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POLICY: It sucks to be sick and poor in America

While some of my fellow bloggers have seized on the opportunity afforded by the Canadian election to criticize the alleged "monstrosity" of the Canadian health care system, the true "stinking" is emanating from the system for care of the poor here at home. CHCF is out with two new studies which, while not exactly new news, confirm that access to care for uninsured Californians is terrible, access for those on Medi-Cal is not much better, and that those who receive their care at Federally Qualified Health Centers have enormous problems getting to specialist care.

I won’t dwell on this here and you can go read the reports, but suffice it to say that the Fraser Institute’s analysis of what’s wrong with Canada continually omits to tell the truth about the relative difference between the systems. THCB analyzed the actual situation (rather than some Libertarian fantasy) in the "Oh Canada" post last year. The story from exhaustive studies is that all Canadians have to accept some limitations on getting to highly expensive care, but that has no discernable effect on their overall health or real access to necessary care, and no Canadians have real financial problems associated with getting that care. On this side of the border, well insured Americans have more or less immediate access to expensive care, but poorer and even lower-middle class Americans have much worse access than wealthier Americans (as borne out by the recent CHCF studies) and also than poor Canadians. And up to 25% of Americans have significant financial trouble due to health care expenses. If that means that the Canadian system is morally inferior to ours, let me just say that I have a hard time grokking the morality of those who think so.

TECHNOLOGY: Upping the ante on physician technology use

The Bridges to Excellence program, that the very careful THCB reader may have noted was discussed in the P4P piece by the HSC folks referenced in yesterday’s post, is in the news today for offering to hand out cash to doctors. If it was sponsored by a bunch of pharma companies, Eliot Spitzer would probably be getting the handcuffs out now, but as it’s sponsored by lots of big employers and run by the thoroughly worthy NCQA (and I really mean that) led by Peggy O’Kane, it’s actually a good thing.

As, the HSC folks report, "Bridges to Excellence" makes incentive payments to physicians who show improvements in diabetic and cardiac care and invest in information systems and care management tools". The new story is that up to $50 per patient will be paid to doctors who are investing in the IT tools. Theoretically a GP with a panel of 3,000 patients that might amount to $150,000. In fact one practice got $40,000 already, almost real money, and certainly enough to get well up the IT curve. Of course a cynic (i.e. me) might say that this is a Johnny-come-lately attempt to copy the British government which gave its GPs enough money to get computerized in the 1990s and is now paying them based on their ability to manage patients to certain care process targets. But it’s definitely a move in the right direction.

QUALITY: Pay for Performance, Care Management and the scribblings of defunct economists

Back in 1997 when IFTF was working on the 10 Year Forecast of Health and Healthcare, our chief economist Greg Schmidt vehemently decried capitation and FFS as unsustainable systems and said that a rational market would develop in paying for medical excellence. He convinced us all to put something called "Performance-based reimbursement" in our forecast, and our final forecast suggested that by 2010 some 20% of reimbursement for the health care system would be in some kind of pay for performance manner. Remember what Keynes said about us all being "slaves of some defunct economist"?

This week two different sets of leading health care luminaries have put the state of Pay for Performance and its related cousin of plan-based care management in their sights. Brad Strunk and Robert Hurley at HSC have an issue brief looking at the spread of "P4P" in several of the markets that HSC tracks. Their analysis is that P4P is plan driven and a response to try to tease out some of the "good effects" of capitation. (You remember the pre-Helen Hunt period when capitation was supposed to encourage long-term thinking in care management, and innovation in improving patient services?) It’s obviously also a way for plans to try to establish some limited control over provider behavior during a period when visions of a return to 1973 and the "Golden Age" have been terrifying the plan medical directors trained at the temples of the prophets Enthoven and Berwick.

Berkeley’s Jamie Robinson (the other Reggie Herzlinger fan) and CHCF’s Jill Matthews Yegian have an online piece in Health Affairs which summarizes the plans dilemma nicely:

    "Health insurers are under conflicting pressures to improve the quality and moderate the costs of health care yet to refrain from interfering with decision making by physicians and patients"

. That’s really what health plans efforts to create better care for their members have evolved into.

