POLICY: A roadmap for reform by Maggie Mahar

Maggie Mahar is an award winning journalist and author. A frequent contributor to THCB, her work has appeared in the New York Times, Barron’s and Institutional Investor. She is the author of Money-Driven medicine: The Real Reason Why healthcare costs so much, an examination of the economic forces driving the healthcare system.

In its June
2007 report to Congress
, MedPac (the
Medicare Payment Advisory Commission) highlighted one of the dirty secrets
of our healthcare system:  as a nation, we are currently spending billions
on drugs, devices, surgical procedures and diagnostic tests without
having a clue as to whether they are effective. The reason, MedPac explained:
we have very little “comparative-effectiveness research” that provides
head-to-head comparisons of various treatments for a particular malady.

the Medicare commission observes, “Many new services disseminate quickly
into routine medical care without providers knowing whether they outperform
existing treatments, and to what extent. For example, a recent study
showed that inexpensive diuretics may control hypertension as effectively
as expensive calcium-channel blockers (ALLHAT 2002).”

One might think
that the FDA would require that a manufacturer show that its new drug
or device is better than existing treatments—at least for some patients. 
After all, new medical technologies are almost always more expensive,
so wouldn’t you think they would have to be “improved” in order
to be “approved”?

Think again.
That’s not the FDA’s job. The FDA exists simply to decide whether
the benefits of a particular treatment outweigh its risks. Thus, in
order to pass FDA scrutiny
manufacturers need only test their product against a placebo—which,
as MedPac notes, is what most do. In other words, they demonstrate their
treatment is “better than nothing.”

Of course in order to peddle
their product to physicians, some companies do conduct research which
purports to show that their ”breakthrough” is better than the competition. 
Unfortunately, in these cases drug-makers and device-makers tend to

MedPac puts it more politely: “Researchers have shown that industry-sponsored studies were significantly more likely
to reach conclusions favorable to
the sponsor than were non-industry-sponsored studies. Jorgensen
and colleagues (2006)  …. Bias in drug trials is common and often favors
the sponsor’s product (Peppercorn et al.2007, Heres et al. 2006, Als-Nielsen
et al. 2003 . . .

Bekelman and
colleagues have shown that financial relationships
among manufacturers, scientific investigators,
and academic institutions are widespread (Bekelman et
al. 2003). Relationships between members of institutional
review boards and manufacturers are common and
members sometimes participate in decisions about protocols
sponsored by companies with which they have a
financial relationship (Campbell et al. 2006).”

Ideally, unbiased
public-sector researchers who have no financial relationship with the
company would conduct head-to-head trials that pit one treatment against
another. But, MedPac reports, “Although several public agencies conduct
comparative-effectiveness research, it is not their main focus.”

MedPac would
like to change all of this. In its June report it calls on Congress to:
“establish an independent entity whose sole mission is to produce
and provide information about the comparative effectiveness of health

Such an
entity would:

• be independent
and have a secure and sufficient source of funding;

• produce
objective information and operate under a transparent process 
. . .

• re-examine
comparative effectiveness of interventions over time;

• disseminate
information to providers, patients, and public and private

Will this happen
anytime soon?

According to
FDA News, the  pressure
is mounting.  Business
interests, consumer advocates and federal officials unanimously urged
a House panel to get moving on the expansion of comparative effectiveness
research (CER) for health care products and services,” at a health
subcommittee hearing earlier this month, “but the chair of the panel
questioned the feasibility of comprehensive legislative action this
year in the absence of scored savings from the Congressional Budget
Office (CBO)”

Realistically, my guess is
that Congress won’t pass legislation this year—but given the financial
pressure that Medicare faces, it is going to have to do something in
the next two or three years.

Medicare is running out of
funds–in large part because as much as $1 out of every $3 that it lays
out is spent on over-treatment. That money is squandered on unnecessary,
often unproven bleeding-edge procedures, over-priced drugs and devices
that are no better than the products they replaced, and diagnostic tests
that don’t extend lives.

Research done for more than
two decades by Dr. Jack Wennberg and colleagues at Dartmouth University
has proven that over-treatment is the second biggest problem in our
healthcare system: While some Americans (the uninsured, the underinsured
and those on Medicaid) receive too little care, others (the well-insured
and many on Medicare) receive too much care. And “more care” is
not always better care. Dartmouth’s research shows that over-treatment
isn’t just a waste of money—it can be hazardous to your health.

