Vol. 69 June 15, 2012 How to Avoid the “R” Word.

June 15, 2012

“We make those decisions all the time. The decision is not whether or not we will ration care — the decision is whether we will ration with our eyes open.” –Donald Berwick, MD

When infinite demand exists for finite resources certain decisions have to be made by those responsible for distribution of the resources. It is called “rationing“.  And that is what is causing all the palaver about reducing medical care costs. Who decides, how do they decide, and how do the decisions get implemented? “Rationing” has become the political lighting rod of that discussion and any politician or candidate (or even Director-designee of CMS) that does not successfully avoid its use is at great political peril.

A recent thoughtful essay in the NEJM advances the case for substituting “avoidance of waste” for the “R” word. (1) Since 30% of our medical care costs go to tests, treatments, drugs, and medical devices that in truth result in no patient benefit (2), the author argues that, at least, we should first eliminate the non-beneficial expenses. Consumer Reports in cooperation with American Board of Internal Medicine and 16 other medical specialty societies has recently published its list of non-beneficial medical activities for us to avoid. They call the campaign “Choosing Wisely”.

Since many very expensive items can be categorized as new technology, the author also argues for a more rigorous standard for the approval of new technology. New technology currently needs ONLY to prove that is safe and that is better than a placebo. There is NO requirement that it show that it has better outcomes than existing technology. This is true for drugs, PET scanners, linear accelerators, organ and bone marrow transplants, cardiac surgery, and all the different kinds of heart vessel stents. Highly technical, complex, and expensive gene treatment (“personalized medical therapy”) is just now peeking at us around the corner.

If a standard of improved outcome for new technology were in place, how would it be implemented? The ACA established the Center for Comparative Effectiveness Research within CMS to gather comparative outcome data and make recommendations, but the ACA also explicitly denies the CMS the authority to use such recommendations in setting Medicare reimbursement rates!

For example, in the very same issue of the NEJM there is an elegant multi-center study that leads to the implementation questions for a less dramatic, not-quite-so-emotionally-laden, but much more common condition than heart transplants and exotic “savior” cancer drugs; urinary incontinence in women. This study showed beyond a doubt that urodynamic testing results on women who go to a urologist because of urinary stress incontinence had no effect on the outcome of the surgery. The surgery is successful 69-72% of the time whether the urodynamic testing is done or NOT. In other words, the clinical judgement of the urologist in the office is enough to indicate who is likely to benefit from the surgery.

The urodynamic testing, with it’s charge in the U.S. of $640-$1503 depending on the insurance company and region, adds no benefit. The article’s authors (all 34 of them) flatly state that urodynamic testing for women presenting with stress incontinence should not be done. (the same conclusion made by NICE, National Institute for Health and Clinical Excellence, in the U.K. in 2006). The article does list four specific instances where urodynamic testing might prove helpful; 1) patients with previous surgery for incontinence, 2) presence of neurological disease, 3) patients planning more extensive pelvic-organ relapse corrective surgery, and 4) urge-predominant incontinence rather than stress-incontinence. All of these definable situations can be documented in the medical record for the few patients who have them.

How could such a reasonable, well-founded recommendation to reduce costs without compromising quality be implemented?

1) Medicare could refuse to reimburse for urodynamic tests in uncomplicated stress incontinence patients. This is without doubt the most direct way to save these costs. Private insurance would soon follow suit after the political and medical backlash quieted down (urodynamic studies are almost always done in the urologist’s office and can represent a significant revenue stream to the office). Current ACA language explicitly prohibits this action.

2) ACO’s could implement a practice guideline recommending avoidance of urodynamic testing before usual stress continence surgery. Any resulting cost savings could be shared by all the physicians in that ACO. Urologists would receive a portion of the savings to offset their revenue loss, and they in turn could ask the other specialties in the ACO, “What have you done for us lately, so that we can share in some of your cost savings”.

3) Physician leaders in the urological specialty and academic centers could support educational efforts to inform their members of the non-benefits of urodynamic testing for most patients and wait for its use to fade away under the weight of replicating, confirming studies, and editorial comments.

