Unbiased Analysis of Today's Healthcare Issues

Standard Gamble, Time Trade-off and Visual Analog Scale

Written By: Jason Shafrin - Apr• 22•15

Would you rather live for 5 years in perfect health or 10 years with some debilitating disease?  How much do you value living for a year with this debilitating disease compared to a year in full health?  These questions may seem like ones from philosophy, but they are ones that health economics ask all the time.  The goal of these questions is to try to determine how much value patients place on going from a poor health state to a better one.

Many treatments improve patient health but do not decrease mortality.  In these cases, health economists which to measure the value patients receive in terms of improvement in health status.  A paper by Stiggelbout and de Haes (2001) describe three approaches for measuring the value of different health states.  I review their paper below.


EMRs and the Medical Alphabet

Written By: Jason Shafrin - Apr• 21•15

Here at the Healthcare Economist, I have noted that electronic medical records (EMR) are not the cure-all for healthcare delivery.   EMRs have a number of problems in and of themselves.  However, I do certainly acknowledge that going from a medical alphabet (see below) to a regular old English alphabet is a huge advance.



Hat tip: TIE and Healthcare IT News.

Medicare starts using prior authorization

Written By: Jason Shafrin - Apr• 20•15

Included within the many changes to physician payment in HR2, is one provision that may surprise people; a subset of Medicare physicians will be required to receive prior authorization to conduct imaging services.

Beginning with 2017, and in consultation with stakeholders, the Secretary will identify ordering professionals with low adherence to applicable [appropriate use criteria] AUC(s) (“outliers”) based on two years of data. Beginning January 1, 2020, outlier physicians shall be subject to prior authorization for applicable imaging services. Not more than five percent of ordering physicians can be subject to prior authorization. The legislation provides CMS with $5 million in each of 2019, 2020, and 2021 to carry out the prior authorization program.

On the one hand, limiting the use of unnecessary services is a good way to ensure only cost effective services are provided. The question is how well the government can adequately target these physicians. Will it be able to distinguish between physicians who are specialists in providing imaging for complex patients compared to those who are unnecessarily providing imaging services to patients who do not really need it? On the ground this determination may be feasible, but it may be more difficult to do using claims data or other sources. Physicians and patients will grumble about this prior authorizations; whether their concerns are valid will depend on how effectively Medicare can identify outlier physicians.

Precision for Medicine Acquires Precision Health Economics

Written By: Jason Shafrin - Apr• 19•15

Big news in the world of Health Economics and Outcomes Research (HEOR).  The press release is below.

Precision for Medicine Acquires Precision Health Economics

Extends Leadership in Health Economics and Outcomes Research With a Focus on Evidence Generation in an Era of Precision Medicine

Bethesda, MD, and Los Angeles, April 16, 2015 – Precision for Medicine (Precision), a specialized services company supporting next-generation approaches to drug development and commercialization, today announced the acquisition of Precision Health Economics (PHE). A world-renowned and cutting-edge health economics consultancy and analytics firm, PHE leverages the expertise of policy analysts, economists, clinicians, and academics to advance research on the most complex healthcare questions. Life sciences companies and policymakers worldwide turn to PHE to shape strategy, inform key healthcare decisions, and produce effective changes in policy through innovative research.

PHE, headquartered in Los Angeles, CA, was founded by Drs. Dana Goldman, Darius Lakdawalla, and Tomas Philipson, professors at the University of Southern California and the University of Chicago. PHE’s network of academic experts includes numerous nationally and globally recognized scholars in health economics, medicine, and health policy. The team also includes former leaders at the Centers for Medicare and Medicaid Services, the Food and Drug Administration, the Department of the Treasury, the Congressional Budget Office, and the President’s Council of Economic Advisers.

“PHE is the leader in developing innovative approaches to the science of value. Their work impacts policy and influences payment systems across some of the most important and fastest growing sectors of medicine,” said Ethan Leder, chairman, Precision for Medicine. “Adding PHE’s differentiated capabilities fortifies our approach to helping life sciences companies deliver more effective treatments to patients in the era of precision medicine by integrating research, analytics, science, and communications. The PHE management team will remain in place and will continue to focus on their customers in the pharmaceutical and life sciences markets.”