Earlier this week Matthew noted
that  the Congressional Budget Offices’s director Peter Orzag
also has joined the “cult of Wennberg”– like most members of 
MedPac, Orzag is convinced by the Dartmouth evidence.

This is yet another sign that
Wennberg’s seminal work has finally gained widespread acceptance.
We’ve reached a tipping point: the Dartmouth research is going to
have a serious impact on the national conversation about health care
reform.  Last month I wrote about Wennberg’s research —and
how it is likely to influence Medicare reform, here

In this article,
I quote  George Isham, medical director of HealthPartners of Minnesota:
"The fact that the work [the Dartmouth researchers] are doing is
so rigorous, and the reputation of those doing it beyond reproach, means
that [it] brings issues to the table that we wouldn’t be talking about
otherwise—namely the fact that ‘more care” leads to poorer quality.”

Dr. Christine
Cassell, president of the American Board of Internal Medicine, agrees:
“What is so profound—and so scary—is that the data is so powerful,
and it doesn’t change. There is a stark correlation between reduced
utilization and better outcomes.”

Finally, it
is important to understand that Wennberg is not talking about patients
overusing the healthcare system because they don’t have enough “skin
in the game.” He is talking about doctors and hospitals providing
more care than is needed, in part because the economic incentives of
a fee-for-service system encourages “doing more,” in part because
both health care providers and insurers are worried about being sued
if they don’t offer or cover the newest treatments—and in part because
they just don’t have the information they need to know which treatments
are most effective.

In many ways,
the Dartmouth research provides a roadmap for reforming our health care
system. And the fact that both MedPac and CBOE are so enthusiastic about
Dartmouth’s findings suggests that in the next few years, Medicare
reform may help pave the way for national health insurance. Establishing
an independent institute
that compares the clinical effectiveness  of the treatments that Medicare
pays for would be a very good place to start.

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Elizabeth Henryjoe blowMatt GuldinJohn Fembupsonoma Recent comment authors
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Elizabeth Henry
Elizabeth Henry

Many consumers and physicians have turned a more curious eye to complementary medicines in recent years, as many natural products may offer the same benefit as the more expensive standard medications without as many side effects. However, more clinical evidence based information is needed in these areas.
Elizabeth Henry
Natural Standard Research Collaboration

Barry Carol
Barry Carol

Maggie, Thanks for the detailed responses and for your research. I wonder if you have any data or references that compare the general approach to healthcare in different countries, especially among the elderly with the following conditions: (1) advanced Alzheimer’s, (2) severe dementia, (3) stage 4 cancer, and (4) ESRD. Even without explicit rationing, as might be practiced in the UK, I suspect that there is a considerable difference between the U.S. and elsewhere as to what constitutes good, sound, medical practice. On the issue of doctor compensation, I think doctors will always earn more money in the U.S. because… Read more »

joe blow
joe blow

One thing you forget is that every year Medicare expands the definition of a “provider.” Now we have nurse practitioners and physician assistants that DIRECTLY BILL MEDICARE for their services.
This does nothing but greatly increase costs. Not only that, but Medicare now allows podiatrists, acupuncturists, homeopathists, naturopaths, and a whole slew of other people who provide at best questionabel therapies yet get paid by medicare.

Maggie Mahar
Maggie Mahar

John, Matthew First, regarding other countries– they don’t keep their reserach “hidden” from us; we just don’t ask for it. For years, we have insisted that we have “the best healthcare in the world”; so why would we be interested in another country’s research? Sweden, for instance, keeps a registry of devices –like artificial knees and hips-keeping track of which brands have been implanted in which patients, how long they lasted, how well the patient functioned, etc. Based on that evidence, they have found that the newest knees, hips, etc are not necessarily the best. In the U.S., by contrast,… Read more »

Matt Guldin
Matt Guldin

Thanks for the thoughtful response Maggie. Couple of points: 1. Maybe the MedPac guys are a lot further along about contemplating how to truly fit cost-effectiveness analysis into actual benefit designs/payment structures. According to a recent briefing by Ginsburg and the folks at the HCS, the private sector hasn’t been all that successful: “Innovative benefit designs include incentives to encourage healthy behaviors; incentives that vary by service type, patient condition or enrollee income; and incentives to use efficient providers. But most applications of these innovative designs are not widespread, suggesting that any significant cost impact is many years off.” http://www.hschange.com/CONTENT/913/… Read more »

