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Keep the Focus on Rising Drug Prices, Not Smirking Shkreli

Activism over prescription drug pricing has reached a fever pitch. The recent House subcommittee hearings featuring testimony (or non-testimony in the case of bad-boy Martin Shkreli) from Turing Pharmaceuticals and Valeant executives provided an outlet for public outrage over those companies’ price gouging on life-saving drugs. Meanwhile, presidential candidates Hillary Clinton and Bernie Sanders have both talked up plans to rein in spending on prescription drugs, and even Donald Trump announced that as president he would allow Medicare and Medicaid to bargain with drug companies.

The sordid tale of Shkreli and his company’s 5,000% price increase for a 60-year-old off-patent drug used mainly to treat toxoplasmosis in AIDS patients has been well-documented. Valeant is the other poster child for blatant greed in the pharmaceutical industry with CEO Howard Schiller testifying to the House committee that price increases (most notably for cardiac drugs Isuprel and Nitropress by 536.7% and 236.6%, respectively) accounted for 80% of the company’s growth in 2015. Schiller also told the committee that only 3% of profits were put back into research. Rep. Carolyn Maloney (NY) summed up Valeant’s business strategy as buy a drug, set revenue goals and “then jack up prices.”

The hearing made for good theater but was ultimately disappointing for those of us hoping to actually hear about legislative or other remedies for curbing rising prescription drug costs. Because as Rep. Elijah Cummings pointed out, this problem is “not limited to two companies, it pervades the industry.”

According to Health Affairs, per-capita prescription drug spending in the United States, the highest in the industrialized world, increased by 12.2% in 2014, up from a 2.4% increase in 2013. In a Kaiser Family Foundation health tracking poll , nearly three-quarters of all Americans said the cost of prescription drugs is “unreasonable” and that pharmaceutical companies set the prices too high for their drugs. One-fifth of those who are prescribed medications say they either have to skip doses, cut pills in half, or are unable to afford their prescriptions. Read more…

Are Readmission Penalties Unfair to Safety Net Hospitals?

Earlier this month Medicare fined 2,610 hospitals—a record number—for readmitting too many patients less than 30 days after they were discharged. In 2015, these hospitals will see their Medicare reimbursements cut by as little as .01% to a maximum of 3% in this, the third year that the Center for Medicare and Medicaid Services’ Hospital Readmissions Reduction Program (HRRP) has been in place.

The fines “are intended to jolt hospitals to pay attention to what happens to their patients after they leave,” according to Kaiser Health News. The take-home message is that CMS wants hospitals to know that preventing readmission requires more than sending patients home with discharge orders in their hands. Instead, providers need to develop action plans that ensure patients have access to the medications they need, have scheduled follow-up appointments and are connected to community health services that can assist them with managing their health.

The goal of the readmissions reduction program is to improve the quality of care while also cutting Medicare costs associated with patients bouncing back and forth to hospitals. There are already signs of progress. In 2013, 17.5 % of Medicare patients were readmitted within 30 days to hospitals for any condition, down from an average of 19% each of the past five years. That’s good news for CMS, which estimates the cost of 30-day readmissions for Medicare patients to be $26 billion annually with $17 billion of that deemed potentially avoidable if patients had received the right care. Reducing avoidable readmissions by just 10 percent could achieve a savings of $1 billion or more.

Despite this overall trend, progress in reducing readmissions has not been consistent across the board. Safety-net hospitals—mostly public and teaching institutions that serve the largest proportion of low-income patients—are lagging and, according to The Commonwealth Fund, on average, receive higher penalties under the CMS program. They are also far more likely to be penalized: 77 percent of the hospitals with the highest share of low-income patients were penalized for excessive readmissions in the program’s first year vs. just 36 percent of the hospitals with the fewest poor patients. The Medicare Payment Advisory Commission (MedPAC), which advises Congress on policy, has found that lower-income patients have higher readmission rates and major teaching hospitals, which serve large numbers of indigent patients, face the highest penalties. With this in mind, there is growing concern that instead of improving the quality of care, the penalties could worsen health disparities among Medicare beneficiaries who live in low-income areas. Specifically, higher readmission penalties might actually exacerbate the financial challenges safety net hospitals already face, resulting in fewer services, more frequent readmissions, and hospital closures in high-need urban or rural areas.

