Category: Health Policy

Health Care’s Debt Problem

Apr 10, 2024

By KIM BELLARD

Among the many things that infuriate me about the U.S. healthcare system, health systems sending their patients to collections – or even suing them – is pretty high on the list (especially when they are “non-profit” and./or faith-based organizations, which we should expect to behave better).

There’s no doubt medical debt in the U.S. is a huge problem. Studies have found that more than 100 million people have medical debt, many of whom don’t think they’ll ever be able to pay it off. Kaiser Family Foundation estimates Americans owe some $220b in medical debt, with 3 million people owing more than $10,000. It’s oft cited that medical debts are the leading cause of bankruptcy, although it’s quite not clear that is actually true.

So you’d think that helping pay off that debt would be a good thing. But it turns out, it’s not that simple.

A new study from the National Bureau of Economic Research (NBER) by Raymond Kluender, et. alia, found that, whoops, paying off people’s medical debt didn’t improve their credit score or financial distress, made them less likely to pay future medical bills, and didn’t improve their mental health.

“We were disappointed,” said Professor Kluender told Sarah Kliff in The New York Times. “We don’t want to sugarcoat it.”

The researchers worked with R.I.P. Medical Debt, a non-profit that buys up medical debt “at pennies on the dollar,” to identify people with such debt, and then compared people whom R.I.P. Medical Debt had helped versus those it had not. One set of people had hospital debts that were at the point of being sold to a collection agency, and another had debts that had already been sent to collection. And, perhaps to highlight how little we understand our healthcare system, they asked experts in medical debt what their expectations for the experiment were.

Much to everyone’s surprise, having debt paid off made no difference between control and debt-relief groups. I.e.,

“We find no average effects of medical debt relief on the financial outcomes in credit bureau data in either of our experiments.
We similarly estimate economically small and statistically insignificant effects on other measures of financial distress, credit access, and credit utilization.
We find that debt relief causes a statistically significant and economically meaningful reduction in payment of existing medical bills.
We estimate statistically insignificant average effects of medical debt relief on measures of mental and physical health, healthcare utilization, and financial wellness, with “opposite-signed” point estimates for the mental health outcomes relative to our prior.”

In short:

Our findings contrast with evidence on the effects of non-medical debt relief and evidence on the benefits of upstream relief of medical bills through hospital financial assistance programs. Our results are similarly at odds with views of the experts we surveyed, pronouncements by policymakers funding medical debt relief, and self-reported assessments of recipients of medical debt relief.

Amy Finkelstein, a health economist at the MIT and a co-director of J-PAL North America, a nonprofit group that provided some funding for the study, told Ms. Kliff: “The idea that maybe we could get rid of medical debt, and it wouldn’t cost that much money but it would make a big difference, was appealing. What we learned, unfortunately, is that it doesn’t look like it has much of an impact.”

If only it was that easy.

To be clear, there were three key statistically significant effects:

“small improvements in credit access for the subset of persons whose medical debt would have otherwise been reported to the credit bureaus,
modest reduction in payments of future medical bills, and
worsened mental health outcomes, concentrated among those who had the largest amount of debt relieved and those who received phone calls to raise awareness and salience of the intervention.”

The authors admitted they had not expected the mental health results and had no good explanation, but their “preferred interpretation is that recipients of the cash payments viewed the transfers as insufficient to close the gap between their resources and needs, raising the salience of their financial distress and harming their mental health.”

As Neale Mahoney, an economist at Stanford and a co-author of the study, told Ms. Kliff: “Many of these people have lots of other financial issues. Removing one red flag just doesn’t make them suddenly turn into a good risk, from a lending perspective.”

The authors concluded:

Nonetheless, our results are sobering; they demonstrate no improvements in financial well-being or mental health from medical debt relief, reduced repayment of medical bills, and, if anything, a perverse worsening of mental health. Moreover, other than modest impacts on credit access for those whose medical debt is reported, we are unable to identify ways to target relief to subpopulations who stand to experience meaningful benefits.

On the other hand, Allison Sesso, R.I.P. Medical Debt’s executive director, told Ms. Kliff that study was at odds with what the group had regularly heard from those it had helped. “We’re hearing back from people who are thrilled,” she said.

