Unbiased Analysis of Today's Healthcare Issues

The costs of quality reporting

Written By: Jason Shafrin - Mar• 11•18

Provider pay-for-performance initiatives aim to increase reimbursement to physicians and others who provide high-quality, low-cost care to patients. Medicare has two main programs for physicians to ahcieve these goals: (i) the Merit-Based Incentive Payment System (MIPS) and (ii) the Alternative Payment Models (APM).  MIPS measures cost and quality for smaller physicians groups whereas APM requires physicians to participate in accountable care organizations, bundled payment, or other alternatives to traditional fee-for-service payment.

In his Health Affairs blog post, however, Matt Fielder argue that MIPS is not likely to improve quality.  Physicians are able to choose their own quality measures which leads to (i) physicians choosing ‘easier’ measures–often screening measures, or (ii) physicians choosing measures they already know they are good at.   The article mentions that a number of observers–including MedPAC–have argued that MIPS is unlikely to improve quality while the administrative burden on physicians is likely to be large.

How large?

Notably, CMS estimates that providers will spend $694 million complying with MIPS reporting requirements for the 2018 performance year. External estimates of the administrative costs of prior quality reporting programs suggest that burdens could be even larger.

The authors also report a number of strategies to improve quality.  They are bullish on the benefits of APMs and ACOs–whereas I am a bit more skeptical that these approaches will truly improve quality of care.  I do agree with the authors that it is a good ideas to have clinician reporting to clinical data registries as it “…can generate benefits for the health care system as a whole by creating a knowledge base that can be used to identify strategies to improve patient care and that allows clinicians to compare themselves to their peers.”

Weekend Links

Written By: Jason Shafrin - Mar• 09•18

Cigna-Express Scripts merger

Written By: Jason Shafrin - Mar• 09•18

Today, Cigna purchased Express Scripts for $52 billion.  This follows another mega-deal where CVS bought Aetna.  The integration of pharmacy benefit managers (PBMs) and insurers is nothing new.  Previously, many insurers managed their own pharmacy benefit.  However, as PBMs grew in size and were able to get larger discounts and rebates, in-house PBMs became less competitive.

The key question on everyone’s mind is, is this deal a good thing?  On the one hand, it could be a good thing.  Many pharmaceuticals improve patients health and reduce the risk of hospitalizations.  By bringing Express Scripts in house, Cigna may be able to better internalize these cost savings.  In addition, this deal will help with value-based contracts.  Under value-based or performance-based contracts, life sciences firms must provide discounts if their products do not show the health benefits or savings expected.  By better integrating pharmacy and medical benefits, these contracts are much more feasible.  Further, the Cigna-Express Scripts deal may increase the purchasing power of this entity, which could drive down prices.

However, there are also reasons to be pessimistic.  Driving down prices may be good in the short-run, but–as I mention in my interview with NBC News–oftentimes these discounts are not passed on to consumers.  This could be changing, however, after UnitedHealth Group announced a few days ago that it would be passing drug rebates on to consumers.  Although value-based contracting could is a promising area for PBMs to ensure that new treatment’s value is worth the cost, there is some worry that the contracts would largely be structured to control cost and access to new medications would be restricted.  For instance, CVS’s new Transform Rheumatoid Arthritis Care program appears to have some cost and outcomes guarantees it would provide to employers.  Cost guaranttes are only possible, however, if PBMs can restrict access to innovative–but perhaps more expensive–new therapies that come on the market.  Further, if access to new medicines becomes more restrictive, life sciences firms may reduce their R&D investments in response, leading to the development of fewer innovative medications.  Finally, with increasing consolidation, there is a risk for price increases to consumers.  With fewer insurer and PBM choices, there is less competition and health insurance premiums could rise.

They key question is, how will patients and consumers be affected by this deal in the short, medium and long-runs.  That question, is still yet to be answered.

Pharmacy Spending Trends in Workers Comp

Written By: Jason Shafrin - Mar• 07•18

According the Centers for Medicare and Medicaid Services’ Office of the Actuary (OACT), in 2016 the U.S. spent $328.6 billion on prescription drugs, or 10% of all health care spending.   We also see that prescription drug spending increased 1.3% to $328.6 billion in 2016, slower than the 8.9% growth in 2015.

These trends towards more spending on prescription drugs, however, is not homogenous throughout the economy.  Take a look at the graph below looking at pharmacy spending growth among workers compensation plans.  As detailed in a report by Joe Paduda of CompPharma, we see that prescription drug spending is actually falling among those covered by workers compensation plans.

