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1. 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
   http://www.naturalstandard.com

2. 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 of the higher opportunity cost of compensation in other fields like business or the law vs other countries. Even if doctors graduated from medical school with much less debt (or even no debt), opportunity costs would still be higher here. Besides, according to the California Healthcare Foundation, only about 22% of healthcare costs are for physician and clinical services, and close to half of that is for practice expenses (staff salaries, office rent, malpractice insurance, etc.) as opposed to doctors’ income. Moreover, PCP’s and pediatricians are, if anything, underpaid.
   While we do pay considerably more for brand name drugs here, I don’t think the government could do much about that unless it is prepared to move to a highly restrictive formulary like the VA does, and it’s questionable how seniors, in particular, would react to that.
   I’m glad that CMS appears to be finally getting serious about comparative effectiveness and practice pattern variation, though the nature of the political process and special interest money will complicate and extend the process. Given CMS’ poor record of controlling costs to date (despite help from cost shifting to the private sector), I don’t think they should be trusted with control over any more of the healthcare system than they already influence. They have all the critical mass they need to get more value for the money they are spending assuming the political will is there. At the same time, it is easier for private insurers to experiment with changes in benefit design in response to customer demand.
   CMS, however, will probably have to provide the leadership to change incentives on the provider side. In the final analysis, I don’t think we will be able to make significant headway in eliminating low value utilization unless we can develop ways to reward the most cost-effective providers and penalize the high utilizers including removing them from Medicare’s list of approved providers if they can’t (or won’t) improve in a reasonable timeframe.

3. Maggie,
   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.

4. 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, manufactuers keeping bringing supposedly newer, “better” devices to market. Then they pay surgeons “consulting fees” (often enormous fees) to
   use the device, train other doctors to use it, etc.
   Thus the new device is adopted–without anyone tryig to determine whether it really is better.
   In the U.S. we pay two to three times as much as other countries pay for
   exactly the same drug or device. In other countries , the goverment negotiates with the manufacturers and says “no, we won’t approve this drug at the price you are asking. It is a little better than what we have–but not that much better. So the manufacturer comes down on the price.
   We also pay certain specialists far more than they are paid in other countries. Medicare is now looking into getting independent recommendations for readjusting fee schedules. (Right now the specialists’ societies make recommendatoins, and as MedPac notes, they rarely suggest that Medicare is overpaying for a particular service.)
   Why do Americans put up with paying so much more for exactly the same treatments? Because Americans have been brainwashed to believe that care in the U.S. is better–and to be suspicious of research coming from the U.K., France, Germany etc.
   Why doesn’t Congress insist that Medicare negotiate lower prices–the way governments in other countries do?
   Because lobbyists for the manufacturers make huge campaign contributions. That’s why the Bush administration’s Medicare bill specifically forbid Medicare from negotatiing for lower prices.
   Matt– in Oregon they were forced into making very hard deicisions about what to cover because they were working with Medicaid funds–and Medicaid (which pays for care for the very poor)is always underfunded.
   Medicare, on the other hand, is already spending more than enough to provide very good care for everyone over 65–in fact, most policy-makers agree that it is spending 33% more than it needs to–i.e. 1/3 of the money is wasted on unncessary procedures.
   Other countires provide as good,or better, care for all of their citizens while spending half of what we spend. This tells us that there is plenty of money sloshing around in our system to provide excellent care for everyone. Our problem is that we pay more for everything, and do more bleeding-edge procedures and tests that haven’t been proven. In our profit-driven healthcare system, everyone is sellig something, and sellling hard. In other countries there is more emphasis on less profitable, but medically necessary care–like preventive care, palliative care for the dying, mental health care. None of these are big money-makers, so they get less attention here.
   Meanwhile, in many cases we have a very good idea of where we are wasting money.
   For instance, we know that we perform too many anigoplasties and open heart surgeries. And the most recent research shows that angioplasty does a heart attack victim no good if it is performed more than 12 hours after the attack. The American Heart Association has been saying this for a few years –yet physicians go ahead performing pointless angioplasities because a) this is a very lucrative procedure and b)many physicians feel “this is how I have always practiced medicine–and no one is going to tell me what to do.”
   Meanwhile, many American patients believe that the angioplasty is a “quick fix.” They are not interested in hearing that heart attack victims fare better in Canada (comparative studies have actually been done) where many fewer angioplasties and bypasses are done.
   Similarly, we know that oncologists over-use chemo. Recently, I interviewed Dr. Peter Eisenberg, an oncologist who is on the American Board of Oncology who said “from where I sit, oncologists are making a stack of money administering chemo that does their patients no good. And they don’t help their patients realize the implications of their decision to have chemo.”
   Eisenberg reports that after a first round of chemo he often says to a patient–“Let me ask you a question–how do you want to spend the foreshortened time that you have left? Do you want to spend it hanging out with me and my staff? Or is there something else you would like to do?”
   The FDA has approved many forms of chemo that give the average patient an extra three months, maybe an extra six months of very low-quality life. One drug gives the average patient an extra third of a month–that’s right less than 2 weeks. What is the point of letting these drugs on the market? What is the point of having Medicare cover them?
   Matt, you’re right that probably only 15-25% of what we now do is supported by credible evidence. So what we need to do is to begin by a) testing the most expensive and questionable procedures and products and b) insisting that manufacturers do head-on-head comparisons of their product to existing products before bringing it to the FDA (or at least before expecting Medicare to cover.) Then, an independent agency can run its tests–to check the credibility of the manufactuers’ claims. (If we did this, many fewer “me-too” products would come to market. Manufacturers would begin focusing on prodoucts where there is real hope of making significant progress.)

