Road To Hellth

Jul
24

Encouraging Common Sense in Public Policy

Science is nothing, but trained and organized common sense.
–Thomas Huxley

First a quick note. Our postings are fewer and farther between this summer due to a particularly busy schedule, but will become more frequent and regular again as we get closer to the November elections.

In the meantime, the dog days of summer seem to be producing relatively few new or interesting journeys on the Road to Hellth. Buoyed by the Supreme Court’s decision, The Affordable Care Act is continuing to allocate money in ways that appear to be directed more toward influencing the results of the election than contributing to the long-term viability of the nation’s healthcare system. A prime example is the ongoing use of “research” money to preserve Medicare Advantage benefits for millions of seniors until just after conclusion of the Congressional and Presidential elections.

Indeed, most everything in healthcare seems to be in a state of suspended animation until after the election. This only makes sense. Why should millions of companies and individuals voluntarily make elaborate and expensive plans based upon a law that may be actively overturned (or at least undermined) if Mitt Romney should be elected in just a few months. No one really knows if ACOs are going to be real or imaginary, whether all of the taxes involved will kick in, or if the dozens of promised carrots and sticks will come into play. So money continues to be spent and decisions continue to be made based upon the existing law, but they are half-hearted.

Unfortunately, this doesn’t mean that reason and common sense are spreading throughout the world of healthcare either. In case you missed it, we would like to illustrate with a seasonal example from the world of schools and camps for children.

By now, virtually everyone knows – or certainly ought to know – that too much exposure to ultraviolet light is a bad thing for skin and human health. The ACA even includes a well-intentioned but ineffective 10% tax to raise money and discourage the use of tanning salons; unfortunately tanning rates have stayed about the same, while the measure has raised far less revenue than previously expected. For many years the American Academy of Dermatology has paid for advertising campaigns that encourage the use of sunscreens and natural shade, discourage tanning and educate laypeople on the high risk of developing skin cancer as a result of unprotected exposure to the sun. One might think that schools and summer camps would have picked up on these themes long ago. But every American institution lives in world where bureaucratic requirements and legal liability concerns eventually trump every other consideration. Jesse Michener, a mother in Tacoma, Washington found this out the hard way when she sent her two daughters school field trip, only to have them return with severe sunburns. The reason? In an effort to ensure that no “drug abuse” takes place, their school has a policy that bans sunscreen use (an over-the-counter item to be sure) without a doctor’s prescription. We’ll let USA Today tell the story as Ms. Michener:

…was horrified to see two of her daughters, ages 11 and 9, return from a school field day with severe sunburns.

The girls have extremely fair skin, and none of the adults at the event offered them sunscreen — or shade, for that matter — as a rainy day turned sunny, Michener, 37, wrote in a post in her blog, Life.Photographed, that got nationwide attention. More than a week later, their skin still is peeling and red, Michener told USA TODAY Wednesday: “It’s appalling.”

Violet Michener, age 11, after her field trip.

…But sunscreen rules are common. They typically stem from state and local policies that stop kids from bringing any drug — including non-prescription drugs — to school, says Jeff Ashley, a California dermatologist who leads an advocacy group called Sun Safety for Kids.

Sunscreens are regulated as over-the-counter drugs, so many districts treat them like aspirin, just to be safe, he says.

Ashley helped get California to pass laws that say kids have a right to bring sunscreen, hats and other sun gear to school. That was nearly a decade ago, but as far as he knows, no other state has done the same.

So there’s a mish-mash of policies. Often, “sunscreen application at school seems to be an issue that each individual school district rules on,” says Jennifer Allyn of the American Academy of Dermatology. “Some treat sunscreen as they would any other fragrance-type product, and forbid their use to avoid allergic reactions. Others require a doctor’s note, and others treat sunscreen like something as basic as Chapstick.” The academy endorses sunscreen use but has no policy on how schools should handle it, she says.

But Ashley says allergy concerns are overblown: “Sunscreen allergies are no more common than allergies to soap. Are schools going to take soap out of their bathrooms?”

Another common concern: Adults will get in trouble for inappropriately touching kids if they help apply sunscreen. That was the question in Maryland last summer when the state enforced, then repealed, a rule forbidding camp staffers or even other kids from slathering lotion on campers. Now it’s OK, as long as parents say it is.

Michener says her daughters also were forbidden to bring hats to school. That’s another common policy, Ashley says. “Schools will tell you hats can be signs of gang affiliation.” Some schools dodge that danger, he says, by selling or supplying identical sun-safety hats…

Why is common sense so uncommon among the people whom we have trusted with positions of public responsibility? Is this really the same country that managed to win World War II (although to be honest, with the help of other countries – the Soviet Union and Britain in particular) and put a man on the moon?

There is no question that, in the hands of children or abusers, some over-the-counter (OTC) medications can be positively harmful. Robitussin® (dextromethorphan) in common OTC cough syrup is often taken and abused by adolescents and drug abusers for the “out of body” feeling and hallucinations that it can produce. One study showed that 2.4 million teens — about 1 in 10 — got high on cough medicines in 2005. That makes it just about as common as cocaine abuse. Excessive ingestion of acetaminophen can cause liver damage. Laxatives and diet pills often consist of nervous system stimulants. Should parents, teachers and counselors be worried about these things? Yes, of course they should.

