Boston researcher in NYTimes on why the US spends so much on health care. The answer is same as it was in 2003 — prices.

33586416554_c4c88c0477_zAustin Frakt,  director of the Partnered Evidence-Based Policy Resource Center at the V.A. Boston Healthcare System writes in The New York Times today:

A large part of the answer can be found in the title of a 2003 paper in Health Affairs by the Princeton University health economist Uwe Reinhardt: “It’s the prices, stupid.

He goes on to quote a JAMA  study:

Over all, the researchers found that American personal health spending grew by about $930 billion between 1996 and 2013, from $1.2 trillion to $2.1 trillion (amounts adjusted for inflation). This was a huge increase, far outpacing overall economic growth. The health sector grew at a 4 percent annual rate, while the overall economy grew at a 2.4 percent rate.

You’d expect some growth in health care spending over this span from the increase in population size and the aging of the population. But that explains less than half of the spending growth. After accounting for those kinds of demographic factors, which we can do very little about, health spending still grew by about $574 billion from 1996 to 2013.

Did the increasing sickness in the American population explain much of the rest of the growth in spending? Nope. Measured by how much we spend, we’ve actually gotten a bit healthier. 

For more on Dr. Frakt’s work, see his blog, The Incidental Economist.

 

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KHN: Medicare Fails To Recover Hundreds Of Millions Of Dollars In Lab Overcharges

Used by permission. Note comment from Boston lawyer. Also published by STATnews. 

captureFive years ago, Companion DX Reference Lab hoped to cash in on cutting-edge genetic tests paid for by Medicare.

The Houston lab marketed a test to assess how a person’s genes affect tolerance for drugs such as opiates used to treat chronic pain. It also ran DNA tests to help treat cancer and urine screens to monitor drug abuse.

cms logoBut the lab went bust last year after Medicare ordered it to repay more than $16 million for genetic tests health officials said were not needed.

Companion Dx is one of at least six clinical labs mired in bankruptcy court after Medicare alleged they improperly billed the government for unnecessary urine, genetic or heart disease tests expected to cause hundreds of millions dollars in losses to taxpayers, an investigation by Kaiser Health News found.

As the nation’s bill for drug and genetic tests has climbed to an estimated $8.5 billion a year, there’s mounting suspicion among health insurers that some testing may do more to boost profit margins than help treat patients.

Medicare has slashed fees for urine tests and tightened coverage of some genetic screens, which can cost Medicare $1,000 or more per person. Private insurers, who mostly have paid these bills without question, also are taking a more penetrating look at spending on the controversial lab work.

Yet, getting these firms to repay Medicare and private insurers remains a formidable challenge. While some doctor-owned labs have dodged collection efforts for years, several testing firms deeply in debt to Medicare appear to have few assets to repay overcharges dating back years, court records show.

“Medicare shouldn’t be paying for dubious tests, but the time to catch that is in the very beginning when [labs] are asking for payment,” said Steve Ellis, vice-president of Taxpayers for Common Sense, a budget watchdog group. “They need to increase oversight so the dollars don’t go out the door in the first place.”

A spokesman for the federal Centers for Medicare & Medicaid Services (CMS) had no comment. Neither did the Department of Justice, which represents the government’s interests in court.

Labs can run a range of genetic and drug tests using a saliva sample, blood or urine specimen. The price tag to Medicare can mount quickly, especially when doctors order highly specialized tests for large numbers of patients. Two bankrupt labs that federal officials say routinely overused tests to detect rare heart ailments in the elderly, for instance, could end up owing the government a total of more than $200 million, court records show.

Some labs have kept operating in bankruptcy while others liquidated equipment and sold off assets. Several bankruptcy trustees, whose duty is to ferret out assets, are suing suppliers, insurers and some doctors to recover funds.

Whether they can raise the pile of cash needed to repay Medicare is doubtful.

Companion Dx, according to bankruptcy records, had $117,497 cash on hand at the end of September. Medicare is seeking the return of $16.2 million paid to the company for services “not considered medically necessary,” according to a January court filing.

The Texas lab had no comment, but in court filings has blamed its collapse on disagreements with Medicare over the merits of its tests and government audits that retroactively disallowed claims. Medicare pays only for services it deems “medically necessary,” and audits typically take many years to complete.

Companion Dx opened in January 2012 expecting to “capture favorable profit margins that existed in connection with this cutting edge technology,” the company wrote in its bankruptcy filing.

