Author Archives: henrykotula

Reducing Administrative Costs in US Health Care: Assessing Single Payer and Its Alternatives

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Reducing Administrative Costs in US Health Care: Assessing Single Payer and Its Alternatives

Administrative costs in the US healthcare system are known to be higher than those in any other country, even than other countries with private health insurance systems. There also is widespread agreement the excessive US costs generate little, if any, value, and that they impose a tremendous burden on physicians. With administrative costs even for primary care services approaching $100,000 per year per physician, there is a growing recognition that reducing healthcare-related administrative costs is a policy priority.

Despite the longstanding concerns about these escalating costs, there is little understanding of what generates them and how we can reduce them. To the degree there has been any academic inquiry into administrative costs imposed on US providers, it has compared them to the much lower costs in other countries with nationalized systems. These comparisons are unflattering to the US system and are designed to encourage wholesale healthcare reform.

Our paper published in Health Services Research begins at the retail level, focusing on the specific administrative costs inflicted by our payment system on providers. We examine the complex contractual arrangements between insurers and physicians and measure the efforts that physicians must endure to get paid.  It then offers a simulation model to estimate how certain policy reforms would result in nationwide administrative savings.

Currently, each health plan and each physician or physician group (and each hospital) negotiates over a contract for services on a periodic basis. Our analysis examines three separate costs that result from this type of market structure: architectural costs (the enormous number of contracts that are generated annually to provide services to patients), contractual complexity (the difficulty of following all of the requirements of each agreement to receive payment), and compliance costs (the costs of not following the rules in submitting a bill).

Based on this framework, we ask two questions: First, what if physicians entered into simpler contracts with insurers? And second, what if physicians (who accept patients with many kinds of insurance) agreed to a single boilerplate contract with all insurers rather than individualized contracts with each insurer? Put more simply, what if contracts were simpler and standardized?

Our simulation predicts that simplifying contracts would reduce billing costs by nearly 50%, standardizing contracts would reduce those costs by about 30%, and both simplifying and standardizing contracts would reduce those costs by over 60% percent.

We then used the model to estimate administrative cost savings from a single payer “Medicare-for-All” model. Consistent with claims made by advocates for nationalized health insurance, we estimate that a Medicare-for-All plan would reduce administrative costs between 33-53%, largely by standardizing contracts. But these cost savings are less than those generated from standardizing and simplifying contracts within our current system of private health insurance because we modeled that a Medicare-For-All plan would retain Medicare’s complex payment models and have increased compliance costs compared to private payers.

We think this is good news. Though we find that a single-payer system will reduce certain administrative costs, we also find that reforms to our current multi-payer system could generate at least as great a reduction.

There might be benefits to pursuing national health reform, but we can reduce burdensome administrative costs through much simple and less disruptive paths.  The even better news from this study is that we can now have a more precise understanding of where administrative costs arise in our health system, and we have the means to evaluate the effects of other kinds of reforms. Understanding is the prerequisite to reforming.

Medicare spending on advertised drugs

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Medicare beneficiaries spent more on advertised drugs, study finds - Axios

Prescription drugs with some of the highest Medicare spending also had the highest level of direct-to-consumer advertising, a recently-released GAO report found.

By the numbers: The GAO found the Medicare program and its beneficiaries spent nearly $324 billion on prescription drugs advertised to beneficiaries and other consumers between 2016 and 2018.

This amount is more than half (58%) of total Medicare Parts B and D spending on drugs during that time, the most recent data available.

  • Seven of the top 25 drugs in Part D and two of the top 25 drugs in Part B with the highest spending were also among the top 25 drugs with the highest consumer advertising spending that year.
  • For example, Trulicity, as well as Lyrica, Eliquis and Humira were among the top 25 drugs in Part D and direct-to-consumer advertising spending.
  • Keytruda and Botox were among the top 24 drugs in Part B and direct-to-consumer advertising spending.

Alzheimer’s drug presents Democrats’ new policy dilemma

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New Alzheimer's drug could be 'devastating' for Medicare - POLITICO

With a $56,000-a-year price tag, Biogen’s newly approved Alzheimer’s drug Aduhelm is dovetailing into the debate on Capitol Hill over how to lower prescription drug prices.

Why it matters: Democrats may be positioning themselves to push policy measures that assign value to drugs and then price them accordingly — a huge potential blow to the pharmaceutical industry.

To truly address its launch price, policymakers have to grapple with big questions the U.S. system currently avoids: How should we determine the value of a drug, and who gets to make that decision?

  • President Biden proposed giving an independent review board the power to determine the Medicare rate for new drugs that don’t have any competition.
  • Democrats’ most prominent drug legislation is a House bill that gives Medicare the power to negotiate drug prices.
  • Sen. Ron Wyden, the chairman of the Senate Finance Committee, recently called out Aduhelm by name in a document outlining the principles that will guide the Senate’s drug pricing bill, a hint that the Senate’s legislation will take a different direction than the House’s.