What can be done? A good first step would be to change the way readmission penalties are calculated. Currently, Medicare tracks the number of patients who go into the hospital for a heart attack, heart failure or pneumonia and then are readmitted within 30 days. This year for the first time Medicare also tracked patients with chronic lung problems and those who underwent elective hip and knee replacements. Hospitals that readmitted patients at a rate higher than expected—keeping in mind the severity of the problem and other confounding factors like gender and age of the patient—saw their reimbursements cut. The question then becomes; are safety-net hospitals providing lower quality care to their disadvantaged patients or are there factors outside the hospital’s walls that are leading to more frequent readmission? Read more…

Do Workplace Wellness Programs Work? Yes, But it Depends…

There’s been a lot of controversy recently about workplace wellness programs: Do they save money for employers on healthcare costs? Can they produce measurable benefits for employee health? Do they unfairly punish people who are unable to participate? Are these programs just a ploy to shift medical costs to unhealthy employees?

Recently Austin Frakt and Aaron Carroll revisited these questions in a piece for the New York Times’ Upshot column, “Do Workplace Wellness Programs Work? Usually Not.” As the title makes clear, Frakt and Carroll come down on the side of the skeptics. I have always appreciated Frakt and Carroll’s analysis of healthcare economics but this time I think they might have missed the mark. A recent analysis of the value of health promotion programs in the Journal of Occupational and Environmental Medicine (JOEM) has a similar title; “Do Workplace Health Promotion (Wellness) Programs Work?” Instead of answering “Usually Not,” the twenty-plus authors of the JOEM article—all experts in the health promotion field—conclude that some wellness programs work superbly while others are abysmal failures. What separates bad, good and great programs, according to the JOEM authors, is basically “a combination of good design built on behavior change theory, effective implementation using evidence-based practices, and credible measurement and evaluation.” In short, the answer to the question really should be “It Depends…”

Frakt and Carroll came to their conclusion based on a handful of high-profile studies that fail to distinguish the abysmal from the superb. This has been a long-running problem in the health promotion field. The $6 billion corporate health promotion industry is made up of multiple players, including some who promote their vision of “wellness” to executives by promising savings that never materialize. Although half of all companies with 50 or more employees report having health promotion programs, what qualifies as a “program” is poorly defined. A company that offers its employees a financial incentive to fill out a health risk assessment (HRA) questionnaire but offers no other services has a health promotion program. A firm that provides free flu vaccines and access to smoking cessation and Weight Watchers programs is considered to a have health promotion program too. But does anyone really believe that such token efforts will reduce healthcare costs or have any measurable impact on employee health, productivity or even company morale?

For the past year, I have witnessed some of the very good and even “great” programs firsthand. I’ve been working with Ron Goetzel, one of the authors of the JOEM article, and his team at Johns Hopkins University’s Institute for Health and Productivity Studies (IHPS) on a project funded by the Robert Wood Johnson Foundation to identify and visit companies with health promotion (or wellness) programs that truly do “work” and have convincing data to prove it. One of the goals of this project is to formulate a series of “best practices” to help guide businesses that want to create high-performing health promotion strategies. Read more…

Can an “Ambiguity” Derail Obamacare? Premium Subsidies in Court

After more than 40 attempts to pass legislation calling for repeal or significant changes to the health law, opponents of the Affordable Care Act have moved their focus from the House floor to the courthouse. Currently at least four lawsuits are working their way through state and district court—and one case awaits a nod from the Supreme Court—that would make it illegal for the federal government to provide premium subsidies to qualified consumers who buy Obamacare plans in 36 states that failed to set up their own exchanges. Depriving lower-and middle-income Americans of affordable healthcare is bad enough. But these lawsuits are just the latest weapon in the long-term quest to overturn the ACA—and hobble the Obama presidency—by any means necessary.

