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Archives for February 2013

More medical Monopoly: How Steve Brill got it wrong

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image credit: Alec
image credit: Alec

I talked about Steve Brill’s epic TIMEpiece Bitter Pill: Why Medical Bills Are Killing Us last week. I’m still absorbing the cost data he uncovered in that piece, and the graphics and images alone are worth the $5.99 cover price to get a physical copy of the magazine. The stories he shares about the healthcare industry’s Great & Powerful Oz – the hospital chargemaster price list – do reveal a big reason for the out-of-control price spikes in US healthcare.

As brilliant, informative, and galvanizing as Brill’s piece is, I believe he dropped the ball just short of the goal line when, in his wrap-up recommendations, he talks up solutions that nibble around the edges of the cost problem, but don’t address its core cause: our crazy 3rd-party payer system.

Take a walk with me through the hallways of US healthcare history. Here’s the timeline:

  • 1880s: Chloroform in use as surgical anesthesia (thank GAWD).
  • 1900s: The American Medical Association (AMA) becomes a big player.
  • 1900s: Doctors no longer work fee-free in US hospitals (see bullet #2).
  • 1910s: America lagging behind European nations on health insurance (already?).
  • 1920s: Political complacency (must have been all the bathtub gin) leads to a “what, me worry?” attitude toward rising medical costs.
  • 1930s: Oops, we broke the stock market. Blue Cross, against insurance industry advice, starts offering hospital insurance coverage.
  • 1940s: Stiff wage controls in WWII defense plants lead to employers offering health insurance to their factory workers. President Truman draws up national health insurance plan, gets beat up on the White House lawn by Congress.
  • 1950s: Pharma industry becomes big player via antibiotic and vaccine development, along with meds for a variety of illnesses. Lots of proposals for national health plan, all get beaten up in public and sent home. Employer-based group insurance plans, offering coverage for “major medical” (hospitalization), become the norm.
  • 1960s: First incidence of the idea of a “doctor shortage”. Hospital costs have doubled since the last decade. Specialist MDs now are 70% of working doctors. Medicare becomes law.
  • 1970s: First HMOs established (rending of garments and gnashing of teeth followed swiftly behind). Medicare expenditures are growing faster than predicted. President Nixon proposes national health plan, gets beaten up on the White House lawn by Congress, complains about it on Watergate tapes. Starts “War on Cancer” instead.
  • 1980s: In the Corporate Decade, corporations start to take over, consolidating hospitals and health systems. Medicare shifts to paying by diagnosis rather than by treatment, private insurers follow suit. Private insurers start complaining that “fee for service” is being exploited by healthcare providers, but say nothing about the corporatization of healthcare.
  • 1990s: Healthcare costs now increasing at double the rate of inflation. President Clinton attempts healthcare reform, gets beaten up on the White House lawn by Congress. 16% of US citizens now uninsured. The AMA starts up the RUC (Specialty Society Relative Value Scale Update Committee), a star-chamber group that sets pricing for medical procedures in secret and hands it to Medicare. Price-fixing? Nope, cause Medicare publishes the list, not the AMA.
  • 2000s: Medicare starts to be judged as unsustainable. The RUC is still working in secret. Healthcare costs rise 100% for the average family during the decade. Employer-based group health insurance faces economic challenges due to changing workforce demographics. Insurance premiums for health coverage double. Oops, we broke the stock market AGAIN.
  • 2010s: Obamacare passes. President Obama’s repeatedly beaten on the White House lawn by Congress, but he gets a few licks in himself. Obamacare is a fat, wet kiss on the lips for the insurance lobby; how it affects the rest of us is a still-open question. Word starts spreading about the RUC.

