Reference Pricing in Germany: Implications for U.S. Pharmaceutical Purchasing

Reference pricing for pharmaceuticals


  • Issue: The German health care system resembles that of the United States in important ways — it is financed by multiple private payers and relies principally on negotiation rather than regulation to establish prices. New drugs that offer minimal benefits compared with existing alternatives within a therapeutic class are subject to reference pricing; those with incremental benefits are subject to price negotiations. Together, the reference and negotiated pricing systems have held German prices substantially below U.S. equivalents.
  • Goal: To describe the German reference-pricing system and compare it to tiered formularies and consumer cost-sharing in the United States.
  • Methods: Document review and interviews with leaders in payer, policy, and pharmaceutical industry organizations in Germany.
  • Key Findings and Conclusions: The German pharmaceutical pricing system uses modest levels of consumer cost-sharing to influence consumers’ choices for drugs with therapeutically equivalent alternatives. Manufacturers are free to set the prices of their products, but insurers will not pay more for a new drug than for its comparators unless it offers an additional clinical benefit. For drugs covered by reference pricing, the insurers’ payment maximum is set at a level that ensures sufficient choices of low-priced options. These models offer an alternative to the U.S. system of tiered formularies.


In reference pricing — a component of health insurance design — a health care purchaser establishes a maximum payment it will contribute toward covering the price of a drug. It is used when there is a wide variation in the prices for therapeutically similar products. The payment limit is set at the minimum, median, or other point along the range of drug prices within a therapeutic class. If a patient’s physician prescribes a drug with a price at or below the reference limit, the patient pays only a modest copayment. If a more expensive option is selected, he or she pays the copayment plus the full difference between the reference limit and the price of the chosen product.

Reference pricing offers several advantages over the most commonly used insurance designs in the United States, such as annual deductibles and coinsurance, which expose consumers to financial obligations without providing an affordable option or guidance on how to select products offering the best value. To date, however, reference pricing has been applied only by a limited number of purchasers and only to drug classes that feature multiple generic or therapeutically equivalent alternatives. For these therapeutic classes, it can reasonably be assumed that all products work similarly. Purchasers can limit their payments to the level charged for the cheaper products in each class and patients desiring a higher-priced option reasonably can be required to pay the difference themselves. Patients with physician-identified clinical needs for higher-priced options can be granted an exception.

In its efforts to improve the effectiveness and efficiency of pharmaceutical purchasing, the U.S. can learn from Germany, which manages traditional drugs using reference pricing and novel drugs using comparative-effectiveness pricing. Germany has developed evidence-based methods to assess the clinical benefit of new products, establish reference-based payments for drugs that do not offer incremental benefits over existing products, and negotiate new prices for drugs that do offer incremental benefits.1 This approach enjoys considerable social legitimacy as a mechanism for ensuring patient access while moderating payer expenditures.

The health care system in Germany resembles that of the U.S. in several important respects yet differs in others. (See box.) Both feature multiple nongovernmental insurers rather than a single governmental payer, favor negotiation over regulation for determining prices, enjoy declining expenditures for many traditional, nonspecialty drugs but face rising expenditures for novel specialty products, and are embedded in a culture that values patient access to even the most expensive treatments. However, in Germany, the clinical assessment of each new drug is centralized and the negotiation of drug prices is done collectively by the umbrella organization of health insurers, rather than by each insurer individually. This issue brief describes the structure of drug assessment and pricing in Germany and its potential applicability to the U.S. market.2



In Germany, reference pricing falls within an institutional system that features publicly regulated and accountable associations of insurers, physicians, and other stakeholders. Statutory and case law establish the rules governing interactions among these entities, and the Ministry of Health continuously monitors and supports their processes. But the government does not directly assess the comparative clinical benefit of new drugs or negotiate their prices. In this regard, it resembles the U.S. framework more than other European systems where the heavy lifting in pharmaceutical cost control is done directly by governmental payers.

