deficit $137 billion between next year and 2025—a relatively small number considering annual deficits have ranged from $439 billion to 687 billion annually since 2012. But given GOP control of both chambers of Congress and growing concern about national debt, it’s likely there will be pressure to cut funding to Medicare as a means of slowing the deficit surge.

So where do we stand on the affordability issue? Economists and academics ponder the concept in virtually every sector of society. Affordable housing, affordable tuition, affordable transportation et al are common in our lexicon. The Business Dictionary defines affordability as “costs relative to the amount that the purchaser is able to pay.” The Society of Actuaries adds “affordability adds the avoidance of undesirable or unreasonable sacrifices” in their equation. 

I pay $2.13 for my morning Starbucks because I can afford it.  It’s not a sacrifice for me, but it could be for others. As I travel through areas of town where incomes are lower than others, the absence of Starbucks locations in some neighborhoods is noticeable. It’s because Starbucks chooses sites more accessible to patrons who can afford their brews. They have no third-party payers, PBMs, GPOs, heavy regulations or mandates that every person buy or use their products. That’s the coffee market.

The healthcare market is more complicated. Every person uses the health system. Most pay something but some don’t. Our costs are not readily apparent nor directly related to our prices and charges. And insurance premiums are only about part of health costs. Out of pocket expenses, lost time at work, and the myriad of “do it yourself” therapies compound the question of affordability.

So, as we replace the ACA, affordability needs fresh attention. Consider:

1-Healthcare affordability is a household issue: For those with access to employer sponsored insurance, wages have not kept up with their health insurance premium increases and employers have shifted the cost burden their way via high deductible plans and coverage restrictions (the average deductible for those with employer sponsored insurance is now $1221–quite alarming when juxtaposed with Federal Reserve’s data showing 47% of households are unable to handle a $400 emergency health bill). Medicare has increased its premiums in lock step and everyone is paying more for drugs. The result:  Medical costs are eating up more of the household’s budget (14% of discretionary spending) hitting lower and middle income households hardest. Healthcare ranks right behind transportation and food costs, and above education in household economics (Bureau of Labor Statistics) and is dinner table talk in the majority of households.

2-Prominent health reform policy proposals will heighten attention to affordability: Newly named HHS Secretary-nominee Tom Price favors elimination of tax subsidies to help defray insurance costs for those newly covered. House Majority Leader Paul Ryan favors shifting Medicare from a defined benefit to a defined contribution plan. President Trump has said he wants insurers to cover anyone regardless of pre-existing condition and states to play a larger role in managing Medicaid.  There’s no clarity about the trio’s predisposition toward the myriad of value-based payment programs that seek to change provider incentives from volume to value spending but implementation of MACRA and sequestration cuts are assumed to continue. Therefore, issue of affordability will be discussed by legislators in the context of federal spending and national debt. In companies, it will be discussed in terms of coverage for employees and increased insurance premiums. And at the dinner table, how to afford coverage which carries high deductibles and limited access to the hospitals and doctors preferred. 

3-Hospitals will bear an inordinate share of the affordability pressure: Health insurers serve those that pay their premiums. Drug and device manufacturers sell products to their customers and focus on their needs. Physicians may limit access to their practices. Out of a sense of purpose or mission, individuals and organizations among these often contribute time and resources to those facing affordability challenges. But hospitals, regardless of their ownership or size, are required by law to serve everyone, whether they can pay or not. They can’t dodge the affordability bullet.

The growing challenge of healthcare affordability means increased financial pressure for hospitals. Unlike Starbucks, their doors are open to everyone whether they can afford to pay anything or not.

Given renewed attention to health reform as the ACA is replaced, perhaps a starting point should be a fresh look at affordability-how it’s defined, how it impacts key stakeholders, and how it can be addressed equitably and responsibly. 


P.S. Last week, the 21st Century Cures Act passed the House offering ways to expedite drug approvals, expand mental health services and facilitate state efforts to reduce opioid abuse. As the 114th Congress winds down, expansion of telehealth via the ECHO Act is advancing and, by this Friday, passage of a continuing resolution to keep the federal government funded is likely. While the Trump team is rounding out its key appointments and nominations and legislative leaders prepare for the 115th Congress, healthcare reform and affordability are certain to be priorities. Stay tuned.




Categories: OIG Advisory Opinions

Letter from Washington: Don’t Jump … Yet

Mon, 12/05/2016 - 07:42

Washington, D.C. hardly seems like a town on suicide watch.

As November turned to December, from the venerable Old Ebbitt Grill near the White House, to Charlie Palmer Steak at 101 Constitution and over to The Capital Grille at 601 Pennsylvania, revelers abounded, in both food and drink.

At the Capitol Hyatt on New Jersey Avenue though, some contrasts were evident. While contestants from the Miss World 2016 pageant moved in and out of the upper lobby to awaiting buses, in the lower-level meeting rooms, also from November 30 to December 2, the mood was hopeful optimism meets whistling past the graveyard.

There the Jefferson College of Population Health summit brought forth Andy Slavitt, Michael Leavitt, Farzad Mostashari, NCQA President Peggy O’Kane, former advisors from the George W. Bush and Obama administrations, officials from Johns Hopkins, the Henry Ford Health System, Brookings, Deloitte, AMA, AHA and the American College of Physicians and many more to dissect MACRA and ponder “population health strategy under the new administration.”

The consensus on where value-based care (VBC) is heading?

Wait and see.

The predictions? The Cadillac tax will go the way of the DeSoto. Medicare Advantage payment models will increase. The overriding attention on ACA insurance will back-burner VBC changes buffered also by MACRA. Track1+ will itself be the savior of MACRA. And looming large is whether Medicare will become a voucher or premium support model.

Voices of hope and optimism, sometimes bordering on defensiveness, could be heard, all as the bipartisan 21st Century Cures bill moved toward law a few blocks away.

Mandatory bundled payments will be killed. Wait a minute; bundled payments have returned nearly 3% to the Medicare Trust Fund, versus .02% by ACOs. Tom Daschle, like Tom Price, was once a shoe-in as secretary of HHS. VBC pilots preceded CMMI. Value preceded ACA. Well, most federal payment models will just be renamed or rebranded, beginning with the term physician.

Former HHS Secretary Michael Leavitt sought calm. “CMMI will be challenged, but the analytics it provides are important to maintain … we need to find the balance between provider readiness and the speed to change between providers and payers … the GOP is not in lockstep … the bottom line is we don’t know.”

As a prelude to his standing ovation, outgoing CMS Administrator Andy Slavitt called for the continuation of lifetime limits, coverage for pre-existing conditions and those up to age 26 be maintained on parental policies.

PTAC to the rescue

Given much attention at the conference was a so-far overlooked element of the MACRA law, the establishment of the Physician-Focused Payment Model Technical Advisory Committee (PTAC).

Amid speculation that the new regime at HHS will, again, decry mandatory bundled payments, shrink MACRA, lay siege to EHRs (which took its lumps from many quarters) and roll back the movement to VBC or quality reporting payment models seen as onerous to physician workflow, PTAC was seen as a potential fresh start.

Its mandate is to assess and put forth new physician-focused payment models, done by a committee of 11 already appointed by the GAO; a committee that includes six MDs. Already nine letter-of-intent proposals have been submitted, and PTAC is to refer winning payment model proposals to, yes, the new secretary of HHS by the spring of 2017.

These new payment models can be APMs, A-APMs, bundled payments; you name it. The criteria for them includes the use of health information technology, risk-level flexibility, value over volume, integrated care coordination and cost-quality metrics.

Physician Heal Thy Future

In the end, Bob Margolis, MD, Duke-Margolis Center for Health Policy, took a more direct position. Physicians should take the debate out of Washington and into their own hands, and realize a future without a government single payer with price controls and salaried doctors.

How? Establish their own care plans around predictive modeling and population analytics. Consider a global capitated population health approach stratifying patients into appropriate treatment plans. Realize that EHRs are not tools for analytics and that BI tools are needed on top. And then, assessing risk-based payment models can be a holistic approach. He reminded the attendees that PCPs and their aligned specialists control 85% of the healthcare spend. In Washington, D.C., that’s called power.

Outside on the newsstands, Washingtonian magazine featured a wistful cover shot of the Obamas for its December issue, headlined “How They Changed Our City.”

Past nightfall, as visitors gathered around one side of the White House to view the Christmas tree, scaffolding was being erected on the other for the upcoming inauguration.

What’s clear throughout the town is that while pockets of the country fume, Washington, D.C. is ready to take change in stride again.

Greg Fulton is industry & public policy lead for Philips Wellcentive

Categories: OIG Advisory Opinions

A Policy Agenda to Address New Unintended Adverse Consequences of EHRs

Sun, 12/04/2016 - 07:58

In large part due to the $35 billion, Health Information Technology for Economic and Clinical Health (HITECH) Act incentives more than 80% of acute care hospitals now use EHRs, from under 10% just 7 years ago. Despite considerable progress, we have not achieved all that was originally envisioned from this transformation and there have been numerous unexpected adverse consequences (UACs), i.e. unpredictable, emergent problems associated with health IT implementation, use and maintenance. In 2006, we described a set of UACs associated with use of computer-based provider order entry (CPOE) (see Table 1).  Many of these originally identified UACs have not been completely addressed or alleviated, and some have evolved over time (e.g., more/new work, overdependence on technology, and workflow issues).  Additionally, new UACs not just related to CPOE but to all aspects of EHR use have emerged over the last decade.  We describe six new categories of UACs in this blog and then conclude with three concrete policy recommendations to achieve the promised, transformative effects of health IT. 

1. Complete clinical information unavailable at the point of care

Adoption of EHRs was supposed to stimulate a tremendous increase in availability of patients’ clinical data, anytime, anywhere. This ubiquitous increase in data availability depended heavily on the assumption that once clinical data were routinely maintained in a computable format, they could seamlessly be transmitted, integrated, and displayed between health care systems’ EHRs, regardless of differences in the developer of the EHR. However, complete clinical information on all patients is not yet available everywhere it is needed.

2. Lack of innovations to improve system usability leads to frustrating user experiences

Although EHR usability has improved considerably since the days of hard-wired, keyboard-based, VT100 terminals connected to a mainframe computer (see figure 1), very little has changed since the current mouse-based, point and click, graphical user interfaces were introduced 15 years ago. 

Figure 1. A Digital Equipment Corporation (DEC) VT100 terminal. (from:

3. Inadvertent disclosure of large amounts of patient-specific information

Health care is increasingly a victim of a large number of patient privacy breaches. Some of these are the result of external bad actors trying to take advantage of the increased monetary value of personally-identifiable health-related data, such as the breach of over 78.8 million patient files at Anthem. Others are the result of health care organizations’ failure to take the necessary precautions to protect their systems.

4. Increased focus on computer-based quality measurement negatively affects clinical workflows and patient-provider interactions

The move from fee-for-service to pay-for-performance payment models in health care has given rise to more EHR-based clinical quality measurement. This push for quality measurement has necessitated an increased need for capturing complete, accurate, structured data that can easily be extracted, aggregated, and reported to administrators, quality oversight organizations, and payers – both public and private. These requirements for the entry of more structured data have resulted in increases in clinician work load.

5. Information overload from marginally useful computer-generated data

As the breadth and depth of computer usage to record, store, display, and transmit clinical and administrative information have increased, so has the amount of information that clinicians are required to review and act upon.  The capability for patients to generate, capture, and transmit information about various physiological (e.g., blood glucose, heart rate, or blood pressure) or physical (e.g., number of steps walked or hours slept) processes further exacerbates the amount of information potentially available to clinicians.

6. Decline in the Development and Use of Internally-developed EHRs

Over the last decade, the number of EHRs developed and maintained by academic researchers for their teaching facilities, or entrepreneurs for their small practices, has declined precipitously as large academic health centers increasingly adopted commercial EHRs and acquired small practices. Many of the previously developed innovations are not being translated to the new EHR products.   

Policy Recommendations

Each of the UACs identified above poses significant challenges to EHR developers and users and a new policy agenda is needed to mitigate these problems.

Fund Research Dedicated to Measurement of EHR-related Safety

Measurement is often considered an essential first step to improvement. Addressing the wide safety gaps in EHR usability, interoperability, information management, and data security requires valid and reliable measurements to help assess whether newly implemented features and functions are actually improving patient care. A new National Quality Forum (NQF) report provides guidance on how to measure the safety and safe use of health IT, prioritizes risk areas and builds a strong scientific foundation to advance measurement science in this area. However, without additional research and development, this measurement agenda will not move forward.  For example, the NQF recently endorsed a safety measure focused on wrong patient errors which was developed through a substantial amount of research and validation efforts before it was considered ready.  Few funding agencies however fund this type of research.  The budget for Agency for Healthcare Research and Quality (AHRQ) must be increased in order to do this and related safety work that will be needed to develop and test interventions once these measurements are widely adopted.

Develop Models for Better Collaboration between EHR Vendors and Academic Informaticians

Currently, there is little collaboration between academic informaticians who often evaluate and recommend improvements to the EHR and EHR vendors. To ensure progress, we need to develop new models of collaboration where a) EHR vendors address both problems and recommendations emerging from the work done by the academic informatics research community and b) EHR vendors inform the research community of new problems researchers should address.  Currently, many contractual barriers exist, which taken together make important research on usability, interoperability, and security difficult if not impossible. For example, many EHR vendors restrict sharing of screen shots of their systems, which has had the effect of stifling EHR usability testing and research. Recommendations on how to address some of these issues now need to be operationalized.

Create a National EHR Safety Center

As we have previously described in great detail, creation of a National EHR Safety Center is critical for the collection, investigation, and analysis of EHR-related errors. Without such a center, we will never know the true extent of what are currently perceived to be idiosyncratic EHR problems due to local configuration, implementation, or use. With access to more data, we may be able to identify commonalities in specific error-prone events, workflow processes, hardware configurations, or interactions between disparate clinical computing applications and begin to develop scalable solutions to address them.

