Health care CEOs made $2.6 billion in 2018

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Illustration of George Washington with a stethoscope around his neck.

The CEOs of 177 health care companies collectively made $2.6 billion in 2018 — roughly $700 million more than what the National Institutes of Health spent researching Alzheimer’s disease last year, according to a new Axios analysis of financial filings.

Why it matters: The pay packages reveal the health care system’s real incentives: finding ways to boost revenue and stock value by raising prices, filling more hospital beds, and selling more drugs and devices, Axios’ Bob Herman reports.

By the numbers: The median pay of a health care CEO in 2018 was $7.7 million. Fourteen CEOs made more than $46 million each.

  • The figures were calculated by using actual realized gains of stock options and awards, which are in the annual proxy disclosures companies file with the Securities and Exchange Commission.

The highest-paid health care CEO last year was Regeneron Pharmaceuticals CEO Leonard Schleifer, who made $118 million. A spokesperson said Schleifer “has built Regeneron from a start-up into a leading innovative biopharmaceutical company” and that he “generally holds his option awards until nearly the end of the full 10-year option term.”

  • Pharmaceutical CEOs represented 11 of the 25 highest compensation amounts last year.
  • Executives of medical device and equipment companies that don’t attract as much attention — such as Intuitive Surgical, Masimo, Hill-Rom and Exact Sciences — also were sitting at the top.

Between the lines: A vast majority of CEO pay comes from exercised and vested shares of stock. Salaries are almost an afterthought.

  • But health care executives routinely earned millions of dollars in cash bonuses, based on factors like revenue goals and financial metrics that experts say can be manipulated.
  • Quality of care is either not a factor at all in CEOs’ bonuses at all, or a marginal one.

Details: McKesson CEO John Hammergren received a $4 million bonus for hitting financial targets last year, just as the company was facing a slew of lawsuits over its role in the opioid crisis. McKesson did not immediately respond to questions.

  • Community Health Systems CEO Wayne Smith recorded a $3.3 million bonus even though his hospital chain continued to hemorrhage money. His bonus was heavily weighted by an adjusted metric that made CHS look profitable, and none of his bonus was tied to patient outcomes. CHS did not respond.

Worth noting: The analysis does not include compensation from not-for-profit hospital systems, because their 2018 tax filings have not been released yet.

 

 

 

Congress Warns Against Medicaid Cuts: ‘You Just Wait for the Firestorm’

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WASHINGTON — If President Trump allows states to convert Medicaid into a block grant with a limit on health care spending for low-income people, he will face a firestorm of opposition in Congress, House Democrats told the nation’s top health official on Tuesday.

The official, Alex M. Azar II, the secretary of health and human services, endured more than four hours of bipartisan criticism over the president’s budget for 2020, which would substantially reduce projected spending on Medicaid, Medicare and biomedical research. Democrats, confronting Mr. Azar for the first time with a House majority, scorned most of the president’s proposals.

But few drew as much heat as Mr. Trump’s proposed overhaul of Medicaid. His budget envisions replacing the current open-ended federal commitment to the program with a lump sum of federal money for each state in the form of a block grant, a measure that would essentially cap payments and would not keep pace with rising health care costs.

Congress rejected a similar Republican plan in 2017, but in his testimony on Tuesday before the Health Subcommittee of the House Energy and Commerce Committee, Mr. Azar refused to rule out the possibility that he could grant waivers to states that wanted to move in that direction.

Under such waivers, Mr. Azar said, he could not guarantee that everyone now enrolled in Medicaid would keep that coverage.

“You couldn’t make that kind of commitment about any waiver,” Mr. Azar said. He acknowledged that the president’s budget would reduce the growth of Medicaid by $1.4 trillion in the coming decade.

Representative G. K. Butterfield, Democrat of North Carolina, said that “block-granting and capping Medicaid would endanger access to care for some of the most vulnerable people” in the country, like seniors, children and the disabled.

Mr. Trump provoked bipartisan opposition by declaring a national emergency to spend more money than Congress provided to build a wall along the southwestern border. If the president bypasses Congress and allows states to convert Medicaid to a block grant, Mr. Butterfield said, he could face even more of an outcry.