Joe gives some highlights in his Managed Care Matters blog as well:

2017 drug spend dropped 13.4 percent from 2016 – the biggest decrease in the 15 years we’ve been doing the survey

Opioid spend decreased twice as much – over 26 percent.

Note that the huge drop in opioid spend occurred BEFORE adoption of formularies and other controls in big states like Pennsylvania, New York and California.Note also that this is the sixth drop in drug spend since 2010.

In short, while drug spending is increasing, but perhaps decelerating in the economy as a whole, workers comp actually has seen a large drop in prescription drug spending, particularly for opioids.

The downside of medical homes

Written By: Jason Shafrin - Mar• 05•18

Integrated delivery networks (IDNs) and medical homes are all the rage among health wonks.  The ability for patients to receive holistic are from multispecialty practice teams seems like it would be beneficial.  While quality of care may (or may not) improve with more integrated care, provider consolidation may have one downside: higher prices.  An NBER working paper by Baker, Bundorf and Kessler finds exactly this.

we find that generalist physicians charge higher prices when they are integrated with specialist physicians, and that the effect of integration is larger in uncompetitive specialist markets. We find the same thing in the reciprocal setting — specialist prices are higher when they are integrated with generalists, and the effect is stronger in uncompetitive generalist markets. Our results suggest that multispecialty practice has anticompetitive effects.


Does episode-based payment reduce cost?

Written By: Jason Shafrin - Mar• 04•18

That is the question that Carroll and co-authors try to answer in their latest NBER working paper (WP #23926).  They examine the Arkansas Health Care Payment Improvement Initiative (APII), which is a state-wide, multi-payer episode-based program.  Unlike most episode-based payment (EBP) models, provider participation  in the program was mandatory (as of 2013).  NBER summarizes the program as follows:

The APII initially covered five types of health care episodes, including perinatal care. Like many modern EBP programs, the APII employs a retrospective payment model, where providers are paid FFS while they oversee episodes, but face reconciliation payments at the end of the year. The provider’s annual average spending per episode (adjusted for patient risk factors) is calculated based on episodes for which they served as Principal Accountable Provider (PAP). Each PAP’s average episode spending is then deemed to be either commendable, acceptable, or unacceptable based on pre-determined thresholds. PAPs with unacceptable ratings are responsible for half of the spending beyond the acceptable level, while those with commendable ratings can share in half of the savings.

The authors use a difference-in-difference approach comparing cost in Arkansas before and after the APII implementation to changes in spending for neighboring states for whom no EBP was implemented.  Costs were measured for episodes constructed from claims data for perinatal episodes.  The authors found that:

…in the first full year of EBP implementation, spending per episode declined by 3.8 percent, or $403, in Arkansas relative to the control states. The savings were driven by slower spending growth in Arkansas after EBP implementation, while spending growth continued on a similar trajectory in the control states.

Over 80 percent of these savings stem from a large (6.6 percent) reduction in spending on inpatient facility care. The researchers find that this decline was largely driven by changes in the price of inpatient care rather than in the quantity of care. While unable to test directly for a mechanism underlying this effect, they suggest that a change in referral patterns is a likely cause. Outside of inpatient facility care, the implementation of EBP led to few changes in perinatal care. Declines in physician spending and outpatient spending were small and statistically insignificant, as were changes in utilization, including caesarean section rates and the length of inpatient stays. In terms of quality measures, EBP implementation was associated with improvements in chlamydia screening rates but no other changes.

I would guess that most policy wonks and academics (yourself included) would have assumed that EBP would have little effect on price, but would incentivize providers to reduce health care utilization.  In the case of perinatal care, one may hypothesize that the number of cesareans would go down.  Perhaps it is easier for provider’s managers to dictate to physicians which providers they should use (i.e., lower cost ones) rather than to try to mandate to physicians that they need to change their practice patterns.   This is just a hypothesis, but it will be interesting to see if the results from Arkansas are also found in other EBP initiatives.


Alien Hand Syndrome

Written By: Jason Shafrin - Mar• 03•18

An interesting profile on the Alien Hand Syndrome from Invisibilia of NPR.


Written By: Jason Shafrin - Mar• 01•18

What is more for cancer patients: increased screening or treatment innovation?