As statisticians would say, anecdotes are not data.

————-

Removing medical debt seems like a can’t-lose idea. A number of states and local governments have passed programs to pay off medical debt (most working with R.I.P. Medical Debt) and a number of others are considering it.

Last fall the Consumer Financial Protection Bureau initiated rulemaking that would remove medical bills from credit reports. It has also, according to NPR, “penalized medical debt collectors, issued stern warnings to health care providers and lenders that target patients, and published reams of reports on how the health care system is undermining the financial security of Americans.”

Director Chopra admits: “Of course, there are broader things that we would probably want to fix about our health care system, but this is having a direct financial impact on so many Americans.”

If nothing else, the new study should remind us that our health system is best at putting band-aids on problems rather than solving them. The problems we should be addressing include: why are so many charges so high, why aren’t people better protected against them, and why don’t more Americans have enough resources to pay their bills, especially unpredictable ones like from health care services?

I’m glad R.I.P. Medical Debt is doing what it is doing, but let’s not kid ourselves that it is solving the problem.

Kim is a former emarketing exec at a major Blues plan, editor of the late & lamented Tincture.io, and now regular THCB contributor

An Urgent Call to Raise Awareness of Heart Disease in Women

Apr 5, 2024

By KELLY CARROLL

There is a dire need to raise awareness about heart disease in women. It is the number one killer of American women, and key data points reveal a lack of cognizance among doctors and women.

An assessment of primary care physicians published in 2019 revealed that only 22% felt extremely well prepared to evaluate cardiovascular disease risks in female patients. A 2019 survey of American women showed that just 44% recognized heart disease as the number one cause of death in women. Ten years earlier, in 2009, the same survey found that 65% of American women recognized heart disease as the leading cause of female death, revealing an alarming decline in awareness.

Recent evidence suggests that many adults don’t know the important health numbers that can help identify heart disease risk factors, like their blood sugar and cholesterol. A 2024 survey of American adults conducted by The Ohio State University Wexner Medical Center found that only 35% of adults knew their blood pressure and 16% of adults knew their cholesterol levels. In comparison, the study reported that 58% knew their childhood friend’s birthday.

Heart Disease Risk Factors in Women

Women have specific risk factors for heart disease that don’t pertain to men. Nanette Wenger, M.D., a cardiologist and researcher, said in an American Heart Association (AHA) statement, “For most of the last century, heart disease was considered a problem for men, and women were believed to have cardioprotective benefits from female sex hormones such as estrogen. However, emerging evidence shows that there are a substantial number of heart disease risk factors that are specific to women or predominant in women.” Some gender-specific risk factors outlined by the AHA are early onset of menstruation, early menopause, autoimmune disease, anxiety, depression, and pregnancy complications.

Bethany Barone Gibbs, Ph.D., an associate professor at West Virginia University, emphasized in an email that pregnancy is a “critical window” for women’s cardiovascular health. She said, “The cardiovascular and metabolic challenge of pregnancy may unmask risk for conditions like hypertension and diabetes, but it is also possible (though not yet clear) that experiencing an adverse pregnancy outcome may independently contribute to the development of maternal cardiovascular disease.” A history of adverse pregnancy outcomes can be associated with more than two times the risk of cardiovascular disease later in life, she explained.

Filling in knowledge gaps regarding the connections between pregnancy and long-term cardiovascular health is important to improving outcomes.

Optum: Testing Time for an Invisible Empire

Apr 2, 2024

By JEFF GOLDSMITH

Years ago, the largest living thing in the world was thought to be the blue whale. Then someone discovered that the largest living thing in the world was actually the 106 acre, 47 thousand tree Pando aspen grove in central Utah, which genetic testing revealed to be a single organism. With its enormous network of underground roots and symbiotic relationship with a vast ecosystem of fungi, that aspen grove is a great metaphor for UnitedHealth Group. United, whose revenues amount to more than 8% of the US health system, is the largest healthcare enterprise in the world. The root system of UHG is a vast and poorly understood subsidiary called Optum.

