Medical Pricing Transparency via Non-Transparent Rule

copyright 2015 Daniel Ginsberg PhotographyHidden in a 700-page draft regulation to improve patient’s access to their electronic medical records is a proposal to require doctors, hospitals, and other healthcare providers to publicly reveal the prices they have negotiated with insurers. This rule, tied to the 21st Century Cures Act, would set the stage for eventually making prices publicly available. Although price transparency may be a good way to help lower medical costs, it’s ironic that there is a lack of transparency when it comes to the proposed rule. I challenge you to read the Title, Summary, or Actions section and realize that it includes such a major change (hint – in the PDF document it’s on page 7513 of the Federal Register under Price Information).

On the face of it, making prices readily available sounds like a no-brainer, but I think it’s more complicated than that, and there may be unforeseen consequences. The rule is long and complex, and I don’t have the few days it would probably take me to really understand it, but let me play devil’s advocate. Some of the comments posted say that medicine is the only industry that hides the cost. To a certain extent that’s true, but this rule could go beyond just saying the price consumers pay. If you go to a restaurant they won’t reveal how much they paid for the the ingredients. If you book through a 3rd party website, they don’t tell you how much, if any, they pay them for the referral. When you buy a car the dealer usually doesn’t tell you if the automobile manufacturer is giving them a rebate. From the point of view of a business, the consumer shouldn’t get to know their internal costs as that’s secret competitive information.

What mitigates that argument is that the price of healthcare has gotten out of control. Despite being better educated about the matter than most, when it comes to getting healthcare for their own family I suspect most physicians struggle to understand their bills just like everyone else.

When it comes to pay, doctors are a commodity. For a given surgical procedure or office visit of a certain complexity, they are paid the same amount as mandated by Medicare or Medicaid, as negotiated with insurance companies, or their list price for the unfortunate cash patient. Just like any profession, some doctors are better than others. If you want to hire a top lawyer or an A list actor, you have to pay top dollar.  But that’s not so with much of healthcare. The price doesn’t necessarily reflect the quality of the care.

Hospital systems mitigate that somewhat. They can negotiate higher prices with insurance companies and with large employers by demonstrating that they provide higher quality care and/or lower cost care, or because patient perceive them as providing superior care and they demand that that can get care from them. What will happen if the rule goes into affect and patients can easily compare prices? I don’t know, but potentially they might choose the lowest cost without regard to quality. That could lead to systems competing on price, cutting corners to do so, and ultimately lowering quality.

The lowest price might actually not be the path to cost savings. Imagine two surgeons. One of them charges $5,000 for a knee replacement, and operates on 60% of the patients seen for knee arthritis, treating the rest successfully with injections and physical therapy, which on average costs $1,000. The other charges $7,000, and operates on 50% of the patients seen and treats the rest successfully with the same conservative measures. Besides the physician fee, the hospital system charges $10,000 for the surgery. In this example, treating 100 patients would cost $940,000 for the first surgeon, and $900,000 for second. So even though the second surgeon charges 40% more than the first, on average the doctor ends up being cheaper when it comes to managing knee arthritis.

I’m inclined to support more transparency in healthcare pricing, but I don’t know how much of an impact it will have, and there may be unintended consequences.

Don’t expect to see published prices anytime soon. Even if the proposal goes forward, following a public comment period that ends May 3, it’s likely to be tied up in legal challenges for quite a while.

When is DNR not DNR?

Montparnasse Cemetery viewed from Montparnasse Tower. Copyright 2013 Daniel Ginsberg
Montparnasse Cemetery viewed from Montparnasse Tower. Copyright 2013 Daniel Ginsberg

Patients are often encouraged to make wishes known with a living will or other instrument. If someone says they would not want resuscitation if their heart stopped, they are said to be DNR, as in Do Not Resuscitate, or more accurately DNAR, Do Not Attempt Resuscitation. Success rates one month after out of hospital cardiac arrests when CPR is performed are only about 4.9% to 9.2%.