Written By: Jason Shafrin - Mar• 01•18

Let’s get this out of the way: both are clearly important.  Within appropriate screening, patients don’t get the treatment they need.  Further, delayed screening can make treatments less effective if the cancer has progressed or metastasized.  On the other hand, without effective treatment, screening won’t have a major impact on patient outcomes.

The question is, which one is more important?  The question is not just of academic nature.  Funders such as the National Cancer Institute, NIH, foundations, employers and health plans need to determine where they should focus their money: paying more for increased screening or for innovative treatments.

A recent paper by Plevritis et al. (2018) aim to answer this question for patients with ER/ERBB2-specific breast cancer.  The authors use six Cancer Intervention and Surveillance Network (CISNET) models and measured the effects of changes in screening and innovative treatments on US breast cancer mortality from 2000 to 2012.  They find the following:

In 2012, the estimated reduction in overall breast cancer mortality rate was 49% (model range, 39%-58%) relative to the estimated baseline rate in 2012 of 63 deaths (model range, 54-73) per 100 000 women: 37% (model range, 26%-51%) of this reduction was associated with screening and 63% (model range, 49%-74%) with treatment. Of the 63% associated with treatment, 31% (model range, 22%-37%) was associated with chemotherapy, 27% (model range, 18%-36%) with hormone therapy, and 4% (model range, 1%-6%) with trastuzumab.

Note that the relative importance of screening compared to treatment varied by molecular subtype. On average, however, about 60% of improved survival gains were associated with innovative treatments.  Previous studies have also found that treatment advances make up the majority of survival gains, ranging between 75% and 100% of gains for the years between 1988 and 2000.


Which Medicare initiatives use quality measures?

Written By: Jason Shafrin - Feb• 28•18

In December, CMS listed its quality measures that it is considering for incorporation into some of their value-based payment programs and quality reporting programs. However, which Medicare quality reporting and payment initiatives use quality measures?  A full list is below.

  1. Ambulatory Surgical Center Quality Reporting Program (ASCQR)
  2. End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
  3. Home Health Quality Reporting Program (HH QRP)
  4. Hospice Quality Reporting Program (HQRP)
  5. Hospital-Acquired Condition Reduction Program (HACRP)
  6. Hospital Inpatient Quality Reporting Program (HIQR)
  7. Hospital Outpatient Quality Reporting Program (HOQR)
  8. Hospital Readmissions Reduction Program (HRRP)
  9. Hospital Value-Based Purchasing Program (HVBP)
  10.  Inpatient Psychiatric Facility Quality Reporting Program (IPFQR)
  11.  Inpatient Rehabilitation Facility Quality Reporting Program (IRF QRP)
  12.  Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
  13.  Medicare and Medicaid EHR Incentive Program for Eligible Hospitals (EHs) and Critical Access Hospitals (CAHs)
  14. Medicare Shared Savings Program (MSSP)
  15. Merit-based Incentive Payment System (MIPS)
  16. Prospective Payment System (PPS)-Exempt Cancer Hospital Quality Reporting Program (PCHQR)
  17. Skilled Nursing Facility Quality Reporting Program (SNF QRP)
  18. Skilled Nursing Facility Value-Based Purchasing Program (SNF VBP)

One can readily see how these quality-based programs, while well-intentioned could be problematic for providers.   A hospital that is part of an ACO that provides inpatient, outpatient and psychiatric and rehabilitatoin facilities would be subject to quality reporting for HACRP, HIQR, HOQR, HRRP, HVBP, IPFQR, IRF QRP, and MSSP.  That is a lot of quality reporting.

Another question you may have are whether these measures are any good.  Most measures are NQF endorsed.  Further, a number of other of government agencies have provided input on these measures.  A full list of agencies providing input is below.

  1. Office of the Assistant Secretary for Health (OASH)
  2. Office of the National Coordinator for Health Information Technology (ONC)
  3. National Institutes of Health (NIH)
  4. Agency for Healthcare Research and Quality (AHRQ)
  5. Health Resources and Services Administration (HRSA)
  6. Centers for Disease Control and Prevention (CDC)
  7. Substance Abuse and Mental Health Services Administration (SAMHSA)
  8. Office of the Assistant Secretary for Planning and Evaluation (ASPE)
  9. Indian Health Service (IHS)

In short, getting from volume to value-based payment, ultimately depends on being able to accurately measure quality.  Measuring quality is a lot easier to do in theory than in practice.