In fact, it is a strategy grounded in disruptive economics. As Jonathan Gruber, an MIT economist and chief architect of Massachusetts’ health reform law explains it, the Affordable Care Act is designed as a three-legged stool: The first “leg” is new rules that prevent insurers from hiking premiums or denying coverage for people with pre-existing conditions. The second “leg” is the individual mandate that requires all Americans to have health insurance. The third “leg” of the health law is the federal subsidies that make this insurance affordable to lower and middle-income people. Knock out one leg and the whole law becomes economically unfeasible.

Where are the potential weaknesses? The first leg of the stool is solid: There is bipartisan support for ending discriminatory practices in the insurance industry. The second leg is strengthened by the Supreme Court decision that found the individual mandate to be constitutional and enforceable. But the third leg—federal subsidies to help lower-income families and individuals pay for health coverage—is considered wobbly enough by conservatives to collapse with the right legal pressure. Their focus now is on the wording of a section of the Affordable Care Act that authorizes the federal subsidies. The law allows that tax subsidies may be available to qualified citizens who enroll in insurance plans “through an Exchange established by the State.” Read more…

Do You Really Like Your (Sub-Par) Policy? Keep it Another Year

For about 5% of the population, President Obama’s promise “if you like your insurance, you can keep it” was clearly off the mark. They like it and they can’t keep it—or they will have to pay more for it. Their anger and sense of betrayal are being used by opponents of the Affordable Care Act to discredit the President and highlight the law’s alleged shortcomings. But let’s be honest; how great was that insurance in the first place? Sure it might have been cheap, but many policyholders were one illness or accident away from crushing bills and even bankruptcy. And is it worth it to allow insurers to keep selling these policies to cherry-picked healthy people, even if it threatens to raise premiums for many of the 40 million uninsured people who have been priced out of the individual market because of their health status, age or gender?

The answer, for at least another year, is “yes.” Under pressure from anxious Democrats in Congress—including some like Sen. Mary Landrieu (LA) who are facing tough reelection battles—Obama today proposed an administrative fix to the ACA that would let insurance companies renew plans through 2014 that do not meet the benefit standards of the health care law. State insurance commissioners and insurance companies will now make the final decision on whether they will renew cancelled policies on the individual market. Insurers would have to notify plan subscribers of alternative plans they could purchase through the exchanges, as well any benefits they would miss out on by staying with their existing policy. As the President put it: “the Affordable Care Act is not going to be the reason why these companies are canceling your plan.” Read more…

Same Drug, Wildly Different Price: Generic in Name Alone

It was a huge relief to Carol Thompson in 2011 when her breast cancer drug Femara (letrozole) went off patent and became available in a generic version. With a high deductible in her private insurance plan, Thompson was forking over $450 for a month’s supply of the life-saving drug. After the generic hit the market she was thrilled to find letrozole available for just $11 a month at Costco. But curious to find out if she could save even more at another pharmacy, Thompson made a few calls to local chains and mail-order services to compare prices.

What she found was astonishing: prices for letrozole ranged wildly, from $450 for a month’s supply at CVS to just $14 at a local, independent drug store. Pity the person who assumes that big national chains like CVS and Target that buy generics wholesale in large quantities will naturally provide the best value.

Thompson’s story is told in a recent PBS NewsHour segment that takes a wider look at the wildly different prices pharmacies charge for medications that include some of the most common prescriptions drugs.