The bottom line: “Any kind of process for valuing new drugs like Aduhelm take you immediately into the controversial quagmire of how to quantify improvements in quality of life for people,” said KFF’s Larry Levitt.

More hospitals poised to require COVID-19 vaccines

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It’s “a trickle that will become a torrent,” Ashish Jha, dean at Brown University’s School of Public Health, tweeted.

More hospitals are likely to require employees receive a COVID-19 vaccine, experts said, to further protect the sick and vulnerable patients who rely on them for care.

A Houston-area hospital captured headlines after taking a firm stance on requiring vaccines that prevent severe illness of the coronavirus, which has killed more than 600,000 in the U.S. and ravaged the economy.

Houston Methodist employees who refused the vaccine were either terminated or resigned. A judge earlier this month sided with the hospital and tossed out an employee lawsuit that was seeking to block the mandated inoculation. The ruling may give other hospitals the green light to require the jab, and as more facilities put a similar policy in place, others are likely to follow, experts said.

It’s “a trickle that will become a torrent,” Ashish Jha, professor and dean at Brown University’s School of Public Health, posted Thursday on Twitter.

3 large health systems in Massachusetts to require all workers to be vaccinated.

Given the critical need to protect vulnerable patients, its critical all hospitals do this.

Leading systems will do it soon.

Laggards will get there eventually.

Joining the growing tide of vaccine mandates are a variety of systems and hospitals, including Mass General Brigham in Boston, BJC Healthcare in St. Louis and Inova Health System in Virginia.

Some of the nation’s largest health systems have yet to mandate the shot, including Kaiser Permanente and CommonSpirit Health.

“Vaccination will only be required for Kaiser Permanente employees if a state or county where we operate mandates the vaccine for health care workers,” the company said in an email.

The American Hospital Association continues to hear that a growing number of its members are requiring the vaccine, with some exemptions. However, many member hospitals are waiting until the FDA grants full approval, a time when more safety and efficacy data will be made available.

“Getting vaccinated is especially critical for health care professionals because they work with patients with underlying health conditions whose immune systems may be compromised,” AHA, which has not taken on stance on the requirement, said in a statement.

The mandates raise ethical questions, some say, pointing to the profession’s promise to “do no harm.”

Arthur Caplan, head of medical ethics at New York University School of Medicine, said the codes of ethics that doctors and nurses says to put patients first, do no harm and protect the vulnerable.

“Of course they should be vaccinated,” he said. “If they don’t want to get vaccinated, I think they’re in the wrong profession.”

The Equal Employment Opportunity Commission said employment law does not prohibit employers from requiring the jab, essentially giving the green light to employers to put incentives and requirements in place for their workers. The EEOC is the federal agency tasked with ensuring that workplaces do not discriminate.

Some states are going against the tide and signing legislation that bars vaccine mandates, including Florida. The city of San Francisco will require hospital employees and workers in high-risk settings to get the vaccine. San Francisco, like other employers and universities, will require all city workers get inoculated.

The differing policy stances across the country creates additional hurdles for corporations with a large footprint.

More than 99% of US Covid-19 deaths are among unvaccinated patients

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Almost All of the Current COVID-19 Deaths Are Among Those Unvaccinated

As the delta variant of the coronavirus spreads, especially among the unvaccinated, the Biden administration is gearing up for a new push to vaccinate the so-called “movable middle”—and some public health experts say FDA could advance that goal by fully approving Covid-19 vaccines.

Analysis reveals toll of US Covid-19 deaths among unvaccinated patients

According to an analysis by the Associated Press, nearly all recent Covid-19 deaths have occurred in unvaccinated individuals.

The AP analysis is based on data from CDC, although CDC has not itself released estimates of the share of Covid-19 deaths among unvaccinated patients.

According to the AP analysis, just 0.8% of Covid-19 deaths in May were among the fully vaccinated. Meanwhile, the share of hospitalized patients who were fully vaccinated was just 0.1% in May, with fewer than 1,200 fully vaccinated people hospitalized out of more than 853,000 hospitalizations.

Meanwhile, according to CDC, 54% of the U.S. population, including 66% of American adults, have received at least one dose of a Covid-19 vaccine, while 46.1% of the total population and 56.8% of American adults have received all required doses.

The U.S. COVID-19 Outbreak Is Still Bad—And It Could Get Worse

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The U.S. COVID-19 Outbreak Is Still Bad—And Could Get Worse | Time

In many places across the United States, COVID-19 feels over. Unmasked citizens run rampant. New York City is planning an August mega-concert in Central Park. I’m as hopeful as the rest of us, but I think we may be suffering from memory loss.

Let’s start from this time last year, when many Americans were exuberantly returning to newly reopened beaches, parks and restaurants after a seemingly eternal three months—three whole months!—of quarantine. Universal observance of safety guidelines was surely going to be sufficient to limit viral spread.