At $226 billion annual revenues, Optum is the largest healthcare business in the US that no-one knows anything about. Optum by itself has revenues that are a little less than 5% of total US healthcare spending. An ill-starred Optum subsidiary, Change Healthcare, which suffered a catastrophic $100 billion cyberattack on February 21, 2024 that put most of the US health system on life support, put its parent company Optum in the headlines.

But Change Healthcare is a tiny (less than 2%) piece of this vast new (less than twenty years old) healthcare enterprise. If it were freestanding, Optum would be the 12^th largest company in the US: identical in size to Costco and slightly larger than Microsoft. Optum’s topline revenues are almost four times larger than HCA, the nation’s largest hospital company, one third larger than the entirety of Elevance, United’s most significant health plan competitor, and more than double the size of Kaiser Permanente.

If there really were economies of scale in healthcare, they would mean that care was of demonstrably better value provided by vast enterprises like Optum/United than in more fragmented, smaller, or less integrated alternatives. It is not clear that it is. If value does not reach patients and physicians in ways that matter to them—in better, less expensive, and more responsive care, in improved health or in a less hassled and more fulfilling practice—ultimately the care system as well as United will suffer.

What is Optum?

Optum is a diversified health services, financing and business intelligence subsidiary of aptly named UnitedHealth Group. It provides health services, purchases drugs on behalf of United’s health plan, and provides consulting, logistical support (e.g. claims management and IT enablement) and business intelligence services to United’s health plan business, as well as to United’s competitors.

Of Optum’s $226 billion topline, $136.4 billion (or 60% of its total revenues) represent clinical and business services provided to United’s Health Insurance business. Corporate UnitedHealth Group, Optum included, generated $29 billion in cashflow in 23, and $118.3 billion since 2019. United channeled almost $52 billion of that cash into buying health-related businesses, nearly all of which end up housed inside Optum.

For most of the past decade, Optum has been driving force of incremental profit growth for United. Optum’s operating profits grew from $6.7 billion in 2017 (34% of UHG total) to $15.9 billion in 2023 (55% of total). However, the two most profitable pieces of Optum by operating margin—Optum Health and Optum Insight—have seen their operating margins fall by one third in just four years. The slowing of Optum’s profitability is a huge challenge for United.

Gaul Had Three Parts, So Does Optum

The largest and least profitable (by percent margin) piece of Optum is its giant Pharmacy Benefit Manager, Optum Rx, the third largest PBM in the US.

The Long and Tortured History of Alpha-Synuclein and Parkinson’s Disease

Mar 29, 2024

By STEVEN ZECOLA

This study tracks the decades-long journey to harness alpha-synuclein as a treatment for Parkinson’s disease. Steven Zecola an activist who tracks Parkinson’s research and was on THCB last month discussing it, offers three key changes needed to overcome the underlying challenges.

A Quick Start for Alpha-Synuclein R&D

In the mid-1990’s, Parkinson’s patient advocacy groups had become impatient by the absence of any major therapeutic advances in the 25 years since L-dopa had been approved for Parkinson’s disease (PD).

The Director of National Institute of Neurological Disorders and Stroke (NINDS) set up a workshop in August 1995 that featured scientists with expertise in human genetics who might open novel avenues for PD research.

One such scientist, Robert Nussbaum, made the following remarks at the workshop:

“…finding genes responsible for familial Parkinson’s should be helpful for understanding all forms of the disease. Techniques now available should allow researchers to find the genes responsible for familial Parkinson’s disease in a relatively short time.”

Two years later in 1997, Spillantini et al. showed that alpha-synuclein (A-syn) was a major contributor of abnormal clusters of proteins in the brain, not only in patients with synuclein mutations but, more importantly, in patients with sporadic Parkinson’s disease as well.

As Nussbaum had predicted, progress had occurred rapidly. President Clinton in his 1998 State of the Union address, said:

“Think about this, the entire store of human knowledge now doubles every 5 years. In the 1980’s, scientists identified the gene causing cystic fibrosis. It took 9 years. Last year scientists located the gene that causes Parkinson’s disease in only 9 days.”

The NIH is Asked to Take a Leadership Role

Shortly after President Clinton’s call to action, a Senate Committee asked the National Institutes of Health (NIH) to develop a coordinated effort to take advantage of promising opportunities in PD research.

