The week’s edition of the Cavalcade of Risk (its145th incarnation) is hosted by David Williams of the always interesting Health Business Blog. Check it out.
You are currently browsing the monthly archive for November 2011.
Tags: CoR
Is this a spam post? Is the Healthcare Economist working for Pfizer? The answer to these questions are no and no.
However, there are two easy ways to get the cholesterol lowering drug Lipitor for a lower price tomorrow:
- Buy the generic form of Lipitor
- Buy Lipitor
According to Marketplace, on Friday Lipitor will go off patent. On Thursday, the Indian drug company Ranbaxy will launch its generic at a low price. Pfizer will also lower the price of Lipitor to the generic levels. Using its monopoly pricing power, Pfizer has made $81 billion from this blockbuster drug.
Although the arrival of generic Lipitor is good news, consumers could have saved more money earlier if it weren’t for a phenomenon known as pay-for-delay. Pay for delay occurs when a brand drug pays a generic company to delay certain lawsuits to bring a drug off patent. In essence, the generic forces the brand to split the rents from their monopoly power. In many cases the profits from splitting these rents will exceed the profits the generic drug could make by entering the market. By allowing pay-for-delay, however, consumer access to affordable drugs is also delayed. Drugmakers win; American patients and taxpayers lose.
Tags: Lipitor, Patent, Pharmaceuticals
“We must have a strategy that regulates the financial system as a whole, in a holistic way, not just its individual components.”
- Ben S. Bernanke, “Financial Reform to Address Systemic Risk” at the Council on Foreign Relations, Washington, D.C., March 10, 2009
In a 2010 short paper, Brunnermeier, Hansen, Kashyap, Krishnamurthy and Lo (2010) argue that the field of economics has not adequately examined the topic of systemic risk. One of the reasons for this is that systemic risk is difficult to observe and quantify. The Office of Financial Research (OFR) is President Obama’s attempt to fill this gap in knowledge.
Even though systemic risk is poorly measured, that does not mean that economists haven’t thought of ideas to combat systemic risk. The Fed Chairman’s quotation citing the need for holistic regulation is one approach. Is a holistic approach to regulation a good thing? Today, I give my 2 cents.
Merits
Financial and economic market are complex entities. Creating multiple government bodies where each one only regulates a piece of a given market can often be suboptimal. An individual agency may be in charge of making a given financial instrument safer or more transparent. Even if they government body succeeds in their mission, their regulations may create unintended consequence. For instance, another, more volatile, less transparent, unregulated financial instrument is created. Or the regulation could have an adverse effect on real markets. Having a single entity regulate all financial markets in an integrated fashion seems like a promising idea.
Problems
However, regulation generally requires more specialized knowledge than any one agency can maintain. For instance, credit default swaps are complicated entities. Regulators must have specific knowledge in order to properly regulate these instruments. Having a single body regulate all financial markets may create an entity with a wide breadth of knowledge but little depth. Further, if the regulatory scheme created by the central planner is poorly constructed, investors may have no other markets from which they can seek more rational regulation. If regulation by some of the government bodies is successful, investors could migrate to investments in more rationally regulated sectors (although this shift from well-regulated to poorly-regulated markets is a distortion in and of itself).
Motivation
In addition, one has to question the Chairman’s motivation for expanded regulation. He may have the best interests of the country at heart; integrated regulation may be the best mechanism through which one can decrease systemic risk. However, Dr. Bernanke is not an unbiased observer. Centralizing regulatory control increases the power of the Fed, the and the prestige of Dr. Bernanke. Thus, the desire to centralize regulation may not be a completely unbiased opinion.
Tags: Bernanke, Fed, Financial Markets, Regulation
In short, yes. California is the land of managed care. Kaiser-Permanente–the managed care poster child–owns one third of the market. Love for managed care is not just in the private market; in 2010, over half of all Medi-Cal and more than one-third of Medicare beneficiaries were enrolled in managed care plans. Further, California managed care plans even have their own regulator. Whereas the California Department of Insurance (CDI) regulates non HMOs, the California Department of Managed Health Care (DMHC) regulates HMOs.