The opportunities to leverage health IT to impact health and health care have never been greater.  While the health IT revolution has had a tremendous positive impact, new UACs have emerged. We must re-focus our efforts to address UACs and facilitate a safe, effective and efficient EHR infrastructure in order to do this. These policy recommendations are a start. 

<em>Dean Sittig is with the University of Texas Health Science Center at Houston, Adam Wright is with Harvard Medical School, Joan Ash is with Oregon Health & Science University, Hardeep Singh is with Baylor College of Medicine. </em>

Categories: OIG Advisory Opinions

Medicaid, Meet Indiana

Fri, 12/02/2016 - 09:38

We will soon have a Vice President and a head of CMS who hail from the great state of Indiana, and are proud of what they’ve done with Medicaid there through the Healthy Indiana Plan. Seema Verma, the proposed CMS Administrator, is credited with being the architect of Healthy Indiana, and Mike Pence, the Vice President-elect, presents Healthy Indiana as one of the signature achievements of his term as governor of that state.

It is too early to tell if the program will be enough to raise Indiana up the ranks on health and healthcare from the bottom quintile (1, 2). However, since Republicans have run the table with Congress, the White House and soon the Supreme Court, we can reasonably conclude that the future of Medicaid in America is going to look more like Indiana.

That doesn’t mean that income-based Medicaid eligibility will dramatically change. Pence was one of the few Republican governors who took advantage of the opportunity to expand Medicaid eligibility up to 138% of poverty, and President-elect Trump has promised, in his emphatic way, that people will not be denied healthcare coverage in his administration. Some Republicans in Congress have different ideas, however, and the outcome is not at all clear yet.

While eligibility levels and the overall level of federal support for program costs get worked out over the next few months, there appears to be more clarity on coming changes to the financial responsibilities between Medicaid and the people the program serves. One can sum up the core shift in a phrase: Medicaid recipients will take on greater responsibility for the cost of their care. This responsibility may take several forms: greater out-of-pocket expenses for care, the introduction of Medicaid premium payment obligations, or a requirement to work in order to receive Medicaid benefits.

The Design

The Healthy Indiana Plan has more serious carrots and sticks than traditional Medicaid, which had one very big carrot (sign up, get benefits) and almost no sticks. As the safety net insurance plan for those who are impoverished and/or who have behavioral or developmental issues, the standard idea was that even small access barriers like a $10 copay or monthly premium would lead to the avoidance of necessary care and would harm public health. Healthy Indiana took this standard view as a challenge: build a system that gives recipients more “skin in the game” and creates an ethic of accountability, while not creating a public health disaster.

It starts with a carrot: an enriched benefit program called HIP Plus, which includes benefits that traditional Medicaid in Indiana did not, such as vision and dental. Everyone eligible for Medicaid starts in HIP Plus, but they only get to stay there if they pay a monthly contribution of 2% of their income. So, someone earning $250 a month would pay $5 each month. That’s about the price of a pumpkin spice latte, but it is paid by someone who isn’t earning enough to (a) pay for an unsubsidized studio apartment in Indianapolis, (b) pay for the gas and insurance on a car, or (c) buy food, toiletries and clothing at market rates–let alone do all of these things together. Still, one can argue that compared to other expenses on such a tight budget, $5 for health insurance is a great deal, and a rational person would prioritize this above other things.

In most respects, this personal 2% contribution functions as a premium, though it is framed as a payment into a health savings account. And that’s because Medicaid in the Healthy Indiana program technically has been turned into a high deductible health plan, with a $2,500 deductible. Almost the entire $2,500 is funded in advance each year by the state, so primarily it is an artifact of accounting and an attempt to take advantage of the psychology of savings. The only part that isn’t paid by the state is the 2% income contribution. If someone earning $1,000 a month in HIP Plus gets care that costs $3,000 in a year, the person’s own contribution is $240 ($20 x 12), the state-funded HSA pays $2,260 ($2,500 – $240) and the Medicaid benefit pays $500 ($3,000 – $2,500). In short, this considerable amount of bookkeeping complexity results in $240 of real additional cost to the recipient, and for it they get enhanced benefits.

In addition, if money is left in the account at the end of the year, it rolls over and can pay for some or all of the personal contribution the following year. That means that the healthy could get enhanced benefits at no cost, while those less healthy would pay a monthly contribution. (Whether this is intended as an incentive not to get sick is unclear.)

Now for the big stick: If you miss enough of your monthly payments, there is a punishment. For those at or below the poverty line, the name of that punishment is HIP Basic. The HIP Basic high deductible is entirely funded by the state, making that part of the plan an accounting exercise. HIP Basic doesn’t have a premium (sorry, “contribution”) but it reduces coverage to only the essential health benefits required under the Affordable Care Act. Copayments are also added for pretty much every type of service and visit, ranging from $4 to $75. These differences may mean nothing to a healthy person, or an unhealthy one who avoids care, but for someone seeking treatment for medical or dental issues it could mean hundreds or even thousands of dollars in additional costs a year.

For those between 100% and 138% of poverty, the punishment for not paying the monthly contribution is to be cut off from Medicaid and be forced to go on the exchange for insurance, assuming there still is an exchange. At those income levels, it would be difficult or impossible to purchase insurance for as little as the HIP Plus contribution, and if you did, the out of pocket expenses would be larger, on the order of 6% to 40% of medical expenses depending on the type of plan purchased and whether cost-sharing subsidies are retained in 2017. In short, if you are in that income range and didn’t contribute for the HIP Plus Plan, you are very likely going uninsured.

Last but not least, Healthy Indiana includes a Gateway to Work program. Contrary to what some have suggested, it is voluntary rather than required to receive benefits. The program attempts to assess skills and refers participants to training programs and employment opportunities. The voluntary nature of the program was designed to comply with Obama administration hostility to restrictions deemed to create barriers to health care access under Medicaid.

What to Make of All This

In interpreting why Healthy Indiana is designed the way it is, it’s important to remember that it needed to be approved by a skeptical Obama administration that would look for reasons to reject it on the grounds that provisions to shift costs to recipients, or other requirements making it more onerous to receive coverage or care, were antithetical to the purpose of the Medicaid program. Ohio is an example of a state that didn’t know when to stop penalizing the poor for not paying in, and had its Medicaid waiver rejected. Healthy Indiana is to be commended in that sense, as a cleverly designed program that would maximize Republican reform priorities in a hostile regulatory environment. Consultant Verma has been an expert operator within the system, among the most adroit in the nation on the conservative side. In the new regulatory and legislative environment, future CMS Administrator Verma and others have much more flexibility to add teeth to personal responsibility requirements. Rather than pleasing the CMS approver, she will be the ultimate approver of waivers and state plan amendments, and the states will have to please her. Mandatory work requirements, less fully-funded HSAs, and higher premium contributions are all on the table. Today’s Healthy Indiana might actually look tame compared to other state programs four years from now.

So if that’s where we are going, what do we know about how well the personal responsibility incentives are going to work? Quite a lot, actually, because premium contributions, HSAs and out-of-pocket costs have been tried before in Medicaid. The results are not promising from a public health standpoint, though Verma has posted statistics in Health Affairs indicating that those who stay in HIP Plus are doing better on numerous measures of appropriate medical utilization than those in HIP Basic. Whether this is causation or correlation (and if causation, in which way it runs) remains to be seen.

The clearest outcome of responsibility requirements historically has been in saving the Medicaid program money by having fewer people enrolled, or by their avoidance of services. We know going all the way back to the RAND experiment 40 years ago that utilization does decrease as cost-sharing increases, but it does so across the board and not only for wasteful services. In Oregon, increasing copays and requiring a premium contribution in Medicaid had disastrous results, causing around a 75% drop out rate in 30 months. In the first year of Healthy Indiana 2.0, about 30% didn’t make their contributions and were demoted out of HIP Plus. A lighter touch has its own problems: In Arkansas, a CMS-approved plan for cost-sharing was cancelled when it was recognized that the administrative cost of collecting the small premiums outweighed the revenue from the premiums, and since people were not being kicked off the rolls for non-payment, no real incentive was created.

There are other reasons to be skeptical. Roughly half the cost of the Medicaid program is not for the income-eligible population, but for special populations like the mentally and physically disabled. These skin in the game reforms do not touch those costs. But most importantly, homo sapiens is not homo economicus. Unlike the Economics 101 view of the individual as a consumer with rational preferences whose satisfaction is maximized using all available information, real people are shortsighted, distracted, forgetful, don’t seek all available information, and are subject to emotional decisions that aren’t in their long term best interest. We can argue about whether a conservative or liberal approach is more insultingly paternalistic, or maternalistic, for those whose fortunes in life have brought them to Medicaid, but in the end if we don’t design a program for real people rather than ideological constructions, it will fail.

There Is an Alternative

There is a very large caveat to attach to all this speculation on the future of Medicaid. One of the pillars of Republican proposals on Medicaid reform is to implement block grants for the states. These are global budgets by another name, which liberal policy wonks sometimes pursue as means of cost control (nearly every nation with universal healthcare has already adopted global budgets of some kind). Part of the point of block grants to states, and similar proposals like Paul Ryan’s capitated approach to state funding, is to push the hard details for cost control and quality improvement to the states, along with the credit or blame that attaches to the efforts. Block grants outsource responsibility for the details to states, while the states outsource responsibility to managed care organizations (MCOs), and through value-based contracting MCOs outsource responsibility to providers. The buck can get passed a long way, but under a block grant approach the state is supposed to have control over its destiny. If Texas and Florida want to follow Indiana while New York and California do not, the block grant approach should be neutral and allow each to go their own way with minimal interference.

However, if that approach gains headway, then the responsibility-intensive approach of Indiana would not be the national standard but more of a red state template enacted in maybe 20-30 states instead of 50. Seeing this threat to the universal adoption of “skin in the game” for Medicaid, the Heritage Foundation and some other groups have argued that block grants should be coupled with more centralized requirements on cost-sharing. Block grants for Medicaid are also feared and loathed by liberals due to the belief that it is a Trojan horse to further impoverish the program relative to Medicare and commercial insurance, and the proposal will likely receive strong opposition unless funding levels can be set in a way that doesn’t damage states with richer benefits. But if block grants do pass, liberals and blue states like New York may find themselves in the worst of both worlds, contending with a fixed federal budget and tight federal management on how the dollars are spent. In the end, the conservative program for personal responsibility may be poised to win over the conservative principle of states’ rights. The battle lines are being drawn up, and the consequences of the outcome are huge.

Jonathan Halvorson edits the New Economy section for THCB and is a senior consultant with Sachs Policy Group. FD: As a consultant Jonathan works with startups, providers and health plans, advising clients on policy issues, strategic direction and related topics.

Categories: OIG Advisory Opinions

Keeping Medicare’s Promise

Thu, 12/01/2016 - 21:20

So, you decided to come to Washington to see what was new and how things might be changing… I am sure we did not disappoint.

I am honored to have been invited to address this summit, which I’m sure will be your first of many. It’s a certainty that making our delivery system work better for patients and spend money more wisely will always be in season no matter which party is in charge. And, while many new approaches and changes may come to bear, ultimately health is not a partisan issue.

However, I do hope you all think of a better name– the MACRA MIPS/APM summit sounds like the world’s hardest word scramble. We’ve tried to make MACRA more accessible by naming it the Quality Payment Program… something to think about.

Looking at your speakers today, you have gathered some of the most experienced people across the country focused on the most difficult health care problems we as a nation face. Simply put, how to complete the changes we have begun to make the system more patient centered and accountable. So today, I come here to add my perspective to this discussion and continue to ask for your valuable help.

You, as clinical and business leaders, represent an active and important voice in the delivery of health care for all Americans. As we make changes, you are part of the leadership who will be the first to know what is working and what is not. You will also be the best at articulating what you need from Washington. At CMS, we have worked hard over the last few years to transform from an opaque bureaucracy into an accessible service organization, getting us closest to making decisions based on where care is provided across the country.

I want to talk about the next evolution for our health care system. 

For nearly two years, I have had the incredible honor to serve at CMS and to oversee the Medicare, Medicaid, and Marketplace programs, which together provide health coverage to one in three Americans and likely pays for the majority of care that occurs in most health care communities across the nation.

There’s an old joke at CMS that if you find yourself in a tense conversation, you can usually diffuse it by saying, “Well, my mom is a Medicare beneficiary.” Inevitably, the other person will say, “Mine too.” And, from that shared sense of responsibility, you can go forward from the right place – one that is focused on figuring out what’s right for the beneficiaries we serve.

That is because Medicare is a uniquely American promise. One that – for more than a half-century – has said to all Americans that as you get older, or if you have a disability, you will be able to access care, and your family won’t go broke in the process. Before Medicare, do you know how many seniors in this country lived in poverty? One in three…. One in three. Today, it’s less than one in ten. Our promise to the millions of Americans –our neighbors — particularly when we are living on a low or fixed income– is part of what has made us who we are.

Medicare is what provides your parents’ health care and if we do our jobs right, one day, your children’s. Think of it. How we make decisions today will allow us and our children to one day put that Medicare card in our wallets to keep us secure.

So how are we doing to advance Medicare to keep its promise?

Since the passage of the ACA, over the last 8 years, together, we have made significant progress in cost and quality and in evolving to meet the new shape of health care.

  • Today, 30% of fee-for-service Medicare payments flow through alternative payment models, up from essentially none in 2010. And, millions more are covered through innovative Medicare Advantage programs.
  • Quality and safety have improved with the rate of hospital-acquired conditions declining by 17%, which has prevented an estimated 87,000 deaths over 4 years. The rate at which Medicare patients are readmitted to the hospital within 30 days after discharge has decreased sharply, resulting in 565,000 fewer total readmissions.
  • Medicare provides more access with new prescription benefits and, thanks to the Affordable Care Act (ACA), we’ve closed the Medicare donut hole and with that, 11 million beneficiaries have saved an average of more than $2,000.
  • The CMS Innovation Center, which the ACA created, takes best practices from the clinical field and has developed over 30 alternative payment models and initiatives, serving millions of Medicare beneficiaries. The CBO expects the Innovation Center to reduce federal spending by about $34 billion over the next 10 years as we find new and better ways to care of people.
  • And, with all of this, we have been spending tax payer resources more wisely with extended record low medical inflation. The ACA extended the life of the Medicare trust fund and has helped deliver $473 billion in savings.