But as we’ve seen so many times, the problem occurs when someone in a position of power decides to draft a standard “guideline” of care without really knowing what they’re doing. The guideline rapidly becomes set in stone, and the means by which those dealing with the population in question are judged, rewarded and punished. In this case the guideline was thoughtlessly crafted to be overly broad; it doesn’t take a genius to determine that some OTC items are more subject to abuse than others, or that some of these items were themselves created and distributed to address a potentially serious healthcare problem. Sunscreen is one example, but there are others. Mosquitos and ticks can be carriers of serious illnesses such as Lyme disease and West Nile Virus. Properly formulated and administered, insect repellents are safe for use in children. Presumably the same ban on OTC products prevents their use in many schools and camps nationwide. How difficult would it be to draft a list of “allowed” OTC items rather than banning the entire class of products willy-nilly? Apparently too difficult for the people whom we are paying to look after such things.

Lest we be too critical, we should note that the provision allowing the use of standard hats as a means countering gang-related activity is a logical and thoughtful response to a pervasive social problem. At least someone somewhere is using their head.

This particular episode brings up a question that has, as far as we know, been completely ignored in healthcare reform. Why are physicians and hospitals held responsible for the quality and appropriateness of their actions and decisions, but not the bureaucrats regulating them? One could certainly argue that a policy-maker in Washington or even at a state school system has far more power over our nation’s lives and treasure than any individual physician could possibly muster. Why aren’t regulators scored, awarded and punished based upon the health and economic effects of their performance? Indeed, in some respects laws directed toward enhancing the performance of regulators and policy-makers stand a much better chance of improving public welfare than anything aimed at providers themselves.

Want to mandate the implementation of an electronic medical record system? No problem. In that case your own salary will be increased or decreased based upon the resulting change in medical productivity that results from the policy. Planning on deploying a system of pay-for-performance incentives for healthcare providers? Excellent. However be aware that if it does not result in a significant improvement in performance as measured by health-adjusted cost savings, the cost of implementing and administering the plan – including the cost of compliance – will be deducted from your department’s annual budget. Want to ban the use of sunscreen by schoolchildren rather than encourage it? Okay, just be aware that we intend to monetize the cost of any excess sunburns that may result, and apply them against the compensation of those formulating the policy.

The quality of healthcare policy and regulation would improve overnight. So would the use of common sense.

Categories : Bureaucracy Run Amok, Clinical Care, Economics, Ethics, Healthcare Policy, Overhauling Healthcare, Politics, Quality Questions, Solving Problems, Stupid Guideline Tricks, The Practice of Medicine

May
30

Who’s Regulating the Regulators?

by Dr. Doug Perednia

It’s easy to criticize the regulation of medicine these days. No really, it is. There is so much material to choose from. And it frankly doesn’t much matter whether this regulation comes from the private sector or the government. Most of it is very, very poorly done. It defies logic. It defies common sense. It increases costs. It decreases quality. It makes people sick or sicker or even kills them. It disrupts clinicians and nurses who have actual work to do. And all for little or no benefit. You could get rid of it all tomorrow and no one – except the people doing it – would shed a tear.

Just before the recent holiday weekend a colleague of ours wrote a prescription for a diabetic patient for glucagon. Glucagon is a hormone that, when injected, raises blood sugar levels. Insulin-dependent diabetics will always want to have a syringe of glucagon around in case they either give themselves too much insulin, or are unable to eat on time after taking their usual insulin dose. If this happens their blood sugar can go too low and they can go into a hypoglycemic coma or even die. The advantage of glucagon is that it will raise blood sugar levels even if the patient is unconscious and unable to take food or a glucose tablet. It can be administered by someone else who happens to be around, but not in a coma. So a good, competent physician will always make sure that having a syringe of glucagon around is always an option for their insulin-dependent diabetics. It’s one of those true “quality” things, even though it’s not on any “quality of care” checklist that we’re aware of from the government or insurance companies.

As it happens so often these days, the private health insurance plan that the patient in question had requires that any brand-name medications be pre-authorized by the insurance company, and our colleague’s prescription for glucagon was rejected by the pre-authorization system. (As it happens, there really is no generic version of glucagon – just two brand-name versions made by Eli Lilly and Novo Nordisk. It’s not that the drug is patented; it’s just that the market isn’t big enough to support the research and manufacturing costs that a generic producer would have to incur to make it. It’s actually a fairly complex drug to produce, and is typically sold for about $100 per injection. That’s actually not so bad when one takes into account that patients just have to have one around for emergency use.)

Nonplussed, our physician colleague was forced to take the time to call the insurer to ask why the prescription request was rejected. The conversation went like this:

Physician: “I’m calling about a prescription for glucagon for Mr. Jones that you rejected. I’d like to know why this was denied. His name and policy number are blah, blah, blah.”

Insurance company denial officer: “You didn’t send a justification for why this patient needs this drug. We don’t know why it’s being used.”

Physician: “There is only one use for this medication. It’s to treat hypoglycemic in diabetic patients. Mr. Jones has had Type I diabetes for the past 20 years. There is no other possible explanation.”

Insurance company denial officer: “Okay. In that case it was probably denied because you prescribed it as an injection. We need you to try the oral or topical form first.”

Physician: “There is no oral or topical form of this drug. It only comes as an injection, and it’s to keep the patient from becoming brain damaged or dying.”

Insurance company denial officer: “In that case I’ll need you to send me the records so I can show them to the nurse, and she can decide whether to approve it or not.”

Physician: “A nurse needs to approve my request for this drug? Do you have any medical knowledge or training whatsoever?”

Insurance company denial officer: “No, but I follow the guidelines that the computer provides to insure that patient are receiving quality care at the lowest possible cost.”

Physician: “Please let me talk to the nurse.”