The German institutional framework does differ from its U.S. counterpart in important respects. The organization that assesses the comparative clinical performance of new drugs, the Federal Joint Committee (GBA), consists of representatives of the national insurance, physician, and hospital organizations. Patient advocacy organizations have nonvoting seats on the board. The GBA, in turn, delegates the clinical evaluation of new drugs to a privately governed but publically accountable entity, the Institute for Quality and Efficiency in Health Care (IQWiG). IQWiG bases its evaluations on: dossiers submitted by manufacturers, which include a systematic review of the incremental benefit of the drug; the clinical trials for initial market authorization by the European Medicines Agency, as well as other clinical trials; reports by technology assessment agencies in other nations; and other available evidence. GBA then makes its official assessment of each drug’s contribution based on the IQWiG study, further input from the manufacturers, and follow-on testimony at public meetings.

The GBA assessments are used by the umbrella organization of Sickness Funds, the GKV-SV. The GKV-SV works within a statutory and regulatory framework that assigns it special rights and responsibilities, and interprets its role as negotiating the best prices from the point of view of the health system, and not merely that of its constituent insurers.


Assessment of Comparative Effectiveness

In the German pharmaceutical system, new drugs are assessed and priced relative to existing treatments for the same conditions. Drugs that offer additional clinical benefits are paid higher prices; reference pricing is applied to new drugs with clinical performance similar to products already on the market. Comparative-effectiveness pricing applies to new products that perform better than their comparators.

All drugs authorized for market access by the European Medicines Agency (EMA) are immediately available after launch for physicians to prescribe and patients to use. The manufacturer unilaterally sets the new drug’s price at time of launch and is reimbursed in full at that price for the drug’s first year. During this first year, an assessment is conducted of the drug’s comparative clinical safety and efficacy by the Federal Joint Committee (GBA), a self-governing but publicly accountable entity representing associations of nongovernmental insurers (also known as “Sickness Funds”), physicians, and hospitals.

The GBA makes several important decisions regarding the assessment of each drug’s incremental benefit, with input from the Institute for Quality and Efficiency in Healthcare (IQWiG), the pharmaceutical manufacturer, relevant medical associations, patient advocacy organizations, and other interested entities. First and often most importantly, GBA decides which drug will be used as the comparator against which the new product is to be assessed; a drug treating multiple indications may have multiple comparators. If the new drug is found to offer incremental benefits, its price will be negotiated upwards from the comparator’s price, and so the manufacturer has an interest in having the GBA select a high-priced comparator. However, if GBA picks as the comparator a drug with high price but also high efficacy, the new drug faces a more difficult challenge in demonstrating incremental benefit. A finding of no incremental benefit leads to the drug being assigned to a therapeutic class subject to reference pricing. All products are reimbursed at a level based on the lowest prices charged within the class, if it falls within a therapeutic class for which reference prices have been established. If the new drug is found not to offer an incremental benefit but also does not fall into a reference-priced therapeutic class, its price is subject to negotiation with the proviso that the negotiated price not exceed that of its comparator drug.

Second, the GBA chooses the metrics that will assess the new drug’s benefit. These metrics may differ from those used by the EMA, the European equivalent of the U.S. Food and Drug Administration (FDA), in its review of the drug for initial market authorization and for which the manufacturer has conducted clinical trials. In some cases, GBA has rejected metrics acceptable to EMA, such as “progression free survival” for cancer drugs, as it deems them not relevant to the patient’s quality of life. Progression free survival indicates how many months the patient survives posttreatment without an increase in the size of his or her tumors. This metric is correlated with the more important overall survival metric, which indicates the number of months the patient remains alive posttreatment, but is often not correlated with patient quality of life. In other cases, GBA has required that pharmaceutical firms provide metrics that EMA does not require, principally quality-of-life indicators such as change in pain and nausea.