In Washington State per a directive it often say,

“(a) If at any time I should be diagnosed in writing to be in a terminal condition by the attending physician, or in a permanent unconscious condition by two physicians, and where the application of life-sustaining treatment would serve only to artificially prolong the process of my dying, I direct that such treatment be withheld or withdrawn, and that I be permitted to die naturally. I understand by using this form that a terminal condition means an incurable and irreversible condition caused by injury, disease, or illness, that would within reasonable medical judgment cause death within a reasonable period of time in accordance with accepted medical standards, and where the application of life-sustaining treatment would serve only to prolong the process of dying. I further understand in using this form that a permanent unconscious condition means an incurable and irreversible condition in which I am medically assessed within reasonable medical judgment as having no reasonable probability of recovery from an irreversible coma or a persistent vegetative state.”

For many patients this is reasonable, but not for all. No one lives forever, but even a generally healthy 98-year-old does not have a terminal condition. Many of my older patients tell me they are DNR, but most are surprised when I tell them their health care directive says they would want to have CPR and get shocked with a defibrillator if their heart stopped, as they do not have a terminal condition.

I think this is probably a failure of lawyers drawing up the health care directive to modify the language to what makes sense for their clients. I’m not a lawyer, but they might add something like:

(b) If I attain the age of 80-years-old, then I do not want to have my life artificially prolonged, other than using medications, including intravenous medications, and oxygen. An exception is that if I’m undergoing a procedure and develop a cardiac rhythm not compatible with life, then I would approve of an immediate attempt at shocking my heart back into rhythm if the physician deems there is a reasonable chance of success.

Just because a lawyer inserts boilerplate language, does not mean it cannot be changed.

Quitting Smoking and Happiness

The FDA is proposing a new rule in regards to tobacco regulation. As detailed recently in the New York Times, the benefits of stopping smoking, such as less heart and lung disease, would need to be discounted 70%, making it that much harder to justify spending money on smoking cessation. It sounds like something inserted at the bequest of tobacco lobbyists. Tomorrow is the deadline to make a public comment. Here is what I submitted:

I think it’s a dire mistake to discount the economic and health benefits of stopping smoking because of the loss of enjoyment. Although smokers may get temporary enjoyment from smoking, they also get enjoyment from being healthy. Surely one gets more pleasure taking a walk in a park and living at home, than pushing an oxygen tank down a hall in a nursing home because of severe emphysema. Smokers die at a younger age than they otherwise would. What about the enjoyment their partners, children, and grandchildren lose when the smoker dies prematurely? Loss of enjoyment should not be part of the equation, unless it’s a negative number which would serve to magnify the cost smoking places on individuals and society.

Up in Arms, Up in Smoke

20090715_japan_0671If you apply for health insurance, you may find you have to pay higher rates if you’re a smoker. Now federal regulators are trying to decide if insurers who participate in the Affordable Care Act (aka ObamaCare) exchanges can add a surcharge for those using e-cigarettes or vaporizers.  They already can for cigarettes in most states.

Some argue against this, in the name of harm reduction, the idea that if people are going to smoke, it’s better to smoke something safer. For example, Reynolds American Inc spokesman David Howard, said, “We don’t believe policies should be implemented that might deter current smokers from considering switching to smoke-free alternative products like e-cigarettes.”

Numerous studies have, shown, however,that the best way to get people to cut back on smoking, is to make it more expensive. E-cigarettes and vaporizers are cheaper than cigarettes, so paying more for insurance for all forms will encourage more people to stop smoking. No one is suggesting that those smoking alternative forms of tobacco be charged more than those who smoke cigarettes, so even if insurers charge extra for those who use e-cigarettes or vaporizers, they will not pay more than if they stuck with cigarettes, so really it won’t deter smokers from switching. People switch because it costs less, it’s more socially acceptable, or they perceive it to be safer.

In that last regard, vapor may be safer than cigarettes, but we really don’t know. Recent studies show they can definitely have known carcinogens, such as formaldehyde. Would you really want to inhale a chemical used to embalm corpses? I tell my patients that if they use e-cigarettes to help them quit smoking, which may or may not help, then I’m alright with that, but the goal should be to stop using tobacco products, and not just switch from one habit to another.