“You just wait for the firestorm this will create,” Mr. Butterfield said, noting that more than one-fifth of Americans — more than 70 million low-income people — depend on Medicaid.

As a candidate, Mr. Trump said he would not cut Medicare, but his new budget proposes to cut more than $800 billion from projected spending on the program for older Americans in the next 10 years. Mr. Azar said the proposals would not harm Medicare beneficiaries.

“I don’t believe any of the proposals will impact access to services,” Mr. Azar said. Indeed, he said, the cutbacks could be a boon to Medicare beneficiaries, reducing their out-of-pocket costs.

After meeting an annual deductible, beneficiaries typically pay 20 percent of the Medicare-approved amount for doctor’s services and some prescription drugs administered in doctor’s offices and outpatient hospital clinics.

Mr. Azar defended a budget proposal to impose work requirements on able-bodied adults enrolled in Medicaid. Arkansas began enforcing such requirements last year under a waiver granted by the Trump administration. Since then, at least 18,000 Arkansans have lost Medicaid coverage.

Mr. Azar said he did not know why they had been dropped from Medicaid. It is possible, he said, that some had found jobs providing health benefits.

Representative Joseph P. Kennedy III, Democrat of Massachusetts, said it would be reckless to extend Medicaid work requirements to the entire country without knowing why people were falling off the rolls in Arkansas.

If you are receiving free coverage through Medicaid, Mr. Azar said, “it is not too much to ask that you engage in some kind of community engagement.”

Representative Fred Upton, Republican of Michigan, expressed deep concern about Mr. Trump’s proposal to cut the budget of the National Cancer Institute by $897 million, or 14.6 percent, to $5.2 billion.

Mr. Azar said the proposal was typical of the “tough choices” in Mr. Trump’s budget. He defended the cuts proposed for the National Cancer Institute, saying they were proportional to the cuts proposed for its parent agency, the National Institutes of Health.

The president’s budget would reduce funds for the N.I.H. as a whole by 12.6 percent, to $34.4 billion next year.

Mr. Azar was also pressed to justify Mr. Trump’s proposal to cut federal payments to hospitals serving large numbers of low-income patients. Representative Eliot L. Engel, Democrat of New York, said the cuts, totaling $26 billion over 10 years, would be devastating to “safety net hospitals” in New York and other urban areas.

Mr. Azar said that the Affordable Care Act, by expanding coverage, was supposed to “get rid of uncompensated care” so there would be less need for the special payments.

While Democrats assailed the president’s budget, Mr. Azar relished the opportunity to attack Democrats’ proposals to establish a single-payer health care system billed as Medicare for all.

Those proposals could eliminate coverage provided to more than 20 million people through private Medicare Advantage plans and to more than 155 million people through employer-sponsored health plans, he said.

But Mr. Azar found himself on defense on another issue aside from the president’s budget: immigration. He said he was doing his best to care for migrant children who had illegally entered the United States, were separated from their parents and are being held in shelters for which his department is responsible.

He said he was not aware of the “zero tolerance” immigration policy before it was publicly announced in April 2018 by Attorney General Jeff Sessions. If he had known about the policy, Mr. Azar said, “I could have raised objections and concerns.”

Representative Anna G. Eshoo, Democrat of California and the chairwoman of the subcommittee, summarized the case against the president’s budget.

“The Trump administration,” she said, “has taken a hatchet to every part of our health care system, undermining the Affordable Care Act, proposing to fundamentally restructure Medicaid and slashing Medicare. This budget proposes to continue that sabotage.”

 

 

 

 

Congratulations on the Promotion. But Did Science Get a Demotion?

https://theincidentaleconomist.com/wordpress/congratulations-on-the-promotion-but-did-science-get-a-demotion/

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number of recent news articles have brought renewed attention to financial conflicts of interest in medical science. Physicians and medical administrators had financial links to companies that went undeclared to medical journals even when they were writing on topics in which they clearly had monetary interests.

Most agree such lapses damage the medical and scientific community. But our focus on financial conflicts of interest should not lead us to ignore other conflicts that may be equally or even more important. Such biases need not be explicit, like fraud.