John Fembup
John Fembup

“as a nation, we are currently spending billions on drugs, devices, surgical procedures and diagnostic tests without having a clue as to whether they are effective. The reason, MedPac explained: we have very little “comparative-effectiveness research” ” Is the lack of research into comparative cost-effectiveness really a meaningful driver of high costs in the U.S. How does that happen, exactly? Health care in many other countries is qualitatively similar to the U.S. yet costs much less. Does the lesser cost in these countries result from their having some kind of double-secret comparative cost-effectiveness studies that have been withheld from America?… Read more »


Point #1)
Nobody discusses Medicare fraud. Here’s an example.
I’m told that such fraud may run to the 10’s of billions of dollars.
Point #2)
EMR providers have enough data to determine best practices without lots of new and expensive quality assessment agencies. Why not tap that?
Point #3)
Why not tap best practices work done in other countries. Don’t reinvent the wheel if you don’t have to.

Maggie Mahar
Maggie Mahar

Barry and Matthew, First, Barry you are right—“cost-effectiveness” has, until recently, been a forbidden phrase at Medicare. But that is changing. In its June report, MedPac talks a lot about “cost-effectiveness” and specifically says: “ Researchers have suggested several ways for CMS to use comparative-effectiveness information in the payment process including: • Creating a tiered payment structure that pays providers more for services that show more value to the program; • Creating a tiered cost-sharing structure that costs patients less for services that show more value to the program; • Using the cost-effectiveness ratio to inform the payment level; •… Read more »

Barry Carol
Barry Carol

MG and Maggie, Do you have an estimate of how much it might cost to do the necessary comparative effectiveness analysis? I note that the CDC’s budget is about $10 billion per year, while NIH spends about $30 billion. It’s hard to believe that this mission would cost anywhere near what CDC spends. Given the overall size of the federal budget combined with the huge and rapidly increasing outlays for healthcare, it seems that financing should not be a serious issue if the political will and sense of urgency is there. To me, comparative effectiveness basically means comparing, say, drug… Read more »

Matthew Guldin
Matthew Guldin

I agree that independence from political pressure is crucial and that providers/general public will always be leary and skeptical of private efforts like Blue Health Intelligence or the new combined effort from Thomson Medstat/Mercer. Probably the most realistic option is establishing a quasi-private/public entity or independent private entity as Gail Wilensky recommended in her piece last summer in Health Affairs. MedPAC has functioned pretty well in a similiar capacity on advising Congress of issues related to Medicare. Regardless of whether or not the U.S. establishes an a serious “effectivness” entity on health care interventions anytime soon (and I am doubtful… Read more »

Maggie Mahar
Maggie Mahar

You’re absolutely right–spine surgeons were up in arms after the AHRQ suggested that they were doing unncessary spine surgery, and the surgeon’s lobby was strong enough to persuade Congress to slash AHRQ ‘s funding. We need an agency that is insulated from political pressure, and this will be difficult. (Some have suggested the Fed as a model). Transparency is key; and it’s important that the media keep a close eye on such an agency. But today, newspapers like the NYT and the WSJ have begun to do a good job of reporting on manufacturers’ biased research, while also explaining how… Read more »

Barry Carol
Barry Carol

My understanding is that Medicare is, for the most part, specifically prohibited from taking cost into account when new drugs and devices enter the market. If they win FDA approval, Medicare pays for them. This approach serves drug and device manufacturers as well as providers quite nicely, but taxpayers don’t fare very well. A Best Practices Institute or similar organization needs to be structured like the Federal Reserve Board in order to assure its independence from political pressure, and Medicare should be required to incorporate the findings into its coverage and payment decisions in some reasonable and consistent manner. Separately,… Read more »

Matt Guldin
Matt Guldin

The idea of having a U.S. governmental agency that does comparative research (health services research) on the effectivness of medical interventions is nothing new. In fact, the U.S. did have an agency, the Agency for Health Care Policy and Research (AHCPR), with this exact purpose. However, Congress killed this agency and it was only reborn as the Agency for Healthcare Research and Quality (AHRQ) in the late 1990s. Here is a slightly dated article but a great historical perspetive on funding health services research and what happened to AHCPR: http://content.healthaffairs.org/cgi/content/full/hlthaff.w3.311v1/DC1 There are also some nice responses to the article by… Read more »