Of course, there has been enormous progress extending beyond Medicare: 

  • 20 million people now have health insurance who didn’t have it before the ACA (and I am sure you understand that affordable coverage for every American helps keep Medicare costs low. A 62-year old who has affordable coverage and can manage or prevent a chronic disease will be much healthier and less costly when they enter Medicare three years later.)

You have heard the 20 million stat before. But the effects are much more profound in the everyday life and health of people.

  • Since the ACA went into effect in 2014, more people now have a personal physician (increase of 3.5%) and easy access to medicine (increase of 2.4%).
  • Just yesterday, the CDC reported that families struggling to pay medical bills dropped from about 21% in 2011 to 16% in the first half of 2016.
  • There have been substantial decreases in the share of people who are unable to afford care (decrease of 5.5%) reporting fair or poor health (decrease of 3.4%).
  • The Medicaid coverage expansion has improved the financial security of the newly insured (for example, by reducing the amount of debt sent to a collection agency by an estimated $600 to $1000 per person gaining Medicaid coverage).
  • States that expanded Medicaid also saw their hospitals reduce debt by about 13%; 10% more than in states that didn’t expand Medicaid. As former Arizona Governor Jan Brewer said, “I don’t know how you could deliver that population any more services better, more cheaply, than what we’ve already done here,” when asked about her state’s Medicaid expansion.

If you don’t think this progress has made a major difference in the day-to-day lives of all Americans, you have been paying more attention to politics than people. In fact, there hasn’t been a greater stretch of progress in our nation’s history as measured by the amount of positive change that has impacted people and their lives and our path to a sustainable future as in the last 8 years.

But this progress should only be the start if we are to fulfill the real promise of caring for people in our country and doing it in a way that reduces the overall burden of the health care system.

Today, taxpayers spend over $500 billion each year for the Medicare program. The question that needs to be addressed head on is how Medicare will continue to control costs in the face of a demographic boom as over 10,000 Americans enter Medicare each day, rising demand for health care’s new cures and technologies; and an epidemic of chronic disease.

This is an important way to understand the context behind MACRA.

To build on the foundation we have begun on reforming the delivery system so that value based care can reach every community in America. Given this magnitude of change, I asked the team to approach MACRA differently. After this historic legislation passed, the CMS team was eager to get to work on implementation. But they heard something different from me. Stop writing, get out of DC, and start listening. 

Through 4,000 formal comments, nearly 100,000 attendees at our events across the nation, focus groups, design sessions, workshops, physician office visits (and countless tweets), we got to hear patients and clinician points of view on things we can do to make healthcare better for them.

  • We heard the deep dedication that both patients and clinicians have to the Medicare program, but also the many frustrations.
  • We heard from clinicians who challenged us to prove that MACRA and the Quality Payment Program wasn’t one more check-the-box program and instead allows them to focus on care and quality improvement
  • We heard from physicians who are fed up that their EHRs do not support patient care. Clinicians want technology that make their jobs easier, match their workflows, and give them access to needed data.
  • We heard patients who were tired of lugging around or repeating their treatment history — who wanted more time with a physician who knows them personally, so that they can get the right treatment at the right time without unneeded repetition or miscommunications.Our challenge isn’t about accountability or quality or costs or whatever euphemism people use. It’s to recognize that the path forward isn’t through any one model or new three-letter acronym or quick fix, but by addressing the basic things, which lead to bad outcomes, physician burnout, or for patients, particularly needier ones, to feel displaced and not get the right care.

Your opportunity with MACRA isn’t to implement a new scorekeeping system. If we do that, we will not only miss the opportunity to transform, but we will add complexity to an already overly complex system.

Based on what we heard, we made major changes to how we approached this program holistically.

First, we focused on a lighter touch and less regulation. By adopting the idea that if we simplified and reduced what was measured and gave physicians back more time with patients and instead supported their quality efforts, we would make more progress. And, we reduced the number of requirements in half to help level the playing field for small or independent practices.

Second, we came to realize MACRA is many clinicians’ first experience with reporting and paying for quality for the first time. We created multiple timelines to allow clinicians to pick their own pace of entry and development.

Third, we also recognize that many practices are advanced and ready to go further, so we built more opportunities for clinicians and to allow more innovative models to flourish. We estimate that about 25% of eligible Medicare clinicians will be in an Advanced Alternative Payment Models by 2018, and we have a goal of creating options for physicians in all specialties and geographies in order to allow them to pick models that are right for them.

As we move forward, we all need to keep building on what works while systematically demanding improvement where we can do better. 

So how do I suggest we tackle the next opportunities?

One. Build from a foundation of progress, not head backwards. There can be no delivery system reform without building on the foundation of reaching universal coverage. That means building on the record 20 million people who have newly found coverage and continuing the security and protections Americans have found, including no-cost preventive care, the elimination of lifetime and annual coverage limits, and the end of pre-existing condition exclusions. If we want to fix how care is delivered, so that we’re providing value, then we must ensure that Americans can afford and access quality care at every point in their lives. If we lose even some of the coverage gains made under the ACA, or leave people in limbo, people will lose access to regular care and we will drive up long-term costs. This doesn’t mean we shouldn’t improve how coverage works in a bipartisan fashion. We must always do that and we should now as new leaders bring new approaches and solicit new ideas.

Two. Insist that modernization of Medicare must actually mean modernization. Progress is achieved by ingenuity, innovation, teamwork, and the use of data and technology, not by changing funding formulas.  

I’ll say this bluntly: MACRA can’t work as well without a CMS Innovation Center that can move quickly to develop and expand new approaches to paying for care. With changes to the Innovation Center, the advanced alternative payment approaches could slow significantly. We will have a much narrower path with fewer specialty options and approaches, which take in patient and physician feedback. Medicare and commercial payers would then fall further out of alignment, and more importantly, less patients would have access to innovative care methods.

Three. Start to demand technology that can exchange data, that supports care, and that is affordable. MACRA is an opportunity to move the focus away from paperwork and reporting and towards paying for what works. For a variety of reasons, EHRs became an industry before they became a useful tool. The technology community must be held accountable by their customers and make room for new innovators and to give clinicians more freedom and more flexibility to focus on their patients, to practice medicine, and deliver better care. We worked alongside physicians to design technology tools ( and a support center that allows physicians to learn about, access, and even design their involvement in the Quality Payment Program.

Four. Don’t forget that people are the heart of every policy made. We are on a journey as a nation towards better health for all. Patients. Care givers. Consumers. You know them better than anyone because you care for them. View MACRA as a step in the journey to develop care together.

With 50 days to go, I want to close by thanking everyone who has provided the often tough but critical feedback that has helped CMS do our jobs better — and that have helped me by sharing the realities of what really matters. The CMS team is committed to being your partner, to being transparent, to leading and delivering a path to better care. Remind us that your mother, and any mother are at the center of every decision we make, and we will be too.

Categories: OIG Advisory Opinions

Trump State of the Union

Thu, 12/01/2016 - 20:22

New POTUS Donald Trump doesn’t like the White House, it is drafty and was occupied by black people, and so he and his family have decided to stay in New York to run the country on Twitter.   The State of the Union address will be a live Twitter event from Trump Tower at 3.00 AM.  THCB has received the secret first draft from an anonymous POTUS speechwriter.

Heading to U.S. Bank Arena in Cincinnati, Ohio for a 7pm rally.
Join me! Tickets:

— Donald J. Trump (@realDonaldTrump) December 1, 2016


Thank you.  We won.  We won big.  It was huge.  And we would have won popular vote except for all illegals voting.  Hillary poor loser. Sad.

State of the Union is not strong.  Weak.  We don’t win anymore, but we will make America Great again!

Priorities:  Jobs, Repeal and Replace Obamacare, Immigration and National Security.  Already working on them all.  I am doing this for you.

Jobs.  Will bully CEOs to keep manufacturing in US & throw tax breaks at them. Expect air conditioners to get expensive.  Sorry Florida.

China: You are currency manipulators dumping product in US.  Expect tariffs and then big increases in prices at Wal-Mart.  Sorry America.

Infrastructure.  We will build beautiful new bridges using American steel and coal.  Plans announced soon.  Good Jobs for hard hats.  Bigly!

Repeal and Replace.  Obamacare is a disaster.  Dr. Tom Price a surgeon will cut it out.  Will replace immediately with something amazing.

Replace.  Get rid of the lines.  it will be beautiful. So much great competition from amazing plans.  Much better than Obamacare.  Watch!

Immigration.  Working on Muslim registry plans.  But need Wall first.  NAFTA renegotiation includes Mexican funding the wall.  No games.

NAFTA.  Don’t trust the Trudeau kid…….a socialist.  So maybe Canadian wall if they don’t behave.

Love riffing with world leaders without briefings.  Even our enemies are amazing people.  We get along. Great opportunities for Trump brand.

No Legal Conflict of Interest for POTUS, but stepping away.  Kids will run Trump brand I will have no involvement except for my name on it.

My children will not formally help me run the country, just Ivanka and Jared, informally.  I will see them and we will talk.  Great minds.

No Salary.  I will not take a salary as President.  And I will continue to not pay any taxes.  That makes me smart.

Cabinet handpicked for a diverse America:  Goldman Sachs, billionaires and Fox News contributors.  Successful people not affirmative action.

National Security.  Big issues to deal with.  Obama told me some of it.  Wow, we have great assets but huge challenges, I had no idea.

ISIS.  We will bomb the shit out of ISIS with Russia’s help and take their oil.  Know more than the generals, on this.  Need strong leaders.

Torture.  A general told me it doesn’t work.  Wow, who knew?  Maybe we keep it up our sleeve and let ISIS  think we will  do it.

North Korea.  If he tweets at me or tries something with the nukes I will respond big, time.  That I can assure you.

Growing the economy.  Taxes on the wealthy will be cut massively.  Economy will grow at 4%. Lots of manufacturing jobs as a result. #MAGA

Role of the Press.  The failing NYT and WAPO need to support Trump policy.  Need to change libel laws to curb press criticism. Unfair.

On Democrats who Lost.  I want to be President for All Americans, but you lost and i won so now you have to do what I say.

God Bless You and God Help the United States of America.

Categories: OIG Advisory Opinions

Something Not So Terrific

Thu, 12/01/2016 - 02:26

The brand new President Barack Obama, whether wittingly or not, invested his entire political capital in reforming health care in America. He gambled and he lost, not because he had nefarious intentions, but because he left the gory details to a corrupt Congress and a shady cadre of lying and conniving technocrats, ending up with something vastly different from what he campaigned on. From everything I’m reading now, Mr. Trump is about to walk in Mr. Obama’s footsteps, and if he does, the results will be unsurprisingly identical.

On the campaign trail, Mr. Trump repeatedly stated that Bernie Sanders forfeited his place in history when he “made a deal with the devil” and embraced the corrupt Democratic Party establishment that fought his candidacy in most abject fashion. Guess what? Mr. Trump seems to be making the same deal with the red version of the same devil. Mr. Trump’s cabinet choices indicate that he is now embracing the ultra-conservative factions of the Republican Party, the same people who actively or passive-aggressively opposed his candidacy. Nowhere is this peculiar and completely unnecessary capitulation more evident than in the beleaguered health care sector.

Mr. Trump campaigned on repealing and replacing Obamacare with something “terrific”, because Obamacare premiums are “going through the roof”, and because deductibles are so high that you can’t actually use your Obamacare plan “unless you get hit by a truck”, and because people can’t keep doctors and plans they like. Mr. Trump also recognized that some Obamacare provisions are good and should be retained. One would therefore assume that whatever Mr. Trump proposes to replace Obamacare with, will lower premiums, lower deductibles and increase choice of plans and doctors. Although the details were rather fuzzy, two things were consistently mentioned during the campaign: selling insurance across state lines and utilization of health savings accounts (HSA). Both “ideas” can be summed up as essentially deregulation of the health insurance industry and the unleashing of free-markets. We’ve seen this movie before.

Déjà Vu

As late as 1978, interest rates on loans were governed by local state usury laws. Based on biblical moral and ethical considerations, these local regulations placed modest limits on interest rates charged by banks in a particular state. Just like our own advocates for selling health insurance across state lines, the national banks lobbied back then for the ability to lend across state lines, which means that the bank home state governs the interest rates in all other states. In 1978 the Supreme Court ruled in favor of the banks, and in 1980 Congress passed formal legislation to that effect. The result, as surprising as that may be, was not fierce competition between banks offering the lowest possible interest rates in all states. Instead, some states immediately removed all caps on usury in order to attract big banks, and high interest rates spread like wildfire, rendering state protections against usury irrelevant.

With a little more help from the Court, the same deregulation was applied to credit card late fees in 1996, with the same typical free-market results for citizens who watched their late fees quadruple. To create the appearance of efforts to counteract the disastrous effects of deregulation on interest rates, the Federal government created the Consumer Financial Protection Bureau, an agency with no power to do anything of consequence, and which is currently busy spending taxpayer money on a mega database containing “more information than most people can remember about themselves”, financial, personal and social. The parallels to health care should be self-evident.

And then of course there is the saga of the Glass-Steagall Act of 1933, which enforced the separation between banking, insurance and dealing in securities, because mixing these activities was seen as a conflict of interest and an increased risk to bank failures. Glass-Steagall was repealed in pieces, with the death blow delivered by the Financial Modernization Act of 1999. Financial institutions merged and integrated vertically and horizontally into gigantic experiment labs for innovative financial instruments with no oversight and no accountability. The results came home to roost in 2008, with millions of people kicked out of their homes while their taxes were diverted to feed the gargantuan players of free financial markets. We never had a Glass-Steagall in health care, but watching hospitals merging, gobbling physician practices and morphing into underwriters, while insurers are expanding in the opposite direction, is more than enough to trigger that spooky déjà vu feeling.