In response, the NIH and the National Institute of Neurological Disease and Stroke (NINDS) held a major planning meeting that included all components of the PD community. The group’s recommendations formed the basis of a five-year PD Research Agenda.

The Research Agenda was codified in a comprehensive 42-page report that covered all aspects of research from better understanding the disease, to creating new research capabilities, to developing new treatments, and to enhancing the research process.

Noting the “remarkable paradigm shift in Parkinson’s disease research” from the discovery of the effects of alpha-synuclein, the report stated that:

“New insights into the role of synucleins in the pathobiology of Parkinson’s disease would accelerate discovery of more effective therapies and provide fresh research opportunities to advance our understanding of Parkinson’s disease”.

NIH invested nearly $1 billion from FY 2000 to FY 2004 to implement the PD Research Agenda. A-syn research would be funded out of the funds allocated to the categories of Genetics and Epidemiology, with both categories targeted to receive about 15% of the overall spending.

Overall, there were 19 broad categories with spending authorizations, including $32.7 million allocated to Program Management and Direction.

When the PD Research Agenda reached the end of its 5-year span, NINDS sponsored a second PD Summit which was held in June 2005. It brought together an industry-wide consortium to assess the progress over the previous five years and to develop future directions for PD research.

The participants generated more than fifty specific recommendations. NIH considered these plans and the unmet goals from previous efforts and developed a 3-year Plan.

A major focus of that Plan was to identify and intervene with the causes of PD.

Gen Z’s Mid-Life Crisis

Mar 27, 2024

By KIM BELLARD

These are not happy times in America.

Now, I’m not thinking about the increasing cultural wars, the endless political bickering, the troubles in the Med-East or Ukraine, the looming threat of climate crisis, or the omnipresent campaigning for the November 2024 elections, although all those play a part. I’m talking about quantifiable data, from the latest World Happiness Report. It found that America has slipped out of the top 20 countries for the first time, falling to 23^rd – behind countries like Slovenia and the U.A.E. and barely ahead of Mexico or Uruguay.

Even worse, the fall in U.S. scores is primarily due to those under 30. They ranked 62^nd, versus Americans over 60, who ranked 10^th. A decade ago those were reversed. Americans aged 30-44 were ranked 42nd for their age group globally, while Americans between the ages 45-59 ranked 17^th.

It’s not solely a U.S. phenomenon. Overall, young people are now the least happy, and the report comments: “This is a big change from 2006-10, when the young were happier than those in the midlife groups, and about as happy as those aged 60 and over. For the young, the happiness drop was about three-quarters of a point, and greater for females than males.”

“I have never seen such an extreme change,” John Helliwell, an economist and a co-author of the report, told The New York Times, referring to the drop in happiness among younger people. “This has all happened in the last 10 years, and it’s mainly in the English-language countries. There isn’t this drop in the world as a whole.”

Jan-Emmanuel De Neve, director of the University of Oxford’s Wellbeing Research Center and an editor of the report, said in an interview with The Washington Post that the findings are concerning “because youth well-being and mental health is highly predictive of a whole host of subjective and objective indicators of quality of life as people age and go through the course of life.”

As a result, he emphasized: “in North America, and the U.S. in particular, youth now start lower than the adults in terms of well-being. And that’s very disconcerting, because essentially it means that they’re at the level of their midlife crisis today and obviously begs the question of what’s next for them?”

Gen Z is having a mid-life crisis.

Disability Activist: Take Great Care When Seeing Bias Toward Disabled Citizens

Mar 20, 2024

By RANDY SOUDERS

During the years I served as Chairman of the Board for Jean Kennedy Smith’s Arts and Disability program, Very Special Arts (VSA at the Kennedy Center), I had there opportunity to meet a wide range of remarkable and courageous disabled Americans. Among the lasting friendships is a painter and visual artist, Randy Souders, who was rendered quadriplegic at the age of 17 in a 1972 accident. His concerns of late have been heightened by Trump and MAGA Republicans. I share his communication with his permission here in the hope that tech designers and others will be alert to the fact that great care is required at this point, lest history repeat. — Mike Magee MD

When I was injured at the age of 17 the world was still quite closed for people like me. That was a year before passage of HR 504 of the Rehabilitation Act of 1973. As I recall that law was the first to mandate access to public places that received federal funds. A year later Jean Kennedy Smith founded VSA (Very Special Arts) which has provided important arts opportunities to literally millions of people with disabilities around the globe. It was a very different world back then and artistic achievement was an important way people such as myself could prove their worth to a society that still saw little evidence of it.