5. 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/
   2. The Oregon experience did fail in part because of the political differences but a large part of the failure was also trying to use the cost-effectiveness evidence to determine a cost-benefit for each individual service offered by the Oregon Medicaid program. Cost-effectiveness research is difficult but cost-benefit ($/per some unit of health) adds the complexity of social equity.
   Basically it came down to trying to best figure what individual services you cover with a limited pot of money. While a vaccination or some other type of preventive service may be a slam dunk from a cost-benefit perspective, certain types of mental health services or medical devices for disabled individuals may not be from a societal perspective.
   Gets really difficult to say (Democrat or Republican) to a disabled individual that they should haven’t a certain motorized wheelchair or to a mental health patient shouldn’t have some form of medication that may help their condition. Let alone to a child’s parents that their child should just die because the procedure is only experimental.
   3. As for the cost aspect of doing cost-effectiveness analysis on a wide-scale basis, I am willing to bet it would be considerable, incredibly different, and not even possible in some circumstances. An article by David Eddy in Health Affairs last year (David M. Eddy “Evidence-Based Medicine: A Unified Approach”) estimated that only “15 to 25 percent of medical services are supported by credible evidence on clinical effectiveness.” Additionally, the article highlight some other important barriers to doing cost-effectiveness analysis.
   4. Incorporating cost-effectiveness analysis is a necessary step but it is not a panacea for Medicare’s cost woes. It is going to take some real tough gut-checks about just how much of society’s resources we want to put into the health of the elderly vs. other priorities. My bet is that politicians won’t get serious about it until the money is literally about to run out in the last hour just like they did with Social Security in 1983.

6. “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?
   Or do other countries somehow achieve lesser costs using the same information as available in the U.S?
   Which is it, I wonder?

7. Point #1)
   Nobody discusses Medicare fraud. Here’s an example.
   http://www.detnews.com/apps/pbcs.dll/article?AID=/20070315/LIFESTYLE03/703150387/1003/METRO
   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.

8. 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;
   • Not paying the additional cost of a more expensive
   service if evidence shows that it is clinically
   comparable to its alternatives; and
   • Requiring manufacturers to enter into a risk-sharing
   agreement, which links actual beneficiary outcomes
   to the payment of a service based on its comparative
   effectiveness. Manufacturers might rebate the
   Medicare program for services that do not meet
   expectations for their effectiveness (Chernew et al.
   2007, MedPAC 2006).
   Medicare might use comparative-effectiveness
   information to prioritize pay-for-performance measures,
   target screening programs, or prioritize disease
   management initiatives. A pay-for-performance program
   could link providers’ bonuses to the provision of services
   that are clinically effective and of high value. “
   Moreover, going forward I think Medicare will have no choice but to begin to consider cost-effectiveness when deciding what to cover.
   In eleven short years Medicare’s trust fund
   will no longer be able to pay all of Meciare expenses. Meanwhile the bills physicians send to Medicare keep rising –even though Congress tried imposing a “sustainable growth rate” (SGR) on payments to physicians.
   The SGR legislation decreed that if physicians’ total bills exceeded the SGR in a given year, Medicare should cut their fees across the board. Medicare did that one year—causing quite an uproar—and since then, it just keeps postponing the cuts—pushing them forward. As a result, Congress is
   now slated to cut physicians fees by 40% over the next 8 years.
   Of course, this won’t happen. Many doctors would simply stop seeing Medicare patients.
   But something has to give. And refusing to pay for goods and services that and come with no clinical evidence that they are more effective than what we already have seems like a very good place to start.
   The problem will be fighting the lobbyists and educating the American public. People need to understand that looking at cost-effectiveness is not “rationing” It’s not a matter of refusing to cover something because it’s too expensive-“– rather it’s about refusing to covering something because there is no medical evidence that it is “more effective” And, in many cases, there is also very little evidence about the risks of the new product.
   One way to explain this to the public is to point out that the Mayo Clinic looks at comparative -effectiveness and cost when deciding what drugs to use. This is one reason why it is much less expensive for Medicare to pay for a chronically ill patient who gets his care at The Mayo Clinic than for a very similar patient who receives care at, say, UCLA hospital. Mayo is much more efficient—and gets much better value for the healthcare dollar. And yet no one thinks of Mayo as “cut-rate” medicine. What Mayo is offering—and what Medicare should offer—is evidence-based medicine.
   Matthew is right that the Oregon plan failed, but it failed for two reasons: 1) Governor John Kitzhaber, the doctor who created the plan was a Democrat and during his time in office the state legislature was controlled by Republicans. They refused to work with him. 2) The Oregon Plan applied only to Medicaid patients, and as a result, there were questions about equity. Some people assume that the state was refusing to cover certain goods and services, not because they were relatively ineffective, but because the patients were poor.
   Since Medicare covers the rich as well as the poor, there won’t be the same questions about equity. And if Congress is controlled by Democrats at a time when we have a Democrat in the White House, they are more likely to agree on the importance of comparing effectiveness. (Of course lobbyists will still be a huge problem—and lobbyists fund Democrats as well as Republicans.)
   Matthew asks how Medicare could possible keep up with all of the new products entering the market.. The number of new products is part of the problem. There are far too many drugs and devices coming to market each year that just aren’t very different from each other.
   See my earlier post on THCB “Can There Be Too Many Cures for Cancer?” Oncologists say “yes—there are way too many ineffective drugs on the market—more than they can keep track of—and very, very few that are effective.” Why so many? Manufacturers want to be able to
   tell Wall Street that they have something “new” in the pipeline, so they keep flooding the marketplace with new products..
   Barry– I’m not sure how much it will cost to compare effectiveness of various treatments , but.
   proposals I’ve seen call for an independent agency funded by both the private and public sector –with the public sector covering more than 50% of the cost, and maintaining final oversight.
   I agree that MedPac serves as a good model for an independent agency. I’ve interviewed MedPac’s chairman as well as a few members of the panel, and I’ve read their reports. I’m very impressed by the level of discourse and by their in-depth knowledge of the subject. They are willing to take on very controversial subjects and there doesn’t seem to be a lot of political axe-grinding.
   Barry, I also agree about the importance of variations in care. MedPac talked
   about this in an earlier (March 2007) report. I wrote about that report in the article I’ve linked to in my original post above. (See the paragraph where I’m talking about Wennberg’s “seminal” work.)
   Finally, I admit that it will be difficult to get MedPac’s recommendations through Congress. Lobbyists for the manufacturers and some specialists will fight the idea of Medicare looking at “comparative-effectiveness” tooth and nail. But Congress is going to have to do something. What are the alternatives? Slash doctor’s fees? Raise Medicare payroll taxes? Dissolve Medicare?