Their article is an accurate parsing of the state of the art of DSM as managed by major health plans (or more accurately their data jockey and care management subsidiaries). They parse care management it into Identification (either data based, self-assessed by patients or more likely gained via notification from physicians that something bad is happening) and Intervention. Intervention tends to happen well when a nurse gets the patient on the phone (the American Healthways or Lifemasters model) and not so well when a medical director is trying to change physician behavior one doc at a time (the initial Active Health Management model).

Robinson and Yegian basically call the state of medical management out as being nothing more than a minor attempt to keep some level of quality improvement in the system while not upsetting providers or patients very much. They also doubt that there is much bang for the buck in these programs beyond a narrow segment:

    "The health plans’ medical management programs are designed, packaged, and priced with modest expectations for what they can deliver. All programs assert that they generate a positive return on investment, with the benefits in lower medical costs exceeding the administrative costs of identification and intervention. The positive return on investment is predicated on the modest level of investment, however, and a major ramping up of medical management programs would not generate commensurately higher returns and slay the dragon of cost inflation and quality deficiency."

In other words they seem to think that Wennberg and the Dartmouth crowd’s jobs are safe for now.

In a follow-up piece Victor Villagra notes that as health plans have developed DSM outside of the "traditional" provider system, no one has dealt with the complex question–"Can DM Organizations Support Small-Practice Adoption Of The Chronic Care Model?" It’s not hard to see Robinson and Yegian’s answer as being "No".

I’m not quite so certain. Somewhere in the bowels of the malpractice debacle a reasonable debate about following evidence-based medicine is trying to get out. If you think about it care management is all about extending evidence-based medicine over the continuum of care. P4P is merely about trying to encourage that trend. While the defeat of managed care in the court of public opinion and in the boardrooms of insurers seems more or less final for now, there are two things leading me to believe that the war is not yet over. First, it’s just the right thing to do, and you know what Churchill said about Americans doing the right thing. Secondly, and rather more known to motivate Americans, it’s the money. If aggressive private sector negotiating doesn’t work to restrain health care costs, something else will find its place. Stein’s law says that if something’s unsustainable in the long run it will end. At some point 15-20% rises in health care costs every year is unsustainable. The combination of EBM, care management and P4P has the kernel of a promise to reduce the care variation, the unnecessary care and the dumb care that is responsible for a big chunk of the $1.6bn spent every year.

So round one to the system, but I for one still believe that the question of Greg Schmidt’s "defunctness" is still up in the air.

The IFTF Forecast from 1998

PHARMA: Formularies–penny-wise, pound foolish.

You may notice some slightly funky publishing schedules this week as I’m on the east coast confirming that Boston is cold in May, that the Big Dig is never-ending, and that Amtrak can make the trains run on time. Meanwhile in the better late than never category I wanted to make sure that THCB readers didn’t miss (and of course you saw it elsewhere) the RAND report about pharmaceutical formularies and their impact on Rx consumption. In yet more proof that in my earlier life I hung around with intellectuals way above my station, this study was led by Dana Goldman, who was a mere Econ grad student when I was at Stanford, but has certainly moved on since then! (He’s now head of Health Economics at RAND).

Goldman’s team linked a huge dataset of Rx claims with pharmacy benefit design for over half a million lives from a wide variety of plans and employers. (Incidentally the brain and data crunching required for this study–given that these things are not usually correlated in that way–must have been immense and makes me glad that I didn’t try to emulate his success!). The results mirror a study in the NEJM last year, which looked at 3-tier formularies. The bottom line in both studies is that if you increase the co-payment at point of dispensing, people take fewer drugs. RAND found that a doubling of the co-pay caused up to a 45% decrease in use of NSAIDs and antihistamines–presumably because cheaper OTC products were substituted. That’s a win for the payer and probably not too much of a loss for the consumer. But at that point things get a little less clear. “Reductions in overall days supplied of antihyperlipidemics (34%), antiulcerants (33%), antiasthmatics (32%), antihypertensives (26%), antidepressants (26%), and antidiabetics (25%) were also observed.” And even more disturbingly “patients with diabetes reduced their use of anti-diabetes drugs by 23%.”.

