Paul Levy (CEO, BIDMC): Commentary on Payment Reform

Re-post: Interesting blog post from Paul Levy, CEO of Beth Israel Deaconess Hospital in Boston, on payment reform being considered in the Commonwealth. As usual, worth the time to read Paul's perspective...

Unanswered questions on payment reform

from Running a hospital by Paul Levy

Here is a story by Robert Gavin in the Boston Globe about the deteriorating financial condition of Massachusetts hospitals. This is another in the now all-too-familiar type of story about layoffs of health care workers in our state, something some of us predicted several months ago.

While there are some who suggest that a move from fee-for-service to global, or capitated,* payments is the key element in solving rising health care costs, some questions need to be answered as part of the payment reform movement in Massachusetts. If the wrong answers are given, the movement will result in a simple transfer of risk and finances between and among insurers and hospitals, and between and among hospitals. This will aggravate the problem noted above and, with the creation of Accountable Care Organizations, may also lead to greater market concentration in the state.

1) Given the underpayment to hospitals and doctors by Medicare and Medicaid, what margin would private payers need to be pay to provide hospitals with an operating margin consistent with maintaining and renewing physical plant and equipment and with providing proper levels of clinical staffing? (Medicare is the largest single payer for most hospitals, and the percentage of patients it covers in hospitals is growing as the baby boomers age.)

2) How is that needed margin consistent with the current actions by the state's insurers to impose rate increases on hospitals and doctors below the rate of inflation -- actions that are based in part on the decision by the state to require insurers to undercharge for small business and individual premiums?

3) As insurers move to capitated rates, do they have any intention of equalizing rates among provider groups in the state to reflect population-based characteristics as opposed to the relative market power of providers? If so, what is their timetable for doing so?

4) As insurers move to capitated rates, shifting actuarial risk to providers, will there be a commensurate reduction in capitalization requirements for those companies? Will there be a reduction in the remarkably constant 10% of premiums that goes to paying administrative costs for those companies? How and when will those savings be passed along to consumers?

5) How will the body politic deal with the inconsistency in payment models between capitated-limited network plans offered by private payers and the open choice (i.e., PPO) model offered by Medicare?

As an economist, I recognize the merits of capitation. But, if it is done with incomplete consideration of these questions, we will have traded one set of problems for another.

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Who's Has More Control Over Prescribing -- Pharmaceutical Companies or Insurers?

Here's an article from MedPage Today about a Consumer Reports telephone survey assessing perceptions of physician-industry relationships.  It starkly contrasts a recent article in their blog (MedPage Today's KevinMD), which highlights the influence of insurers on prescribing.


It's worth (re-)reading the article on the influence of insurers first, then comparing it the one below ... you be the judge of who is wielding the most influence.


1. Insurer influence on prescribing, Read more...


2. Industry influence on prescribing ...

	Patients Wary of Doctors' Relationships By Kristina Fiore, Staff Writer, MedPage Today Reviewed by August 24, 2010 Review Many patients taking prescription drugs believe that pharmaceutical companies have too much influence over their physicians' prescribing practices, according to a new survey. A telephone survey of more than 2,000 U.S. adults by Consumer Reports found that the majority of those currently taking medications -- 69% -- had such concerns. About half of the medication-users believed that their doctors were too eager to write a prescription when other nonpharmacological options are available. "On the one-to-one level, many patients trust their physicians," Lee Green, MD, MPH, of the University of Michigan, told MedPage Today. "But I see a lot of skepticism out there and it's well-founded." Jerome Kassirer, MD, professor of medicine at Tufts University in Boston and former editor of the New England Journal of Medicine, said trust between a doctor and a patient "is absolutely essential in getting patients to believe what their doctors are telling them. ... Any kind of loss of trust between doctor and patient is deleterious." That could mean patients don't heed instructions about taking their medications, according to physicians interviewed by MedPage Today. The findings come from a telephone survey of 2,022 patients in the U.S., with the final analysis based on 1,154 responses from those adults currently taking prescription drugs. On average, those patients reported routinely taking four different medications. Almost half of the patients taking medications who were surveyed (47%) thought that gifts from pharmaceutical companies influenced their doctor's choice of drugs. Most of them (81%) were concerned that physicians engaged in practices that resulted in being rewarded by pharmaceutical companies for writing lots of prescriptions for the company's drugs -- a practice that is illegal, according to Randy Wexler, MD, MPH, of the Ohio State University. "Unfortunately, I have found this fear expressed in my own research," he told MedPage Today. But Green said this practice is more likely to occur among specialists because their smaller numbers make it easier to keep track of the drugs and devices they prescribe. Surveyed patients were also worried about their physicians acting as paid spokespersons for drug companies (72%), speaking at industry conferences (61%), and getting free meals (58%). Their fears may not be unfounded -- given that pharmaceutical companies are increasingly targeting primary care doctors rather than high-profile academicians to spread the word about their drugs. (See On the Stump: When Academics Are Out of the Picture). Green said pharmaceutical companies are increasingly turning to eloquent community physicians, partly because academic doctors "are asking too many questions." Many academic institutions have also set new rules against such conflicts of interest (See Conflict-of-Interest Policies: A Detailed Look) Kassirer said the physician "who works in the community may not be as informed about the drugs and might be more willing to follow the line of the pharmaceutical company in telling others how to use those drugs." Indeed, 66% of patients reported receiving free samples of prescription medications, and 41% felt their doctors prescribed newer and more expensive drugs over proven generics. Eroding trust, especially combined with rising costs of medications, could spur compliance issues, researchers say. The survey found that monthly out-of-pocket patient spending is around $68 -- and 14% of patients spend more than $100 of their own money every month on prescription drugs. In the past year, 27% of patients said they failed to fully comply with their medication regimens, most commonly skipping a prescription fill (16%), taking expired medication (12%), skipping a dose (12%), cutting pills in half (8%), or sharing pills ($4). This combination of circumstances "provides some with the ability to rationalize why a specific medication does not have to be taken," said Wexler. "That can be very dangerous in the setting of many chronic diseases such as diabetes, high blood pressure, hypertension, and high cholesterol." More than half of patients feel that their doctors don't consider their ability to pay when they prescribe. In fact, 64% of survey respondents didn't learn how much the prescription would cost them until they picked it up at the pharmacy. Only 6% were informed of the costs of prescription drugs while in their doctor's office. Physicians are hardly the lone party at fault. About 20% of patients reported asking their doctor for a drug they saw advertised on television. And physicians complied with those requests 59% of the time. Still, physicians should take steps to make it clear to patients that they're free of conflicts of interest, Green said. Kassirer said physicians can avoid being on speakers' bureaus, and discourage pharmaceutical representatives from coming into offices bearing free lunches and free samples. They should also "eliminate all evidence of pharma largess from their offices -- no pens, no pads, none of that." He also cautioned that it's up to patients "to be alert to these things." Wexler added that it's "reasonable for patients to ask their physicians what, if any, arrangements they have with outside vendors, and what that relationship is." "If the physician will not discuss it," Wexler said, "then it is time to find another physician." This article was developed in collaboration with ABC News.