Health Savings Accounts (HSA) are another financial instrument beloved by free-market advocacy groups. The idea is to allow people to spend their own money as they see fit, instead of forcing them to buy government defined insurance benefits. To sweeten the deal, HSA moneys are not taxable. HSAs are usually paired with so called catastrophic health insurance to cover life’s major disasters. The theoretical logic favoring HSAs is impeccable. Why should you buy insurance for things you don’t need? Why should you buy insurance for routine services you know you will need and are able to budget for, just like you budget for oil changes on your car, haircuts, gutter cleaning and such? Just imagine how expensive all these things would become and how little choice you would have, if you paid for them with insurance. Fair enough.

There is one small problem though. According to a recent Fed report, “forty-six percent of adults say they either could not cover an emergency expense costing $400, or would cover it by selling something or borrowing money”. Another survey from GoBankingRates found that “nearly seven in 10 Americans (69%) had less than $1,000 in their savings account”. These are not “just” the traditionally poor people in inner cities, rural boonies, Appalachian trailer parks, or however your pampered mind imagines poverty in America. This is the middle class.  These are the “nice” people you see every day all around you. So how much funding do you think will be going into those spiffy HSA accounts? Not much.

Catastrophic Care

This week, President-elect Trump picked Rep. Tom Price, a former orthopedic surgeon, to be the next Secretary of Health and Human Services, and Dr. Price is a man with a plan. The plan is to replace Obamacare with age adjusted, tax credits and HSAs, while making the same model available to employers, Medicare and Medicaid too. People would use the tax credits to buy a catastrophic health plans across state lines, and deposit the difference in their HSAs to cover routine health care. Sounds good until you realize that the tax credits proposed by Dr. Price are ridiculously low and would cover less than half the cost of a catastrophic insurance plan. Now, it is possible, that once all Obamacare protections are removed, trashy little health plans, priced exactly the same as the tax credits, will return to the marketplace, but I seriously doubt that anything will be left over for HSA deposits. I’m willing to bet that the majority of employers will jump at the chance to extend the same parsimonious offer to their employees.

Once the Medicare modernization features of Dr. Price’s plan are also implemented and Medicaid gets cut and tossed into the lap of perpetually bankrupt states, America will finally achieve universal catastrophic health care. Let me dispel the bleakness for a brief moment though. Dr. Price’s plan has all sorts of great features for doctors. Malpractice insurance reform, freedom to provide cash services to Medicare beneficiaries, freedom to balance bill, some relief from regulatory burdens and a seat at the table for medical associations, are all included in the plan. It is also quite possible that physicians in non-catastrophic specialties will get to enjoy some well-deserved leisure time. I can’t imagine too many non-catastrophic customers, flush with non-existent HSA cash, banging on their doors. 

Augment and Replace

Mr. Trump has a mandate to replace Obamacare with something “terrific”. He has a mandate to defend Medicare, Medicaid and Social Security. Those are the things he campaigned on and this is the mandate that comes with his election, nothing more and nothing less either. The conservative apparatus that rode into power on his surprisingly long coattails has no independent mandate. Donald Trump was elected President of the United States by the people of these United States in spite of the Republican Party not because of it. We did not send Mr. Trump to the White House to help Speaker Ryan and his conservative posse of faux intellectuals to dismantle the big bad “welfare state”. I can only hope that the President-elect understands that the manufactured urgency of repealing Obamacare, while blowing up Medicare, is nothing but a shrewdly laid trap for him personally, for his presidency, and for the American people.

It may be helpful to remember that for each Obamacare frustrated person, there is at least one fairly content person, and many if not most of those content people are less affluent, mostly white, working families who either receive large subsidies or have become eligible for Medicaid. These are the forgotten workers Mr. Trump promised to speak for, fight for and win for. Yes, Obamacare needs to be replaced, and the best and safest way to replace it is not to repeal it, but to augment it. Try selling insurance across state lines if you must. Add options to pair catastrophic plans with HSAs. Heck, while you’re at it, might as well try an experimental public option. And sure, get all your anti-abortion stuff in there to keep the faux intellectuals happy. Let people choose what works best for them, because free people trump free-markets every single time, and that is truly terrific.

Categories: OIG Advisory Opinions

The Price Is Basically Right

Thu, 12/01/2016 - 01:47

Recently, President-Elect Trump selected Rep. Tom Price, MD to lead the Department of Health and Human Services.  Suffice it to say, this signals Mr. Trumps’ resolve and commitment to definitively repealing and replacing.  Dr. Price has already sunk his teeth into health care reform, having proposed alternative healthcare solutions in every Congressional session since 2009.  As a physician myself, I am delighted at the prospect of having another doctor at the helm of HHS. The last physician to lead HHS was Louis Sullivan, MD as part of the administration of George H.W. Bush.  Having a physician, who can understand the needs of physicians and patients, representing both in health policy decision making at the federal level gives everyone the best chance for meaningful and successful health care reform. 

Dr. Price is a third generation physician and a retired orthopedic surgeon with experience in clinical practice and academia before being elected to the U.S. House of Representatives.  At his core, he has been a fierce critic of Obamacare.  Dr. Prices’ most frequent objection to the ACA is the fact it hinders the ability of patients and physicians to be in control of medical decision making and puts the government squarely between doctors and patients.  Amen! He understands the subtle distinction that while expanding coverage may provide insurance, it is in no way akin to delivering patients unfettered access to health care. 

As I fend off increasing government regulations in my quest for survival as an independent physician, Dr. Price (and Seema Verma – Mr. Slavitts’ replacement at CMS) seem like an oasis in the desert.  Below are some basic tenets of the Price Plan, The Empowering Patients First Act. 

  1. Tax credits so individuals may buy insurance on the private market. It starts at $1,200 a year and increases with age, but is not adjusted for income. People on Medicaid, Medicare, and Tricare, could opt to buy private insurance and receive this tax credit.
  2. Expansion of health savings accounts, which allows people to save pre-tax money which can be used to pay for premiums, copayments, and deductibles.
  3. Individuals with existing medical conditions cannot be denied coverage if they had continuous insurance for 18 months before selecting a new policy. This continuous coverage provision incentivizes individuals to purchase insurance while young in the hope of creating a long-term insurance pool, (something Obamacare has been unable to accomplish.)
  4. Federal money would be given to individual States to create high-risk pools. These are government-run health plans for people with existing medical conditions who cannot obtain affordable health insurance on the private market. Price has suggested using $3 billion in funding for high risk pools—which comes to $1 billion a year.  This approach carries some inherent risk because cost predictions may underestimate reality.  Critics say high-risk pools have been tried in as many as 34 states and largely failed because they were routinely underfunded. It is possible the annual cost of high risk pools at closer to $2.5 billion a year. Fine, make sure we fund this adequately this time.
  5. Balance billing could be allowed, which evens the playing field for physicians and patients alike.  It would offset the exorbitant “facility fee” hospitals are allowed and independent offices are forbidden to charge.  Allowing physicians leeway on reimbursement could significantly alter the dismal trend of physicians leaving clinical medicine in droves. 

Dr. Price has criticized “government takeover of healthcare.”  I agree with him wholeheartedly.  His socially conservative stances have angered many; he is pro-life, votes against insurance coverage for women’s health issues, additional funding of CHIP (Children’s Health Insurance Plan), and LGBT issues.  However, the more I struggle to stay afloat in independent practice, the less these differences of opinion actually matter.  Sylvia Burwell and I probably agree on Womens, LGBT, and childrens’ health issues, but my bleeding heart, ironically, has worsened my chance for survival in a career I love.  Reality is what brought this very liberal physician to advocate a different approach to healthcare reform. 

Dr. Price recently stated, “Premiums have gone up, not down. Many Americans lost the health coverage they were told time and time again by the President that they could keep. Choices are fewer.”  He is correct.  Choice for all of us has evaporated from the system in many small rural areas suffering from physician shortages already. Frustration at the overwhelming increases in insurance premiums is palpable everywhere in this country.  Maybe it is time to give Dr. Price and Seema Verma a chance.  There will be many compromises as in all things, but allowing physicians and patients more control over their lives and livelihoods is a revolution worth celebrating. 

Categories: OIG Advisory Opinions

Science in the Age of Trump

Wed, 11/30/2016 - 07:44

As Donald Trump seeks to build his administration, he will likely struggle with creating a science infrastructure, given his estrangement from the nation’s scientific community.

The distance between Trump and scientists seems to reflect mutual disdain. Trump famously trusts his gut over more data-driven methods. Trump’s success, against most expectations, can be read as a triumph of instinct over science, or at least to reveal the perils of data-driven overconfidence. Trump’s apparent intention to appoint a climate-change skeptic to lead the environmental protection agency suggests to many a disregard for the vast weight of scientific data here, while his comments about vaccinations during one of the Republican debates were charitably described by Steven Salzberg as “wildly inaccurate” and “thoroughly discredited.”

For their part, most scientists take a very dim view of Trump: Science prides itself on being inclusive, international, objective and collaborative–not generally the first adjectives used to describe Trump. (Whether science in practice lives up to these ideals is another question.) Add to this Trump-specific distaste the left-leaning bias of universities (well documented by centrist academics like Jon Haidt, among others–see here and references therein), and the result is a community that seems solidly united against the President-elect. (That said, I’d note that I’ve met more than a few political independents within academia who chafe at current norms.)

The problem, of course, is that science matters to America and to Americans. The U.S. scientific ecosystem has advanced knowledge and powered a range of industries, from biotech to aerospace. America has a wonderfully robust tradition of supporting scientific exploration, and it’s hardly surprising–but worth noting–how many great scientific advances, including many resulting in Nobel Prizes, were made by researchers originally from other countries attracted to the United States by the freedoms of our nation.

Many Trump critics argue passionately against participating in the Trump Administration, essentially suggesting that joining the team would help legitimize an unworthy (some would say execrable) regime. (In a small, informal and unscientific Twitter poll I did over the weekend, about a quarter of respondents were in this category.)

The alternative view is that in a Trump administration, it’s especially important for rigorous scientists to participate and be heard–provided, of course, that their voices would be heard, rather than their prestige co-opted. Because so few scientific innovators seem to be drawn to the Trump team, those who participate may find themselves–like Silicon Valley VC Peter Thiel – with an opportunity for influence far greater than they would have had in a more traditional administration.

To this end, one name that immediately comes to mind as a potential biomedical advisor or potential appointee is Dr. Jeffrey Flier, who recently stepped down as Dean of Harvard Medical School, after nearly a decade in that role.

(Disclosure: I know Flier as an endocrinologist and colleague, but do not have a personal or business relationship; I do have a long history with the university, including a current adjunct/visiting scientist appointment.)

In addition to deep expertise in medicine and science, and a range of honors including elected membership in the National Academy of Medicine, Flier has three attributes that would presumably appeal to the Trump administration.

First, Flier has encouraged the university to embrace entrepreneurship while remaining true to its academic foundation–an incredibly difficult needle-threading challenge that he somehow seems to have pulled off, a testament to his vision, independent thinking and political aplomb.

Second, Flier’s striver background is arguably similar to Trump’s: on the way to becoming Dean at Harvard, Flier went to City College of New York, and received his MD and subsequent training at Mount Sinai School of Medicine. He rose through the ranks at Harvard’s Beth Israel Hospital, which might be viewed as Boston medicine’s version of coming from the Outer Boroughs (see this Samuel Shem classic for more detail).

Finally, Flier’s love of medicine is clearly part of the family business; his wife is also a professor of medicine at Harvard, his brother as an internist in the Boston area, and his two daughters are physicians as well.

While Flier has suggested on Twitter he has no interest in being considered for a role in the new administration, Trump’s team would do well to do whatever they could to bring him into the fold.

Our nation’s continued leadership in biomedical science is vitally important for our collective future. The new administration must seek to recruit the best talent–even NeverTrumpers, like Flier; similarly those who are tagged–even NeverTrumpers–must consider serving, for the benefit of the country.

Categories: OIG Advisory Opinions

What Does the Recent Election Mean For Predictive Analytics In Healthcare?

Tue, 11/29/2016 - 20:56

The outcome of the recent election caught many people, and many forecasters, by surprise. How could their predictions have missed the mark so significantly? Granted, there were a number of people who predicted the outcome more accurately, but many of those who used data models to analyze the likely outcome are left now with head-scratching and postmortem analysis in order to improve their methods.

In their book Superforecasting, The Art and Science of Prediction, authors Philip Telock and Dan Gardner describe a subset of people who, on average, are significantly more accurate in their ability to predict upcoming events. “What makes them so good is less what they are than what they do—the hard work of research, the careful thought and self-criticism, the gathering and synthesizing of other perspectives, the granular judgments and relentless updating.”

What does this mean for healthcare? I’m not talking about the impact of the new presidency on health policy and healthcare delivery (that’s another discussion) – I’m talking about whether predictive analytics is really all that accurate in the first place. Where does it fail?

The strengths and weaknesses of predictive analytics

Predictive Analytics in healthcare, a buzzword in the industry for a couple of decades, is the science of determining which populations are likely to become ill, what the health and cost implications of that are, and what might be done by way of pre-illness intervention to change things. About 20% of the population consumes 80% of health care dollars. But those who are catastrophically ill this year are not necessarily the ones who will become catastrophically ill next year – the high-cost cohort, though a consistent finding year after year, will be comprised of different individuals each year. The goal of medical Predictive Analytics is to figure out who will likely drop into that high-cost bucket next year, and what can be done to reduce that risk.

Much of risk stratification (the core of medical Predictive Analytics) is focused on populations. Taking people with certain health risk parameters in aggregate, as a population, is something that is predictable, can be measured and studied, and is the basis of what we have now. But drilling that understanding down to an individual patient becomes much more uncertain. Should this diabetic patient, controlled with medications but not on a statin, and who has at-target LDL cholesterol levels for a diabetic – should this patient be prescribed statins anyway? Doctors will have differing opinions, will do different things, and will look to supporting data (which may be sparse in a more granular analysis) to justify their choices.

How can we get better at individualizing medical recommendations? How can we take the current state of Predictive Analytics, which concerns itself with population management, and move it forward to something more precise?