“I believe a more worrisome source of research bias derives from the researchers seeking to fund and publish their work, and advance their academic careers,” said Dr. Jeffrey Flier, a former dean of Harvard Medical School who has written on this topic a number of times.

How might grant funding and career advancement — even the potential for fame — be biasing researchers? How might the desire to protect reputations affect the willingness to accept new information that reverses prior findings?

I’m a full professor at Indiana University School of Medicine. Perhaps the main reason I’ve been promoted to that rank is that I’ve been productive in obtaining large federal grants. Successfully completing each project, then getting that research published in high-profile journals, is what allows me to continue to get more funding.

A National Institutes of Health regulation sets a “significant financial interest” as any amount over $5,000. It’s not hard to imagine that being given thousands of dollars could influence your thinking about research or medicine. But let’s put things in perspective. Many scientists have been awarded millions of dollars in grant funding. This is incredibly valuable not only to them but also to their employers. Journals and grant funders like to see eye-catching work. It would be silly not to think that this might also subtly influence thinking and actions. In my own work, I do my best to remain conscious of these subtle forces and how they may operate, but it’s a continuing battle.

Getting positive results, or successfully completing projects, can sometimes feel like the only way to achieve success in research careers. Just as those drivers can lead people to publish those results, it can also nudge them not to publish null ones.

As a pediatrician, I’ve been acutely aware of concerns that relationships between formula companies and the American Academy of Pediatrics might be influencing policies on feeding infants. But biases can occur even without direct financial contributions.

If an organization has spent decades recommending low-fat diets, it can be hard for that group to acknowledge the potential benefits of a low-carb diet (and vice versa). If a group has been pushing for very low-sodium diets for years, it can be hard for it to acknowledge that this might have been a waste of time, or even worse, bad advice.

 

 

Senate votes to reopen government, averts major setback to health agencies

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Debate on the Senate floor on Jan. 22. Credit: C-span

Here’s a look at HHS, ONC and CDC plans during a government shutdown.

The Senate voted on Monday to approve a temporary funding measure that keeps the government running through Feb. 8.

The vote came after the government had been shut down for two days with the U.S. Department of Health and Human Services contingency plans already kicking in as of Monday morning when about 50 percent of its staff stayed home on furlough.

The Office of the National Coordinator for Health Information Technology is not operating. However, the NIH is continuing care for current NIH Clinical Center patients.

A contingency staffing plan is keeping other operations going, including Medicare and Medicaid payments, though an extended shutdown could result in delays in claims processing, audits, and other administrative functions.

In the short term, the Medicare program will continue largely without disruption during a lapse in appropriations, according to HHS.

States will have sufficient funding for Medicaid through the second quarter.

The Centers for Medicare and Medicaid Services will maintain the staff necessary to make payments to eligible states from remaining Children’s Health Insurance Program (CHIP) carryover balances.

CMS is continuing key federal exchange activities, such as open enrollment verification.

Other ongoing HHS activities include substance abuse and mental health services for treatment referral and the suicide prevention lifeline.

The Administration for Children and Families and Temporary Assistance for Needy Families (TANF), along with child support and foster care services continues.

The Centers for Disease Control and Prevention is maintaining its 24/7 emergency operations center.

The CDC will continue to track the data on the flu, which has been virulent this season.

How investing in public health could cure many health care problems

http://theconversation.com/how-investing-in-public-health-could-cure-many-health-care-problems-84256?utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20for%20October%201%202017%20-%2084576980&utm_content=Latest%20from%20The%20Conversation%20for%20October%201%202017%20-%2084576980+CID_49b12b4a2a39e7f173235a40290664ab&utm_source=campaign_monitor_us&utm_term=How%20investing%20in%20public%20health%20could%20cure%20many%20health%20care%20problems

Now that the Cassidy-Graham bill has been pulled, it’s a good time to think about concrete ways to improve health and health care in our country. Despite advances in medicine, U.S. health care spending grew to US$3.2 trillion in 2015, or 17.8 percent of the nation’s gross domestic product. To contain health care costs, the U.S. needs to invest in strengthening the public health system and reconsider approaches to making all Americans healthier.