What 66-year-old Carol Thompson encountered in Edina, Minnesota should be an eye-opener for any of us who assume the price we pay for generic drugs is more or less the same from pharmacy to pharmacy. The explanations from chains like CVS for why some of their generic drugs cost so much is that the price reflects the added cost of having 24 hour prescriptions services, drive-through pharmacies and so many local brick and mortar stores. But this explanation rings false: For prescription drug buyers it is just the latest case of haggling for health care. Read more…

The Nine Lives (and counting) of Obamacare

It is hardly an understatement to characterize the health insurance exchange rollout as a big disappointment. A botched website poses a serious problem and threatens to dampen enthusiasm for the new law—especially among the coveted “young invulnerables” who need to sign up for coverage to keep premiums affordable for all. In the short term, the website troubles put the Obama administration firmly back on the defensive, scrambling to explain to Congress and the public how officials missed such serious problems.

Testimony from vendors involved in designing various parts of the network broke down into a predictable blame-fest, while Health and Human Services Secretary Kathleen Sebelius singled out certain vendors as the main source of the website flaws. Yesterday, CMS head Marilyn Tavenner used her testimony  in front of the House Ways and Means Committee to offer the first true apology from the Obama administration for the botched site.

It seems that the worst consequence of this website debacle is the resurgence of the fanatical foes of the Affordable Care Act who briefly lost momentum when they forced an unpopular government shutdown in an attempt to defund “Obamacare.” Despite lingering calls for Sebelius’ head, the bluster over the website’s problems is now giving way to a new source of outrage: the unrealistic promise behind President Obama’s tag phrase; “if you like your insurance, you can keep it.” According to the Washington Post, “The president’s promise apparently came with a very large caveat: ‘If you like your health care plan, you’ll be able to keep your health care plan — if we deem it to be adequate.’” 

More on this later, but in her testimony yesterday, Marilyn Tavenner cited new projections from a government report that nearly half of uninsured young adults — 46 percent of those ages 18 to 34 — should be able to purchase a plan through for a monthly premium of $50 or less. In her own testimony before the same committee today, Sebelius noted:

“The weighted average premium for the second-lowest-cost silver plan, looking across 47 states and DC, is 16 percent below the premium level implied by earlier Congressional Budget Office estimates.” The Secretary also points out that a recent Kaiser Family Foundation report found that while premiums will vary around the country “fifteen of the eighteen states examined would have premiums below the CBO-projected national average of $320 per month for a 40-year-old in a silver plan.”

So as the forces regroup for yet another sustained attack on the ACA via billboards, sound bites, Congressional hearings where those called to testify are rudely interrupted by political screeds, and a conservative media blitz, it’s important to remember that the health law has weathered relentless attacks over the last three years. Frankly, the opposition is beginning to look desperate. As Ezra Klein writes, “The classic definition of chutzpah is the child who kills his parents and then asks for leniency because he’s an orphan. But in recent weeks, we’ve begun to see the Washington definition: A party that does everything possible to sabotage a law and then professes fury when the law’s launch is rocky.”  Read more…

It’s October 1: Health Exchanges Open, World Doesn’t End

Well, the day has finally come. The Affordable Care Act’s health insurance marketplaces are up and running, ready to sign up millions of Americans shopping for coverage. And as has been the case since the law first began wending its way through Congress, over-heated rhetoric and plain old obstructionism have turned the first day of what will be a long, gradual process, into a highly-charged circus.

With House Republicans refusing to approve financing for government operations unless “Obamacare” is delayed or defunded, the federal government is closed for business; 800,000 workers are on furlough, national parks are closed, the National Zoo’s panda project has stopped providing live feed, tax audits grind to a halt and a range of other non-essential services will cease. And for what? The nation is being held hostage by hardline conservatives who refuse to accept a law that was enacted by Congress, backed by the Supreme Court and promises to offer affordable health coverage for millions of uninsured, low and moderate-income Americans.

The truth is, the health law will move forward despite the theater unfolding right now. Granted, the ACA is complicated, balky and yes, imperfect legislation that will need tweaking as the major provisions are implemented. But guess what doomsayers? The world did not come to an end when “Obamacare” opened for business today. In fact, for the 88% or so of Americans who already have health coverage from their employers, Medicare or Medicaid, there is zero impact. For those of us who hope to buy insurance through the exchanges or will now be covered by an expanded Medicaid program, we have until the end of March 2014 to sign up for individual or family coverage.