AI: the next step in prediction

This is where Artificial Intelligence (AI) in healthcare can be very powerful. AI is the intersection of Machine Learning (ML) – a set of self-teaching algorithms that can identify patterns in data without being pre-programmed on what to look for (therefore without “pre-analysis bias”) – and the application of that ML to very large data sets. The shortcoming of medical AI so far is not so much a shortcoming in ML algorithms, but is the lack of very large, normalized data sets on which it can work. Medical data (clinical data) is historically fragmented into institution-centered silos, and claims data is segmented into payer silos. Aggregating this data into huge data sets is the task at hand in order for AI to become meaningful.

From this effort, our Medical Knowledge Graph (MKG) can be extraordinarily useful. The Flow Health Medical Knowledge Graph is the organized result of AI insights built in a way that can be used on-the-fly by a variety of medical applications, such as Electronic Health Records, population management and reporting tools for value-based care, web tools, and patient-facing apps. For the patient described above, the individualized recommendation can be made for that given person, and take into account all the diagnoses, lab values, medications used and discontinued in the past, and genetic markers if known.

Does this technology, once it matures, make the doctor’s role obsolete? No. It makes the doctor’s role more precise, more accurate, more consistent. In clinical medicine, we use clinical judgement based on recognizing a pattern presenting in a given patient, and we try to match that against similar patterns from our learning and our experience. We then use that pattern-matching to make recommendations. In the case of AI and the MKG, the pattern can be described in more detail, and the comparison is done against the entire body of data available to the ML engine. It becomes a tool that can make clinical judgement much better informed.

Predictive analytics, and the AI tools now becoming available, predict the odds of success, or the odds of something occurring. They deal in probabilities. However, as noted by many forecasters, nothing is truly certain (until it happens). Failures of accurate prediction teach the learning engines. This is true in political outcome prediction, and it is true in medicine. Leaders, whether in government, in the military, in business, or in healthcare, need to be well-advised, but must make executive decisions. In healthcare we call that making a surgical decision (there are no erasers on the ends of scalpels). Clinicians need to be decision-makers, informed by the best analytics available. In health IT, we need to build the best analytics engines we can, so as to inform medical decision-making in the best way that technology allows.

Robert Rowley, MD is Chief Medical Officer at FlowHealth

Categories: OIG Advisory Opinions

One Regulation Could Eliminate a Dozen Others

Tue, 11/29/2016 - 03:08

President-Elect Trump recently announced: “for every one new regulation, two old regulations must be eliminated.” Regulatory capture, the topic of a recent THCB post by Nortin Hadler, has enabled many regulations based on HITECH that restrict competition by allowing information blocking. Many other regulations around quality measures, documentation, decision support, contract transparency, and kickback safe harbors are now needed to counteract EHR vendor consolidation through regulatory capture.

One regulation designed to establish a patient-controlled interface (a patient-controlled API) to health records will enable competition for all aspects of the institutional EHR by decentralizing access to the patient information. The impact on health reform, ACA reform, and medical research would be immense.

“Give me the place to stand, and I shall move the earth.” If Archimedes were moving healthcare practices and politics then data would be his lever. The data to move healthcare is much more than a hospital’s EHR will ever be trusted with. It includes the social determinants of health, it includes employment and exposure, it includes your genome and family, it includes personal beliefs.

The data to move healthcare practices and politics does not split cleanly between research and clinical uses. Sync for Science is not enough to provide independent decision support at the point of care. Access to detailed personal data spanning the full range of human experience and aggregated over a lifetime is now technologically possible. Who can be trusted with this formidable power?

Nobody but ourselves. Regardless of how well-regulated and well-organized our healthcare and government institutions might be (need we review the cybersecurity track record of either hospitals or government?), the only one to be trusted with knowing everything about me is me.

The world is full of institutions and people that know something about me. Some, I know about. The vast majority are hidden data brokers. Surescripts, Acxiom, Lexis-Nexis, Optum, IMS, All Payer Claims Database, and Prescription Drug Monitoring Programs are all collecting and selling as much about me as they can. It’s their only business and I am the product. Even as the patient surveillance industry has boomed along with my out-of-pocket costs, transparency of health care quality or cost is as elusive as ever.

As Doc Searls recently commented: “Economically speaking, the American health care system is not built for patients, because patients aren’t the ones paying for it directly. Insurance companies are.” This well-known technology journalist speaks in favor patient-centered health records.

Technology now makes it possible for each of us to control more and better data than the hospitals and data brokers. That means each of us as patients would have more leverage to move health care and health insurance practices. Instead of buying our information from hospitals and data brokers, our providers, researchers, and regulators would be getting the information by asking us. By asking us.

Which leaves one major contingency: Who would pay to give us patients the ability to control our own health records? A less regulated, more market-driven health system is now technically possible but it requires investment and a sustainability plan. In the long run, patients facing many thousands of dollars in out-of-pocket expenses will see the wisdom of spending a few hundred to inform their spending. More immediately, and aligned with whatever policies a Trump administration brings to health and human services, we might see pharmaceutical companies, insurance companies, and public institutions – anyone that would benefit from better access to patient records in a value-based payment system – invest in patient-centered health records. It all starts with one well-designed regulation to replace information blocking with “Just ask me”.

Adrian Gropper is Chief Privacy Officer of the Privacy Rights Foundation.

Categories: OIG Advisory Opinions

Why Trump Won? A Brief Tutorial for Harvard Medical Students

Sun, 11/27/2016 - 18:25

Mike Milligan, a Harvard medical student, recently wrote in THCB about the shock felt throughout his medical school upon the election of Donald Trump.  Seeking to understand how it may be that ‘equality, service and compassion’ were defeated, Mike settles on the narrative that appears to have taken hold of the elites on the left – Trump did not really win, Hilary lost.  While he does not say so in explicit terms, clearly we are to understand that the recent election was lost, and that in order to assure a better outcome the next election, physicians should urge their patients, and particularly their ‘poorer and less educated patients’ to register to vote.   Hopefully, these voters can then ensure that access to ‘affordable, high-quality medical care’ through constructs like Obamacare and MACRA are nevermore placed in jeopardy.

What complete hogwash.

Let me start with the factually incorrect parts.

Mike writes that ‘Mr. Trump received fewer votes in victory than the previous two republican nominees garnered in defeat.’  As of today Donald Trump has received 62.2 million votes out of a total of 126.6 million votes cast.  Mitt Romney received 60.9 million votes out of a total of 126.8 million votes, and John Mccain received 59.9 million votes out of a total of 129.4 million votes cast.  So despite the fact that his opponent raised and spent close to 1 billion dollars on ads promising the literal apocalypse if Trump was elected, no republican candidate in history garnered more popular votes than Donald Trump.  While it is true that nearly half of all Americans did not cast a ballot in this election, 3 million more votes were cast in 2016 than were cast in 2012.  The percentage of eligible voters casting their vote in 2012 was 55%.  The percentage of voters casting their vote in 2016?  Also 55%.  I realize the desire to deligitimize Trump by arguing this was a low turnout election that delivers no mandate is a very strong one among the millions on the losing side.  Unfortunately, wishes and reality sometimes find themselves in conflict.

The real story of the election is that the Donald Trump managed to flip the rust belt states of Michigan, Wisconsin and Pennsylvania by convincing blue-collar, mostly white voters that his party was now the “workers’ party”.  Traditionally blue strongholds of towns like Erie, Luzerne, and Northampton counties in Pennsylvania turned red in 2016. A Republican hasn’t won Erie County since 1984!  Obama won this county  by 16 percentage points in 2012 – Trump won this same county by 2 percentage points.  Statewide, Trump performed better than Romney in 58/67 counties while Clinton performed worse than Obama in 65 counties.  So it is absolutely true that Clinton performed worse than Obama, but not to focus on the story of the overperformance by Trump is to be willfully blind.

As to the implication that it was the least educated sitting at home that sunk Mrs. Clinton, data would argue the opposite.  The poorly educated did vote, and by a wide margin chose Trump.  Pre-election polling showed Trump with a 30-percentage point advantage among whites without a college degree – he ended up winning them by 40 points.  Indeed, one of the single best predictors identified in counties that swung to Trump is the percentage of non-college whites.  The greater the percentage of non-college educated whites in your county, the greater the chance of Trump emerging victorious.

The only metric found to be even more predictive than your race and education?  Poor health. You are reading that correctly.  In an analysis done by the Economist , a weighted index of obesity, diabetes, heavy drinking, physical exercise, and life expectancy performed even better than race and education level in predicting counties that moved to Trump.  The poorer your health, the more likely you were to vote for Trump.

A wonderful interactive version of the graph can be found here.

Apparently, those who stood the most to gain from affordable, high quality health care were also most likely to choose the candidate who called for repeal of Obamacare.  It is safe to say that this was a stunning repudiation.  To a great many who had voted for the promise of Obamacare, the reality of high premiums, penalties, and narrow networks left a bitter taste.  And so it came to be that those uneducated and in poor health – the losers in this economy – chose the candidate who promised change over the candidate whose campaign slogan was grabbed from the recent Lego movie – “Everything is Awesome”. What a complete shock.

There are many story lines that underlie Hilary Clinton’s defeat.  She was clearly unable to animate and connect with her base in the way Barack Obama did – but if this is the major narrative rocking liberals to sleep in these cold dark times, I would advise the overworked mental health specialists dealing with the trauma of a Trump election on college campuses to pace themselves for eight years of inconsolable sobbing.

Anish Koka is a cardiologist in Pennsylvania.

Categories: OIG Advisory Opinions

The Uncertainty Bomb

Sat, 11/26/2016 - 21:24

I like certainty and routine. I like my daily Tall Dark Roast with no room for cream at 5 am at Starbucks. I like the same restaurants, the same suits and ties and the same TV shows. Holidays throw me off and I get bored quickly when I have down time.

For six years, the healthcare industry in the U.S. has been adjusting to its new normal based on the regulatory framework of the Affordable Care Act (ACA). It became routine to discuss the volume to value, accountable care organizations, bundled payments, Medicaid expansion and We were certain they’d be around for years to come.

Then came the election. When 61 million voters elected Donald Trump to the White House and kept GOP majorities in both houses of Congress, it signaled our routines in healthcare would be disrupted. The campaign promised to repeal and replace the ACA: its repeal appears certain but it’s replacement injects uncertainty into our routines around a number of meaty issues:

  • Senate Composition: The mechanisms for replacing key elements of the law will require a super majority of 60 in the Senate: will the 52 GOP senators broker support from 8 Dems for weighty items like how Medicaid block grants could work, how consumers could buy insurance across state lines, how tax credits would work as individuals replace employers as the key insurance market, the potential for vouchering Medicare and much more. How the Senate advances the ACA’s replacement will be a protracted process with many moving parts and considerable political deal making.
  • Federal Budget: Healthcare spending by the federal government is 30% of its total spending. The tension between budget hawks in Congress who fear escalating deficits and the Trump team’s promise to invest $550 billion in infrastructure including hospital improvements will require deft political craftsmanship. Funding for healthcare will compete against pressures to reduce federal spending pitting it against education, transportation, homeland security and defense for budget consideration. And GOP partisans vow cuts to healthcare spending which, in some cases, are at odds with Trump campaign promises.
  • Health Insurance: Creating a new regulatory framework for private health insurance will be complex and time-consuming. Uncertainty about the individual insurance market is particular unsettling and the future of marketplaces unknown. Will the new administration ease restrictions on private insurers that result in higher premiums? Will the individual and employer mandates that are repealed be replaced by other mechanisms that induce coverage and spread risks? Will the shift of financial risk and affordability to providers from insurers accelerate the growth of integrated health systems that operate hospitals, sponsor health plans and networks of clinicians? There are 106 of these today: is integration of financing and delivery the future? And what’s to become of the 21 million who gained insurance coverage through the ACA, including the 12 million who expect to get subsidies to pay their premiums (estimated at $43 billion this year).
  • Consolidation: What’s the future for industry consolidation? Will FTC recent constraints on health system consolidation in Pennsylvania and Chicago be sustained or revisited as appointments to key posts in the Department of Justice and FTC are made. What’s the view of the new administration toward mega-mergers like CHI-Dignity Health, Aetna-Humana and Anthem-Cigna to name a few.  And will the Trump affinity for  free market competition lead to mega-players akin to other industries like banking where five organizations control 45% of assets nationally, airlines where 4 carriers control 80% of passenger miles flown?
  • Veterans Health et al: And how will the new administration orchestrate pledged improvements in veteran’s health, lower drug prices, protection of Medicare, trade agreements and tax reforms that impact U.S. drug and device manufacturers that operate globally and much more?

Answers to these are unknown. And they’ll not be found overnight. That’s the new, new normal. Uncertainty.

Most healthcare organizations put their 2017 Strategic Plans to bed before the election. Capital and operating budgets are already in place as by-products of their planning effort. Each is based on assumptions that carry a high level of certainty.  The election results changed things for many.

The new, new normal in U.S. healthcare is about navigating uncertainty.

For drug and device companies, the news is mostly good. Though the 12 nation Trans Pacific Partnership trade deal appears dead and the Trump campaign railed against drug prices, price controls appear unlikely.  The elimination of excise taxes on medical devices and mandated discounts for prescription drugs appear likely. The administration is likely to focus on streamlining the FDA’s approval process to create more competition which could take years. That’s the reason their stocks in these sectors have gained 10% since the election.

Ditto good news for the health insurance industry. Repeal of the ACA means onerous requirements like essential health benefits and premium increase constraints go away. They’ll benefit from greater flexibility in setting premiums and benefits design. No doubt, they’ll negotiate around guaranteed issue and risk-ratings to strengthen their bargaining position. The marketplaces will be auctioned off to the states, and commissions will be created to define a path forward for private coverage just in time for the 2018 elections. All in all, good news.

For health information technology companies, the news is mixed: there’s no evidence meaningful use will be suspended at last through Stage Two since its funding is outside the ACA, but fear that hospitals and physicians might pull back investing in HIT given mounting uncertainties is evident. Digital health and telemedicine sectors are the exception as the healthiest hospital systems advance their care coordination and population health management efforts but solution providers in both sectors are plenteous and standards around privacy and security risks a work in process.