We know how that turned out. By mid-June 2020, there were already signs that our bleary-eyed re-emergence was premature. On June 22, 2020, the number of new daily cases of COVID-19 (33,485) surpassed the high-water mark hit on the worst day of the horrific first surge, when that figure peaked at just over 32,000.

A year later, the daily case count is not as foreboding—nor is it nearly as low it may appear.

You’ll notice that this graph covers only the past 12 weeks, while virtually every chart you’ll find (including the one on TIME’s dashboard) graphs COVID-19 cases from the beginning of the outbreak. This is intentional. The toll of the pandemic in the U.S. has persisted for so long, and reached such catastrophic heights in the first weeks of 2021, that patterns such as this one are nearly impossible to see on the typical chart. Here’s what the same graph looks like against that backdrop:

The U.S. COVID-19 Outbreak Is Still Bad—And Could Get Worse | Time

My fear is that the pandemic remains much more deadly than how it looks on the page. Yes, deaths remain on a steady decline, having recently sunk below 300 people a day on average for the first time since March 24, 2020, right around the time that many offices were shuttering. But a surge in cases, particularly among the large number of unvaccinated Americans, could quickly reverse that decline.

As you can see, it has been less than a month since the 2021 case count sunk below the year-over-year figure, on May 26. The massive nationwide vaccine rollout is undoubtedly a major factor, but it’s difficult to quantify the impact of vaccination on the currently low case and death figures. There are only weak correlations between states’ vaccination rates and some key indicators, like the rate at which cases have risen or fallen in recent weeks.

What we can quantify is that, in the 27 days since the lines crossed, the vaccination rate in the U.S. has only crawled upward, from 39.7% to 45.3% of Americans who have received a complete dosage. While the official vaccination rate applies to the entire population, data from the U.S. Centers for Disease Control and Prevention (CDC) also includes percentages for several age groups. By TIME’s calculations, there are 97.4 million adults age 18 and over who have been eligible for vaccination for two months but who have not yet received even a first dose. This group trends heavily younger, with those 65 and over representing only 7.8% of the unvaccinated population. (These figures do no include those under 18, who constitute a small portion of the eligible population.)

On May 13, two weeks before daily case numbers in 2021 fell below the year-over-year figures from the same day in 2020, the CDC issued guidance liberating fully vaccinated individuals from wearing masks in many scenarios. I do not have conclusive proof that any of the country’s 97.4 million unvaccinated adults have abused this privilege. All I can state with confidence is that, based on the number of people I’ve seen not wearing a mask in places like stores, which often have signs imploring those who are not fully vaccinated to continue to mask up, it is mathematically almost certain that more than a few have done so.

Which is to say: the situation today, if one can momentarily rewind to Memorial Day of 2020, feels very familiar. There appears to be a lambent light at the end of the tunnel, yet cavalier attitudes towards the pandemic, particularly among younger people who, as a group, are under-vaccinated, resembles what we saw last summer just before the second wave.

Watching these trends, I grow more concerned every day that the country is positioned for yet another surge in cases, despite our defensive upgrades in the off-season. I hope I’m wrong, but the numbers are not nearly as comforting as they first look. The fact that the Delta variant, which is both more transmissible and appears to cause more severe disease, is on pace to become the dominant form of COVID-19 in the U.S. in the coming months is further reason for alarm. Moreover, some states have significantly higher vaccination rates than others, leaving those with less protection more vulnerable to future spikes.

Forgive me for being a buzzkill, but unless we can institute a functional vaccine passport system, which appears unlikely, I do not think it is wise to assume that every unmasked individual is fully dosed. Short of a passport system, and with dangerous variants competing for dominance and the duration of vaccine protection still unclear, we ought to continue to ration physical space in public areas—a policy that is hastily being relaxed at places like Major League Baseball parks. I love baseball and eagerly look forward to buzzing up to Philadelphia to take in a game at Citizen’s Bank Park, which is operating at full capacity. But not while the policy is that “Unvaccinated fans are strongly encouraged to wear their masks in all indoor and outdoor areas in and around the ballpark.”

I also think there might be a backdoor to a digital passport system. Based on polling data, it appears there is a substantial population of people who aren’t categorically opposed to vaccination, just unmotivated to get around to it—what we’ve termed vaccine “meh-sitance,” not hesitance. My proposal is that bars, restaurants and other popular venues merely require each person who enters to verbally affirm that they are fully vaccinated.

This might sound about as effective as asking passengers in the exit row to individually verify that they listened to the instructions. But while it’s one thing to ignore a sign at the grocery store, it’s another to lie in front of your friends. Peer pressure is a powerful motivator, and if even a fraction of the unvaccinated would take the time to resolve that dissonance, or risk missing out on trivia night, it could substantially push up the percentages. I call this the “FOMO method,” and though we are still a long, long way from eliminating the disease altogether, it could help us avert a fourth wave this summer.