It’s unbelievable to think there are serious threats to roll back many of those hard won gains in the name of deregulation and profitability. Disability is costly and people with disabilities are still woefully underemployed. So when a billionaire presidential candidate repeatedly mocks people with disabilities, how long till the “useless/ unworthy” excuses rise again? The old term describing a person with a disability as an “invalid” has another meaning. The adjective use is defined as “Not valid; not true, correct, acceptable or appropriate.”

Few today are aware that the first victims of the Holocaust were the mentally, physically and neurologically disabled people. They were systematically murdered by several Nazi programs specifically targeting them. The Nazi regime was aided in their crimes by perverted “medical doctors and other experts” who were often seen wearing white lab coats in order to visually reinforce their propaganda.

Branded as “useless eaters” and existing as “lives not worthy of life,” people with disabilities were declared an unbearable burden both to German society and the state. As Holocaust historians have documented, “From 1939 to 1941 the Nazis carried out a campaign of euthanasia known as the T4 program (an abbreviation of Tiergartenstrasse 4 which itself was a shortened version of Zentral Dienststelle-T4: Central Office T4) the address from which the program was coordinated.”

These most vulnerable of humans were reportedly the first victims of mass extermination by poison gas and cheaper CO2 from automobile exhaust fumes. But first “a panel of medical experts were required to give their approval for the euthanasia/ ‘mercy-killing’ of each person.”

In the end an estimated quarter million people with disabilities were killed in gas chambers disguised as shower rooms. This model for killing disabled people was later applied to the industrialized murder within Nazi concentration and death camps such as Auschwitz-Birkenau.”

Much has been written on this topic but few seem to know the chronology and diabolical history of how these “beneficial cleansings” of undesirables often start. The Nazi’s enlisted medical doctors to provide them with a veneer of moral justification for their atrocities.

Throughout history, authoritarian political despots have also worked diligently to silence dissent and co-opt religion in order to assist in their mutual quests for total control and dominance of others.

What could we do if GLP-1 weight loss drugs were free? Would our obesity epidemic be solved for good?

Mar 13, 2024

By CECI CONNOLY and SAMI INKINEN

Unless you have been living under a rock, you likely have heard the names Ozempic, Wegovy or Mounjaro. Or perhaps been humming the jingle. Rarely has a class of drugs (in this case, GLP-1s) achieved such widespread attention in popular culture and the media, which has people clamoring for them in every doctor’s office in the nation.

And for good reason. What we know is that the efficacy and safety profile of these medications is substantially better than any weight loss drug in the past, while our obesity epidemic has only ballooned. As organizations committed to sound science and holistic patient care, we are encouraged by the benefits of these new therapies for diabetes. The clinical evidence shows that GLP-1s are highly effective for controlling blood glucose levels among patients living with Type 2 diabetes and certain co-morbidities. GLP-1s may even improve heart health for high-risk patients.

To date, the biggest worry with these weight loss therapeutics has been the hefty price tag, ranging from $800 to $1700 per person, per month. Conservatively, these weekly injections could cost the nation more than $100 billion dollars annually. Already, state Medicaid budgets are sagging under the financial burden. In North Carolina, for example, officials dropped coverage of GLP-1s for obesity, noting that two drugs alone would cost about $1 billion over 6 years, and that’s with a nice discount.

As troubling as the cost is, what we don’t know is what should really worry us. Amidst the excitement over patients rapidly shedding up to 15% of their body mass, fundamental questions remain about who should be taking GLP-1s, at what dosages and what the long-term health and economic consequences will be for patients and society. Ultimately, the price paid to people’s long-term health may be more concerning than the price paid out-of-pocket.

With the recent release of the SELECT trial data highlighting limitations of existing published studies of GLP-1s, it is now even clearer that the public isn’t getting the full picture.