This third option is often how our practice patterns currently change, but it is a slow process as shown by our continued discussions of the comparative benefits of open heart surgery or various vascular stents. That this “revelation” about the non-benefits of urodynamic testing has been around since 2006, but still warrants an article published in a 2012 NEJM is another clue about the pace of change. Given the inevitability of rationing and the moral repugnance of doing so with broad-brush budget caps monitored by bureaucrats, arbitrary decisions by non-accountable insurance companies, price-based decisions by for-profit drug companies, age-based discrimination, or by economic or social class classifications, we can only hope that we can find a better way.

Comparative Effectiveness Research under the ACA could develop evidence-based standards to be implemented by ACOs of high quality, cost-conscious physicians who would then share in the savings resulting from their hard work of changing practice patterns appropriately. Otherwise, we may have to settle with our current system of “muddling through” and try to be patient with the plodding pace of change as we watch the treasury run dry.

It might help if we did replace “rationing” with “avoidance of waste”, but I don’t hold out too much hope for that. It will take more than one article and a less insipid term to capture our imagination.

In my next blog on July 1, I will describe how to avoid the “F” word.

1. “From an Ethics of Rationing to an Ethics of Waste Avoidance”, Howard Brody, M.D.,Ph.D; NEJM 366;21 May 24, 2012: p. 1949
2. “The Implications fo Regional Variations in Medicare Spending”, Wenneberg et al., Ann Intern Med 2003;138: p. 288
3. “A Randomized Trial of Urodynamic Testing before Stress-Incontinence Surgery”, Nager et al., NEJM 366;21 May 24, 2012: p.1987

Vol. 65 April 15, 2012 First ACOs Appear with a Whimper, Not a Bang.

April 15, 2012

Medicare just released the names of the first Accountable Care Organizations (ACO), a major innovation of the Affordable Care Act (ObamaCare). ACOs apply to and are approved by the federal government as participants in the Medicare Shared Savings Program :

“All ACOs that succeed in providing high quality care – as measured by performance on 33 quality measures relating to care coordination and patient safety, use of appropriate preventive health services, improved care for at-risk populations, and the patient experience of care – while reducing the costs of care – may share in the savings to Medicare.”


 In the world of health care providers there has been much consternation, gnashing of teeth (maybe other body parts too), and exuberant, expert speculations about what an ACO was going to look like and by what means  the ACO program was going to “revolutionize American medicine” as promised by Washington.


 The first 27 ACO’s are surprisingly underwhelming. None of them have been developed by the “big boys” with name recognition in the medical marketplace, unless you happen to live in Caldwell County, North Carolina, coastal Georgia, or Hackensack NJ . Half are small physician-led organizations. Less than half appear to involve hospitals. All totaled they cover less than 1% of Medicare patients. Only two of the twenty-seven are willing to take limited risk of losing money (“going over budget”) in return for the potential of sharing in more savings (“providing care under budget”).

Medicare beneficiaries (patients) will continue to be able to see ANY provider and unless the provider boasts about it or otherwise publicize it, the patient may not know that his or her physician is a member of an ACO. In my local community the physicians organization took out a full-page ad in Sunday’s paper to “congratulate” themselves on being selected as an ACO. This particular physicians organization has had a contentious business relationship with the local hospitals for ten years, plans to cover only the minimum of 5,000 Medicare patients, and finds itself in competition with a recently spawned physician-hospital organization.

Another physicians organization formed just this year in a neighboring county plans to cover 6000 Medicare patients and does not involve its community hospital. The hospital itself is in a fierce, cost-cutting competition with a larger hospital up the road  just 15 miles closer to the academic medical centers who are courting it for a merger.

Both situations illustrate how complicated the medical/political/economic environment is for these initial ACOs.

Is this meager initial blossoming of ACOs due to bureaucratic complexity and uncertainty,

(“In conjunction with the final rule, the Department of Health and Human Services Office of Inspector General, the Department of Justice, the Federal Trade Commission, and the Internal Revenue Service issued separate notices addressing a variety of legal issues as they applied to the Shared Savings Program.  These included the interaction of the Shared Savings Program with the federal anti-kickback, physician self-referral, civil monetary penalty (the fraud and abuse laws) and antitrust laws, as well as the Internal Revenue Code regarding the tax implications for nonprofit entities seeking to participate in ACOs.  The final rule, the notice of the Advance Payment ACO Model, and the regulatory guidance on fraud and abuse were published in the Nov. 2, 2011 Federal Register.”)