After spending roughly 30 minutes of uncompensated time trying to find someone with enough common sense and medical knowledge to approve the prescription, our colleague hung up the telephone angry, exhausted and in no mood deliver kind, appropriate and compassionate care. Or really any care at all. The prescription was approved, but it felt more like a defeat than a victory. Why do we bother training doctors if they have to justify their decisions to regulators who wouldn’t know a shot of glucagon if it poked them in the derriere? What the heck is all this hogwash about being licensed and certified, if the decision really is in the hands of a high school graduate who is simply reading instructions off of a computer screen? This isn’t “quality”. It’s a joke.

Just who is regulating the regulators? No one. And it’s destroying the efficiency, economy and quality of the healthcare that is being delivered every day. You might as well place plumbers in charge of air traffic control, or ballerinas in charge of military operations in Afghanistan and South Korea. It makes just as much sense. Just hand them computers that give them “guidelines” that they’ll use to keep airplanes apart and soldiers supported by air strikes.

Another endocrinologist, Dr. Richard Dolinar, recently wrote quite eloquently about this topic in the journal Endocrine Today.

Once upon a time, not so long ago, I used to be a doctor…

I used to order medications, therapies and hospitalizations for my patients.

Now, I request them, beg for them, cajole for them and often await prior approval authorizations from people at 1-800 telephone numbers. Some of them are doctors (although this is usually the exception), some are nurses, others are high school graduates and some, for all I know, might even be high school dropouts. Most are usually sitting in front of a computer screen as they attempt to determine the “appropriate care” for my patient, whom they haven’t ever seen, talked to or examined. As they attempt to dictate to me what drugs will be used on my patients, the exchanges can be telling. Today, for example, my office staff was told that I needed to use a lower dose of exenatide extended-release for injectable suspension (Bydureon, Amylin) or it would not be covered. How am I to use a lower dose of a medication that only comes in one dose?…

I used to go to the nurses’ station, and there actually was a time when nurses would offer their chair to the doctor. That was back in the days of the 8-hour nursing shift.

Now, many of those chairs are used by ex-nurses employed by third-party payers checking on the patient’s status. They sit, taking up critical space at nurse stations, which are often very cramped and crowded to begin with. They have “important” sounding names such as “insurance liaison,” etc. I call them “checkers,” and to this day, continue to wonder, “Who checks the checkers?”

I used to treat diabetic patients as their situations indicated, being careful not to use medications in “contraindicated” ways.

Now, I am told that hypoglycemic drugs are “not indicated” combined with each other unless clinical studies have been submitted to and approved by the FDA for such use. And third-party payers will not pay for them because they are not indicated, even if they are effective and not contraindicated. But what about using any hypoglycemic medication with any lipid-lowering medication or any hypertensive medication? Every time we use more than one medication on a patient, aren’t we usually using a combination that has not been evaluated or approved by the FDA and is, therefore, not indicated? Should we therefore not use it? Should we advise our chronic obstructive pulmonary disease patients to stop their inhalers because we want to start a hypoglycemic agent? Should we tell our cardiac patients to stop their cardiac meds because we want to start a statin? Why is it that only the glucose-lowering medications are held to this standard? Why aren’t various combinations of blood pressure pills or lipid agents held to the same?

It is, indeed, “Who checks the checkers?” is one of the key issues in American healthcare today. Who checks the regulators who make these idiotic and counterproductive rules? Who checks the Congressmen, who are (and we’re not making this up) less trusted by their constituents than telemarketers or car salespeople.

Because if these people are not honest-to-goodness experts in healthcare delivery, medical treatment and medical economics, they have absolutely no business being allowed to come within 50 miles of you, or your doctor, or your joint patient-doctor plan for managing your medical conditions or those of your family.

That’s a law/regulation that would be truly worth making.

Categories : Business and Law, Clinical Care, Economics, Ethics, Healthcare Policy, Politics, Quality Questions, The Practice of Medicine, Uncategorized

Jan
31

Will Medicare Bother to Learn Anything from Its Own Demonstrations? – Part II

by Dr. Doug Perednia

In our last Road to Hellth post, we looked two of the four ”value-based payment” demonstrations whose results were recently reported by the Congressional Budget Office (CBO).

Key Features and Results of the Demonstrations of Value-Based Payment (Click on image to enlarge table)

These demonstrations are important because they represent the best thinking that Medicare can muster with respect to how to reduce healthcare costs and make things all better on the American healthcare front. In particular, they represent the Affordable Care Act’s only real hope for stemming the more than one-trillion dollar hole on the federal budget that it’s going to create over the next ten years. So much is riding on these results that it would be a crime to simply acknowledge the findings with a headline and blithely launch into yet another series of demonstrations. After all, our national objective should be to find and disseminate what works, and discard what does not work. In our previous post we looked at the Physician Group Practice Demonstration and the Premier Hospital Quality Incentive Demonstration and were frankly disappointed with the results. How did the next two fare?

The Medicare Home Health Pay-for-Performance Demonstration lasted for two years, but the CBO only had the results of the first year available to analyze. As to the design:

“The Medicare Home Health Pay-for-Performance Demonstration was initiated by CMS to test the effects of providing financial incentives to home health agencies (HHAs) to improve quality of care. Under the demonstration, HHAs received their standard payments from Medicare and were eligible to receive additional payments if the participating HHAs in their region achieved Medicare savings and if they met certain criteria regarding the quality of care…

For each of four regions, CMS estimated the Medicare savings attributable to the demonstration and distributed the entire amount of those savings to HHAs in the treatment group whose quality scores were in the top 20 percent among demonstration participants in their state or whose improvement in quality scores was in the top 20 percent.23 Thus, although it was anticipated that the demonstration might lead to improvements in the quality of care that could reduce Medicare expenditures, the demonstration was not intended to yield net savings for the Medicare program. HHAs in regions that did not achieve savings did not receive any additional payments, regardless of their quality scores.”