The GBA delegates the clinical evaluation of the new drug to IQWiG,3 which considers the portfolio of evidence used for market authorization by EMA plus other studies conducted by the manufacturer. The final assessment of the drug’s benefit then is decided by the GBA. Drugs can be judged by the GBA to offer a major, substantial, minor, positive but nonquantifiable, or no incremental benefit, relative to the comparator treatment. The nonquantifiable benefit is used when the drug is considered likely to offer incremental benefit but lacks sufficient evidence for a confident judgment of the scale. Orphan drugs, which often have no direct comparator and for which the clinical evidence may be based on very small patient samples, usually are awarded a nonquantifiable benefit. The GBA also evaluates the strength of the available evidence (weak, moderate, or strong). The clinical benefit of a drug can be reassessed by GBA in response to changes in the available evidence, sometimes triggering a renegotiation of the price.


If the GBA considers a drug not to offer an incremental benefit over existing treatments, it usually assigns it to one of the therapeutic classes covered by reference pricing. Manufacturers are permitted to set whichever price they feel is appropriate for drugs falling into these classes, but the umbrella organization of health insurers (GKV–SV) establishes a limit to what individual insurers will contribute toward payment. The GKV–SV sets its payment limit near the 30th percentile in the distribution of prices within each therapeutic class, high enough to ensure that patients have more than one choice but low enough to ensure that the payer is not responsible for paying the highest prices within the class. Most generic drugs fall into the reference pricing system. Approximately 34 percent of drugs, 80 percent of prescriptions, and 33 percent of drug spending in Germany is for drugs subject to reference pricing.4

Patients must pay out of pocket the difference between the price set by the manufacturer and the reference-based reimbursement limit set by the purchaser organization. Many patients are unwilling to contribute out of pocket and prefer drugs priced below the reference limit and their physicians will prescribe drugs at or below the limit. Of products subject to reference pricing, approximately 84 percent are priced by their manufacturers at or below the reference price limit and therefore not subject to additional cost-sharing.5 These products make up 92 percent of all prescriptions made for reference-priced drugs. Manufacturers can submit new prices up to twice a month for drugs in the reference pricing system. The umbrella organization of insurance firms is required to update the therapeutic classes every quarter and the payment limits at least annually. Manufacturers are permitted to lower their prices to the reference limit to avoid the otherwise inevitable reduction in sales volume; many do.

For drugs included in the reference pricing system, patients may be required to pay additional copayments, depending on which drug they select in consultation with their physicians. Patients selecting a drug priced above the reference maximum for their class contribute a copayment plus the difference between their drug’s price and the reference maximum. These extra copayments do not count toward the patients’ annual out-of-pocket cost-sharing maximum. However, the extra copayments are modest, since most of the drugs included in the reference pricing system are older, generic medications with typically low prices. For drugs not included in the reference pricing system, German health insurers require patients to pay the cost-sharing amount only.

Aside from the requirement that patients pay the difference between the reference limit and the full price of a product, which applies only in contexts where the patient can choose a low-priced option, Germany places tight limits on patients’ out-of-pocket financial responsibilities. The statutory copayment ranges from a minimum of EUR 5 to a maximum of EUR 10 per prescription, up to an annual out-of-pocket maximum (for all health care services) of 1 percent of gross income for people with chronic diseases and 2 percent for others. Approximately one-quarter of enrollees also have complementary private insurance, which covers these cost-sharing requirements.6


If a new drug is judged by the GBA to offer an incremental benefit over existing treatments, it is referred to the GKV–SV for price negotiations with the manufacturer. The insurer umbrella association uses the GBA’s assessment of clinical benefit, as well as the prices of the comparator drug, therapeutically similar medications, and prices charged in other European nations to negotiate a discount off the new drug’s launch price.

Some drugs are judged by the GBA not to offer an incremental benefit yet do not fall into an existing reference-priced therapeutic class, as there must be at least three therapeutically equivalent drugs to constitute a class for reference pricing. These drugs also have their prices negotiated between the manufacturer and the insurer association, but with the proviso that the price of the new drug cannot exceed that of the comparator product chosen by the GBA.