 OR does it herald the appearance of an actual “new model of lean and mean care organization led by entrepreneurial physicians”,

 OR is it just one more step in our historically incremental evolution towards a system of universal health care?

Maybe the next 150 ACOs to be announced in July 2012 will give us more of a clue.

Stay tuned.

Vol. 52 October 1, 2011 Medical Costs of Prisons, Medicare Cost Projections

October 1, 2011

Please excuse the September 15th hiatus. The cyber-devils made my website go down and it took a
while for my consultant to diagnose the problem between the website host and the domain registry.
It was more like “Who’s On First” then “Tinker to Evers to Chance”.


25% of all Americans with HIV, 33% of Americans with hepatitis C, and 33% of all heroin users spend some time in prison. (1)

U.S. has 5% of the world’s population and 25% of the world’s prisoners. That was 2.8 million prisoners in January 2008.

40% of federal inmates have mental disorders which is 4X the rate in the general population. If you count all types of jails, the number peaks at 60%. The largest facilities housing psychiatric patients in the U.S. are jails. 7% of inmates receive mental health treatment while incarcerated.

Released prisoners are 129 times more likely to die of a drug overdose within 2 weeks of release then the general population. Most are uninsured. They are terminated by Medicaid upon incarceration and are ineligible to re-enroll upon release in most states. The Affordable Care Act permits former prisoners to receive health care coverage.

State correctional spending is the fastest-growing sector of government spending other than Medicare.

Rhode Island spends an average of $41,346 per year per inmate. That jumps to $109,026 per year per inmate for maximum security inmates. Massachusett’s average annual cost per inmate is closer to $46,000.

The $5.6 TRILLION surplus projection in 1995 that turned into a $6.2 TRILLION deficit projection was spurred in part by the $272 BILLION prescription drug coverage (Part D) and the $1.9 TRILLION tax cuts passed during George Bush’s administration (plus a couple of wars, of course). (2)

The savings in Medicare costs projected by “health care system redesign” and changes in coverage and/or benefits will have their first real effect in 2022. “People say you can’t solve the deficit problem without dealing with health care, but you can’t solve the near-term deficit problem by dealing with health care either.” (3)

Under Rep. Ryan’s proposal, if you are under 55 years old you will pay $12,500 out-of-pocket for your health care  while the government will spend $8,000  in 2022 . Under current policy that cost to you would be $6,250 with the government paying $8,500.

$500 BILLION has already been cut from Medicare costs by reducing payments to Medicare Advantage plans (HMO-like plans that studies showed did not reduce medical costs for enrollees) and to acute care hospitals (Helps explain all the recent public scrambling for “policy reviews” and pleas for help coming from many urban acute care hospitals in most states.)

Medicare is projected to consume 6% of the GDP (Gross Domestic Product) in 2035. Raising the eligibility age for Medicare from 65 to 67 in 2014 would reduce Medicare costs only about 0.4% of that 2035 GDP. (5)

If you are 65 years old today you paid an average of $150,000 in Medicare and Social Security taxes over your lifetime and will receive about $350,000 in retirement benefits. A 46-year-old under current policy will pay over $200,000 in Medicare and Social Security taxes and will receive over $500,000 in retirement benefits. (6) Hence, all the discussion about higher premiums for the affluent, restrictions on gold-plated Medigap plans, and increases in co-insurance and deductible amounts.

My Conclusions:
1. It seems to cost more to consider drug addiction a crime than to treat it as a medical disorder.
2. Medical technology will continue to improve and cost more, so be prepared to pay more taxes and/or higher premiums for your health care insurance at any age.

1. Medicine and the Epidemic of Incarceration in the United States, NEJM 362;22 June 2, 2011, Rich et al
2. Money, Pat Regnier and Amanda Gengler, October 2011, p.107-115
3. Henry Aaron, economist, Brookings Institute, ibid
4. Kaiser Family Foundation, Congressional Budget Office, ibid
5. Congressional Budget Office, ibid
6. Urban Institute, ibid

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