More evidence that cost-sharing doesn’t work

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A growing body of research keeps undermining a key tenet of health economics, Axios’ Sam Baker writes — the belief that requiring patients to pay more out of their own pockets will make them smarter consumers, forcing the health care system to deliver value.

Driving the news: Even a seemingly modest increase in out-of-pocket costs will cause many patients to stop taking drugs they need, according to a new working paper from Harvard economist Amitabh Chandra.

  • Raising Medicare recipients’ out-of-pocket costs by just $10 per prescription led to a 23% drop in overall drug consumption, and to a 33% increase in mortality. 
  • And seniors weren’t simply ditching “low-value” drugs. People at high risk for heart attacks or strokes cut back on statins and blood-pressure medications even more than lower-risk patients.

Between the lines: This research focuses on Medicare’s drug benefit, but higher cost-sharing is all the rage throughout the system, and there’s little evidence that it has generated “smarter shoppers.”

  • Patients with high-deductible plans — increasingly common in the employer market — don’t shop around for the best deal, which is all but impossible to do in many cases even if you wanted to try.

Go deeper: The “skin in the game” theory of health care hasn’t panned out

Most seniors aren’t vaccinated yet

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Most seniors have not gotten a COVID-19 vaccine yet, according to an analysis from the Kaiser Family Foundation.

Why it matters: There’s simply not enough vaccine available right now to take on every priority, Axios’ Marisa Fernandez writes.

  • Even as states eye the next phase of the process and additional high-risk groups clamor for access, there’s still a long way to go just in protecting most vulnerable.

By the numbers: In the first month of vaccinations, about 29% of recipients were 65 or older, per KFF.

  • The first round of vaccines was directed primarily at health care workers and the residents of long-term care facilities.

Where it stands: West Virginia has vaccinated the most seniors at 34%, thanks to a focused effort in nursing homes.

  • Nine states — West Virginia, North Carolina, Florida, Mississippi, Delaware, Texas, Michigan, New Jersey, and Wisconsin and Washington, D.C. — report vaccinating at least 20% of seniors.

Yes, but: Demographic data aren’t available in some states and cities, which will make it hard to track how well the U.S. is addressing high-risk groups as more people become eligible.

Where the pandemic has been deadliest

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In the seven states hit hardest by the pandemic, more than 1 in every 500 residents have died from the coronavirus.

Why it matters: The staggering death toll speaks to America’s failure to control the virus.

Details: In New Jersey, which has the highest death rate in the nation, 1 out of every 406 residents has died from the virus. In neighboring New York, 1 out of every 437 people has died.

  • In Mississippi, 1 out of every 477 people has died. And in South Dakota, which was slammed in the fall, 1 of every 489 people has died.

States in the middle of the pack have seen a death rate of around 1 in 800 dead.

  • California, which has generally suffered severe regional outbreaks that don’t span the entire state, has a death rate of 1 in 899.
  • Vermont had the lowest death rate, at 1 of every 3,436 residents.

The bottom line: Americans will keep dying as vaccinations ramp up, and more transmissible variants of the coronavirus could cause the outbreak to get worse before it gets better.

  • Experts also say it’s time to start preparing for the next pandemic — which could be deadlier.

CEO gets 15 years in prison for $150M healthcare fraud

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The CEO of a group of Texas-based hospice and home health companies was sentenced Feb. 3 to 15 years in prison for his role in a $150 million healthcare fraud and money laundering scheme, according to the Department of Justice. 

Henry McInnis was sentenced more than a year after he was convicted of conspiracy to commit healthcare fraud, conspiracy to commit money laundering, obstruction of justice and healthcare fraud. 

From 2009 to 2018, Mr. McInnis and others submitted more than $150 million in false and fraudulent claims for healthcare services. The claims were submitted through Merida Group, a hospice company with dozens of locations in Texas. 

Mr. McInnis was CEO of Merida. He had no medical training but acted as the director of nursing for the company. He also enforced a companywide practice of falsifying medical records to conceal the scheme and ordered employees to change medical records to make it appear patients were terminally ill. 

Mr. McInnis also paid bribes to physicians to certify unqualified patients for home health and hospice. 

Mr. McInnis was sentenced less than two months after the owner of Merida Group, Rodney Mesquias, was sentenced to 20 years in prison and ordered to pay $120 million in restitution. 

Tower Health to cut pay for executives, managers

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Tower Health said it is cutting salaries of executives and managers amid financial losses linked to the COVID-19 pandemic.

The West Reading, Pa.-based health system has struggled financially in the last two fiscal years. It recorded an operating loss of $378.2 million in fiscal year 2020, as well as an operating deficit of $178.8 million the year prior. And last November, the health system said it would consider selling six of its Philadelphia-area hospitals, including those it has purchased since 2017 from Franklin, Tenn.-based Community Health Systems, as part of a financial turnaround plan.

To help offset the financial damage, about 400 Tower Health executives and managers will have their pay cut, beginning in their Feb. 19 paychecks, according to The Philadelphia Inquirer, which cites a letter CEO Clint Matthews wrote to staff. Executives will have their pay cut by 15 percent, and directors, senior directors and associate vice presidents will have their pay cut by 10 percent.

In a statement shared with Becker’s on Feb. 8, the health system said it “is undertaking several initiatives as part of a coordinated plan to improve operations, strengthen care delivery and address the ongoing financial impact of COVID-19.”

“These actions include compensation reductions for executives and managerial employees, along with operational improvements to reduce costs and enhance revenue,” according to the Tower Health statement.

The salary cuts will be in effect until June 30, and do not affect front-line clinical or support staff, who received merit increases in January.

Tower Health projects cost savings of about $11.6 million because of the pay cuts.  

“Reducing management compensation is a difficult but necessary decision that will stabilize and strengthen our financial performance as we continue to meet the challenges of the COVID-19 pandemic, as well as our ongoing mission of providing compassionate, accessible, high-quality, cost-effective healthcare to our communities,” the health system said.