In Bitter Pill, Brill’s “big bad devil” is hospital profiteering via the chargemaster. He highlights the hospital lobby as the most politically powerful group in any Congressional district, and calls out the high salaries of hospital administrators as a big driver of overall healthcare costs. He also recommends that pharma patents should be limited in their blockbuster-drug Monopoly game, and that medical malpractice caps need to be put in place – both of which I agree with 100%. However, Brill reserves most of his bitch-slaps for hospitals, and the chargemaster.

I counter that the chargemaster arose as part of an overall structure problem in US healthcare: like the rest of US business, it’s bottom-line and shareholder-interest driven. Customers (commonly called patients) aren’t given a thought in the corridors of healthcare power other than as revenue units. And that’s because we aren’t directly paying the bills. It really is all about the Bens, and who hands them over, in a commercial transaction – healthcare, and everywhere else.

I’m not saying that doctors, and hospital administrators, need to work for minimum wage. Hell, I don’t think anyone should have to work for minimum wage – who could live on $7.75 an hour, which amounts to the princely gross sum of $310/week? What I do recommend is starting to put value into the equation for patients, not just for shareholders and employee bonus assessments. Healthcare customers – patients – need to be able to assess the value of the healthcare services they receive, beyond the fact that it might be saving their lives. Yes, that’s certainly a high-value item, but it’s not part of every healthcare encounter.

Making that value apparent will require putting customers – patients – at the table for all parts of the healthcare conversation. Starting with (and yes, I know I’m a broken record on this) asking, always and everywhere, “How much is that?” when making a healthcare decision. We also need to take a long, hard look at employer-based group insurance, and maybe put it out to pasture. I’m on record with my thoughts that we should all be buying our own insurance – when various groups shout about “job killers,” I wonder if they’ve ever had to buy group insurance for their employees. That’s a real job killer, right there.

Access to cost information, hand in hand with outcomes information (available on Leapfrog’s hospital safety app and other outcome-metrics reporting tools), will reveal the value of a service. That’s what will really reform the system: patients asking questions, and working to get the full answers to them. And killing off the RUC would be a great idea, too.

Otherwise, we might as well go beat ourselves up on the White House lawn – hey, the Secret Service might help us out if we do …

More Medical Monopoly [hotels everywhere!]

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medical monopoly image
image credit: James N. Vail

Last week’s post called medicine in the U.S. a monopoly. I took some heat for using that metaphor from some of my economist and journo colleagues, and realized that I needed to make a clarification: Medicine is a game of Monopoly, not a true economic monopoly. My very-snark-infested point was, and always is, that the pricing model in healthcare in this country is about as fair as a crap game or, yes, a round of Monopoly.

More grist for my point arrived this week in the form of a TIME special feature, Bitter Pill: Why Medical Bills Are Killing Us. In it, reporter Steven Brill (yes, that Steven Brill, Mr. CourtTV himself) walks the reader through the chaos behind a veil of secrecy that is healthcare pricing, starting with an under-insured man’s treatment at MD Anderson Cancer Center in Texas, which involved waiting – while wracked with the chills and fever caused by his non-Hodkin’s lymphoma – in a crowded hospital reception area until the check for his treatment cleared. He wound up having to use a credit card to pay $7,500 toward his medical costs before they’d initiate his chemotherapy. By the way, MD Anderson is a non-profit hospital. A close review of that man’s hospital bills revealed a 400% markup on many of the cancer drugs in his chemo treatments.

Another example in the TIME feature is one involving a $21,000 false alarm – a woman was having chest pain, and was taken by ambulance to a local hospital. After testing, it was discovered that she was suffering from indigestion. The Medicare billing for the trip would have been around 80% less than what the woman – who didn’t have insurance – was billed for the hospital visit. However, since she was 64, and not eligible for Medicare, she was billed $21,000. Yikes.

time cover image
image credit: TIME Magazine

At the root of the cost determinations in both of these cases is the hospital’s chargemaster list – the Great and Powerful Oz of that hospital’s billing structure. When pressed, hospital spokespeeps will say “no one pays those rates, they’re just a guideline” or “those lists have been around forever, we only use them as a reference” – but uninsured and under-insured people are asked to pay them. Hospital executive will also say that the pricing on the chargemaster list is justified by the fact that the hospital has to provide charity care to indigent patients. While it’s true that there are patients who can’t pay for the care they receive, the vast majority of patients are covered by either a private health plan, or Medicare, or Medicaid. The rates paid by those payers are negotiated with the hospitals. Why can’t an un- or underinsured person negotiate a fair cash price, too?