But for providers, especially hospitals, the election outcome is particularly unsettling. As insurers gain leverage and employers press for lower costs, they’ll hammer physicians, hospitals and post-acute providers for steeper discounts. Medicare’s path will be an unknown for a while: will the GOP successfully orchestrate its transition to a premium support model? Will its mandated bundled payment and value-based purchasing programs carry over as a new CMS team steps in? As Medicaid is transferred back to the states via block grants, will providers be commoditized by the private Medicaid managed care organizations currently used in 39 states to keep costs/beneficiary low? For physicians, MACRA isn’t likely to go away: the election assures that at least 90% of eligible physicians will simply opt for its lower risk MIPS payment model until the dust settles around alternative payment programs like ACOs. Thus, for all providers, uncertainty is reality. And for hospitals, the uncertainty is precautionary.

In most hospitals, boards and management are meeting to revisit their 2017 plans in light of the election results. Like early-stage prostate cancer for men, watchful waiting is a reasonable response to the new, new normal. Uncertainty can be debilitating but a few things are clear:

The certainty of escalating cost pressure. Operating margins for hospitals will shrink faster than anticipated. The potential suspension of insurance coverage for 21 million newly insured means increased bad debt for hospitals. That’s reality. Scale and scope need fresh attention: affiliations and partnerships make more sense now than ever. And cost reduction efforts will take center stage beyond the bread and butter punch list promoted by most consultancies– supply chain improvements, workforce productivity, capital costs for bricks, sticks and technology, and formulary design. Clinical process redesign will be first and foremost: a recent Truven analysis showed savings of $400 per admission in cardiology, gastroenterology and other key programs that are designed around efficiency and effectiveness—more than savings in formulary design and other staples in cost reduction. These expanded hospital cost reduction efforts will necessitate attention to medical practice operational performance since one in three physicians is now a hospital employee and compliance risk mitigation to avoid penalties for safety lapses, avoidable errors and suboptimal outcomes. Add cost effectiveness in data capture necessary to quality, safety and costs, rationalizing of health information technology investments, surgical precision in the design of health insurance benefits for hospital employees and openness to outsourcing virtually every function where efficiency and effectiveness gains can be realized—that’s the widening domain of hospital cost reduction. And it’s certain to be a priority.

The imperative of physician leadership. Physicians aren’t happy. The majority in their ranks believe the health system is deteriorating as their clinical autonomy is challenged and incomes threatened. Being an employee of a large medical group or hospital is not a desired end-game for many but remaining independent seems a pipe dream to most. And the complexity of clinical practice—adherence to evidence, measuring and monitoring outcomes and patient experiences, engaging peers in care coordination, converging behavioral, physical and alternative health disciplines in diagnostics and treatment planning, and acclimating to person-centered care that’s transparent—is daunting. Hospitals bear the brunt of these understandable feelings: they’re intense. Effective physician leadership will be imperative in every sector of healthcare as the new, new normal unfolds. It requires business savvy that compliments clinical training: as financial pressures mount and regulatory expectations change, understanding creation of and access to capital, compliance risks, workforce performance, and day to day operations will be as important as acumen in understanding signs, symptoms, risk factors and co-morbidities. System-building is the future: that’s certain. And those activities, programs, investments, relationships and business interests will revolve around capable physician leadership and financing and delivery are fully integrated.

The centrality of person-centered services. Individuals in every stage of health are the most important stakeholder in the new, new normal. Patient-centered care is limiting: it conveys a paternalistic demeanor toward individuals lending to widespread variability in access, costs and outcomes. It’s limited to inpatient and outpatient services delivered by providers to patients. That’s not the future. Employers are pushing away from conventional coverage forcing employees into high deductible plans. Social media and digital health are providing meaningful comparisons of providers, drugs and plans conveniently and credibly. Health is being defined more broadly around concepts of wellbeing in which social determinants and community programs matter. Alternative health, retail services, telemedicine and online services are as critical in the new, new normal as beds and clinics. Healthcare organizations that default to traditional views of individuals as patients and enrollees risk a growing opportunity for growth and innovation. Transparency in interacting with individuals will be more important than ever: the unintended consequence of Campaign 2016 is widespread public disillusion with established institutions and suspicion about “fake news”.  That’s the reality of the new, new normal.

The election 12 days ago assures uncertainty in U.S. healthcare. Across our system, the unknowns outweigh the knowns. The new, new normal need not be paralyzing: it presents new opportunities for organizations that adapt.


P.S. The election surprised many. In this Thanksgiving season, we should celebrate a system where our periodic political campaigns are the basis for the governing of our Republic. Regardless of the outcome, we live in a system that’s imperfect but still “of the people”.

Categories: OIG Advisory Opinions

How Doctors Can Help Win the Next Election

Sat, 11/26/2016 - 20:39

On the morning of November 9th, the day after the 2016 U.S. Presidential Election, a visceral sense of shock was felt throughout the campus of Harvard Medical School. Donald Trump’s victory appeared to be an abrupt rebuke of so many of our commonly held values—equality, service, compassion. As medical students and physicians in Boston, we understood that we were isolated—both geographically and ideologically—from the myriad forces that swept Mr. Trump into office. However, there was something unsettling about our collective disbelief. How was it that so many of us had failed to recognize the depth of pain and divisiveness that existed within our country? There arose, in all of us, a need to understand.

In the aftermath of the election, political analysts have ascribed Trump’s victory to several themes—condemnation of the intellectual elite, widespread economic disaffection, and the rise of a potent strain of populism.  However, closer inspection reveals another contributor to this startling election result. Though the final votes are still being tallied, it is clear that Mr. Trump will have received fewer votes in victory than the previous two republican nominees garnered in defeat. Instead of representing a powerful mandate, Mr. Trump’s victory hinged on vast portions of the electorate choosing to stay home. Nearly half of all Americans did not cast a ballot in this election1. As captured poignantly by Jon Favreau, former speechwriter to President Obama, “democracy is fragile and belongs to those who show up.” 

With this in mind, what can we as medical students, physicians, and allied healthcare professionals—no doubt part of the “intellectual elite”—do to heal the personal and societal wounds from this election? How can we ensure, going forward, that the values to which we adhere remain secure? Answers to these questions will likely require significant reflection, but we believe that democracy is at its best, and most equitable, when all voices are heard. Therefore, we suggest that there is meaningful and feasible action that we can take today. We can help our patients register to vote. 

Voter Registration in a Healthcare Setting is Meaningful

Since the pioneering work of Rudolf Virchow in the 19th century, generations of physicians have sought to improve the social factors that cause illness among their patients. This advocacy has led to, among many others, the provision of safe drinking water, widespread access to vaccines, and campaigns to reduce cigarette smoking. More recently, physicians have focused their attention on the so-called “social determinants” of health—factors like housing instability, poor nutrition, and occupational exposures. The number and scope of interventions designed to improve social determinants have expanded dramatically, and in an effort to focus physicians on the most impactful projects, Russel Gruen and colleagues developed a novel framework. Put forth in a 2004 special communication in JAMA, they delineated between professional obligations—which address social issues that both directly cause illness and are amenable to change—and professional ambitions—which tackle the broader social factors that indirectly affect health2. Professional obligations must come first in any provider’s agenda, but ambitions too should be championed. Voting, of course, does not directly cure disease, but it can empower citizens to influence society around them. A vote for any candidate or platform propels a particular healthcare agenda, whether it defends or denies women’s’ reproductive rights, raises or lowers the price of prescription drugs, or expands or narrows access to healthcare. Our system is most equitable when all voices are heard, and regardless of one’s own political stance, promoting voter registration is a worthy aspiration.

Voter registration in the U.S. is indeed problematic.  Driven by low overall rates of registration, turnout for American elections is lower than in almost every other developed country around the world3. Additionally, wide discrepancies in voter turnout exist across demographic groups. For example, in 2012, Asians and Latino Americans voted at a 20% lower rate than whites or blacks. Poorer and less-educated citizens turned out at roughly half the rate of their more affluent peers, and similarly low levels of voting were observed among Americans with disabilities and unstable housing opportunities4. While not yet fully characterized, the results from this month’s election are likely to show a familiar trend.

The same demographics least likely to vote are also those with the poorest health in our society. Failing to vote, of course, does not lead to poor health, but the two are certainly related.

A 2001 study found a striking connection between voter participation and self-reported levels of health. Stated simply, citizens in states with the greatest voting disparities between rich and poor tended to rate their health poorly, whereas citizens of more equitable voting states rated their health better. This difference remained significant even after controlling for baseline levels of wealth and income inequality5. The connection between a state’s voter turnout and overall health seems peculiar, but Kim Qualie Hill, a professor of political science from Texas A&M University, and his colleagues posited one explanation. In an article published in the American Journal of Political Science, they found that electorates that contained fewer low-income voters tended to have less generous social welfare systems6. They reasoned that administrations enact legislation that favors their electoral coalitions, and that higher-class interests—overrepresented in such blocs—are often at odds with policies benefitting the poor. These findings suggest that, by failing to vote, society’s most disenfranchised citizens are forgoing a powerful opportunity to improve their conditions, health among them. 

Voter Registration in a Healthcare Setting is Feasible

In the clinic patients come first, and while many healthcare providers aspire to make sweeping improvements in socioeconomic inequalities, time is increasingly constrained. So how can busy practitioners find time to address professional ambitions like voter registration? Luckily, recent experiences inform a practical path forward.

Studies have shown that many unregistered voters simply lack the initiative, time, or understanding to navigate the registration process, but are receptive to assistance. Citing the National Voter Registration Act of 1993—which encourages providers of public assistance, like Medicaid services, to build voter registration capacity—the National Association of Community Health Centers ran a voter registration drive in 2008. Through their efforts more than 18,000 low- and middle- income citizens were added to the official rolls. Another program, conducted in 2012 at two Federally Qualified Health Centers in the Bronx, showed that a large number of voters could be registered easily without requiring significant physician effort, compromising patient-doctor relationships, or creating undue political influence7. Patients were simply asked about their voter registration status while waiting to see their doctor. If they were unregistered but interested in voting, clinic staff provided them with voter registration cards and answered any of their questions. Completed forms were then mailed to the Board of Elections. In all, each registration took as little as 5 minutes to accomplish.

It is important to note that it would be inappropriate for physicians, with their institutional and professional power, to coerce their patients to adopt specific political beliefs or actions. However, these studies showed that when performed as a nonpartisan public service, either by clinic employees or physicians themselves, voter registration drives do not pose legal or ethical concerns. While it is unclear how many of these patients subsequently cast a ballot in an election, registering to vote represents a substantial step in the right direction.

Path Forward

Now is the time for healthcare providers to facilitate voter registration among their patients. We are poised at an uncertain time in the course of our democracy, and recent events have put the future direction of healthcare into question. President-Elect Trump vowed during his campaign to repeal the Affordable Care Act—an idea likely to be welcomed in the GOP-controlled congress. Additionally, roll out of the Medicare Access and CHIP Reauthorization Act is set to begin in 2017, and the tenor in Washington will likely play a major role in how the law is instituted. Although the legislative agenda over the next 4 years remains unclear, it seems likely that millions of Americans are in jeopardy of losing access to affordable, high-quality medical care. However, if it is the will of the voters, future laws might be enacted to strengthen our healthcare system. Whatever direction, everyone should have a say in their health.

The success of a democracy, by definition, depends on the engagement of its participants. Healthcare providers, by virtue of serving all patients, are uniquely poised in society to understand the diverse needs of a diverse populace. Physicians already counsel their patients to quit smoking, adjust their diets, and apply sunscreen, and I strongly believe that registering to vote should join this list of prescriptions. This simple act can enable patients from every socioeconomic and ethnic background to fight, in a small but absolute manner, for the rights that they believe in. Healthcare and otherwise.


1. McDonald, MP. 2016 November General Election Turnout Rates. United States Election Project. accessed November 14, 2016.

2. Gruen RL, Pearson SD, Brennan TA. Physician-Citizens—Public Roles and Professional Obligations. JAMA. 2004; 291: 94-98.       

3. Desilver D, U.S. Voter Turnout Trails Most Developed Countries. Pew Research Center. August 2, 2016. accessed November 14, 2016.

4. Perez V. Representational Bias in the 2012 Electorate. Project Vote. 2015

5. Blakely TA, Kennedy BP, Kawachi I. Socioeconomic Inequality in Voting Participation and Self-Rated Health. Am J Public Health. 2001; 91: 99-104

6. Hill KQ, Leighley JE, Hinton-Andersson A. Lower-Class Mobilization and Policy Linkage in the U.S. States. Am J of Political Science. 1995; 39: 75-86

7. Liggett A, Sharma M, Nakamura Y, Villar R, Selwyn P. Results of a Voter Registration Project at 2 Family Medicine Residency Clinics in the Bronx, New York. Ann Fam Med. 2014; 12: 466-469

Categories: OIG Advisory Opinions

Two Nations Separated by 5.3 mm

Fri, 11/25/2016 - 19:22

A popular meme is that the U.S. spends more on healthcare than other developed nations but has nothing to show for that spending. This is different from saying that the U.S. spends more, but achieves something, but the something it achieves is so little that it isn’t worth the public purse. The latter is difficult to assert because the asserter must then say how little is too little in regards to how much is spent, and why. It is easier believing the excess spending has no effect whatsoever, zilch in fact, because this absolves one from having to apply a value judgment on how much a life is worth. This meme, a convenient heuristic, like other convenient heuristics, is wrong.

A recent study looked at trends and outcomes in the management of abdominal aortic aneurysm (AAA) in the U.S. and the U.K. An aneurysm, dilation of the aorta, is more likely to burst the bigger it gets. Aneurysms should be repaired before they rupture because the mortality of ruptured aneurysms can be 50 %. The study, which analyzed several databases that recorded surgery, size of aneurysms, and cause of death, found that Americans repair twice as many aneurysms as the Brits, and the repaired AAAs are smaller, on average, in the U.S. Between 2005-2012 elective AAA repair (i.e. repair of non-ruptured aneurysms) increased from 27 to 32 per 100, 000 in the U.K, and from 58 to 64 per 100, 000 in the U.S.