If negotiations between the insurer umbrella association and the drug manufacturer do not conclude with a price agreeable to both sides, the drug is referred to arbitration. In this process, a three-person panel selected by the manufacturer, the insurance organization, and the GBA assesses the evidence and renders a decision. Through the end of 2017 one of five (35 of 186) new drugs assessed by the GBA received a final price through arbitration rather than negotiation; for another 24, the negotiating parties reached an agreement after an arbitration process had been initiated.7

If a manufacturer cannot obtain an acceptable price either through negotiation or arbitration, it can withdraw its product from the market. Between 2011 and 2017, 148 drugs were subjected to comparative-effectiveness assessment and had their prices negotiated by the insurers and manufacturers. Of these, 29 were removed by the manufacturer from the German market by 2018.8 For 12 of these, the manufacturer chose to withdraw the product immediately following the results of the GBA evaluation — this is known as “opting out” of the pricing process. In 16 cases, drugs were withdrawn in reaction to the determined price, mainly through arbitration, and one was withdrawn because its manufacturer went bankrupt.9

Lessons for the United States

The German system uses modest levels of cost-sharing as an instrument to influence consumer choices for drugs with therapeutically equivalent alternatives. However, it does not apply cost-sharing to new drugs that lack alternatives. Comparative-effectiveness pricing is used for new specialty medications that offer clinical benefits over existing treatments. Manufacturers are free to set the prices of their products, but insurers will not pay more for a new drug than for its comparators unless it offers an additional clinical benefit. For drugs covered by reference pricing, the insurers’ payment maximum is set at a level that ensures sufficient choices of low-priced options. These models offer an alternative to the U.S. system of tiered formularies.

In the United States, the level of cost-sharing and the resulting financial burden on patients is high, especially for patients with complex medical conditions. U.S. payers often impose modest copayments on low-cost drugs with many direct substitutes but onerous coinsurance on high-cost drugs with few substitutes. Coinsurance does not point the patient toward the most cost-effective drug choices. In contrast, insurance designs built on reference pricing identify drugs that are priced below the insurer’s payment maximum and require only minimal cost-sharing.




Florida wipes inspections of troubled nursing homes from its website

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On a good day, Olga Vasquez would dress up in the morning, apply makeup and stand in the hallway at her Hialeah Gardens nursing home, helping other residents get in and out of wheelchairs or offering unsolicited advice. On a bad day, her depression got the best of her and she would remain in bed in her nightgown.

May 31, 2012, was a very bad day.

Vasquez — who hadn’t seen a psychiatrist in weeks despite instructions to the contrary — hoisted herself out of the window of Room 310, and hurled herself to the concrete courtyard 39.4 feet below.

This is the type of thing you might want to know about before your mom, dad or spouse moves into a nursing home. And such documented events were readily available on the website of state health regulators.

They aren’t anymore — part of the latest erosion in what is supposed to be ready access to public records in Florida.

 A little under three months ago, the state scrubbed its website. No longer can you go online and view the 83-page report that found Vasquez’s death to be the result of misconduct and that determined other residents of Signature Healthcare of Waterford were in “immediate jeopardy.”

The document can still be obtained from the state Agency for Health Care Aministration, although you have to know what to ask for and whom to ask — and you may be required to pay and wait. Online, AHCA now refers consumers to a separate website managed by the federal Centers for Medicare and Medicaid Services, though that site does not include as much material as the state previously provided. AHCA does maintain spreadsheets online that rate homes on a host of criteria, and allow consumers to compare.

For many years, AHCA’s website included links to inspections of nursing homes, retirement homes and hospitals. They were available with a few keystrokes with very few redactions. The agency then began to heavily redact the reports — eliminating words such as “room” and “CPR” and “bruises” and “pain” — and rendering the inspections difficult to interpret for families trying to gauge whether a facility is suitable for a loved one. AHCA says the redactions were necessary to protect medical privacy, though patients were identified only by number. Vasquez was “Resident 239.”

Carmen Veroy’s 89-year-old parents, Libia and Gabriel Giraldo, survived the ordeal — but Veroy said she could not fathom the overheated conditions in the rehab center until her sister sent her a video of the hallway scene during a visit Tuesday night.