A recent report by the California Health Care Foundation investigates managed care in California and provides a high quality overview of the California health insurance market. Some of their findings include:
- Five insurance carriers (Kaiser, Anthem Blue Cross, Health Net, Blue Shield, United Healthcare) accounted for three-fourths of the $105 billion health insurance revenues in California in 2010. Revenue growth has been slower for managed care plans in recent years, however.
- The six largest managed care plans together lost more than 400,000 commercial enrollees. On the other hand, Medi-Cal and Medicare managed care enrollment grew.
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Anthem Blue Cross and Blue Shield experienced enrollment decline in 2010, which reversed a previous growth trend.
- Large majorities of HMO and PPO members rated their plan highly in terms of getting appointments quickly, finding a doctor, and getting the care they need. HMO enrollees more often rated their care highly than those enrolled in PPOs, while PPO participants were more likely to favorably cite their ability to get an appointment quickly.
Source: Katherine Wilson, “California Health Plans and Insurers” California Health Care Foundation, November 2011.
Tags: California, Commercial, Health Insurance, Managed Care, Market, Medicaid, Medicare
The head of the Centers for Medicare and Medicaid Services (CMS), Don Berwick, announced he would step down from his post on Wednesday. Berwick was a temporary 18 month appointment who Obama hoped would stay on longer. The San Francisco Chronicle reports
“The point man for carrying out President Obama’s health care law will be stepping down after Republicans succeeded in blocking his confirmation by the Senate, the White House announced Wednesday.”
Don Berwick aimed to improve healthcare quality in Medicare. Many individuals, however, have tried to improve the quality of care provided to Medicare enrollees. Why would might Berwick’s efforts have been any more successful than his predecessors? John McDonough of Health Stew notes that Berwick has a legacy of promoting quality improvement across a variety of healthcare organizations.
“In 1989, Berwick wrote a seminal article for the New England Journal of Medicine called “Continuous Improvement as an Ideal in Health Care,” and set off an intellectual revolution in American, and eventually, global medicine. Prior to Berwick, “quality” had been linked with the word “assurance” with the cavalier and false assumption that quality already existed, and all that was needed was adequate policing to root out “bad apples.” Every hospital was required to have a “quality assurance” department that looked out for quality; everybody else just did their jobs.
More than anyone, Berwick changed the word from “assurance” to “improvement” with new assumptions: quality must be an essential part of everyone’s job; no matter how good or how bad you think you and your organization are, every day, you have multiple opportunities to improve; and the key to quality improvement (QI) is the elimination of errors and waste, along with the empowerment of workers. Berwick did more than just establish an idea, he created an organization, the Institute for Healthcare Improvement (IHI), to advance and actualize it. Under his leadership, IHI has become the worldwide home for QI through training, teaching, learning, collaborating, advocating, and more.”
Berwick also ran into trouble for using the ‘r’ word. Specifically, in an interview with a biotechnology journal in 2009, he said, “The decision is not whether or not we will ration care — the decision is whether we will ration with our eyes open.”
- Interest group wish list
- Word of the Day.
- More health reform stumbling blocks.
- 57,000 page tax return.
- MVP.
- PhARMA CEO earns $11.5 million.
Tags: Links, Thanksgiving
Happy Thanksgiving to all my readers. On this holiday, I will highlight an inspiring quote from USA Today Editor Heidi Dezayas. Mrs. Dezayas was recently diagnosed with diabetes. What is she thankful for this year?
“I’m thankful for all the advances in medicine. Years ago, the prognosis for someone with Type 1 wasn’t all that great. Today, I’m confident I will lead a normal, healthy life.
I’m thankful for insulin pens that don’t require me to deal with syringes, mini needles and lancets that reduce pain and scarring at injection/prick sites, and communication technology that allows me to interact with my doctors in a way where I get immediate responses to my questions.
The best medicine, however, can’t be found in a pharmacy or doctor’s office. My loved ones are my medicine of choice.”
This thanksgiving, be thankful for any family you have. They are certainly the best medicine around.
