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Samuel Shem, House of God (Quoting the Fat Man’s Laws)

On rounds a while back in the hospital, we had a patient who had come from ICU and was being cared for by our team. He was a little older than our average patient (he was in his mid 80s), a little sicker (his kidneys and liver were failing), and a lot scared (I don’t want to die, doc. I want to feel better. I want to go back to how I was. Don’t let me die). He was getting a lot of blood draws, had a catheter in, and was getting IV fluids and a strong diuretic. Thanks to “big data” we now have calculators that we can plug in certain data and determine the likelihood of the patient being alive at 3 months, 6 months, and a year. In this patients case, there was a 50% chance that he would be alive in 3 months. As much as I wanted to, I was not ever going to be able to put him back together. I was also sure that he would have at least one or maybe two more trips to the ICU before he died. The sad thing is, those trips to the ICU might just cause him to die sooner.

Americans have believed that the US Healthcare system is the best in the world despite the fact that we consistently rank last among wealthy countries in almost every category measured. We are the most expensive in the world, spending twice what the next highest country spends.. It appears, that we have mistaken excess for quality. It also appears that we physicians are complicit in selling this belief to the public.

I often have patients say to me “do everything.” Often, they make that statement as the end of life is rapidly approaching. In this country, everything comes with a steep price-tag. Part of that price is monetary, For example we spend $1.25 billion in Medicare recipients for cancer care with 25% of that occurring in the last month of life. Part of that price is in shorter life-spans (from the Dartmouth Atlas):

Ironically, research has found that in patients with chronic illnesses, more aggressive interventions result in shorter life expectancy, probably because of the risks associated with hospitalization. This indicates that the best strategy for extending the life of people with chronic illness is to focus on those activities that provide a survival benefit – better control of blood pressure for people with diabetes, for example – rather than on “heroic” end-of-life care.

It turns out that the Fat Man was right. For a lot of people, symptom management (What would you like to be able to do?) with the reduction of aggressive care actually leads to a longer, better life.

What can you do? Take advantage of being well and determine what you would like others to do for you when you are sick. The CDC has some good information on advanced care planning. Only 20% of Americans have done so. If you suffer from chronic illness, have a conversation with your physician about what your expectations are regarding your last year. Only 25% of physicians report having such a conversation. Limit your care seeking behavior to what really is necessary. One in three Americans who die have seen over 10 physicians in the last 6 months and yet they still died (and perhaps sooner than they might have). When it is clear that a cure is not possible, seek symptom relief. Programs providing palliative care improve length and quality of life. In Alabama, only 20% of hospitals have such programs. Makes it hard to follow the Fat Man’s advice.


Why is our health care system so messed up? It would seem that the efficient delivery of health care could be accomplished with much less stress, muss, and bother. We have a defined population (Americans), we have measurable outcomes (infant mortality,  chronic illness care markers, cost of care, cost in last 6 months of life, etc), we have a defined delivery system run by a set of professionals who are licensed (physicians), and we have a physical infrastructure already in place (hospitals, offices, long term care facilities, etc). What’s the problem? To quote a post from the blog naked capitalism, in a post about the financial mess:

[O]pacity, leverage, and moral hazard are not accidental byproducts of otherwise salutary innovations; they are the direct intent of the innovations. No one at the major capital markets firms was celebrated for creating markets to connect borrowers and savers transparently and with low risk. After all, efficient markets produce minimal profits. They were instead rewarded for making sure no one, the regulators, the press, the community at large, could see and understand what they were doing.

In the words of health care analyst Paul BataldenEvery system is perfectly designed to achieve exactly the results it gets.” There is a lot of money in the current system, thus a lot of folks who want to keep the status quo.

Medicare, with the least opaque payment structure, is the most recent delivery payment vehicle to come under scrutiny by the pundits. A very efficient, though open ended system of paying for care through a fee-for-service model has been the hallmark of this program from the start. Congressman Paul Ryan has set his budget-cutting sights on this program (as I discussed here). This program, interestingly, is the one program where defined population (ALL Americans over 65), measurable outcomes, and existing resources would allow us to easily transition to more efficient, less expensive care.

The Affordable Care Act created a myriad of changes to the delivery system. It created incentives to improve the delivery of care, improvements to the delivery of information to those who pay the bills, and provided information that allows patients to become wiser care consumers. Surprisingly enough, it may now be working for Medicare, even before the provisions take effect:

While our elected representatives wrangle over slicing entitlements, virtually no one seems to be paying attention to an eye-popping fact: Medicare reimbursements are no longer accelerating at a break-neck pace. The new numbers should be factored into any discussion about healthcare spending:  From 2000 through 2009, Medicare’s outlays climbed by an average of 9.7 percent a year. By contrast, since the beginning of 2010, Medicare spending has been rising by less than 4 percent a year. On this,  both Standard Poor’s Index Committee and the Congressional Budget Office (CBO) agree. (S&P tracks healthcare spending with the help of Milliman Inc., an independent actuarial and consulting firm.)