Making Americans healthier should not be a partisan issue. Conservatives and progressives alike should agree on the importance of keeping Americans healthy – both on principled and financial grounds. The sicker the American people, the more expensive their care, and much of that cost will inevitably be borne by Medicare and Medicaid. Yet major challenges loom.

As the Dean of Columbia University’s Mailman School of Public Health, I have dedicated my career to the health of populations, using science and evidence to transition to a world where health and health care are collective priorities for all. My research and that of others suggests that this situation can be improved, but it will require a major national strategy and commitment to invest in public health – one that can be highly cost-effective.

Just the facts

Take, for example, the toll of chronic disease in the U.S. As of 2012, about half of adult Americans were living with one or more chronic health conditions, according to the Centers for Disease Control and Prevention, and one in four adults had two or more. Treating people with chronic diseases accounts for most of our nation’s health care costs. Eighty-six percent of the nation’s annual health care expenditures are for people with chronic and mental health conditions.

This problem will only grow as the U.S. population increases. And the census projects that the population will increase by 98 million between 2014 and 2060.

At the same time, America’s crumbling infrastructure is putting many Americans’ health at risk. The country’s drinking water systems, which are foundational to health, received a D grade on the 2017 Infrastructure Report Card of the American Society of Civil Engineers. Hazardous waste management and wastewater treatment earned only D+ grades.

The connection between health and infrastructure is strong: Infrastructure greatly affects access to healthy lifestyles. While access to clean drinking water and waste treatment are paramount, there are other examples, too.

Sidewalks and bike lanes encourage physical activity; public parks provide space for exercise and rejuvenation; and public transit is crucial to getting people out of cars, encouraging walking and, of course, reducing pollution and congestion. Subways and buses also enable older adults to reach needed services and remain in their homes longer.

Improvements to infrastructure are typically one-time expenses with recurring benefits. For example, one new sidewalk benefits an entire generation of walkers and runners. Research shows that every $1,300 New York City invested in building bike lanes in 2015 provided benefits equivalent to one additional year of life at full health over the lifetime of all city residents.

Other studies also have shown that preventing illness is far less expensive than paying for treatment. Trust for America’s Health estimates that “an investment of $10 per person per year in proven community-based programs to increase physical activity, improve nutrition, and prevent smoking and other tobacco use could save the country more than $16 billion annually within five years. This is a return of $5.60 for every $1.” With ever-rising health care costs, how can we overlook such opportunities?

Prevention policies and cessation help

The focus of American health care and health-related research needs to be shifted to include prevention, not just treatment. The “Cancer Moonshot,” which has strong bipartisan support, is a vital step in this direction, providing $1.8 billion in funding over seven years.

Cancer prevention must be a high priority, and the success of this effort could inspire a national consensus around future commitments to tackle other diseases and conditions.

Another prevention priority should be healthy aging. Today there are more than 46 million Americans aged 65 years or older; and by 2060, the number of seniors is expected to more than double, according to the Department of Health and Human Services and the Census Bureau. Promoting healthy aging for older Americans should, therefore, be paramount.

And healthy aging begins far earlier than 65 or 70. Obesity, in particular, may be determined in early childhood, even before. According to research by my Mailman School colleague Andrew Rundle, prenatal exposure to air pollution raises risk for obesity in childhood. His research shows that children who are overweight or obese at age five are more likely to be overweight or obese by age 50. We also know that these adults, and increasingly children too, will be more likely to have diabetes, high blood pressure and high cholesterol.

Efforts at smoking cessation should also be increased. The total economic cost of smoking in the United States is more than $300 billion a year in direct medical care and lost productivity, according to the CDC.

That’s more than we’re spending on the Cancer Moonshot annually.

Thinking big

America has extraordinary research capability. The NIH invests nearly $32.3 billion annually in medical research for the American people. Targeted cancer therapies, for instance, are the focus of much anticancer drug development, according to the National Cancer Institute. Precision Medicine is a top priority at the NIH and other research agencies. Even at $32 billion, Americans are investing in the NIH only 1 percent of what we spend on health care annually. The U.S. should build its advantage by increasing research funding to enhance the potential of breakthroughs in preventing known diseases as well as future threats.