9. 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 or device A to drug or device B. If A is no better or only marginally better than B but costs twice as much or more, than providers should all be aware of this and insurance should probably either not pay for the more expensive approach or pay no more than the cost of the cheaper approach with the consumer paying the difference if he or she really wants it.
   The larger issue, it seems to me, is practice pattern variation. CMS has known for years that Medicare spending per beneficiary is roughly three times higher in Miami than in Minneapolis, for example, with no difference in outcomes yet it has done precious little to shrink the spending gap. Private insurers are moving toward the establishment of premium networks. Members are told who these providers are and are encouraged to use them. To align incentives in the right direction, I suspect the trend will be toward more differentiated or tiered copays. If you want to use the higher cost provider, it will cost you more out of pocket. I think the industry could do a lot more in the areas of price and quality transparency and, perhaps, higher reimbursement rates for the most cost-effective providers to push this along. Eventually, the higher cost providers will be forced to either bring their practice pattens into closer alignment with best practices or lose market share. The sooner the better.

10. 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 that the political will is there), you still face the two huge problems.
    The first problem is that no entity will have enough resources to keep effectively evaluate all current medical interventions let alone keep pace with all of the new interventions that appear on the marketplace. The other problem is how your incorporate the known evidence on effectivness into health insurance benefit design. The only thing this was attempted on a large-scale in the U.S. was with the Oregon Medicaid progam and it was a political disaster.

11. 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 the FDA too often “caves” to corporate interests. And the public has become increasingly skeptical about the for-profit health care industry–which should help.
    Finally, while Blue Health Intelligence may well be doing good work, the public tends to be very skeptical of anyone associated with private-sector insurers telling them that the newest, very expensive miracle cure really isn’t that good. Patients assume that insurers are simply trying to manage costs, not care.
    People seem to be much more willing to accept decisions made by Medicare about what it will and won’t cover –which is why I think this needs to be done with oversight by the public sector.

12. 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, a push for universal living wills, malpractice reform (health courts), and a reassessment of what constitutes good, sound medical practice with respect to care at or near the end of life could go a long way to help reduce wasteful healthcare utilization, free up resources to cover the currently uninsured, and drive overall systemwide healthcare cost growth to a lower and more sustainable level.

13. 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 Wennberg and Clancy. Maybe AHRQ’s scope will be expanded or a new agency created exclusively to do effectiveness research but the biggest stumbling block is going to be “independent and have a secure and sufficient source of funding.”
    I am more optimistic about the prospects of something like Blue Health Intelligence
    http://www.bcbs.com/innovations/bhi/
    Far from an ideal solution but I am more willing to bet this gets off the ground and says running unlike a governmental agency that is at the whim of appropriations from Congress and bugdget subcommittees.