This acquisition will expand the existing health economics and outcomes research (HEOR) capabilities of Precision for Value, a business unit of Precision for Medicine. Precision for Value excels in helping pharmaceutical and life sciences companies demonstrate and communicate the value of innovative medications. Through real-world expertise, and with recognized industry thought leaders and advanced analytic tools, the company’s clients achieve an in-depth understanding of the specific drivers and barriers that impact market access. The acquisition extends the leadership in HEOR with a focus on innovative approaches to evidence generation.

“In the age of personalized medicine, it’s vitally important to understand not only how value derives from tailored treatment, but also how to navigate the data, analytics, and policy challenges associated with precision medicine. This combination of PHE and Precision is uniquely suited to meet these challenges,” said Dana Goldman, co-founder, Precision Health Economics.

Glenn Bilawsky, president of PHE adds, “Joining Precision provides us access to a pool of talent, knowledge, and expertise in the healthcare payer marketplace that will offer our clients deeper insights into the scope and scale economic evidence required to shape future policy decisions.”

About Precision Health Economics

Precision Health Economics integrates deep technical expertise with practical insights to bring intellectual integrity, academic rigor, and a creative approach to the most challenging problems in healthcare. In addition to its world-renowned team of health economists, PHE draws on the expertise of a network of affiliated academic scientists and clinicians from the world’s leading universities, straddling the policy and clinical arenas to reach top decision makers and influence outcomes. The company has offices in Austin, TX, Boston, MA, Los Angeles, CA, and Oakland, CA.  For more information, go towww.precisionhealtheconomics.com.

About Precision for Medicine

Formed in 2012, Precision for Medicine is a specialized services company supporting next generation approaches to drug development and commercialization. It provides integrated services and infrastructure to support pharmaceutical and life sciences companies as they develop new products in the age of precision medicine. Precision for Medicine brings expertise, technology, and project execution to support innovative, patient-centric solutions from discovery through commercialization. The company is headquartered in Bethesda, MD, with offices in Cambridge, MA, Chicago, IL, Frederick, MD, Gladstone, NJ, Indianapolis, IN, New York, NY, and Stamford, CT. For more information, visit www.precisionformedicine.com.

Friday Links

Written By: Jason Shafrin - Apr• 16•15

What is MIPS?

Written By: Jason Shafrin - Apr• 15•15

Yesterday I posted about MIPS, the new Medicare physician reimbursement program set to begin in 2019.  The Health Affairs blog provides a nice summary of some of the changes.

First and probably most importantly, the formulaic approach to setting base payment rates is gone, replaced with automatic increases for all doctors from 2015 through 2019. For six years after that…no automatic increases will be provided and doctors’ respective rates will be altered based on their performance under a Merit-Based Payment Incentive System (MIPS).

The MIPS is basically a consolidation of three pay-for-performance programs already underway and the addition of another…Current penalties under these programs are repealed, though, and the new incentive structure would be budget neutral. For every doctor that makes more from the MIPS, there will be one who makes less. A true zero sum game, if you will.

Assessments will be based on four categories of metrics: (1) quality; (2) resource use (or efficiency); (3) meaningful use of electronic health records…and (4) clinical practice improvement activities. The poorest performing doctors, determined by their composite score drawn from relevant aspects of all four categories, will see their payments cut by up to nine (nine!) percent…

Congress here would also set payments for the years 2026 and beyond. Then, the degree to which an individual doctor’s pay is increased will be dictated by their participation in so-called Advance Payment Models (APMs). Right now, that means accountable care organizations (ACOs), medical homes, bundled payment models, and the like.