Does the increased frequency of repair of AAA in the U.S. reap benefits? It seems so. In 2012, there were twice as many ruptured aneurysms in the U.K. as the U.S., and aneurysm-related deaths were 3.5 times higher in the U.K. Only trends, not absolute numbers, should be inferred from secondary databases. And the trend is clear: in both the U.K. and the U.S., the rates of ruptured AAA and aneurysm-related deaths have declined, while elective AAA repair has increased. The U.K. has reduced aneurysm-related deaths by 20 per 100, 000 by adding only 5 per 100, 000 cases of elective repair. It seems that U.K. has picked the low-lying fruits (large aneurysms) and the U.S. is approaching diminishing returns.

Roughly, for 32 excess electively repaired AAAs, there are 9 fewer ruptured AAAs and 25 fewer aneurysm-related deaths, per 100, 000. These figures aren’t exact but show that repairing AAA before it ruptures has a good return-on-investment and, as far as life expectancy is concerned, more the merrier. Of note, electively-repaired AAAs have the same outcome – i.e. the same complications and therapeutic effect – in the U.S. and the U.K. Neither the skill of the surgeon, nor the attentiveness of the support staff, seems meaningfully different between the two countries.

The corollary of Americans repairing more AAAs is that the size-threshold for repair of AAA in the U.S. is smaller than the U.K. The average size of repaired AAA is 5.8 cm in the U.S. and 6.4 cm in the U.K. At the time of repair of the AAA, on average, is 5.3 mm smaller in the U.S. than U.K. 5.3 mm is a lot! Risk of aneurysm rupture is non-linear – the increased risk of rupture of 65-mm vs. 60-mm aneurysm is more than the increased risk of rupture of 45-mm vs. 40-mm aneurysm, even though the difference in size in the two pairs is the same. The non-linearity of rupture risk means that excess 7-cm AAAs floating around in the U.K, for example, will contribute disproportionately to aneurysm-related mortality.

Clearly, the Americans are repairing aneurysms sooner than the Brits and, in many instances, aneurysms smaller than the recommended size threshold. Further, AAA is more likely to be repaired endovascularly – i.e. by a stent – in the U.S. Stents have lower morbidity-mortality than open repair. In the U.S., there are more physicians available to stent AAAs, or more willingness in physicians to stent, or both. Why is this so?

Consider an analogy. Peter drinks more alcohol than Paul because he has more alcohol in his house than Paul. But the reason Peter has more alcohol in his house than Paul is because he drinks more alcohol than Paul – he drinks more because he has more and he has more because he drinks more. The process is recursive. Americans stent more because it pays more to stent than not to stent. But crucially, the “more stenting” is not for naught. Americans are more aggressive not only with stenting AAA, but surveillance of AAAs – I can attest to that as I read follow-up CT angiograms for AAA. The “Aneurysm Surveillance Program” puts the vigilance of the Central Intelligence Agency to shame.

The study suggests that the size-threshold for repair of AAA, presently 55/ 50 mm (men/ women), should be lower. Thresholds are derived from risk vs. benefit of an intervention – the safer an intervention, the lower the threshold for intervening. Threshold for repair of AAA was derived from a randomized controlled trial (RCT) when aneurysms were repaired by open surgery. Threshold should be revised because now stents, which are safer, are mostly used. The study is an excellent example of how analysis of a secondary database can question practice derived from an outdated RCT.

The study also hints that screening for AAAs may be beneficial. However, it won’t be easy for an RCT to show a treatment effect of mass screening for AAA, even though, undoubtedly, some lives will be saved by screening. This is because the outcome, death from ruptured aneurysm, is still an uncommon occurrence, at a population level.

In summary, Americans stent more aneurysms and stent smaller aneurysms than the Brits, increasing the longevity of some people with aneurysms. There is another message in this paper. The Americans are repairing aneurysms smaller than the recommended threshold. To state this bluntly – they’re saving lives by ignoring evidence-based medicine (EBM). This is, partly, how medicine progresses – someone ignores the status quo, i.e. guidelines. To advance science you must, occasionally, ignore EBM. This is a paradox until you think about it.

This is a good time to deliver my annual message to both countries. Brits: if you want American outcomes, put your money where your mouth is. Americans: if you want British healthcare spending, build more graveyards. Sometimes less is more. Sometimes more is more.


About the author

Saurabh Jha is a radiologist and contributing editor to Healthcare Blog. He makes his living measuring aneurysms. He can be reached on Twitter @RogueRad

Categories: OIG Advisory Opinions

American Healthcare Rackets: Monopolies, Oligopolies, Cartels and Kindred Plunderbunds

Fri, 11/25/2016 - 05:20

The Healthcare Dollar, the Healthcare Industry and the Healthcare System are shibboleths. All are parlance. All render terms such as Healthcare Profession, Service Profession, and Healthcare Professionals quaint. All drive linguistic determinism: if it’s labeled so, it must be so. Furthermore, all have become jingoistic. This is our dollar, our industry, our system and don’t dare tread on us.

These are shibboleths that engender considerable cognitive dissonance. If healthcare is no longer a service profession but an industry that transfers wealth in a systematic fashion, shouldn’t it comply with the legal constraints that tightly govern other industries including others that serve essential needs of the population?

For many such industries the states have an important degree of control over productivity and pricing. Insurance Commissions provide governance over the cost and scope of companies purveying homeowner’s, automobile and Workers’ Compensation insurance. Utility Commissions regulate the rates and services of private sector public utilities. Boards of Education perform similarly whether education is public or private. Federal statutes complement the states’ role in consumer protection. For example, attempts to construct monopolies are met with regulatory zeal.  Otherwise communication and energy monopolies would never have been “busted” and unconscionable pricing would be rampant. This form of check-and-balance relies on the consumers’ political leverage when they realize they are being ripped off.

The track record is far from perfect. Take the “military-industrial complex” (please), an industry charged with supplying armaments and whatever else is needed to support the proclivity of our species to seek violent solutions to disputes and violent means to assuage insatiable greediness. Historically, this was a cottage industry populated by craftsmen, farmers, and all manner of factotums. This cottage industry, like nearly all others, did not survive the industrial revolution. Thanks to unbridled growth in demand and in ingenuity a behemoth has superseded.  In FY 2017, total US government spending for defense (including military defense, veterans’ affairs, and foreign policy) is budgeted to be $853.6 billion, with ¾ for “defense.” This has represents about 5% of the GDP annually during the War on Terror. The expenditure was about 40% of the GDP during World War II and settles down near 1-2% between wars. The military-industrial complex is largely an oligopoly since very few companies are in the modern armaments business, or the business of providing supportive services for that matter. It is a peculiar empire with many an idiosyncrasy, including many that are tolerated despite ethical compromises. For example, the Pentagon typically contracts for goods and services on a “cost-plus” basis resulting in delays and overruns which may lead to penalties and subsequently to more costly contracts that factor in the penalties and promote recidivism. Many an advance in weaponry is initiated by the private sector in collaboration with government and military professionals. We are all aware of the notion of the “revolving door” which predisposes to bread buttering even if the butter must remain in cold storage for a regulated interval. We are all aware of abuses in pricing, such as the infamous air force ashtrays. We are all aware of “this dog won’t hunt” disappointments moldering somewhere without penalty for the manufacturers. We are all aware that the denizens of K Street include a great number of lobbyists for the military-industrial complex. These lobbyists have many agendas, not the least of which is to participate in the debates that define allies who are an appropriate primary or secondary market for armaments. We are also aware of the lobbyists whose agenda is domestic sales. We are awash in claims of our military’s ascendency based on incontrovertible outcome measures in the details of the violence that is wreaked and the intensity of the racket made by our rattling sabers. We are variously amazed and bemused by the mind-boggling transfer of wealth necessary to create corpses. It’s all business as usual. It’s all assumed or asserted to be a necessary evil. And it’s so well-funded and established that cries for reform are largely lost in the din of routine.

It’s so familiar a scenario that we can find it reasonable for the Healthcare Industry to operate on a similarly organized playing field. Before I detail the parallels, let me emphasize that I am not unleashing a diatribe against the players. I am targeting the playing field. I am also not writing a partisan screed. The playing field I decry is the home turf today for fee-for-service, ACA, single payer, block grant, and other reform advocates.

I do not excuse the players for the errors of their ways, but blaming them misses the forest for the trees. Many, if not most, of the leading players in the healthcare and military-industrial complexes are competent, well-meaning and doing the best they can. For example, most military leaders were the fine youngsters admitted to our service academies where they are imbued with traditions of honor and patriotism. The precedent for training leaders in medicine is more of a moving target. Unlike the military, healthcare survived the industrial revolution as a cottage industry and its practitioners as a guild well into the 20th C before it transitioned to “industry” statues. Nonetheless, most students enter medical school today brimming with talent and with sincerely held goals regarding the betterment of mankind. American medical schools are less likely to foster these goals than the service academies. The goals of the industry insinuate earlier. The unanticipated consequences of this insinuation become apparent in postgraduate life. That’s when the young doctor is disabused of any residual notion that the patient’s care and the people’s wellbeing are principle raisons d’être of the Healthcare Industry. These young practitioners have crossed the Rubicon and now their resilience is to be tested.

Connivance and Collusion

So much of what is reprehensible about American healthcare has been comprehensively documented by many authors – including me in the context of my writing to empower patients to ask telling questions. Here I will emphasize the enabling economic and organizational structures that would not be tolerated in a service profession but are well entrenched in the Healthcare System.

Foremost is rampant Regulatory Capture. The Nobel Prize winning economist, George Stigler, was one of the luminaries in the mid-century “Chicago School”. Stigler developed a theory of economic regulation by analyzing the positive and negative influences of public power on the economic status of industries and occupations. Regulatory capture recognizes the tendency for a regulatory agency, created to act in the public interest, to be dominated by the interests it was meant to regulate. In the Healthcare System captured agencies are seldom furtive; rather the capture is declared expedient if not necessary.

The FDA is our object lesson. The current director was appointed despite considerable misgivings relating to his career as a drug “trialist”, including his prior role as director of Duke’s Clinical Research Institute (CRI), a Clinical Research Organization (CRO.) He denies being on the payroll of any pharmaceutical entity although his compensation at Duke was noteworthy and the CRI itself brought Duke a pretty penny (in a law firm he’d be called a “rainmaker”). His predecessor at the FDA departed under something of a cloud relating to conflictual relationships between her husband’s financial firm and particular pharmaceutical firms. All this is innuendo at least, certainly unseemly, but it pales next to the institutionalized conflictual relationships that exist between the FDA and the pharmaceutical industry. Several are statutory or officially sanctioned. A substantial portion of the FDA’s budget is derived from users’ fees, income collected from the petitioning company as the price for determining whether any New Drug Application merits licensure. This tithe alone renders the relationship between the FDA and its clients unhealthy. The political climate keeps them in bed together; there are 6 healthcare lobbyists available to “help” each member of congress appreciate the value of the pharmaceutical industry and of its omnipresent advocacy organization, PHrMa. PHrMa is a behemoth on K Street shelling out far more largesse in 2012 than the lobbyists for the military-industrial complex and big oil combined. Of course, this budget is skimmed off the top of the cost of drugs, devices and potions.

There are other aspects of the licensure process for new drugs that should cause widespread discomfort and debate. Very few of the licensed new drugs are really “new” let alone major therapeutic triumphs. Most are either “me too” agents or afford very few patients more than very little benefit. On top of that, the rare drug that is really a breakthrough is a nearly always a triumph of academic investigators funded by federal dollars; the pharmaceutical firms co-opt the federally funded intellectual property, often gratis, and patent the therapeutic derivative. These are the hard realities of an industry that has largely overgrown its usefulness but not its avarice. And the avarice is facilitated by naiveté on the part of society and inadequacies of oversight. I can find little in the history of the pharmaceutical industry that speaks to originality in its business model, only exploitation. The industry backed onto its perch as an inviolate cash cow. One secret to this evolution is my friend and former colleague, the brilliant biostatistician Dennis Gillings. We were junior faculty together, co-authoring papers and co-editing a book in the 1970s, when Dennis discovered another personal skill and proclivity. Dennis was willing to consult with the pharmaceutical industry regarding the development of drug trials and the presentation of the forthcoming data in a fashion that satisfied the requirements for licensing new drugs or licensing old drugs for different indications. That proclivity became Quintiles Transnational and then the entire CRO industry. I have a great deal of respect and warmth for my Horatio Alger friend but no respect for the industry he spawned and the consequences of its success. Without CROs, I can’t imagine that total prescription drug spending would have exceeded $450 billion (16.7 percent of health care spending) by 2015 or be estimated to increase annually by 6.7 percent through 2025.

Here’s how the shell game works. CROs are the go-to for pharmaceutical firms when they are ready to subject a drug to a licensing trial. Since they anticipate that the drug will have little efficacy at best, affording slight benefit to most or more benefit to very few, the licensing trials are expensive, large, and sloppy (it’s hard to find appropriate subjects, harder to recruit them, and hardest yet to maintain adherence to the trial’s methodology.) CRO’s are contracted at great cost to undertake this exercise. If this was elegant science, equipoise would dominate the methodology, i.e. no one would have any preconception regarding the outcome. However, this is a business arrangement that inherently lacks equipoise: the drug company anticipates success and the CRO has reason to see their client emerge pleased with their contracting. Large sloppy trials seeking small effects lend themselves to all sorts of data massaging and data torturing in the subliminal (or not) quest for success. No wonder these trials are far more likely to demonstrate a statistically significant degree of efficacy if undertaken by a CRO than when the same drug is studied by trialists with federal funding.