There is reason for optimism. The good news stems in large part from the fact that chronic diseases and conditions – such as heart disease, stroke, cancer, Type 2 diabetes, obesity and arthritis – are among the most preventable of all health problems. At least half of these diseases could be prevented, and we are making strides. Death rates from heart disease, the No. 1 cause of death in America, have been reduced by nearly half, for instance, since 1990, according to the American Heart Association.

The growth and aging of the U.S. population and the epidemic of chronic diseases and conditions pose major challenges for America’s health care costs, no matter how health care is constructed. But a relentless focus on public health – and disease prevention in all its dimensions – is the best way to reduce pressure on costs.

One in eight American adults is an alcoholic, study says

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new study published in JAMA Psychiatry this month finds that the rate of alcohol use disorder, or what’s colloquially known as “alcoholism,” rose by a shocking 49 percent in the first decade of the 2000s. One in eight American adults, or 12.7 percent of the U.S. population, now meets diagnostic criteria for alcohol use disorder, according to the study.

The study’s authors characterize the findings as a serious and overlooked public health crisis, noting that alcoholism is a significant driver of mortality from a cornucopia of ailments: “fetal alcohol spectrum disorders, hypertension, cardiovascular diseases, stroke, liver cirrhosis, several types of cancer and infections, pancreatitis, type 2 diabetes, and various injuries.”

Indeed, the study’s findings are bolstered by the fact that deaths from a number of these conditions, particularly alcohol-related cirrhosis and hypertension, have risen concurrently over the study period. The Centers for Disease Control and Prevention estimates that 88,000 people a year die of alcohol-related causes, more than twice the annual death toll of opiate overdose.

How did the study’s authors judge who counts as “an alcoholic”?

The study’s data comes from the National Epidemiologic Survey on Alcohol and Related Conditions (NESARC), a nationally representative survey administered by the National Institutes of Health. Survey respondents were considered to have alcohol use disorder if they met widely used diagnostic criteria for either alcohol abuse or dependence.

For a diagnosis of alcohol abuse, an individual must have exhibited at least one of the following characteristics in the past year (bulleted text is quoted directly from the National Institutes of Health):

  • Recurrent use of alcohol resulting in a failure to fulfill major role obligations at work, school, or home (e.g., repeated absences or poor work performance related to alcohol use; alcohol-related absences, suspensions, or expulsions from school; neglect of children or household).

  • Recurrent alcohol use in situations in which it is physically hazardous (e.g., driving an automobile or operating a machine when impaired by alcohol use).

  • Recurrent alcohol-related legal problems (e.g., arrests for alcohol-related disorderly conduct).

  • Continued alcohol use despite having persistent or recurrent social or interpersonal problems caused or exacerbated by the effects of alcohol (e.g., arguments with spouse about consequences of intoxication).
“Facing Addiction,” a report, pulls together the latest information on the health impacts of drug and alcohol misuse, as well as on the issues surrounding treatment and prevention. (Department of Health and Human Services)

For a diagnosis of alcohol dependence, an individual must experience at least three of the following seven symptoms (again, bulleted text is quoted directly from the National Institutes of Health):

  • Need for markedly increased amounts of alcohol to achieve intoxication or desired effect; or markedly diminished effect with continued use of the same amount of alcohol.

  • The characteristic withdrawal syndrome for alcohol; or drinking (or using a closely related substance) to relieve or avoid withdrawal symptoms.

  • Drinking in larger amounts or over a longer period than intended.

  • Persistent desire or one or more unsuccessful efforts to cut down or control drinking.

  • Important social, occupational, or recreational activities given up or reduced because of drinking.

  • A great deal of time spent in activities necessary to obtain, to use, or to recover from the effects of drinking.

  • Continued drinking despite knowledge of having a persistent or recurrent physical or psychological problem that is likely to be caused or exacerbated by drinking.

Meeting either of those criteria — abuse or dependence — would lead to an individual being characterized as having an alcohol use disorder (alcoholism).

The study found that rates of alcoholism were higher among men (16.7 percent), Native Americans (16.6 percent), people below the poverty threshold (14.3 percent), and people living in the Midwest (14.8 percent). Stunningly, nearly 1 in 4 adults under age 30 (23.4 percent) met the diagnostic criteria for alcoholism.