Once again this study hopes to demonstrate that: (1) “high quality (at least as Medicare measures it) leads to low costs”; and (2) clever payment, leads to high quality. In order to estimate the impact of the payment scheme on its expenditures, Medicare compared the actual expenditures for patients of the HHAs in the treatment group with an estimate of what they would have been without the demonstration. The result:

“During the first year, the demonstration had no overall effect on the seven measures of the quality of care that were used to determine HHAs’ eligibility for bonuses and had little or no effect on the other reportable measures…

An analysis of the effects of the demonstration on Medicare expenditures showed that HHAs in three regions achieved combined savings of about $15 million during the first year; expenditures were about $9 million higher than projected in the fourth region.25 However, the estimated savings were very small as a proportion of projected spending—ranging from 0.4 percent in one region to 1.2 percent in another region—suggesting that those differences between actual and projected expenditures could reflect random variation in Medicare expenditures rather than actual savings. The absence of a notable effect on Medicare expenditures is consistent with the finding that the demonstration had no discernible effect on quality of care—particularly in the number of hospitalizations and in the use of emergency care.”

Here we see some of the same lessons that we should have learned from the Premier Hospital Quality Incentive Demonstration. In this study as in that one, all of the participating organizations were volunteers. Who volunteers for a project that offers to reward home health agencies that meet certain performance criteria? Why, agencies who already know how. So what has Medicare proven by rewarding them for what they already do? Nothing. Absolutely nothing. How much did Medicare save as a result of this innovation? Statistically, nothing. Absolutely nothing.

Who designs these studies?

But there’s no use crying over spilled taxpayer dollars, especially when they’re borrowed from China. Let’s look for some good news from the fourth and last “value-based payment” trial, the Medicare Participating Heart Center Demonstration (MPHCD).

This project was a little different from those that we’ve discussed thus far. Instead of trying to achieve a financial healthcare miracle by rewarding people for hitting “quality” metrics and saving money through more efficient and effective care, the MPHCD represents an effort to save money by “bundling” services. Bundling simply says that, instead of paying for each thing doctors and hospitals do to produce a successful coronary artery bypass operation, Medicare would instead negotiate an up-front one-price-for-everything fee to be paid for each bypass patient treated. If the total cost is higher than the negotiated price, the hospitals and doctors lose money. If it’s lower, they get to make a profit. Simple, eh? Here’s CBO’s description:

“CMS selected the 7 hospitals from 27 applicant institutions.30 CMS’s criteria for selecting participants for the demonstration included the projected Medicare savings implied by their proposed bundled payment rates, the quality of care at the hospital, and the volume of bypass surgeries performed there…

Applicants were required to propose separate rates for two DRGs in which bypass surgery is performed.32 During the demonstration, the bundled rates were updated annually using the payment updates for hospitals and physicians in Medicare’s fee-for service program. According to the government’s estimates before the demonstration, the expected savings at the four original hospitals for services covered under the bundled-payment arrangement varied from about 10 percent to 30 percent, with an average of about 20 percent. For each of the three later-starting hospitals, the expected savings were about 7 percent to 8 percent.

Competitive pressures prompted the hospitals to apply for the demonstration. All of the hospitals that applied anticipated that being named a Medicare Participating Heart Bypass Center could help boost their volume of bypass surgeries. The hospitals also were concerned that Medicare could implement a national policy requiring bundled payments for bypass surgery and contract with a limited number of providers; they expected that their participation in the demonstration might improve their chances of inclusion in such a national program.”

So let’s get this straight. Medicare went to a bunch of hospitals and said directly or indirectly: “Hey, we might give a few hospitals around the country an effective monopoly on Medicare bypass surgeries. If you guys want to have a chance of bein’ one o’ da lucky winners, we want ya to quote us a bundled price for bypass surgery that’s lower than what we’re currently paying ya. If not, well golly gee. It would be too bad if’n ya lost the ability ta do bypass surgery on Medicare patients, especially since da majority of bypass patients are on Medicare. That would kinda wipe out yer heart surgery program, wouldn’t it? But hey, you guys make up your own minds about whether ya wanna take us up on our offer. But don’t wait too long to decide…”

Now here’s the good news. According to the CBO, this strategy worked!

“The evaluation showed that the demonstration reduced Medicare expenditures on services furnished during hospital stays for bypass surgery by about 10 percent. The estimated savings were in the range of about 5 percent to 10 percent for five of the seven hospitals and about 20 percent for the other two hospitals. Those savings reflect the estimated difference between the bundled payments and the amounts that Medicare would have spent for services provided to those bypass patients in the absence of the demonstration…”

Did this bundling reduce the true cost of taking care of those patients? It’s not really clear. It may have in three hospitals, but not a fourth, and there was no direct comparison with comparable cost data in other hospitals. Was there any change in patient outcomes? Nope.

The immediate lesson? If you’re the government and a monopsonist (i.e., pretty much the only buyer of a specific set of goods and services), and you beat up your suppliers by threatening them in a nice way, you can get them to lower their prices. Unfortunately that approach is only going to work for so long. It’s not the financial miracle the Affordable Care Act is going to need in order to keep healthcare from bankrupting the country.