The ‘Barbie Speech’ – How Much Has Really Changed For Women in America?

Mar 11, 2024

By MIKE MAGEE

In our world where up is down, and black is white, there is a left and a right – it’s the middle we appear to be missing. Does it exist, or was it make believe all along?

Into this existential despair enters Britt Cagle Grant, the 47-year old Federal Judge of the U.S. Court of Appeals for the Eleventh Circuit. The Stanford Law graduate, blessed by the Federalist Society and Leonard Leo, and former clerk of Hon. Brett Kavanaugh, was nominated by Donald Trump and confirmed by the Senate on July 31, 2018.

Now six years later, her words in rejecting DeSantis’s “Stop Woke Act” (otherwise known as the “Individual Freedom Measure), are particularly crushing to her supporters: “By limiting its restrictions to a list of ideas designated as offensive, …it penalizes certain viewpoints — the greatest First Amendment sin. Banning speech on a wide variety of political topics is bad; banning speech on a wide variety of political viewpoints is worse.”

When still a Presidential candidate in 2022, DeSantis used the bill as the leading edge of a divisive campaign based on white nationalist victimization, stating, “No one should be instructed to feel as if they are not equal or shamed because of their race. In Florida, we will not let the far-left woke agenda take over our schools and workplaces.”

Ron and Casey DeSantis mirror in many ways the fictional Barbie and Ken – soon to be featured in the 2024 Academy Awards. The comparison of Ron to Ken needs little explanation. And Casey is equally well-credentialed. The former host of PGA Tour Today met her husband on the golf course, and was married at Disney World. Beautiful and smart as a whip, she graduated with a degree in Economics from the College of Charleston where she competed on the Equestrian Team.

With this most recent turn of events, the DeSantis family seems to be following the plot line (with its twists and turns) of Barbie – this year’s favorite for Picture of the Year. And in the aftermath of that film you will find a female disrupter at least as prominent as Justice Grant.

I am speaking of the brilliant actress, America Ferrera, who played a 39 year old mother and Mattel employee, and delivered what one film critique describes as “the ‘Barbie’ monologue we all talked about.” You can find the two minute speech in its entirety here, and it is well worth a listen. Ferrera herself described the big speech this way: “funny and subversive and delightfully weird.”

When I first heard the speech, (husband, father of a grown daughter, grandfather of six granddaughters, brother of six sisters) I cried at one specific line – “It’s too hard.” – That comes in the next to the last paragraph.

Here is “The Speech”:

“It is literally impossible to be a woman. You are so beautiful, and so smart, and it kills me that you don’t think you’re good enough. Like, we have to always be extraordinary, but somehow we’re always doing it wrong.

What Scares Healthcare Like EVs Scare Detroit

Mar 6, 2024

By KMI BELLARD

I’m thinking about electric vehicles (EVs)…and healthcare.

Now, mind you, I don’t own an EV. I’m not seriously thinking about getting one (although if I’m still driving in the 2030’s I expect it will be in one). To be honest, I’m not really all that interested in EVs. But I am interested in disruption, so when Robinson Meyer warned in The New York Times “China’s Electric Vehicles Are Going to Hit Detroit Like a Wrecking Ball,” he had my attention. And when on the same day I also read that Apple was cancelling its decade-long effort to build an EV, I was definitely paying attention.

Remember when 3 years ago GM’s CEO Mary Barra announced GM was planning for an “all electric future” by 2035, completely phasing out internal combustion engines? Remember how excited we were when the Inflation Reduction Act passed in August 2022 with lots of credits and incentives for EVs? EVs sure seemed like our future.

Well, as Sam Becker wrote for the BBC: “Depending on how you look at it, the state of the US EV market is flourishing – or it’s stuck in neutral.” Ford, for example, had a great February, with huge increases in its EV and hybrid sales, but 90% of its sales remain conventional vehicles. Worse, it recently had to stop shipments of its F-150 Lightning electric pickup truck due to quality concerns. Frankly, EV is a money pit for Ford, costing it $4.7b last year – over $64,000 for every EV it sells.

GM also loses money on every EV it makes, although it hopes to make modest profits on them by 2025. Ms. Barra is still hoping GM will be all electric by 2035, but now hedges: “We will adjust based on where customer demand is. We will be led by the customer.”