Why? As pointed out previously, systems are designed to achieve the results they get:

Zeke Emanuel, an oncologist and former special adviser for health policy to White House Office of Management and Budget director Peter Orszag, is certain that this is what is happening.  When I spoke to him last week, Emanuel, said:  “This is not mere chance: this is directly related to the initiation of health care reform.”  It is  not the result of reform, Emmanuel emphasized.  The reform measures that will rein in Medicare inflation have not yet been implemented.  But, he explained, providers are “anticipating the Affordable Care Act kicking in.”  They can’t wait until the end of 2013: “They have to act today.  Everywhere I go,” Emanuel, added, “medical schools and hospitals are asking me, ‘How can we cut our costs by 10 to 15 percent?’”

Combine a change in incentives with increased transparency regarding insurance and perhaps we can continue achieving different results.

As a practicing physician, I have a love-hate relationship with Medicare Part D (the drug benefit). On the one hand, I feel a lot better taking care of folks who are on life-saving medication as opposed to problem solving with a combination of gimmicks (sample closets and discount programs) and compromise (if you don’t eat, you can afford to take this medicine which will buy you six months of extended life on average). The trade-off was that the pharmaceutical companies got a much larger payout than they should have, and Wal-Mart was about a year too late with their $4 plan, which would have been a much more effective way to purchase medications for Medicare recipients.

As I listen to the ongoing Medicare debate (and yell “The Affordable Care Act IS the Democrats’ plan!” at NPR) I am troubled by the statements that Medicare Part D should become the standard bearer for “competition” in health care delivery because it came in under projected budget. The meme is that the various national plans have worked to lower costs by creating educated consumers who have selected efficient, effective commercial plans  from among those available. I have found at least one explanation for my disbelief in that theory in a post by Edward Park at the Center on Budget and Policy Priority.

He points out that the reasons for this program coming in under budget are:

1) Drug costs are down due to a reduction in the new drug “output.” Turns out the pump was primed prior to 2004 with a lot of drugs to treat diseases for which there was previously no adequate treatment. These drugs accounted for a lot of the cost inflation early in the program, but now they have been released as generics. Folks aren’t using less medications, just more generics.Granted, this might be the market and more specifically the fear of the “doughnut hole,” but not a result of Health Springs vs United.

2) Lower than expected enrollment in the program. Turns out that the cheapest program is one that fewer people use than anticipated. It was thought that 96% of recipients would enroll. The actual number is 76%. There are actually a fair number of recipients who seem to only need the occasional Tylenol. Perhaps that’ll change with marketing.

In addition

there is evidence that, far from reducing costs, the use of private plans to deliver the Medicare drug benefit has increased costs.  Prior to the creation of Medicare Part D, Medicaid provided prescription drug coverage to “dual eligibles” — the low-income beneficiaries enrolled in both Medicare and Medicaid.  Then, starting in 2006, Medicare took over drug coverage for the dual eligibles.  When Congress enacted the Medicare drug benefit, it assumed that the private insurance companies that would participate in Medicare Part D would be able to negotiate larger discounts from drug manufacturers than those required under Medicaid.  In fact, however, research shows that the private insurers offering Part D coverage are getting significantly smaller discounts for drugs than the rebates that manufacturers are required to provide state Medicaid programs. One estimate found that drug prices, net of discounts, under Part D to be at least 20 percent higher than the estimated net prices that Medicaid pays.

Turns out, this is a very complex system.

I’m giving a talk tomorrow to the first year medical students about financing health care. This is a talk I give every year, takes about an hour and a half, and it will be all of the information they get on this topic from our medical school for the next 3 1/2 years. The talk tracks health care financing from no insurance to the development of private “insurance,” public payment,and proceeds to the system as it is evolving as a consequence of the Affordable Care Act.

If you’re interested in why things are as crazy as they are, I refer you to The Social Transformation of American Medicine. This book, written in the 1980’s, is still the best resource for this subject matter. Written with attention to context, Paul Starr discusses the transition from a cottage industry which relied on patients paying cash (or other medium of exchange) into, well,  a cottage industry where large swaths of the population did not have access to care. For those who were not independently wealthy, it became clear early on that they would need to pool their money so that when the odd really bad thing happened, there was sufficient money from those to whom bad things had not happened to cover the costs. This was how private insurance came about. For some reason, major population groups were given access to alternative types of care (veterans, railroad employees).

The elderly were a special case. It was clear that every elderly person would need the service (at the time of Medicare’s passage 1 in 6 elderly went into the hospital on an annual basis) and they voted. Congress reported more mail on the subject of elderly access to health care than any other subject. The AMA, according to Mr Starr, was loath to give up the cottage industry aspect for this population. As a consequence, the law accommodated the needs of the elderly (access) and the desires of organized medicine (maintenance of the status quo) for this group. I refer you to the CMS website if you want to see the convoluted consequences of these compromises.