And with that, let’s get back to the original question posed by these posts: will our unelected leaders at Medicare and the Department of Health and Human Services bother to learn anything from the substantial amount of time and money spent on these demonstrations? First let’s review what we believe to be the important take-home lessons of these four “value-based payment” studies:

It’s time to get real with respect to saving American healthcare by use of Accountable Care Organization. Far from proving a boon to the healthcare system in general and Medicare in particular, the results of the PGP demonstration show that this complex, top-heavy strategy has little to offer other than an increase in healthcare infrastructure and administrative expense. Yes, two of the ten PGPs involved secured bonuses in all five years of the demonstration and “saved” money relative to projections. If Medicare specifically wants to study those programs in an effort to understand what made them special, that’s swell. But when the pilot project is a failure, most responsible people would think twice before launching it on a widespread basis as if nothing happened. As they continue to move forward with ACOs, Medicare and the Department of Health and Human Services (HHS) seem strangely indifferent to the results of their own five-year study.

If Medicare wants to prove that paying doctors and hospitals to improve quality measures is a good investment of time and capital, it’s time to design a decent study to prove it. Imagine this scenario. You want to prove that students who are paid to study hard and do their homework will improve their grades and incur fewer education costs than students who aren’t paid. To prove that the payments make a difference, who are you going to recruit into the study: (a) students who already study hard, get top grades and incur few education costs; or (b) students who don’t study as hard, don’t get top grades, and incur substantial education costs?

Yes, we would have picked (b) as well, but this subtlety is apparently lost on America’s best and brightest at HHS. Who are the people who approve these demonstrations, anyway?

Just as students who have already achieved the desired end point in the absence of payment aren’t going to improve much even if we pay them, hospitals and home health agencies that are studly enough to volunteer for Medicare’s pay-for-performance studies aren’t going to change their behavior if they’re already meeting the desired quality criteria. Nor will they prove anything for Medicare by virtue of their participation. Yet this is exactly the approach that Medicare took in both the Premier Hospital Quality Incentive and Home Health Pay-for-Performance (P4P) demonstrations. If you want to show that improvements in quality can be created by a P4P program, common sense dictates that you test your hypothesis on hospitals and home health agencies that have lots of room for improvement, and that you choose the participants on that basis. Not the best, probably not the worst, start out somewhere in the middle. If they show improvements in quality metrics and the level of overall spending after (and only after) you launch the P4P program then you’ve proven something. If not, drop the idea and move on. And if you’re not willing to do the appropriate study,

Proving that you can beat up your suppliers doesn’t mean that you’ve hit upon a beneficial, or even sustainable, strategy for reducing healthcare expenditures. Since the Medicare Participating Heart Bypass Demonstration is the only “value-based payment” demonstration to document savings, it might seem logical to conclude that forcing doctors and hospitals to negotiate bundled Medicare payments that are lower than what they’d normally get from fee-for-service billing is a brilliant idea. However that depends upon who gets stuck with the bill. Medicare and Medicaid have a long history of cost shifting onto patients who self-pay or have private insurance, thus creating yet another hidden tax for them to pay on behalf of the federal government. Not only is this type of cost shifting unsustainable, but it’s exactly the type of approach that is most likely to destroy the entire healthcare system in the long run.

We’ll be the first to admit that these lessons will be hard for anyone at Medicare to accept. They’re grim at best because they say that Medicare’s current cost-saving doctrines are mostly wrong, unproven or unsustainable. But Americans are far better served by facing this reality than continuing to live in a fantasy world where hiring more “quality care” administrators is the best way to reducing the cost of healthcare. The overall message of the CBO to everyone involved in healthcare is pretty clear: it’s time to take a radically different approach to finding economic salvation.

Categories : Business and Law, Clinical Care, Economics, Healthcare Policy, Hospitals and Health Systems, Politics, Quality Questions, The Practice of Medicine, Uncategorized

Jan
24

Will Medicare Bother to Learn Anything from Its Own Demonstrations? – Part I

by Dr. Doug Perednia

This past week, the Congressional Budget Office (CBO) released two reports summarizing the results of 14 major demonstration projects aimed at improving the “quality” and/or reducing the cost of care provided to Medicare patients.

These fell into two broad categories: disease management and care coordination demonstrations, and “value-based payment” projects. Both types of projects are of enormous importance to the future of the Affordable Care (“ObamaCare”) Act and the healthcare policies of the current administration. This is because ObamaCare greatly expanded insurance coverage – and therefore total U.S. healthcare costs – without a proven, sustainable plan for reducing the financial burden of all this new care. Without some cost-saving miracle, the result will be well over a trillion dollars of new healthcare spending by the federal government alone over the next ten years, (and even more if you disallow the bogus “savings” that would have been produced by the now-defunct CLASS program). The innovations behind these Medicare demonstrations were to have provided that miracle.

Unfortunately, things aren’t looking so good on the miracle front Here’s the short version from the CBO:

“The evaluations show that most programs have not reduced Medicare spending. Programs in which care managers had substantial direct interaction with physicians and significant in-person interaction with patients were more likely to reduce Medicare spending than other programs, but on average even those programs did not achieve enough savings to offset their fees. Results from demonstrations of value-based payment systems were mixed. In one of the four demonstrations examined, Medicare made bundled payments that covered all hospital and physician services for heart bypass surgeries; Medicare’s spending for those services was reduced by about 10 percent under the demonstration. Other demonstrations of value-based payment appear to have produced little or no savings for Medicare.”