Some caveats

While the study’s findings are alarming, a different federal survey, the National Survey on Drug Use and Health (NSDUH), has shown that alcohol use disorder rates are lower and falling, rather than rising, since 2002. Grant says she’s not sure what’s behind the discrepancies between the two federal surveys, but it’s difficult to square the declining NSDUH numbers with the rising mortality rates seen in alcohol-driven conditions like cirrhosis and hypertension.

separate study looking at differences between the two federal surveys found that the disparities are probably caused by how each survey asks about alcohol disorders: It found that the NESARC questionnaire used in the current study is a “more sensitive instrument” that leads to a “more thorough probing” of the criteria for alcohol use disorder.

If the more sensitive data used in the current study is indeed more accurate, there’s one final caveat to note: The study’s data go only through 2013. If the observed trend continues, the true rate of alcoholism today would be even higher.

What do the researchers think is driving the increase?

“I think the increases are due to stress and despair and the use of alcohol as a coping mechanism,” said the study’s lead author, Bridget Grant, a researcher at the National Institutes of Health. The study notes that the increases in alcohol use disorder were “much greater among minorities than among white individuals,” likely reflecting widening social inequalities after the 2008 recession.

“If we ignore these problems, they will come back to us at much higher costs through emergency department visits, impaired children who are likely to need care for many years for preventable problems, and higher costs for jails and prisons that are the last resort for help for many,” University of California at San Diego psychiatrist Marc Schuckit said in an editorial accompanying the study.

Trump’s $4.1 trillion budget: 9 healthcare takeaways

http://www.beckershospitalreview.com/finance/trump-s-4-1-trillion-budget-9-healthcare-takeaways.html

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President Donald Trump’s first full budget proposal will include $3.6 trillion in spending cuts to balance the budget in the next decade.

Although the full $4.1 trillion budget plan, titled “A New Foundation for American Greatness,” will be released Tuesday, Office of Management and Budget Director Mick Mulvaney briefed White House reporters Monday on the budget.

Here are nine of the key proposals related to healthcare in President Trump’s budget proposal for fiscal year 2018, which begins Oct. 1.

1. Medicaid cuts. President Trump’s budget includes $610 billion in Medicaid cuts over 10 years. The reduction is in addition to the $839 billion pulled from Medicaid under the proposed American Health Care Act, the ACA repeal and replacement bill that phases out Medicaid expansion, according to The Hill.

2. Repeal and replace the ACA. The budget assumes passage of the AHCA. The Trump administration expects to save $250 billion over 10 years by repealing and replacing the ACA. These savings are in addition to the $610 billion in proposed Medicaid cuts in the budget, according to The New York Times.

3. Medicare unscathed. The budget makes no changes to the Medicare program or to core Social Security benefits, two programs President Trump vowed during his campaign to leave alone, according to The Hill.

4. Reduction in CHIP funding. Under the budget, $5.8 billion would be cut from the Children’s Health Insurance Program over 10 years, according to a budget document posted by The Washington Post.

5. NIH funding cut. Under the budget proposal, the National Institutes of Health budget would be reduced from $31.8 billion to $26 billion, according to The Washington Post.

6. Cuts to CDC funding. Several CDC programs would be hit with cuts under the budget proposal. One of the biggest cuts is to the agency’s chronic disease prevention programs, which would have funding reduced by $222 million, according to The Washington Post.

7. Veterans Choice Program extended. The budget calls for extension of the Veterans Choice Program, which allows veterans to go outside of the Veterans Affairs system for care. Under the budget, $29 billion more would be spent on this program over 10 years, according to The New York Times.

8. Medical malpractice limits. The budget includes medical malpractice reforms, such as capping awards for noneconomic damages, that are intended to reduce the practice of defensive medicine. The Trump administration expects these changes to save Medicare $31 billion over a decade, according to The New York Times.

9. Funds substance abuse treatment. The budget would allocate $500 million to expand access to treatments, including medication-assisted treatment, for those suffering from opioid addiction. The budget also includes $1.9 billion in block grants for states to use for substance abuse treatment and $25 million for the Substance Abuse and Mental Health Services Administration for expanding access to critical interventions. SAMHSA would also receive an additional $24 million to equip first responders with overdose reversing drugs.