However, starting in 2013, Medicare began having second thoughts about the validity of some tests and ultimately decided to cover them on just 1 percent of patients, according to the company. The lab declared bankruptcy in July 2016. The case is pending.

Iverson Genetic Diagnostics Inc. is another lab that turned to bankruptcy court as Medicare tried to reclaim $19.7 million, court records show. The case is pending.

Medicare took aim at the Seattle firm in November 2013 after reviewing “numerous” complaints of billings for genetic tests that patients “had not actually received,” federal officials wrote in a court filing.

A later federal audit concluded that Iverson had charged Medicare for tests that were “not reasonable and necessary.” In September 2015, about two months after Medicare called for the refund, the lab filed for bankruptcy.

Iverson denied overbilling Medicare and is appealing the Medicare decision, which it said in a court filing “was not based upon sufficient or proper evidence.” And Iverson denied wrongdoing in court filings.

Neither the lab, now located in Charleston, S.C., nor its lawyers would comment.

In another case, Pharmacogenetics Diagnostic Laboratory LLC in Louisville exited bankruptcy in late October without repaying Medicare $26.3 million for disallowed genetic tests. The lab, set up in 2004 by two University of Louisville professors, strongly disputed Medicare’s findings but said they were the “primary reason” for the bankruptcy, court records show.

Charity Neukomm, a lawyer for the lab, said another medical group agreed to purchase all its assets “free and clear of liens.” That left nothing for the government.

There’s also little chance that Natural Molecular Testing Corp., a defunct genetic testing lab, will repay the $71 million it owes Medicare, according to John Kaplan, an attorney for the bankruptcy trustee.

Kaplan said the lab near Seattle, which opened in 2010, was “printing money from billing Medicare” until the government suspended payments in April 2013. The company filed for bankruptcy in 2013 in the face of a Medicare audit of its billing and concern over its business practices, such as paying some doctors who ordered its tests as much as $10,000 a month in consulting fees, according to court records.

Five years in, the bankruptcy case is expected to settle next year, but there’s likely to be “no cash left” to repay Medicare, Kaplan said.

Critics argue that Medicare has been slow to assess the benefits of new and controversial tests and technologies — even when soaring costs signaled a warning of possible overuse.

Spending on genetic testing, for example, shot up from about $167 million in 2013 to more than $466 million a year later, according to Medicare billing data. In 2015, the program spent about $317 million on the tests and some $165 million last year. Government auditors credit tighter oversight for the sharp decline in billing.

Ellis, the budget watchdog, said the “huge jump” in these bills should have “sent out a red flag.”

Medicare officials don’t routinely verify that the sales claims labs make to doctors are rooted in scientific evidence. Some labs have hawked genetic tests as a tool for making pain management safer. The labs contend the tests can pinpoint the proper drugs and dosage for each patient based on their genetic makeup, thus reducing the threat of overdose or other injury.

However, many experts argue that the science hasn’t caught up to the sales pitch — and that some high-priced tests may do little to diagnose or treat illness.

Genetic tests “are not ready for prime time,” said Charles Argoff, professor of neurology at Albany Medical College in New York. He said their impact on medical care “hasn’t been measured.”

Court records show that the legal battles to recover assets from failed labs often plod on for years, especially when trustees believe labs paid illegal fees or other kickbacks to persuade doctors to order dubious tests.

“Some of these cases never go away,” said David Schumacher, a Boston health care lawyer who has defended doctors against these claims. Still, he said that even after years of legal wrangling Medicare often is unlikely to “be made whole and fully repaid.”

The trustee for Heart Diagnostic Laboratory, which marketed a panel of blood tests to detect heart disease and other illnesses before its June 2015 bankruptcy, has filed more than three dozen lawsuits to recover money paid to doctors and medical offices, including suspect consulting fees.

“Our analysis is that all of these payments were tainted and therefore we’re entitled to go after them,” said Richard Kanowitz. He added: “It’s an uphill battle.”

 

Will a legislative study put Massachusetts on the path to single-payer? Supporters head to Beacon Hill to push for it.

single payer posterTucked inside the health care bill passed by the state Senate is a provision to study the possibility of a  single-payer health care system.

The bill’s cost control measures are getting all the attention. From the Globe:  

The 100-page bill attempts to help struggling community hospitals by setting a floor for the reimbursements they receive from insurers. It also sets a benchmark for annual growth in hospital spending, estimated at 2.7 percent. If the hospital industry exceeds that benchmark, some hospitals would have to pay hefty penalties.