But we really shouldn’t stop there. The long version is well worth going through in a little detail. So much is riding on these results that it would be a crime to simply acknowledge the findings with a headline and blithely launch into yet another series of demonstrations. After all, our national objective should be to find and disseminate what works, and discard what does not work. So what have we really learned thus far? Let’s look at the “value-based payment” demonstrations first. As shown in the table below, there are four of these.

Value-Based Payment Demos Click to Enlarge

The philosophy behind of all of them is the same: since doctors, hospitals and other healthcare providers are directly responsible for incurring healthcare costs as a result of the care they provide, all we have to do to save money is reward or penalize their incomes based upon how much they spend to take care of their patients. Want to curb spending? Just dangle a carrot or wield a stick in the direction of their bank accounts. Greed will do the rest, wiping out the inefficiency that the doctors themselves have built into the system. The CBO’s Lyle Nelson describes the structure and results of all four of these demonstrations in some detail.

We’ve written about the Physician Group Practice (PGP) demonstration in a previous post. This study is of special significance because it serves as a dress rehearsal for the highly acclaimed Accountable Care Organization (ACO) approach to saving healthcare dollars. ACOs are supposed to combine groups of doctors and hospitals together into a single economic unit for the purposes of taking care of large groups of Medicare patients. The financial incentives and penalties involved are fairly intricate and require that each participating group gathers large amounts of data. Calculating them involves computing the actual money spent on thousands of Medicare beneficiaries, estimates of how much would have been spent in the absence of the ACO, how many “quality-of-care” measures fell into a specific range, whether the calculated savings exceeded a certain threshold, which year of the demonstration it happens to be, and so on. When all is said and done, the PGP’s are supposed to get a cut of the “savings” that were generated by their newly efficient quality practices.

According to the CBO, here’s what happened:

“After accounting for the bonuses paid to the PGPs, the estimated net savings for the Medicare program for the second year of the demonstration was about $1.6 million. That represents a net savings of about $7 per beneficiary across the 10 participating PGPs—a net reduction in Medicare spending of about 0.1 percent. Estimated savings were lower for the first year…”

But the real savings probably weren’t even that large.

“There are two reasons why that estimate might overstate the amount of any net Medicare program savings. First, it appears that some PGPs changed their diagnostic coding practices under the demonstration in a way that increased the risk scores of their patients relative to those of the comparison group… A second factor that might have led to an overestimate of Medicare program savings is that, for the four PGPs that received bonuses in the second year of the demonstration, Medicare expenditures per patient were growing more slowly than were those of the local comparison groups before the demonstration.”

As for quality, the CBO estimates that the proportion of patients receiving recommended tests increased by 1-5% in the demonstration group.

Although the net financial cost to Medicare was negligible, this was hardly the case for the participating PGPs. On average, each of these groups had to install an additional $1.7 million in infrastructure in the first year alone. That was an average of about extra $737 per provider. You can do the math. Just to participate in the project, the PGPs themselves spent ten times the amount of money that Medicare “saved” over the entire five years. But this is almost certainly just the tip of the true-cost iceberg. Any program of this type requires substantial numbers of additional administrators – personnel whose only jobs are to track what’s going on, hold meetings, remind participants of what’s going on and generate reports. Although neither Medicare nor the CBO provide any numbers on what these administrative costs entail, it’s easy to come up with a rough approximation. Let’s assume that each PGP hired just one single additional administrator for this initiative at a fully burdened cost of $50,000 per year. This is almost certainly an underestimate. $50,000 per year x 5 years x 10 PGPs = $2.5 million. This sum alone is over 50% more than the reported savings to Medicare. Adding in the original $17 million investment for all ten PGPs, and we have a total net cost of this demonstration to the U.S. healthcare system of about $18 million over 5 years, in exchange for a minimal increase in the number of “recommended tests” performed. In essence, the physician groups involved and privately insured patients are directly subsidizing Medicare and impoverishing rate-payers in order to achieve a savings of about one-tenth the amount that’s being spent.

It seems pretty clear that while repeating the PGP demonstration a bad business idea, expanding it in the form of ACOs is nothing short of financially and medically irresponsible. Every dollar “saved” by Medicare translates into more than $10 in higher premiums and costs borne by private business and individuals; hardly an approach to “affordable” healthcare. That’s the kind of program you’d pay to do without. Let’s see how the other value-based projects fared.

The Premier Hospital Quality Demonstration was actually an unsolicited proposal to Medicare from Premier, a company owned by 200 non-profit hospitals and health systems. Under this program hospitals reported data on the quality of care provided to patients in five clinical areas: acute myocardial infarction (AMI, or in lay terms, a “heart attack”), congestive heart failure, pneumonia, coronary artery bypass surgery and hip or knee replacements. The information was used to compute a “composite quality score” for each hospital in each clinical area. The top 10% of hospitals in each clinical area were initially paid a bonus by Medicare of 2% of their Medicare payments for those areas. Later in the program, this formula was changed to reward those hospitals whose scores were above the median of the prior two years, or if they had improved markedly compared to their own previous scores.

Why should any of this save money? The inherent assumption is that it’s “quality” as measured by: (1) adherence to various process measures, (such as whether and when to anti-coagulate people); and, to a lesser extent (2) real indicators of morbidity and mortality, that determines how costly it is to hospitalize people. Presumably good quality leads to low costs, while bad quality leads to high costs, longer hospitals stays and frequent re-admissions. Pay people based upon quality and you’ll optimize care and reduce costs at the same time. There is, however, also a second assumption embedded in this study. That is that the quality that people put forth is directly related to how you pay them. Pay them based upon quality measures, and those quality measures will improve.