Presumably having one in four diabetics reducing their maintenance drug use isn’t the type of health promotion that all the PBMs’ marketing materials claim they are aiming for. And of course as Harvard’s Steve Soumerai showed years ago in looking at restrictions on schizophrenia drugs in Medicaid, a modest saving in one place often causes a much bigger loss in another. Although it’s not in the abstract, the Modern Physician story about the report quotes author Geoffrey Joyce:

    While the drop in usage is not nearly so high with drugs for chronic conditions, “we find significant price sensitivity in this population,” Joyce said. “We think there are adverse health consequences.” For patients with diabetes, asthma and gastric acid diseases, emergency room visits climbed 17% and hospital stays rose 10% as the use of prescription drugs dropped, according to the research.

    What to do is a question of balance when creating a formulary, according to Joyce, who warned against using increase in copays as a “blunt tool.” “I think there is this herd mentality to control drug costs without fully considering their overall healthcare costs,” Joyce said. “You can design it to make people price-sensitive without creating adverse consequences.”

Now bear in mind that not only are the health consequences of these serious, but the DCCT study over a decade ago proved that a combination of testing and drug use could maintain diabetics in a stable state, whereas poor compliance increased both the incidence of hospital visits and overall costs for the diabetic population. It seems that those lessons haven’t been learnt. Of course having a drug budget separated out from the overall health budget doesn’t easily allow a payer to make that connection. Consequently you have to be concerned about the way that Medicare is administratively separating off its drug coverage from its overall care system.

POLICY & HEALTH PLANS: Managed care costs Medicare more

This isn’t new news, and has been disputed in a roundabout way in various other pieces, particularly one by Jeff Lemieux that I commented on last year. However, the Commonwealth Fund has a latest report showing that in terms of pure increase in payments, the enrollees in Medicare HMOs will exceed the cost of their equivalents in the FFS program by 8%. In some urban counties (such as Phoenix, AZ) the difference will be as much as $1,000 per year per member.

So the recent legislation designed to "level" the playing field between the public FFS program and the privately-run HMOs in Medicare+Choice has at the very least thrown the advantage back to the HMOs. Logically, if it believed that HMOs actually were cheaper you’d expect the government to get seniors into HMOs and then keep them there as they cut reimbursement rates later. That presumably would save money in the long run. However, we’ve seen this movie before, we know how it ends, and there are problems with the "bait and switch" scenario in which the senior is trapped in an ever-cheaper HMO. The problems are that neither the members nor the plans can at this stage be forced to stay in the market. In the late 1990s the private plans moved out as reimbursement fell, and their members were forced to move back to FFS.

That means that the short-term costs of pushing people into HMOs cannot be "made-up" later by ratcheting down rates so (as Commonwealth says), the increased Federal spending is merely a short-term subsidy to private HMOs and their members. Not exactly logical government policy. But then again, who said PDIMA was logical. Expect Senator Kerry to point this out in the run-up to November!

POLICY: Overview of HC system spending

The California Healthcare Foundation is out with more great reference work. This one is an overview of the whole health care system. They call it Health Care Costs 101 and it’s a nice summary of some voluminous work done at CMS by Katherine Levit’s team.

There’s an easy to digest one page system overview PDF as well as a much larger version here.

Perhaps one of the most interesting views of what we already know is what share of which payers’ expenditure goes on what.

For consumers, “Out of Pocket” expenditure on prescription drugs is 23% of all spending, dental/other professional 21% and other (such as nursing homes) is 18%. For Private Insurance the numbers are hospitals 30%, physician/clinical 30% and Rx 14%. For Medicare hospital care is 56%, physician/clinical Services 26% and nursing Home/Home Health 9%

So as you’d expect the relatively low amount overall paid out of pocket by consumers is concentrated on drugs (and is concentrated in a relatively few number of consumers by the way) with the political consequences we’ve been seeing in the past few years. Whereas private insurers are concerned mostly with hospitals and doctors, and Medicare of course is still fixated on hospitals 20 years after the introduction of DRGs.