The Veroy Family

In the past year, the state spent $22,000 for redaction software that automatically blacks out words the agency says must be shielded from the public. Those same words were available on a federal website unredacted. Elder and open-government advocates said the newly censored detail did more to protect the homes than patients.

In September, 13 frail elders died miserable deaths at the Rehabilitation Center at Hollywood Hills in the sweltering aftermath of Hurricane Irma, which knocked out the home’s cooling system. The Miami Herald and other media wrote extensively about Hollywood Hills’ troubling regulatory history. And the Herald also reported on AHCA’s decision to heavily redact reports.

Soon after, with no announcement or notice, AHCA wiped its website clean of all nursing home inspections, shielding the industry to the detriment of consumers.

“I’m just stunned,” said Barbara A. Petersen, who is the president of the First Amendment Foundation in Tallahassee, an open-government group. “Government serves the people. They are doing a disservice, and one with potentially grave consequences.”

Barbara Petersen

Barbara Petersen, president of the First Amendment Foundation, a Tallahassee-based group that promotes open government, said the removal of online nursing home records makes it difficult for consumers to make informed choices.
Miami Herald file photo

In recent weeks, Petersen needed to find a nursing home for her 96-year-old father in Colorado. The assisted living facility where he lived had become inappropriate, and Petersen had only 48 hours to move him.

“If I was in that situation here, and I had to do that without the information that used to be online, I’d have to submit a public records request for it. And, as we know, it takes a long time for them to produce public records. Meanwhile, I’d be stuck with the hardest decision I’ve ever made in my life without any information.”

“We put a tremendous amount of trust in these homes, and we need to make the best decisions for our families. Honestly, this makes no sense,” Petersen added.

A spokeswoman for the healthcare agency said both AHCA’s website and the federal site at allow consumers to compare homes along a range of indicators, including quality of life, nutrition, dignity and abuse.

“AHCA goes above and beyond Florida law in the amount of information we make available online,” said spokeswoman Mallory McManus. “AHCA’s website allows consumers to compare nursing homes by their inspection rating. Consumers can search by county, Zip code and even by services offered at every nursing home in Florida. This gives families more information to make informed healthcare decisions for their loved ones.”

“In fact,” McManus added, “in 2016 won a Digital Government Achievement Award from the Center for Digital Government in the “Government-to-citizen State and Federal government” category, showing that Florida is a leader in getting information about healthcare facilities to consumers. is an excellent tool for consumers, and a national leader in transparency.”

The award was given before the state removed nursing home inspections from AHCA’s site.

The Herald was unable to speak with administrators at the Hialeah Gardens home. Representatives from the corporate Signature HealthCARE did not return requests for comment. McManus said health regulators removed the “immediate jeopardy” label from the nursing home days after Vasquez’s death after administrators demonstrated they had improved the home’s safety. “Our Agency expected quick action to remove the potential risk to others. During a revisit on July 5 [2012], it was determined that the facility had implemented measures that removed the threat of serious risk to patients,” McManus said.

“Our Agency held this facility accountable, and all deficiencies were corrected,” McManus said.

The home’s plan of correction included a long list of actions administrators took to improve safety, including a comprehensive review of all residents’ medical records, new policies to ensure doctors’ orders are carried out, better monitoring of the symptoms of psychiatric patients, and an audit of records for all patients on mental health drugs to “ensure that they were seen by the psychiatrist as ordered.”

Though reports on Vasquez’s death are no longer available on AHCA’s website — or that of the federal Medicare program — a copy of the inspection obtained by the Herald is heavily redacted. The words “neglect” and “abuse,” for example, are removed from one of the report’s findings — and the definition of abuse from the Florida statutes is redacted.

A separate 50-page AHCA report on the same incident recites a portion of Florida law: “[Redacted] means any willful act or [redacted] act by a caregiver that causes or is likely to cause significant [redacted] to a [redacted] adult’s physical, [redacted] or emotional health. [Redacted] includes acts and omissions.” The portion is drawn directly from the state’s elder abuse law, a public record, and is the definition of abuse.