Tags: Thanksgiving
Medicare’s push to evaluate all types of providers is being extended to Inpatient Rehabilitation Hospitals (IRFs). According to Health Reform bill (specifically, Section 3004 of the Affordable Care Act), CMS is required to start publishing quality measures for IRFs by October 1, 2012. This newly created IRF Quality Reporting Program (QRP) currently has proposed two measures. These include the following:
- Presentation of Urinary Catheter-Associated Urinary Tract Infections (CAUTI)
- Presentation of Percent of Residents with Pressure Ulcers that Are New or Have Worsened
CMS will hold an Open Door Forum on Tuesday, November 29, 2011, 2pm-4pm ET to discuss these measures. It is disappointing that CMS only has two quality measures for the IRF program. Thus, the QRP is far less comprehensive then Health Reform intendend. Hopefully, the number of quality measures increases over time. The Healthcare Economist does realize, however, that rehabilitation services are much harder to evaluate than more procedure based services with more observable outcomes. Specifically, improvement in patient functioning is a key measure for IRFs. However, if the IRFs themselves self-report this data, the quality measures will not be unbiased. I am assuming that the data for the IRF QRP come from the IRF Patient Assessment Instrument (PAI), and thus the quality data will be self-reported by the IRFs themselves. Here is the form used by IRFs as part of the PAI.
One problem with any quality system is cases where the provider fails to report the quality data. In the QRP, however, IRFs will have a strong financial incentive to report these measures. Specifically, if an IRF fails to report their quality measures, Medicare will reduce their payments by 2 percentage points.
Tags: Health Reform, Inpatient Rehabilitation Facilities, IRF, Medicare, QRP, Quality, Rehabilitation, Section 3004
That is the question that that clinicians often have to ask. Depression certainly operates along a scale and it is often difficult to quantify either i) if a person is depressed or ii) how depressed they are.
One option to assess patient depression is the PHQ-9. The assessment asks patients nine questions regarding their mental health status. The patient’s depression level can be quantified on a scale from 0-27 and practitioners can use this information to provide a tentative diagnosis.
The PHQ-9, like many assessment, relies on patient self-reports which depend on the communication skills of the patient. Further, depression can be transitive in some cases; thus additional PHQ-9 questionnaires will need to be conducted over time. Still the PHQ-9 can be a useful tool for physicians assessing patient depression.
Tags: Depression
The Medicare billing system is complex. There an alphabet soup of acronyms, (e.g., RVUs, CPT, HCPCS, GPCI) and each of these affects payments in different ways. In addition to the standard payment terms, Medicare is also creating additional payment incentives. These payment incentives fall into three broad categories:
- Quality reporting
- e-Prescribing (eRx)
- Electronic Health Records (EHR)
CMS’s Physician Quality Reporting System (PQRS) allows physicians to report the quality of care their patients receive. Physicians can report PQRS measures through claims, registries, or EHR systems. To incentivize physician participation in the PQRS, CMS has adopted incentive payments. In 2012-2014, Physicians who meet the PQRS participation requirements will receive a 0.5 percent payment bonus. In 2015 through 2017, however, who do not submit a sufficient number of PQRS measures actually will receive a payment reduction.
In addition to the PQRS incentive, beginning 2012, Medicare eligible professionals who are not successful electronic prescribers under the eRx Incentive Program to a payment adjustment. This payment adjustment applies to all of the eligible professional’s Part B-covered professional services under the Medicare Physician Fee Schedule (MPFS). From 2012 through 2014, the payment adjustment will increase with each new reporting period. Accordingly, for 2012, eligible professionals receiving a payment adjustment will be paid 1.0% less than the Medicare Physician Fee Schedule (MPFS) amount for that service. In 2013 and 2014, the payment adjustment increases to 1.5% and 2.0% respectively.
A table summarizing these incentive payments is below.
| Year | PQRS | eRx | ||
| Incentive Payment | MOC | Incentive | Sucessful | |
| 2011 | 1.0% | 0.5% | 1% | N/A |
| 2012 | 0.5% | 0.5% | 1% | -1% |
| 2013 | 0.5% | 0.5% | 0.5% | -0.5% |
| 2014 | 0.5% | 0.5% | N/A | -2% |
| 2015 | -1.5% | N/A | N/A | N/A |
| 2016 | -2.0% | N/A | N/A | N/A |
| 2017 | -2.0% | N/A | N/A | N/A |
CMS also offers physicians incentive payments to adopt EHR. Incentive payments can be as high as $18,000 per year or $44,000 over a five year period.
Tags: Incentive Programs, Medicare, P4P, Pay-for-Performance, Physician Compensation, Value-Based Purchasing, VBP
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