Simple, eh? How did that turn out? We’ll let the CBO tell the story:

“The composite quality scores for the demonstration hospitals rose from the first quarter of the demonstration to the twelfth quarter for each of the five clinical areas. On average, the increase ranged from 7 percentage points for AMI (the average score rose from 90 percent to 97 percent) to 22 percentage points for CHF (the average score rose from 67 percent to 89 percent). Those increases in composite quality scores were primarily the result of improvements in the process scores. There was little room for improvement in the outcome scores, which were very high at the start of the demonstration.”

So part of our second assumption was right. Pay people to increase their process scores, and they’ll do just that. Or is it?

“Not all of the increases in quality scores for the demonstration hospitals can be attributed to the effects of the demonstration, because quality scores were improving nationwide. The best available evidence indicates that the demonstration was responsible for small increases in quality of care and that most of the increases in quality that occurred at the participating hospitals would have occurred in the absence of the demonstration. The CMS-funded evaluation reported that the effect of the demonstration was to raise quality scores during the three-year period by an average of about 1 to 4 percentage points.”

This suggests that hospitals that are sufficiently motivated to participate in a study like this are already doing just about everything possible to maximize the quality of care as measured by the composite score yardstick. So in a sense, Medicare learned nothing from this wasted six-year effort except perhaps that preaching to the converted is a waste of time. Since the “value-based” payment mechanism didn’t really change anything in terms of the way these hospitals behaved, one would predict that no money was saved as a result. And this is exactly what happened:

“The demonstration did not affect Medicare expenditures for inpatient hospital care… The analysis also showed that the demonstration did not affect the total number of days that patients were hospitalized during the episodes of care or the number of days they were hospitalized for re-admissions.”

So as was the case for the PGP study, if we add in the cost of any extra administrative overhead required to achieve these results, we end up with a net loss of dollars to the overall healthcare system.

Two down and two to go. We’ll look at the remaining two “value-based purchasing” demonstrations, and talk about what this means so far in our next post.

Categories : Business and Law, Clinical Care, Economics, Healthcare Policy, Hospitals and Health Systems, Politics, PPACA, Quality Questions, The Practice of Medicine, Uncategorized

Jan
17

Desperately Seeking Quality

by Dr. Doug Perednia

Earlier this month a physician social networking website asked its subscribers to weigh in on a survey supplied by a “client” who was looking for some help with a perplexing problem. We’re forbidden under the website’s terms of use from publishing the exact post, but it went something like this:

The Affordable Care (“ObamaCare”) Act requires Medicare to expand its “Physician Compare” Directory tool. This is a website that currently allows potential patients to enter an address or zip code and find information about doctors such as their name, address, phone number, medical specialty, sex and whether they accept Medicare and speak more than one language. It also reports on where these doctors obtained their medical training.

As a number of observers have observed, this federal program is not exactly a goldmine of useful information – especially with much better information put out by private sector websites. And even the small amount of information that the federal government has put together with your tax dollars is not exactly reliable. Articles in Forbes and elsewhere have documented that much of it seems to be incorrect, incomplete or a combination of the two.

The survey posting then went on to point out that the law of the land now requires that, by 2013, the Physician Compare website report data about the quality.

Here’s the exact wording from the Affordable Care Act itself:

“SEC. 10331 ø42 U.S.C. 1395w–5 note¿. PUBLIC REPORTING OF PERFORMANCE INFORMATION.

(2) PLAN.—Not later than January 1, 2013, and with respect to reporting periods that begin no earlier than January 1, 2012, the Secretary shall also implement a plan for making publicly available through Physician Compare, consistent with subsection (c), information on physician performance that provides comparable information for the public on quality and patient experience measures with respect to physicians enrolled in the Medicare program under such section 1866(j). To the extent scientifically sound measures that are developed consistent with the requirements of this section are available, such information, to the extent practicable, shall include—

(A) measures collected under the Physician Quality Reporting Initiative;

(B) an assessment of patient health outcomes and the functional status of patients;

(C) an assessment of the continuity and coordination of care and care transitions, including episodes of care and risk-adjusted resource use;

(E) an assessment of patient experience and patient, caregiver, and family engagement;

(F) an assessment of the safety, effectiveness, and timeliness of care; and

(G) other information as determined appropriate by the Secretary.”

The survey post then finally got to the point. The unknown client, who one can only imagine to be a Department of Health and Human Services functionary tasked with implementing this language, mentioned that “we are interested in learning more about” how primary care physicians would measure things like quality, cost and the efficiency of care provided.

In other words, we’re obligated to slap something together pretty soon here if we can only figure out how to realistically measure any of this stuff in literally tens of thousands of private medical facilities all over the country. So we’d thought that we’d ask for your two cents before we officially mandate that you gather immense amounts of detailed new data and hand it over to us.

Too bad many of these doctors and clinics are already struggling just to stay in business.

The survey then went on to suggest a number of different measures one might use such as length of stay (shorter is better), patient satisfaction, how many referrals a doctor got, how many of a doctor’s patients were hospitalized, the volume of preventive care delivered and so on.

We’ve written previously about such dead ends as “pay-for-performance”, but we found this particular survey request interesting for two reasons. The first is that, although the entity posting the survey was asking about “quality”, the sheer volume of information that would have to be gathered in order to comply with the wording of the law is frankly breathtaking. Assessments of the health status and outcomes for a statistically significant fraction of patients in each physician’s practice? These sorts of things are only meaningful if one were to adjust for a host of individual patient-specific factors. How sick was the patient to begin with? How compliant are they with their medical treatment? Do they have any other diseases making them sick? Did their insurer allow their doctor to use the medications and procedures that would have given them the best possible chance at recovery, or were they forced to use whatever happened to be cheapest? How long did they see the doctor in question before the results are measured? What about the impact of the patient seeing other doctors, who might either improve the results or make them worse? Were they allowed to see specialists? The list goes on and on.