That’s not to say that the roll-out will go smoothly. The ACA marks the first new national social insurance program since Medicare and Medicaid were signed into law in 1965. The federal government is running insurance exchanges in 34 states while 16 others have set up their own marketplaces using federal money from the health law. It’s a massive undertaking and a vast public-private venture without precedent. Read more…

Haggling for Health Care

I’m not a big fan of bargaining and my half-hearted attempts to get a better price for a used car, garage sale find or contractor’s service have been mostly unsuccessful. There’s always that nagging feeling that the seller is laughing with delight once I’m gone, thinking, “I really pulled one over on that rube!”

And so it has come as somewhat of a shock to me that medical care has become the new garage sale, as far as haggling goes.

First we found out that hospitals have “chargemasters” that hold the list prices for everything from knee replacements to aspirin tablets, and that these prices differ wildly between hospitals; even those in the same city. We also know that insurers, both private and Medicaid and Medicare, never pay these list prices but instead bargain with hospitals to pay substantially discounted prices. The only ones not getting in on the discounts are the uninsured or under-insured people who get hit with the full list price of hospital care.

The same thing happens with doctor bills. If you’ve ever compared what your doctor bills your insurer with what your insurer actually agrees to pay, it’s clear that there is a lot of bargaining going on. If the list price of an office visit is $125, the insurer pays $60; for a $200 lab test, the insurer reimburses $70, and so on.

A recent New York Times article, “The $2.7 Trillion Medical Bill,” focuses on the cost of colonoscopy to help explain how health care spending can be so much higher in the U.S. than other developed countries. In the article, patient bills for their colonoscopies ranged from a hefty $6, 385 to a whopping $19,438. Meanwhile, their insurers all negotiated the price down to about $3,500. As Elizabeth Rosenthal of the Times notes, this is still far more than the “few hundred dollars” that a routine colonoscopy costs in Austria or Italy.

Why do we have such price inflation here in the U.S.? Our for-profit health care industry has a lot to do with it, as does the maddeningly unregulated nature of the business. Rosenthal writes; “A major factor behind the high costs is that the United States, unique among industrialized nations, does not generally regulate or intervene in medical pricing, aside from setting payment rates for Medicare and Medicaid, the government programs for older people and the poor.”

David Blumenthal, president of the Commonwealth Fund tells the Times; “In the U.S., we like to consider health care a free market.” He adds, “But it is a very weird market, riddled with market failures.” Read more…

Is the “Private Option” A Realistic Plan For Medicaid?

Arkansas is one step closer to being the first state to use Medicaid expansion dollars to buy private coverage for many of its 250,000 newly eligible residents rather than enroll them in the existing Medicaid program. This week the Arkansas House of Representatives approved the plan, leaving only the Senate to decide whether the state will be implementing this “market-based approach” to expanding Medicaid.

The idea of buying private insurance for Medicaid recipients is emerging as a “conservative compromise” for some of the 24 states (home to more than 25 million uninsured residents) leaning toward rejecting federal funding the Affordable Care Act provides for the expansion. In the original legislation, the ACA required states to expand Medicaid to adults earning up to 138 percent of the federal poverty level, $15,870 for an individual or $32,499 for a family of four. The federal government would fully cover the costs of this expansion for two years, with states gradually having to contribute 10% by 2020. Last summer, the Supreme Court struck down the Medicaid expansion requirement, allowing states to refuse federal funding and opt out of the expansion.

But most of these states, including Florida, Texas and Indiana, are leaving a lot of money on the table—from hundreds of millions to $1 billion or more in federal funding.  Under pressure from healthcare providers and other interested parties, some governors view premium assistance programs that move the poor, disabled and frail elderly to the state insurance exchanges to buy private insurance as a way to capture this windfall without appearing to embrace ObamaCare. Read more…


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