So, the applications for the licensure of new drugs that appear in the FDA’s in-box, wrapped in user fees, are seldom overwhelmingly compelling. They tend to support the assertion that there is a statistically significant difference in efficacy between the active drug and the comparator although the magnitude of difference is debatable in terms of clinical meaningfulness. The FDA is not unaware of this “subtlety”. It convenes advisory panels of experts with relevant experience and often relevant conflictual relationships, which Congress deemed acceptable. Interestingly, when studied these experts are not predisposed to look kindly on drugs produced by companies for which they are paid consultants; rather, they are predisposed to disparage the competition. So me-too and small effect drugs are routinely licensed and heavily marketed with language often designed to mislead. For example, how often do we hear that some agent offers a 50% reduction in some outcome when we should have been told that if 400 patients took the drug for 6 months, only one would suffer an untoward outcome compared to 2 who didn’t take the drug (e.g. AstraZeneca’s Jupiter trial which turned Crestor into a “blockbuster” drug ). This is a ploy that plays out at great expense only in America. Direct-to-consumer advertising is not countenanced in any other country save New Zealand where the approach is, comparatively, very understated.

All this is business as usual, and I am not the sole critic. Recently, the FDA and CMS (Medicare Administration) have decided to collaborate regarding the clinical utility of the licensed interventions afforded the Medicare population, a collaboration offered with considerable sanctimony as if this is a novel agenda. It isn’t; it ignores precedents such as PCORI in the ACA, the clinical guidelines kerfuffle, and the machinations of the National Quality Forum (NQF) and the Institute for Healthcare Improvement (IHI). The NQF and the IHI started as advocacy groups that have grown into sizable organizations that capture many millions of dollars to push their agenda. For example, the NQF receives over $10 million annually from CMS (Medicare) to provide the performance measures CMS uses to monitor the quality of the services it purchases. NQF is still reeling from scandals. The first caused the dismissal of its Chair, Dr. Charles Denham, after the Department of Justice accused him of profiteering from kickbacks to the tune of $11.6 million. He was replaced by Dr. Christine Cassel, recruited in 2012 from the American Board of Internal Medicine (ABIM) which she had chaired for a decade. Her appointment to NQF raised a cloud of dust when it was learned that she was paid nearly a quarter of a million dollars by Premier, Inc., a Charlotte, North Carolina company that offers group purchasing and performance improvement consulting for nearly 3000 hospitals and thousands of nursing facilities. Premier clearly has a stake in the work of the NQF and Cassel has since seen wisdom in discontinuing her relationship with this and other similar entities.

The FDA is the object lesson I’ve focused on. But there is a wealth of object lessons all with their distinctive acronym: ACGME, ABIM, AHA, ABMS, ACS, CMS (MIPS, MACRA), HIPAA and there are many more in the alphabet soup. Others are known by their full name like The Joint Commission, a non-governmental agency that wields accreditation with power and authority causing some 20,000 health organization, particularly hospitals, to cringe and comply.  Acronym or not, all these bearers of standards beg critical analysis. All have regulatory influence and all have fallen victim to regulatory capture to some degree. Too often it’s to a degree that undermines benefits to be derived from adherence to standards and regulations. The overlapping of purview and the ubiquity of regulatory capture has created a regulatory establishment that requires ever more funding to support its unbridled reach. It has a life of its own which increasingly impedes the recognition of and response to the needs of the person who has turned to a physician for solace, support, wisdom and care. The American Healthcare Industry desperately needs to be healed of this affliction so that it can provide the infrastructure for America’s Service Professionals to practice according to their conscience and for America’s patients to be served with the uncompromised elegance that has finally become possible in the 21st C. The promotion and growth of a Healthcare Industry is social iatrogenesis at its worst.

Nortin Hadler emeritus professor of medicine and microbiology/immunology at the University of North Carolina, is the author of Worried Sick, Rethinking Aging, Citizen Patient, and By the Bedside of the Patient. 

Categories: OIG Advisory Opinions

Will Trumpcare Repeal & Replace Obamacare?

Wed, 11/23/2016 - 21:27

Donald Trump made repealing Obamacare one of the cornerstones of his campaign. Now that he has won, his administration will face the daunting task of unraveling nearly seven years of Obamacare. Republican policymakers cannot agree how to proceed. Some Republicans believe Trump should repeal Obamacare piecemeal; others worry that would be a disaster.

Whether you oppose or support the Affordable Care Act (ACA), it has structural flaws that will have to be addressed. Addressing those flaws will be less painful if repeal of the costly insurance provisions is accompanied by a replacement plan. Congress can repeal some Obamacare provisions using budget reconciliation, which requires only a simple majority. Only those provisions involving taxes and the budget can be repealed this way. The individual and employer mandates and all the ACA taxes can be repealed using budget reconciliation. However, the regulations that prevent insurers from designing affordable health plans cannot. Repealing the insurance mandates require a filibuster-proof majority. A slight Republican majority in Congress means the Trump Administration likely has the power to gut the ACA. However, Trump cannot replace Obamacare without maybe a dozen Senate Democrats willing to go along.

What else can Trump do? Consider this a Scorched Earth strategy, since it is premised on making Obamacare so unprofitable for insurers they would drop out of the individual market. As president, Trump could command his appointed HHS Secretary to drop the appeal of House vs. Burwell. The Obama administration already lost the court case, which found the ACA cost-sharing reduction payments are illegal, because they have not been appropriated by Congress.  Insurers are required to provide cost-sharing reduction payments to low-income enrollees whether or not the health plans are reimbursed for them. Without being reimbursed for the cost-sharing subsidies, insurers would likely leave the market. The administration could also seek to prevent any Court Settlement Funds from being used to reimburse insurers for loses above the budget neutral risk corridors payouts. 

Another powerful weapon Trump will possess is the power to order his HHS Secretary to merely stop enforcing Obamacare’s provisions. Some provisions are not on the chopping block. Trump has already indicated he supports allowing young adults to stay on their parents’ employer plans. He has also indicated he favors retaining the ban on pre-existing condition exclusions. A ban should come with restrictions, however, such as guaranteed issue and guaranteed renewability only for those who maintain continuous coverage. Obamacare provisions that allow anyone to sign up for coverage without proving they have continuous coverage (no gaps of more than 62 days) is what allows people to game the exchange — driving up premiums for continuous enrollees and bankrupting insurers.

The most pressing goal should be to replace all the costly provisions in the ACA with the consumer-friendly health plans most Americans prefer. Increased flexibility in health plan design should also encourage the use of cost-containment tools, such as transparency tools and expanded health savings accounts (HSAs). Trump has already indicated he supports expanded transparency and HSAs. Why not allow HSAs to be a vehicle for saving for family leave, sick days and retiree medical care — regardless of the coverage people choose?

Many Americans do not have access to coverage through work and must pay for health insurance with after-tax wages or pay the full cost of medical treatment out of their own pockets. Trump supports allowing a tax deduction for those who lack access to health coverage at work. Many Republicans also believe a tax credit should be available to those who do not get employer subsidies. The tax credit could replace the cost-sharing and sliding-scale subsidies of the Obamacare exchanges and could be used to purchase private health insurance or to pay directly for care. The credit could be adjusted for health status, or age as a proxy for health status.

Another goal of any reform agenda should be to expand Americans’ access to primary care. If you ask moderate-income Americans what they want out of health insurance, they mainly want to be able to see a doctor should they become ill. Obamacare’s high-deductibles with unlimited lifetime benefits is generally not the kind of coverage they clamor for.

Medicaid also needs reformed to better serve low-income families. States should be allowed to experiment and find solutions that meet each state’s unique needs. A block grant would do this, while holding states accountable for cost-overruns. For able-bodied adults on Medicaid, the program could be designed to transition them to private plans as their incomes rise, including requiring enrollees to pay small premiums; to work, seek work or participate in job-training programs; and requiring enrollees to pay nontrivial copays and cost sharing. States should also be allowed to remove beneficiaries who fail or refuse to pay premiums, co-pays or follow the rules.

The past seven years have been an exercise in futility for many people who have to buy their own health coverage. In its current form, the Affordable Care Act is unaffordable for taxpayers and many consumers. Maybe both major parties can now come together to work on a replacement plan we can all live with. It will not be easy.

Devon Herrick, PhD is a health economist and a senior fellow at the National Center for Policy Analysis (NPCA).

Categories: OIG Advisory Opinions

Congress Shouldn’t Pass FDA Reform Bills Without Addressing Patient Safety and Drug Prices

Wed, 11/23/2016 - 11:01

A major proposed law that alters the way the Food and Drug Administration (FDA) approves drugs and medical devices has been wending its way through Congress since 2014.  Momentum is building on Capitol Hill to pass the legislation in the current “lame-duck” session of Congress. 

That shouldn’t happen. 

The House passed its version of the legislation—the 21st Century Cures Act (hereafter the Cures bill) —in July 2015.  The Senate health committee created and passed 19 related bills, under the banner “Innovation for Healthier Americans,” this past spring.

Sen. Lamar Alexander (R-Tenn) pushed, without success, to get the legislation to the Senate floor this past summer.  Now, he and proponents—which include the pharmaceutical and medical device industries and dozens of research and patient groups who get support from those industries—seek to pass the legislation in the lame-duck session.

The election of Donald Trump may add to momentum to pass the legislation now, or undermine its chances both now and in 2017.  It’s not yet clear.    

Proponents’ main arguments for lame-duck passage are:

(a) The need to foster innovation at the FDA and bring new drugs and devices to market sooner;

(b) The House bill would increase funding for NIH, by $9 billion over 5 years;

(c) The Obama administration’s “cancer moonshot” and precision medicine initiatives dovetail with the intent of the House legislation, and funding for both may be folded into any final legislative package;   

(d) Americans expressed anger at their government in the election and Congress should pass this bipartisan legislation to demonstrate that lawmakers can work together to get things done.

Some provisions of the House and Senate bills take steps in the right direction.  And I join the overwhelming chorus of voices supporting increased funding for medical research and FDA.     

But enough problems remain with this complex legislation to caution strongly against its hasty passage in lame-duck session.  

First, a major premise of the legislation is, in fact, wrong—namely that the FDA stifles innovation and advances in treatment by approving drugs and devices too slowly compared to other countries.  In fact, at least two-thirds of the novel drugs approved each year from 2012 to 2015 in the U.S. were approved here before they were in any other country.  That’s because many newly approved drugs are currently being reviewed through existing FDA expedited review programs.

Ignoring those facts, the Cures bill and Senate legislation seek to speed-up drug and device approval by weakening many of FDA’s safety and effectiveness standards, without strengthening post-market tracking and evaluation of products. The Senate bills are a significant improvement over the House’s Cures Act in this regard, but they, too weaken current FDA approval standards. 

The second reason to delay consideration of this legislation until 2017 is that must-pass FDA funding is up for renewal next year.  This is the mandatory every-five-year process that sets “user fees” for companies applying for approval of prescription drugs and biologics, medical devices, generic drugs, and biosimilar treatments (“generic” versions of biologics).    

And there’s a third, equally compelling reason to delay consideration to 2017.  Over the past six months it’s become clear that the public is fed up with rising costs of prescription drugs and other medical products.  A series of price hikes has amplified the outrage—most recently, over the 5-fold increase in the price of life-saving EpiPens. 

A survey of 1,205 consumers in October by the Kaiser Family Foundation, for example, found that prescription drug prices are the public’s #1 health policy concern.    Sixty-three percent of respondents agreed that the government should take action to lower drug prices.   

Thus, if President Trump and newly elected lawmakers want to be responsive to one of the public’s main healthcare concerns—and demonstrate the ability to work together—they should commit to tackling the issue of prescription drug prices and costs. 

Consumer groups weigh in

Three consumer coalitions wrote letters this month to Congressional leadership calling for consideration of the FDA legislation to be put off until next year. 

I agree that spending is very likely to increase when standards for approval are lowered without ensuring that unsafe or ineffective (and thus money-wasting) medical products can be much more quickly taken off the market. 

In addition, new funding for the cancer moonshot and precision medicine initiatives, while laudatory, could yield new and expensive drugs that are not as rigorously evaluated for effectiveness before approval and not thoroughly assessed after they are approved.

A recent study of cancer medicines painfully illustrates that dilemma and the need for more linkage between the results a drug yields and its value in the marketplace—one of the major policy solutions under discussion to restrain drug prices and spending. 

Researchers at the National Cancer Institute and Oregon Health & Science University reviewed all the cancer drugs approved by the FDA from 2008 to 2012.  Two-thirds were approved based on biomarkers or other surrogate endpoints, usually tumor shrinkage over a relatively short period of time.  As a condition of approval, the makers of these medicines were required to conduct post-market studies to assure their medicines were actually extending lives. 

The answer, unfortunately: many were not.  After a median follow-up of 4.4 years, only five drugs that had been approved on the basis of a surrogate endpoint were proven to help patients live longer.  Eighteen drugs (50%) failed to extend life and 13 (36%) have unknown impact on survival because no data on them are publicly available.

The National Center for Health Research looked at the cost of those cancer drugs and found something that lawmakers and the Trump administration need to know:  new cancer drugs that are not proven to work cost just as much as the ones that are effective – up to $170,000 per patient.  Meanwhile, the ineffective cancer drugs remain on the market and Medicare and insurers are still paying for them.


The new administration and Congress should combine the elements of the Senate bills that improve the quality of medical care with new measures that make substantial progress on constraining drug prices and spending.  Initial focus should be on three issues:

  1. Price gouging by companies that have created new “profit centers” by buying, repurposing or repackaging older medical products and boosting their prices 3 to 10-fold or more;
  1. The rising cost of new specialty, biologic, and cancer drugs that have not proven to be as effective or more effective than older drugs, and which are leading to substantial increases in Medicaid and Medicare costs and private sector insurance premiums; and
  1. Rising out-of-pocket costs resulting from insurance coverage design that puts consumers at risk for hundreds or thousands of dollars in annual expenses for very expensive medicines.   

FDA reform legislation presents a unique opportunity for a new administration and Congress to demonstrate good will and bipartisanship—and achieve an early win in 2017 for the American people and public health.  Changes are needed, however, to make sure this legislation does more good than harm.

Diana Zuckerman is president of the National Center for Health Research in Washington, D.C.

Categories: OIG Advisory Opinions