 

Tort Reform and Forced Sterilization in North Carolina

Torte - Image credit: <a href='http://www.123rf.com/photo_13722428_delicious-slice-of-home-made-sachertorte-cake.html'>digitalsun / 123RF Stock Photo</a>

In 2011 the North Carolina legislature made major changes to the law governing medical malpractice claims. This tort reform, among other things, capped non-economic damages at $500,000.

Such caps on damages do not restrict payments for financial losses, such as future income not earned due to no longer being able to work as a result of injury or death because of something a doctor did, or neglected to do. Rather it limits awards to compensate for such things as pain and suffering.

Physicians in Washington State, and elsewhere, have lobbied for tort reform. Although some physicians have been guilty of gross negligence, in many cases doctors are sued, and juries award large amounts of money, because a patient has suffered, but not necessarily because of something the physician did wrong. Because physicians worry about getting sued, they tend to practice defensive medicine, and order more tests and procedures than necessary as a result. Besides wasting money, it can cause harm. I’ve had patients who have had dozen of CT scans, because every time they go to the emergency room for abdominal pain, they get one to make sure they don’t have such things as appendicitis. The radiation from the CT scan increases the risk of developing cancer in the future. Although such scans are certainly warranted at times, I believe they are excessively ordered because of fear of getting sued.

Between 1929 and 1974, North Carolina forcibly sterilized 7600 people it deemed socially or mentally unfit. Recently the state agreed to set up a $10 million dollar fund to compensate living victims. So far they’ve identified 177, though as of 2010 the State Center for Health Statistics estimated that 2,944 victims may have still been alive. If they end up with 200 such people filing claims, they would each get $50,000. That’s only one tenth of the amount allowed in that state for non-economic damages, and one hundredth if 2000 filed claims, and infinitesimally less in a state that has no such cap. Physicians may be well off, but their pockets are not nearly as deep as a state.

If a physician inadvertently sterilized a patient while treating them for something else, they could be sued for large sums of money for depriving them the chance of procreating. If states can cap non-economic damages for doing the same, isn’t it only fair that limits be placed on non-economic damage for malpractice for physicians who were trying to do the right thing? Although that’s true in about 30 states, the Washington State Supreme Court ruled such caps unconstitutional in Sofie v. Fiberboard Corp., 112 Wn.2d 636 (1989). Although that was not a medical malpractice case, the reasoning goes against the decisions made by a majority of other states, and ignores the fact that resources are limited. No caps in theory means a jury could bankrupt an individual or company, no matter how large, and no matter how many hurt if that happened, all in the name of “justice” to benefit one person, and their legal team of course.

An Epidemic of Gun Violence

Last week I wrote about the 1st Amendment. This week I’m going to talk about the 2nd. There is an epidemic of gun violence. This is a serious health problem. Watching your diet, exercising, and taking pills is all for naught if a bullet kills you.

In Newtown, Connecticut, one of the worst mass shooting occurred last week when a gunman shot his mother at home, apparently with her own gun, then walked into an elementary school and shot 6 other adults and 20 children, before shooting himself. Gun rights are hotly debated and highly politicized, but gun violence is a serious health issue. The National Rifle Association (NRA) and others have been strong proponents of gun rights, and have fought hard to fight off attempts for even the slightest form of control, including restrictions on semi-automatic and assault weapons.

One of their arguments is that citizens can protect themselves with guns, and that concealed guns are a particularly effective deterrent because potential assailants won’t know who may be armed. But in 61 cased in the US in the past 30 years, maybe only one was stopped by a gun other than their own, or by the police. Even if people want guns to protect themselves, they shouldn’t need to cover the contingency of an invading army, so I see no need for high capacity bullet magazines.