But MassCare, the state’s single-payer advocacy group, says the proposed study creates “a real path in the near future to create a Single Payer system for the Commonwealth!” They’re headed up to the State House this week to lobby House members. lobbyday-958x538

These folks are in if for the long haul, which, according to political scientist James Munroe of Brown University,  is the way to go on single-payer. Writing in the a recent NEMJ, he says:

It is a policy proposal designed to improve health care delivery, an ambitious claim about equality and social justice, and an effort to usher in a more progressive era in American politics. Each is a long shot, but Medicare for All and its advocates stand in a venerable reform tradition that has rewritten U.S. politics many times in the past. It would be a mistake to dismiss them now.

Health Policy Commission versus Partners

Lots of amazing research and care happens at Partners Healthcare, and we pay a bonus for it.

Or, as  Boston Globe writer   puts it “Partners has long been criticized for using its power in the health care market to extract higher payments from insurers and driving up health care costs.”

But, Partners faces scrutiny from the Massachusetts Health Policy Commission, a panel that includes some health care heavyweights and a team of data analysts who are tracking cost and utilization in the state.  

McCluskey reports in today’s paper: 

Partners HealthCare’s expansion plans suffered a setback Wednesday after a state watchdog agency warned that health care costs for consumers would rise significantly if Partners is allowed to acquire the specialty hospital Massachusetts Eye and Ear.

The Health Policy Commission said Partners, the state’s largest health care network, is likely to seek higher reimbursements for care by Mass. Eye and Ear and its doctors if the deal goes through. Because Partners is already a high-priced network, the deal would increase health care spending statewide by $20.8 million to $61.2 million a year, according to the commission.

“These spending increases would ultimately be borne by consumers and businesses through higher commercial premiums,” the commission said in a lengthy report.

Last year, your correspondent interviewed Brandies economist Stuart Altman, who chairs the panel, about what Massachusetts is doing to contain health costs.

First of all, it is the only state that has recognized that it should be involved in total state spending. Some other states that are closer are Vermont and Maryland. But the Massachusetts state government is really acknowledging that it has responsibility for not only what it spends on Medicaid, but that it should be concerned with total spending.

 

Can hospitals be leaner?@STATnews take you insides the Brigham’s “struggle to cut costs.”

More here.

Over the past three months, the Brigham provided STAT unbrigham

usual access to meetings of its top management and internal deliberations and documents. 

This inside look shows how one of the nation’s leading hospitals is confronting the daunting financial and marketplace forces buffeting academic medical centers across the U.S.

“This wasn’t about ordinary cost-cutting,” Walls said. “It was very clear we had to become a much leaner, more efficient organization.”

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All eyes should be on Massachusetts (again) as the state moves beyond expanding coverage to tackling health costs.

The Massachusetts Health Policy Commission is an organization that my peers at the Health Wonk Review can get excited about But the public should too. In health care, smaller cost increases are considered a victory. All of the testimony from hospitals and other healthcare players for an October 3/4 hearing on cost trends is already posted online   

Here’s what chair Stewart Altman writes about their latest report. altman book

“The CHIA report shows positive news for the Commonwealth, chiefly, health care spending increased 2.8% between 2015 and 2016, well below the 3.6% benchmark set by the HPC. Since the establishment of the HPC five years ago, the state, on average, has been below the cost growth benchmark as set forth in law, and lower than national growth trends.

“However, even with these positive trends, there continue to be areas of concern – and challenges ahead. Overall affordability remains an issue for our residents, businesses, and the state. The HPC is anxious to dive deeper into the data and the policy issues they raise at our upcoming Health Care Cost Trends Hearing on October 2 and 3. Through this and other public forums, and our ongoing policy development and programs, the HPC will continue to push the industry to find solutions to create a more transparent, accountable, and affordable health care system on behalf of consumers and businesses in Massachusetts.”

 

Social determinants of health, data dominate Boston event hosted by Atlantic magazine

From Health Leaders Media

The small crowd at Tuesday’s “On the Front Lines of Healthcare” event in Boston included a patient activist, a state health systems analyst, and even a doctor who was in town for a gastroenterologist meeting.

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But the gathering, held in an airy space on 33rd floor of a downtown 

 

high rise, was not a professional or academic m

 

eeting. Organized by The Atlantic and the STAT, a national science and medicine publication, the public event offered an ambitious overview of a range of weighty issues.

Three big topics that resonated throughout the day: the social determinants of health, data, and machine learning—computers that can digest data and use it to answer questions about patient care.

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