In more bad news for EVs, Rivian has had more layoffs due to slow sales, and Fisker announced it is stopping work on EVs for now. Tesla, on the other hand, claims a 38% increase in deliveries for 2023, but more recently its stock has been hit by a decline in sales in China. It shouldn’t be surprising.

As Mr. Meyer points out:

The biggest threat to the Big Three comes from a new crop of Chinese automakers, especially BYD, which specialize in producing plug-in hybrid and fully electric vehicles. BYD’s growth is astounding: It sold three million electrified vehicles last year, more than any other company, and it now has enough production capacity in China to manufacture four million cars a year…A deluge of electric vehicles is coming.

He’s blunt about the threat BYD poses: “BYD’s cars deliver great value at prices that beat anything coming out of the West.”

The Biden Administration is not just sitting idly.

Fee-For-Service: Predominant, Winning & Stupid

Mar 4, 2024

By MATTHEW HOLT

In recent days and weeks, there have been three stories that have really brought home to me the inanity of how we run our health care system. Spoiler alert, they have the commonality that they all are made problematic by payment per individual transaction—better known as fee-for-service.

First, several health insurers who sold their reputation to Wall Street as being wizards at understanding how doctors and patients behave had the curtain pulled back to reveal the man pulling the levers was missing a dashboard or dial or three. It happened to United, Humana and more, but I’ll focus on Agilon because of this lovely quote:

“During 2023, agilon health experienced an increase in medical expenses attributable to higher-than-expected specialist visits, Part B drugs, outpatient surgeries, and supplemental benefits, partially offset by lower hospital medical admissions. While a number of programs have been launched to improve visibility, balance risk-sharing and enhance predictability of results, management has assumed higher costs will continue into 2024,” the company said in a statement

Translation: we pay our providers after the fact on a per transaction basis and we have no real idea what the patients we cover are going to get. You may have thought that these sharp as tacks Medicare Advantage plans had pushed all the risk of increased utilization down to their provider groups, but as I’ve be saying for a long time, even the most advanced only have about 30% of their lives in capitation or full risk groups, and the rest of the time they are whistling it in. They don’t really know much about what is happening out in fee-for-service land. Yet it is what they have decided to deal with.

The second story is a particularly unpleasant tale of provider greed and bad behavior, which I was alerted to by the wonderful sleuthing of former New Jersey state assistant director of heath benefits Chris Deacon, who is one of the best follows there is on Linkedin.

The bad actor is quasi-state owned UCHealth, a big Colorado “non-profit” health system. They have managed to hide their 990s very well so it’s a little hard to decipher how much money they have or how many of their employees make millions a year, but it made an operating profit last year of $350m, it has $5 BILLION in its hedge fund, and its CEO (I think) made $8m. It hasn’t filed a 990 for years as far as I can tell. Which is probably illegal. The only one on Propublica is from a teeny subsidiary with $5m in revenue.

So what have they been doing? Some excellent reporting from John Ingold and Chris Vanderveen at the Colorado Sun revealed that UC has been getting collection agencies to sue patients who owe them trivial amounts of money, and hiding the fact that UC is the actor behind the suit. So they are transparent on how much very poor people allegedly owe them, and come after them very aggressively, but not too transparent on how their “charity care” works. The tales here are awful. Little old ladies being forced to sell their engagement rings, and uninsured immigrants being taken to the ER against their will and given a total runaround on costs until they end up in court. Plenty more stories like it in a Reddit group reacting to the article.

What’s the end story here? UC Health gets a measly $5m (or a share of it) a year from all these lawsuits which is less than the CEO makes (according to a Reddit group—with no 990 it’s a little hard to tell).

Yes, all these patients are being billed or misbilled for individual procedures and visits. It makes people terrified of going to the doctor or hospital, and no rational health services researcher thinks that charging people a fee to use health care encourages appropriate use of care. Last month Jeff Goldsmith had an excellent article on THCB explaining why not.

Of course it goes without saying that if these patients were covered by some kind of a capitation, subscription or annual payment none of this cruelty or waste motion would be happening.

The final example is still going on.