There is absolutely no doubt in our minds that this part of the law was written by someone living in the world of academic research. This stuff is the very essence of elaborate clinical studies; work that routinely require dozens of research assistants, years of data collection and validation, statisticians, approval from human subjects committees and the very real risk that the physician in question will retire or pass away before the results are complete. What other profession on God’s green Earth is expected to gather and report information of this scope and detail? It’s roughly equivalent to soldiers in combat being asked to keep track of everything from their accuracy in shooting (“What was the functional status of each enemy soldier after you fired upon them? Please note whether they under cover or out in the open.”), and their popularity with the civilian population (“How satisfied was each family with your search of their home?”), to the “effectiveness” of their operations, despite the fact that government higher-ups are calling the shots (“Did the Taliban return to your areas of operation in the six month period after your departure? If so, please explain.”)

And exactly who is going to be able to collect all of this information? It’s clear that the forcible collection of this type of data is one of the primary reasons that Medicare has implemented plans to punish clinicians who do not choose to “meaningfully use” electronic medical record systems, but much of this information is simply beyond the ability of the average clinician to gather and still have time to care for patients. Given the rapidly developing shortage of physicians it is perhaps the right time to ask which will benefit that average American more: having all of this information (which may or may not be correct and statistically valid), or having the ability to see a doctor at all? It appears that the Affordable Care Act has decided the answer for them.

Given the obvious complexity of obtaining this data for Congress and Medicare, it seems clear that one purpose of the survey is a plea for help from the regulated. If doctors can be induced to recommend the terms of their own bondage it would certainly help to justify whatever standards of data collection and interpretation were ultimately adopted. So it was particularly interesting to see some of the responses. We’ve received permission to print two of them here. A family practice doctor had this to say:

“I agree 100% that in a free market quality is very easy to spot. You know how? Look at successful operations. They will be delivering quality, guaranteed. In a skewed, third party controlled, overregulated, stifled, stressed system, one will have to go through crazy contortions to determine quality. You have to descend on an operation, probe it, measure it, survey it, poll it, compare it, peer into its computers and grade it. And then what have you got but a bunch of bullshit reports as proxy for free market success.”

While an endocrinologist observed:

“All measures of “quality of care” are biased in some way. Payors rate how much a provider costs them. I am frequently chided for prescribing too many glucose test strips, but I take it as a compliment and a measure of quality care that my patients are testing their sugars. Adherence to accepted guidelines? Every patient is different, and care has to be individualized. I get inquiries from payors and PBMs as to why patients aren’t on certain meds, like ACE’s or statins. My clinical judgment, none of their concern, I shred them. Patient satisfaction? As noted in the above posts, you can’t please everyone. Patients have agendas, and sometimes you don’t know what they are. You do what’s right medically and ethically, according to your clinical judgment. Hospitalizations? Depends on your patient population. Mine is filled with sick, elderly diabetics with all the complications. Many will be hospitalized. Some will die. There is no objective way to rate quality of care that can apply to all providers. I personally think that a good indicator of quality of care is peer reputation. But the bureaucrats can’t figure that into their evaluation models. And how do you prove that your model means anything at all? I agree with gdunn [Ed note: the pen name of another doctor], we need to be involved in setting any standards, and we also need less paperwork and more patient time to give patients quality care.”

With just a few short sentences, both of these individuals have shed more light on the issue of measuring “quality” than all of the academic papers on the topic combined. How did they do it? Well for one thing they live in the real world rather than some sort of academic utopia. In the real world, every time you decide that you want something it has an associated opportunity cost. If you want your auto mechanic to document how successful his repairs have been, it means he can spend less time fixing your car. If he spends less time fixing your car he has to charge a higher rate for the work he does manage to do. So you end up paying for that “quality” report quite directly. Either that or he goes out of business. It’s exactly the same in medicine. To pretend that it isn’t is either stupidity or deceit. Take your pick.

As our first commenting doctor observed, the economically efficient way to gauge quality is to rely on the workings of a free marketplace. One important reason that capitalism beats the stuffing out of communism or any sort of command economy is that it’s far cheaper, more efficient and more reliable to gather information about the relative desirability of goods and services from the marketplace than from a bureaucracy. And free-market demand for that market-based information is what allows the folks at Angie’s List make a living without the need for government subsidies.

And as our second doctor observes, one key reason that bureaucratically-generated “quality” measures are so inadequate is precisely because they are inherently biased – especially when the self-interest of your average insurance company is frequently in conflict with the personal and medical self-interest of your average patient. The inherent conflict is even scarier if the government itself is your insurance company. After all, if you don’t like your private sector insurance company, at least you can switch to a different one.

It rather makes one wonder why government itself doesn’t seem to be associated with any “quality” measures. Perhaps Congress could pass a law to make them mandatory and link poor performance to automatic pay cuts for elected representatives?

Categories : Clinical Care, Economics, Ethics, Healthcare Policy, Politics, Quality Questions, The Practice of Medicine

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Will Medicare Bother to Learn Anything from Its Own Demonstrations? – Part II

Will Medicare Bother to Learn Anything from Its Own Demonstrations? – Part I

Desperately Seeking Quality

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