AHCA’s move is far from the only restriction in what records the public can see. The Herald wrote about an emergency management plan from the Hollywood Hills rehab center that was filed with — and approved by — Broward County, which included portions that were copied and pasted from a prior year, and failed to say how residents would be kept cool during a power outage. Broward and Palm Beach counties then refused to release any plans, though both had originally said they were public record. Miami-Dade released 54 plans, all heavily redacted.

Vasquez, who migrated to Florida from Cuba, first began to suffer from depression about a decade before her death, when her husband died, relatives told the Miami-Dade Medical Examiner’s Office. “Due to her depression, she was placed in” the nursing home, the report said. In addition to depression, Vasquez also was diagnosed with anxiety, chronic insomnia, heart disease and hypertension.

AHCA’s report on Vasquez’s death, dated June 14, 2012, said the 82-year-old former factory worker last saw her primary psychiatrist on March 1, 2012, for treatment of clinical depression. Staff at Signature never told him, the report said, that Vasquez’s condition had worsened.

Vasquez, the report said, “was very depressed at times.”

Vasquez’s primary doctor had ordered a psychiatric consultation around April 30, 2012. But a constellation of lapses led to the home’s failure to ensure Vasquez actually was treated. The psychiatrist Vasquez was to see left the nursing home, a report said, and the nurse who was trying to help Vasquez never was told who would fill in. Meanwhile, a psychiatrist who regularly saw patients on Vasquez’s floor reported “he never saw [her] and [she] was not on his caseload.”

Complicating matters: there was a 15-day gap in nursing notes in Vasquez’s chart, the report said, and the home’s administrator told an AHCA inspector he “had no idea” why no notes were made during those two weeks.

AHCA concluded: “There was no documentation to demonstrate the [psychiatric] consultation was completed, as ordered.”

Three days before Vasquez died, the report said, she “was observed to be sitting in the hallway or lying in bed; she was not wearing any makeup, and the resident told [a nurse] she did not feel like doing anything.” Vasquez needed help to fill out her menus.

A short report from the Miami-Dade Medical Examiner said that, on May 31, 2012, a maintenance worker noticed that the window in Vasquez’s room was open. The widow was found in the courtyard underneath her bedroom window, 14 feet from the building. The medical examiner’s office ruled Vasquez’s death a suicide.

Six months before Vasquez plunged from her window, the U.S. Department of Housing and Urban Development faulted the home for failing to maintain the windows safely. Windows, HUD said, were secured only with screws, and a corrective action plan required Signature to install window locks within all residents’ rooms.

The AHCA report is unclear as to whether the windows in Vasquez’s room were fixed, though an unspecified relative told AHCA she had noticed the day before Vasquez died that “the window clamp was not in place.”

A Hialeah Gardens police report confirms some of AHCA’s account, noting Vasquez wasn’t breathing by the time she arrived at Palmetto General Hospital. A doctor pronounced her dead at 4 p.m.

Vasquez’s niece, Maria Salgado, who handled Vasquez’s affairs, told police she had been taking 10 medications for her depression, some of which are listed in the AHCA report, though the names and dosages are largely redacted.

Staff at the nursing home told Salgado that something happened to her aunt while she was walking in the garden — exactly what Salgado was told is redacted — according to the AHCA report.

Salgado, 53, called her aunt’s death and the ordeal that followed painful to talk about.

She felt very close to her aunt, she said.

“It was such a horrible time,” she said. With a long breath, she added, “I don’t want to relive it.”


To request an inspection report for a Florida nursing home, use this form and submit it to this web address. Here are tips from the Agency for Health Care Administration.

Everything You Wanted To Know About Your Health Plan (But Were Afraid To Ask)

Everything You Wanted To Know About Your Health Plan (But Were Afraid To Ask)

EL SEGUNDO,  CA - OCTOBER 14, 2014:  Pro Proposition 45 supporters delivered a wheelbarrow full of steer manure to the Blue Shield office on Sepulveda in El Segundo to protest ads against the proposition on OCTOBER 14, 2014.  (Photo by Bob Chamberlin/Los Angeles Times via Getty Images)

It can be well worth the effort to go up against your health plan if it denies you treatment you think you need.