The TIME story is a great read – it’s long, but it’s worth every minute of the time it will take you to read it. One patient story that stood out for me: a union guy in his 30s, with severe back pain, was treated by having a spinal-nerve stimulation device implanted. An outpatient procedure, with the nickel-and-dime hospital chargemaster billing adding up to $87,000 – the device itself, which wholesales for $19,000, was billed to the patient at $49,237 – put the patient over his annual health insurance coverage limit of $60,000. He was on the hook for $47,000 of that bill. Again, yikes.

This trip down the medical billing rabbit hole pinged my radar in the same hour that a post by Brian Klepper on KevinMD.com did. It appears that the American Medical Association’s star-chamber price-setting committee, the RUC (about which I’ve ranted here before), has been given a pass by a federal appeals court in Georgia on having to hew to the same public-interest rules that govern other federal advisory groups. In other words, the AMA gets to continue to set healthcare prices by setting the dollar value assigned to each and every billing code in healthcare. Fox, meet henhouse. Again.

What was I saying about medicine not being a monopoly? Well, OK, it’s not a monopoly. But it’s sure as shootin’ a game of Monopoly, with hotels on every single street. And patients just have to keep paying up after every roll of the dice.

Medical Monopoly: Medicine has a major image problem

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medical monopoly image
image credit: Alec

When you hear the word “monopoly,” does it fill you with a warm and fuzzy feeling? (Unless you’re Hasbro, you really should say no, unless you’re a cyborg.)

Healthcare is a monopoly. We can’t DIY cancer treatment, or surgically repair a broken hip for ourselves, so we have to go to the medical-industrial complex to regain our health if we wander into the weeds, health-wise. We also have deep difficulty accessing pricing information. I’ve talked about that here and in even more depth on the Cancer for Christmas blog over the last few years. Maybe not a monopoly in the financial-reg sense of the word, but it sure is mighty like a game of Monopoly.

This “chaos behind a veil of secrecy” (all credit for that phrase belongs to healthcare economist Uwe Reinhart) has created the impression in healthcare customers that there’s no way to tell what something will cost before you buy it. You checks the box and takes yer chances. No Get Out of the Hospital Free cards. No pass-the-admissions-counter-collect-$200 option. That’s a rotten way to run a railroad (one of the original monopoly industries in US history), and an even worse way to run a hospital.

Dan Munro wrote about this, and the star-chamber cabal that actually sets the prices in healthcare, the RUC, on Forbes.com yesterday. I’ve talked about the RUC myself. And the search for price transparency, which seemed such an outlier activity just a couple of years ago, is now popping up in the Well blog on the New York Times site, as well as on Reuters. The Reuters piece has the addition bonus of quotes from my buddy Jeanne Pinder, founder of ClearHealthCosts.com. (Yesterday was a big day in medical price transparency.)

This is the central reason I registered the hashtag #howmuchisthat with Symplur, the healthcare hashtag registry. We all have to start demanding that prices be visible, and that the RUC stop cabal-ing around with our lives and our wallets. As more and more people are finding themselves with high-deductible health insurance, asking how much things cost before you make a healthcare decision will become the norm. If a healthcare provider can’t answer that question, s/he will find that s/he’s seeing the patient panel sinking fast, along with practice revenue.

Get with it, medicine. Remake your image, and your brand, to be clear as glass and user-friendly. Outcome metrics along with pricing would be really nice, too.