The poor were also a special case. Under the cottage industry model, the poor were the responsibility of the community. Care was delivered in public hospitals, by religious orders, by physicians delivering charity care, or more likely not delivered at all. Congress felt that the care was needed but was unwilling to take total control away from the states. As a consequence, Medicaid developed with a minimum level of services but allowed states to provide more services. Payment was a state-federal partnership. Medicaid thus has no long-term constituency (no one sees themselves as poor forever although many see themselves as old forever) and tends to be targeted for cuts by every governor, regardless of political affiliation.

All of these programs were tweaked over the intervening half century. Medicaid began to focus more on children and mothers-to-be in most states. As more illness moved outside of the hospital and the elderly couldn’t afford the medications, prescription drug coverage was added to Medicare. Cost containment has been a problem from the start, both in government programs as well as the private programs.

The New Republic has an amazing series about how the sausage was made to put together the Affordable Care Act, found here (subscription required). It turns out it was no different from the passage of Medicare or Medicaid—with one notable exception. When Medicare was being considered, the elderly were mobilized to assure its passage. The Affordable Care Act, by contrast, is focused on those who currently have no coverage and are unlikely to vote. It is disliked by seniors, possibly due to deliberate mis-information, and they vote. Interestingly, despite a rough start 45 years later Medicare is very popular and performs very well (although somewhat more expensively than it needs to). It may be that once the smell and taste of sausage is in the air the Affordable Care Act will be popular as well.

When I give the talk to the students, they politely listen. Although I am not old enough to have cared for sick elderly folks that were hidden in the attic for fear of exposing the family to medical bankruptcy, I am old enough to have cared for elderly  folks who were hospitalized because they could not afford life-saving medication. I still care for folks who have no insurance, and I have to game the system to get them needed care. I don’t know that the students appreciate how much easier Robert Kennedy and Lyndon Johnson (Medicare, Medicaid), George W. Bush (Medicare prescription coverage, expansion of the Community Health Centers) and Barack Obama (Affordable Care Act) have made their lives.

The Wall Street Journal published a very good article several weeks ago about how payment is set for physicians provided clinical services. It does a good job of highlighting a little known aspect of care, the “fee schedule.” Historically, fees were set in a very disorganized fashion and the introduction of Medicare necessitated the creation of an infrastructure (one might even describe it as a bureaucracy) to establish a fair amount to pay physicians. Importantly, many other insurances use Medicare as a basis to set their rates. Over the years there has been much give and take regarding who can request payment for a certain procedure and what the payment should be. For as long as I have been a physician, my colleagues have complained about non-physicians determining who gets paid and how much. Turns out it’s been the physicians setting the rates all along. Reading this article will give those who want to allow physicians to police their own profession without non-physician oversight pause.

Much of the payment structure was established when physicians did a lot more in the hospital with only occasional tweaking over time. The payment was bundled, with each procedure having a pre-hospital component, a component in the hospital, and a post-procedure follow-up visit. This was supposed to even out (I suppose) unpredictable complications. In the interim, much of the care has moved away from the hospital but

For instance, one operation to treat male urinary incontinence wraps in payment for 118 minutes of hospital visit time after the day of surgery, though 2008 Medicare data show it is done around 80% of the time outpatient or in a doctor’s office. Stephanie Stinchcomb, manager of reimbursement for the American Urological Association, says the surgery used to be largely inpatient; its payment was last updated based on a RUC evaluation in 2003. It’s not clear if a new analysis will find doctors should now be paid less for it, she says.

It seems that the committee only moves in one direction

Out-of-whack Medicare doctor payments are supposed to be corrected in a required review every five years. MedPAC says in the three previous reviews, the RUC endorsed boosts for 1,050 services, and decreases for just 167. Many recommendations on which services to examine came from doctor societies. The upshot may be that payments don’t keep up with medical realities when procedures become easier or faster, MedPAC said.

And has ended up accomplishing one thing

A recent analysis for the Medicare Payment Advisory Commission, or MedPAC, a Congressional watchdog, calculated how much American doctors would make if all their work was paid at Medicare rates. It found that the primary-care category did the worst, at around $101 an hour. Surgeons did better, at $161. Specialists who did nonsurgical procedures, such as dermatologists, did the best, averaging $214, and $193 for radiologists.

These disparities have increased tremendously over the past decade. To be honest, I feel well compensated for what I do but I can guarantee you that students are well aware of the pay differential and it enters into specialty selection.

What should we do? One physician posted a comment

I don’t really understand this attack on medical specialists. I am one such physician and I can tell you that we serve a valuable role in the medical community. … Thus, I propose a different alternative. I believe the days of primary care physicians are coming to an end. Like the death of the dinosaurs. They will be replaced by lower cost medical providers like PAs and ARNPs most likely in the next quarter century. Perhaps PAs and ARNPs could serve as the hub/organizer to refer to the most appropriate specialist. This may save the system money. …. I am a big fan of primary care physicians but I still believe it is inevitable they will be extinct.

If you have read this blog, Josh Freeman’s blog, Paul Grundy’s work, or Barbara Starfield’s work you will know that this is not the case. This would, however, help certain physicians to maintain their income. As I have previously discussed, it will lead to more procedures on unsuspecting patients who are told that more is better. Let’s change the system instead, shall we?