All food for thought when you’re considering who cares about what.

PHARMA: Bristol-Myers to Stop U.S. Sale of Serzone

BMS is pulling its poorly selling anti-depressant Serzone off the market. BMS blames poor sales for the move, but the drug has been blamed for liver problems and the folks at Public Citizen have been suing to force a full recall (rather than just stopping sales) and the cessation of sales of generics.

Overall this will have modest effect on BMS attempts at revival–the way the company deals with the patent expiry of Pravachol will be much more important. As mentioned last week in THCB, Forbes believes they’ll do OK.

LIGHT RELIEF

If you are needing a break to get you to the weekend, the photos from the first half of my trip to the UK and Turkey are now up at my personal blog. But don’t blame me if your boss gets grumpy with how you’re spending your day!

HOSPITALS: CalPERS drops 36 hospitals

Here’s the Sacramento Bee’s report on CalPERS paring down the list of hospitals it will contract with in the Blue Shield HMO product. Although some big names like Cedars Sinai are on this list, the real deal is the fight between CalPERS and Sutter. Sutter operates 13 hospitals in the Sacramento-San Francisco region. However, it’s not CalPERS denying access to hospitals that is the big deal. It’s the issue with physicians affiliated with those hospitals.

While in the SF Bay Area many primary care physicians contract with either an umbrella group like Hill or Brown and Toland and as such CalPERS employees can get to their physicians another way, in Sacramento somewhere in the region of 50,000 CalPERS employees are likely to have to change primary care physicians to a non-Sutter affiliated doc. I suspect that the squealing from that will be fairly loud. The employees can opt for the PPO to keep their docs, but that will cost them more in premiums and co-pays. As a contrast SBC unionized phone employees (including those in the Sacramento are) about to strike because they face co-pays for the first time. The issue was the same in grocery workers strike that lasted most of the past 9 months.

So this one needs to be watched. CalPERs believes that there is still overcapacity of hospitals in the Sacramento region, or else it wouldn’t have tried this. It’s also staying away from the “all or nothing” tactics that Blue Cross tried on with Sutter in its losing contract dispute a few years back. But if Sutter has managed to keep prices 80% higher than everyone else (as CalPERS claims) their market power may be enough to see them through this. Whether CalPERS employees will go along is another matter.

HOSPITALS: Straight Outa’ Compton, by MATT QUINN

St. John’s Regional Medical Center , Oxnard’s only hospital has filed a civil lawsuit seeking to impose an injunction against members of the Colonia Chiques gang. According to the injunction, gang members – who “frequently arrive at the hospital as victims of beatings, stabbings and shootings” could receive care at St. John’s, but fellow gang members would not be able to congregate there.

The hospital claims that the “typical gang member emergency usually results in 20 to 30 people showing up at the emergency room,” where gang members “are very loud, bang on doors, are rude to staff and disruptive, and have no regard for other patients or hospital property.” In addition, the affidavit stated that the gang members “block off the entrance to the emergency room, obstructing the passage of those who need to use it”; “intimidate anyone who wants” to enter the emergency department; and “continually try to obtain information from the emergency room personnel in a way that obstructs staff’s ability to do their job.” Gang members also are responsible for “thousands of dollars worth of vandalism” at the hospital.

While this injunction might seem like a good idea, putting it into practice might be somewhat challenging: does it apply to only Colonia Chiques gang members or does it apply to other (more or less well-behaved) gangs; short of declaring that they’re a Colonia Chiques, how does one know if someone in the E.R. waiting room is a member of that gang or not; what rights does a non-disruptive gang-member have to visit an injured family-member?….etc.

Like it or not, gang members represent part of the “community” that this hospital has a mandate to serve. Other than the vandalism (which should be addressed with better security), it sounds like, perhaps, more spacious waiting facilities and better communications – on both sides – would go a long way toward reducing problems. Too bad St. John’s isn’t seeking a constructive approach.