Other provisions of interest include:

  • The specific MIPS measures have not yet been selected.  However, my guess is that they will likely be based largely on existing measures from the  Physician Quality Reporting System (PQRS) and the physician Value-based Payment Modifier (VPM).  
  • There is additional funding for measure development, especially in the areas of “outcome measures, patient experience measures, care coordination measures, and measures of appropriate use of services, and consider gaps in quality measurement and applicability of measures across health care settings.”
  • The financial impact of MIPS will be even larger than the current VPM system “Negative payment adjustments will be capped at four percent in 2018, five percent in 2019, seven percent in 2020, and nine percent in 2021″…a nearly 10% payment cut for physicians is huge.
  • Physicians who participate in APMs (read ACOs, medical homes, etc.) are not eligible for MIPS.
  • MIPS results will be posted on the Physician Compare website.

‘Doc fix’ fixed?

Written By: Jason Shafrin - Apr• 14•15

This may be the case.  Fox News reports:

The Senate overwhelmingly passed legislation permanently overhauling how Medicare pays physicians late Tuesday in a rare show of near-unanimity from Congress.

The legislation headed off a 21 percent cut in doctors’ Medicare fees that would have taken effect Wednesday, when the government planned to begin processing physicians’ claims reflecting that reduction. The bill also provides billions of extra dollars for health care programs for children and low-income families, including additional money for community health centers.

Although changing the legislation to correct for physician payment reductions that would have little chance of actually coming to fruition, according to Vox the cost of the doc fix is $141 billion over the next decade. The bill also includes other payment reforms:

  • Merit-Based Incentive Payment System (MIPS). This programs rolls three other older incentive programs into one larger one that gives doctors a quality score. If their scores are really great, doctors’ reimbursement rates will go up.
  • Alternative Payment Model. These are typically payment arrangements that require a whole group of doctors to band together and take a lump sum of money to care for a certain group of patients. If they can provide the care for less — and hit certain quality metrics — they get to keep some of the leftover cash. The hope is that these models will force doctors to be vigilant against wasteful care, since doctors have a financial incentive to spend less than their lump sum amount.

As I reported earlier, CMS aims to tie about 30% of provider reimbursement to value-based payments. This reform may just be the tip of the iceberg.

On being well-informed

Written By: Jason Shafrin - Apr• 14•15


HT: Justin Wolfers via The Incidental Economist.

Robots vs. Physicians?

Written By: Jason Shafrin - Apr• 12•15

The Economist reports that adverse events occur relatively frequently when physicians insert catheters:

placing needles inside veins deep in the body is notoriously difficult. Some 15-30% of attempts suffer complications, mainly punctured arteries that can lead to infection (around 250,000 cases in America annually), but also bleeding, collapsed lungs and even cardiac arrest. Failure rates in children can be higher still.

However, there may be a solution.

A team led by Hugo Guterman, a robotics expert, has built a prototype device that uses ultrasound, machine vision and a robotic needle-dispenser to make placing a central venous catheter a push-button affair.

The operator lays the wireless device on a patient’s arm, leg or neck and views an ultrasound image on a nearby computer screen. The system then identifies the centre and edges of each blood vessel, as deep as 15cm inside the body and as narrow as 0.5mm in width, making it particularly useful for treating children. Using a joystick, the operator aligns a target icon over a vein. The system uses a tracking algorithm to keep the blood vessel aligned. When ready, the operator simply presses a button to insert the needle.

Will robotic insertion of catheters become the new norm? The technology promises to greatly reduce the number of adverse events and improve patient health. However, there may be backlash from physicians. The device does not require the robot operator to be a physician. Physicians may feel that the robotic procedure is unsafe if it is no supervised by a physician. This may be true in the early stages of implementing the robotic procedure, but as people become more familiar with the technology (assuming it does in fact work), then the physicians may not be needed. Having physician oversight, in fact, could simply increase the cost of the robotic procedure so that the technology increases cost rather than decreases it.

It is not clear how the use of robots will change the practice of medicine, but innovators must worry about backlash from entrenched interest groups (e.g., physicians) if the new technology could jeopardize part of their financial stability.

4 Questions

Written By: Jason Shafrin - Apr• 08•15

It is currently Passover, the Jewish celebration of the Exodus from Egypt. One of the many traditions at the Passover Seder is to read the 4 questions. Here at the Healthcare Economist, I will also bring you 4 questions…health-care related questions that is on some of the more interesting topics from the past week.