Many mass shooters have mental illness and we need to do a better job providing access to mental health treatments. Some illnesses, such as schizophrenia, often don’t really manifest until people are in their teens or early 20’s, allowing them to purchase guns when their sick enough to do real damage, but not so severe that they would have more trouble planning an attack or convincing someone to sell them a gun. Even if not mentally ill, young men tend to act less rashly as they get older, and are more likely to consider the consequences of their actions. From a list of 22 of the deadliest mass shootings around the world, 65% of them were under 30. We already have a law that says that people can’t buy alcohol until they are 21-years-old, even though they can vote and serve in the military at 18-years-old. Perhaps the right to own a gun should only be allowed for those who are at least 30-years-old.

We need to close legal loopholes, such as sales between private buyers, that allow people to avoid background checks before purchasing guns. I need to fill out more paperwork to prescribe shoes for a diabetic than to buy an assault weapon. We need people to speak up and let our politicians know that gun violence caused by guns is not acceptable. We’ll never prevent all such tragedies, but we should try to minimize the possibility as best we can.

Dinners and the Sunshine Law

Though implementation has been delayed until 2013, per the Sunshine Law, pharmaceutical companies are now collecting information to report to a public website the value of things they give to physicians, including such things as dinner meetings. It may sound like doctors are just being wined and dined to get them to prescribe their medications, but as I’ve said before, there is value in such dinners.

For example, I went to a local dinner meeting early this year, featuring a speaker who was an expert on hypertension. Sure the meal was free, but not such a bargain when you considered that my wife could not attend, it was with people I might not necessarily have chosen to dine with, and despite a long day at the office, this expert was talking about medicine before I could even look at the menu.

But it was worth it because I learned some valuable information. As a result of hearing him talk, one change I made was to more often start giving at least one blood pressure medication at night because he said it would help prevent early morning strokes and heart attacks. After that meeting I later saw an article confirming the value. Had I not attended the talk I might have eventually changed my prescribing habits, but I changed it sooner as a result. In fact studies have shown it usually takes ten years for doctors to incorporate new medical information into their practice.

The pharmaceutical company that sponsored that dinner has a blood pressure medicine that I use some, but frankly not that much, and it has not increased since that dinner meeting. But perhaps I saved a life as a result of knowledge gained from that meeting.

Tort Reform and the Sanctity of the Jury

I serve on WAMPAC, a political action committee for the Washington State Medical Association (WSMA). To help guide our members, last month we met with candidates for Washington State governor Rob McKenna and Jay Inslee.  They were both generous with their time and answered our questions.

As physicians, one of our issues is tort reform. We are concerned that large and unreasonable malpractice awards increase the cost of medical care and cause physicians to order unnecessary tests as ‘defensive medicine’. Attorney General Rob McKenna said he was supportive of tort reform, though didn’t give much specifics. Congressman Jay Inslee said he did not believe in malpractice caps because, he said, unlike others, juries are untainted and therefore we need to respect their decisions. That prompted me to send him the following letter. One month later, he has yet to respond. I wonder how I’ll vote in the primary?

Dear Mr. Inslee,

I enjoyed meeting you, and appreciate your spending time to talk with the Washington State Medical Association WAMPAC Committee 7/3/12 regarding your candidacy for governor.

On the issue of tort reform, you mentioned that you didn’t support malpractice caps because you believed in juries making the decision, as they are untainted by lobbyists or others.

Speaking for myself, I have some concerns about this. Short of Plato’s philosopher kings, juries may be the best choice to decide cases, but they are hardly perfect. There are numerous well documented cases of people sentenced to death, yet later found innocent by DNA evidence. In malpractice cases, I would argue that juries are far from perfect. How else could you explain the differences in the chances of being sued and the size of the award based on specialty (http://www.nejm.org/doi/full/10.1056/NEJMsa1012370)? The average neurosurgeon is sued once every 5 ½ years. You would be hard pressed to find a retired neurosurgeon who has never been sued.

Even if juries make perfectly logical decisions, it’s only as good as the cases presented to them, which may be flawed.

In cases where juries decide the outcome, there are restraints. There are judicial guidelines, and juries cannot impose the death penalty for shoplifting, for example, even if they wanted to. Putting financial caps on malpractice cases would be no different. The jury could still decide if the defendant is guilty, but guidelines would cap the size of the reward.