That’s just one of the many lessons consumers can glean by using a new online tool unveiled today by the Department of Managed Health Care.

It shows that last year, nearly two-thirds of Anthem Blue Cross enrollees who filed an appeal with the department to challenge a denial of-care ended up getting the medical services they requested. The same was true in well over half of the appeals filed by people with Blue Shield of California coverage and 45 percent of cases involving members of Kaiser Permanente, the state’s largest insurer. In some of those cases, the insurer itself decided to reverse its decision.

The department’s “health plan dashboard,” which can be found on its website, contains information pertaining only to the plans it regulates. But those plans cover 25 million Californians — nearly three-quarters of the state’s insured population.

There are many other sources consumers can use to educate themselves about insurance plans, but the Department of Managed Health Care has a wealth of data that probably exceeds any other organization’s, said Betsy Imholz, director of special projects at Consumers Union, an advocacy group.

Imholz noted that many consumers are unaware of all the information available, and it is often difficult to understand. Reporting on quality and other aspects of health care is still in a developmental stage, she said. “But our hope is that data will become better and more accessible. “This [dashboard] is a good step.”

Could It Be Sepsis? C.D.C. Wants More People to Ask

Between one million and three million Americans are given diagnoses of sepsis each year, and 15 percent to 30 percent of them will die, Dr. Frieden said. Sepsis most commonly affects people over 65, but children are also susceptible. According to one estimate, more than 42,000 children develop sepsis in the United States every year, and 4,400 die.

Sepsis develops when the body mounts an overwhelming attack against an infection that can cause inflammation in the entire body. When that happens, the body undergoes a cascade of changes, including blood clots and leaky blood vessels that impede blood flow to organs. Blood pressure drops, multiple organs can fail, the heart is affected, and death can result.

“Your body has an army to fight infections,” said Dr. Jim O’Brien, the chairman of Sepsis Alliance. “With sepsis, your body starts suffering from friendly fire.”

Sepsis appears to be rising. The rate of hospitalizations that listed sepsis as the primary illness more than doubled between 2000 and 2008, according to a 2011 C.D.C. study, which attributed the increase to factors like the aging of the population, a rise in antibiotic resistance and, to some extent, better diagnosis.

Sepsis is a contributing factor in up to half of all hospital deaths, but it’s often not listed as the cause of death because it often develops as a complication of another serious underlying disease like cancer. So although death certificates list sepsis as a cause in 146,000 to 159,000 deaths a year, a recent report estimated that it could play a role in as many as 381,000.

Yet advocacy organizations say many Americans have never heard of sepsis and don’t know the signs and symptoms.

Failure to Improve Is Still Being Used, Wrongly, to Deny Medicare Coverage

For months, physical therapists worked with Mrs. Kirby, a retired civil servant who is now 75, trying to help her regain enough mobility to go home. Then her daughter received an email from one of the therapists saying, “Edwina has reached her highest practical level of independence.”

Translation: Mrs. Kirby wouldn’t receive Medicare coverage for further physical therapy or for the nursing home. If she wanted to stay and continue therapy, she’d have to pay the tab herself.

Medicare beneficiaries often hear such rationales for denying coverage of skilled nursing, home health care or outpatient therapy: They’re not improving. They’ve “reached a plateau.” They’re “stable and chronic,” or have achieved “maximum functional capacity.”

Deanna Kirby wasn’t buying it. “I knew they couldn’t refuse you, even if you’re not improving,” she said.

She’s right. A federal judge last month ordered the federal Centers for Medicare and Medicaid Services to do a better job of informing health care providers and Medicare adjudicators that the so-called improvement standard was no longer in effect.


Discussion on issues in adaptive design for clinical trials with Dr. Deepak L. Bhatt and Dr. Cyrus Mehta