Comparative Effectiveness: Cleveland Clinic CEO Weighs-In

WSJ BLOGS

Health Blog 

The CEO of Cleveland Clinic weighed-in on the impact comparative effectiveness research (CER) may have on innovation.  More specifically, his concern is whether, "manufacturers and investors would still be willing to make financial bets on unproven devices and drugs. He used the example of a heart valve, saying it now takes two decades to bring a new valve product to market and then assess the effectiveness" and what insurers and the government will do with CER study results.

His concerns mirror those expressed by others from both industry and academia and this question -- how will CER results be used? -- will have significant implications for both patient care and research and development as health care reform regulations roll out.  With the intense focus on health care cost-containment in the US, there are legitimate worries that rather than being used as an educational tool, CER will be used as a tool to justify care decisions.  


Given the limitations of even well-designed studies and the time course over which knowledge is accrued, it would be short-sighted to support care decisions based on these data.  And in the long-run, the clinical benefits and applications that are often generated in post-approval studies, and from real-world use, will likely suffer.


Related Blog Post from KevinMD: "Comparative Effectiveness Could Impede Cancer Research."  Read more ...

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Massachusetts: "Gift Ban" Remains Intact

As if the Massachusetts political process wasn't enough of a circus, the Massachusetts House of Representatives decided to ramp up the drama by introducing a bill that would repeal the so-called "gift ban" (previously covered HERE) with the legislative session rapidly coming to an end.

What Happened?

Despite positive media coverage of the repeal and direct appeals from healthcare providers, the bill seems to have quickly been jettisoned when things heated up in the final 48 hours of the legislative session.  So the the ban remains intact. Why the conference committee canned the amendment is unknown beyond the State House walls, but that secret is unlikely to remain hidden for too long -- stay tuned for future posts on that topic.

Why Now?
Some speculated that the decision to repeal the ban was simply good legislators coming to their senses and realizing the effort was ill-conceived.  Others speculated it was the good work of the Massachusetts Restaurant Association, who have been actively touting the unintended consequences of the ban on their business. The other most prevalent argument is that the Association set the stage, but it was the Senate's refusal to play nice with the House on other legislation (gambling legislation, believe it or not) that prompted what could be interpreted as an affront to the Senate President. She was the sponsor of the "gift ban", so there seems to be some logic in the latter. In all likelihood it was a combination of all of the above.

Who Were the Players?Regardless of what prompted the bill and despite a short window to mobilize, the bill generated a ground swell of support from the medical community. A steady stream of communications were emerging from healthcare practitioners from around the state and the medical blogs were buzzing as Massachusetts physicians shared their perspectives from the front lines. In two interesting posts on MedPage Today, physicians tackled the negative impacts of the ban on opportunities to engage with colleagues while learning a little something new (HERE) and analyzed who were the winners and the losers from the ban (Spoil Alert: Answers - Insurers and patients, respectively) (HERE).  The posts obviously struck some chords, check out the comments and see for yourself!

Along with members of the health care community that value being able to make decisions for themselves (i.e., who they interact with, what information they access, etc.), restaurants and convention centers supported the repeal since it directly impacted their businesses. However, what was lesser known was who was pushing to keep the ban in place. Luckily the WSJ Health Blog cleared that up nicely for us HERE.  Apparently, Health Care for All, took some time to celebrate their victory on their website. (Note: The pictured billboard is owned by the International Brotherhood of Electrical Workers 103.  Before launching support for this effort, they ran the "Stop Biotech Looting" campaign HERE.)

And Who Are They?

Health Care for All, is a very active lobbying organization that works closely with Community Catalyst, who have a strong connection to another organization that could be considered 'ground zero' of the conflict of interest (COI) movement: Pew Prescription Project.  Prescription Project has been actively working to sever physician-industry interactions by promoting highly restrictive COI policies at academic medical centers as well as within state legislatures. They co-authored the Brennan et al. (JAMA 2006, subscription required) that laid the foundation for such policies. Interestingly, none of them listed their affiliation with Prescription Project or other activist organizations. Hhhmmm, fighting for disclosure for some but not all, apparently. Although, one blog post can't fully depict the ties between these organizations, hopefully over time you'll notice that it is the same actors making the same arguments with the same highly limited evidence to promote policies that restrict interactions.

What is Their Goal?

If you can answer that, post a comment!