I hope you will reconsider your view on tort reform.

Sincerely,

Daniel Ginsberg, MD, FACP

Making the Affordable Care Act Individual Mandate Work

The Supreme Court has ruled that most of the Affordable Care Act, aka Obamacare, is constitutional.

In order to provide affordable care to all, insurance companies need the healthy to pay premiums, and not just the people who will use a lot of health care resources. In order to try and ensure this, Congress gave a penalty for those who don’t purchase an insurance plan. The problem is that the penalty is far less than the cost of insurance, and the only way they can even force you to pay is if you are getting a tax refund, in which case they can deduct the fine. So someone could elect to go without insurance, and, whether or not they pay the fine, just sign up if they need it. If enough people did that, the plan would not be sustainable. The penalty is $695, and up to $2085/year or 2.5% of income for a family, though it’s lower the first two years. A healthy individual might decide $695/year for no insurance is a better deal than $2000/year for insurance they don’t think they need.

So I propose a solution. Congress could pass a law saying that if someone does not get and maintain insurance within 1 year of when it becomes mandatory, and if they elect to get it later, they will be responsible for the first $10,000 or so expenses they sustain within the next 3 months of applying for insurance. If they get in a major accident or discover a lump that turns out to be cancer, they will still be able to get care and not be burdened with medical expenses that could easily far exceed $10,000. But for those considering going without insurance, even that would be a tough bill to pay.

Of course even now people go without insurance because they feel they can’t afford it. Although that could still apply after the Affordable Care Act goes into effect, the calculations change. Just as a poker player will adjust their bet depending on the size of the pot, I believe consumers would do the same. Instead of a cost of $2000/year versus $0, it would be $2000 versus $695, for example. Thus the cost of going without insurance in this example would drop from $2000 down to $1305 after paying the penalty (or tax, depending on your point of view). Balancing the benefits of having insurance and the risks of not having it, I think more people would elect to get insured with this plan.

FDA and Generic OxyContin

As recently reported in the Wall Street Journal, the pain killer OxyContin is set to go generic next year, and Purdue Pharma is trying to postpone it.

A funny thing often happens before a drug goes generic. Close to that time the manufacturer comes up with a new indication, formulation or dose. They claim it’s an improvement in the product, but it often has the appearance of coincidentally coming out close to when they would lose exclusive rights to sell the product. And wonder of wonders, they often get the market to themselves for a longer period of time because of it.

As someone who treats a lot of patients with pain, from my perspective OxyContin is a fairly good drug. Because it’s timed release oxycodone, it often gives better pain control, has a lot of dosing flexibility, and probably has less potential of causing addiction than immediate release oxycodone. Less is not none, however, and it’s still a frequently abused drug, whether swallowing the pills, or more illicitly, snorting or injecting it.

OxyContin has a new formulation containing polyethylene oxide that makes it harder to crush or inject. Although it’s not yet clear how effective it will be, the street price has decreased, suggesting it is a less desirable drug for someone wanting to get high. So Purdue Pharma is arguing that no one should be allowed to sell timed release oxycodone that does not have the protection they have, which of course is itself patented until 2025. Purdue Pharma is being sued for allegedly previoulsy making false claims to doctors, minimizing the risk of addiction. That has bearing on their new claim that it’s the new and improved version that has the low risk.

Besides that the improved safety is still not certain, their logic is false. From the perspective of controlling drug abuse, supply will meet demand. People will find better ways to process the new OxyContin pills to make them easier to abuse, or they will use substitutes.

From the perspective of a clinician treating pain patients, the cost of the pills and insurance formularies often dictate what doctors can prescribe. I often don’t prescribe OxyContin now, even when I want to, because of this, and have to prescribe controlled release morphine (which used to be sold as the brand MS Contin), methadone, which is a tricky drug to prescribe with a higher risk of accidental overdose, or use other alternatives.

I hope the FDA does not accept Purdue Pharma’s argument. They should either allow generic OxyContin, with or without the polyethylene oxide contained in the new pills, or allow generic manufacturers to use other similar methods of deterrence.