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Heart Failure: A Win-Win for Obamacare
One of the features we got when we got Obamacare was a new program aimed at reducing hospital readmission rates for various expensive diseases. The primary disease targeted by this new program was heart failure. Heart failure was chosen for the simple reason that spending on this condition accounts for 43% of all Medicare spending, which amounts to up to $38 billion each year.
Obamacare stipulated that hospitals that failed to sufficiently reduce the 30-day rate of readmission for their patients discharged with heart failure would be financially punished. This punishment was set at an amount equal to 3% of the hospital’s total annual Medicare payments. (That’s total Medicare payments for every Medicare patient, not just the ones with heart failure.) Given the shaky margins under which many hospitals operate, and given the size of their Medicare populations, this level of financial punishment was potentially not survivable. It was the medical equivalent of the NCAA death penalty.
So, the law did what it was intended to do. It put hospital administrators into a classic “whatever it takes” mode of operation. And the word went out from administrators to all the doctors (who, we must remind ourselves, are now largely under the pay of those selfsame administrators) that, no matter what, patients discharged from the hospital with heart failure are not to be readmitted, at least until Day 31.
Many techniques were rapidly deployed by physicians and institutions to carry out this prime directive, and too-many-to-count new companies sprung up overnight to sell hospitals various systems, strategies, and technologies to assist them in their efforts. Many of these efforts, in fact, addressed prior systematic shortcomings in the medical care of patients with heart failure, such as poor discharge planning, poor instructions, failed communications between discharging physicians and primary care providers, and failing to schedule follow-up visits. Other efforts took advantage of certain definitional loopholes (such as what constitutes an “admission” versus a period of “observation”).
Some good, I cheerfully agree, was accomplished by some of these efforts.
But, given the nature of the threatened punishment, and given the limited ability of such measures to reliably delay readmission, we must assume that other methods were used which are not discussed in polite society, or at all. Nobody ordered doctors directly and in plain language that they must never, ever readmit a heart failure patient until that mystical Day 31, no matter what. But then, nobody ordered certain retainers that they must kill Thomas Becket either.
On Nov 12, in the Journal of the American Medical Association, Gupta, et al., published an analysis of how well American hospitals have performed under this new law. The investigators analyzed data from 115,245 Medicare patients treated at 416 American hospitals. They report that the 30-day readmission rates from heart failure dropped from 20% prior to Obamacare to 18.4% afterward. This constitutes a substantial improvement.
However, Gupta, et al., also report that the 30-day post-discharge mortality rate for Medicare heart failure patients increased from 7.2% to 8.6% and that the one-year mortality rate increased from 31.3% to 36.3%. This increase in mortality reversed a decades-long trend toward improved survival in patients with heart failure.
My only quibble with Gupta, et al., is their suggestion that this increase in mortality is an unintended consequence of the new readmission program.
Nonsense. It is an entirely predictable and (I submit for your consideration) desired outcome.
Heart failure is usually a chronic, progressive condition that is very expensive and time-consuming to manage, and that almost invariably leads to early death. Major (and very, very expensive) advances in recent years in the treatment of heart failure have led to a substantial improvement in the quality of life of these patients and has somewhat prolonged their survival.
To a Medicare actuary, this means that people with heart failure (who, 20 years ago, would have taken digitalis and a diuretic — for pennies a day — and died within five years), are now living longer and consuming massive amounts of healthcare dollars while doing so.
While every patient is different, chronic heart failure tends to follow a pattern. Early in the condition, right after the diagnosis is made and initial therapy is instituted, patients tend to do quite well for a period of months or years. But as the underlying heart disease worsens, symptoms increase and hospitalizations become more frequent. As a result, when we are trying to prevent 30-day readmissions, we are generally dealing with a person who has had heart failure for some period of time, whose condition is becoming more severe, who is generally more brittle, and who is becoming more and more difficult to treat. Nonetheless, with careful and aggressive management (which may indeed include a number of hospitalizations in a relatively short period of time), these people can often be returned to a reasonably good quality of life for a while — until their next bout of deterioration.
It is entirely predictable that, when we pull out all the stops to delay readmissions until at least day 31 in such patients, we are likely to hasten death in some of them.
The data now bears this out, and any Medicare administrator who affects surprise or dismay at these results is trying to fool us. Contrary to any expressions of regret we might hear (though I have heard of none so far from government functionaries), this program is a raging success. Not only has it reduced short-term spending on hospital readmissions, but also it has reduced longer-term spending on chronic heart failure. It is a win-win.
I will admit to being wrong about this when Medicare apologizes and rescinds or substantially revises its readmission policy for heart failure. Even Henry II, after all, ended up giving public penance for the “unintended consequence” of his ill-considered words.
Published in Healthcare
I hope a black market develops. There should be two healthcare systems: one that the government is involved with and one that it is not involved with in any way.
Lots of people will die when they could have been saved in the system that existed in the 1980s. But what the heck, that’s happening with the new system.
I have said it several times, but I’ll say it again. Covert rationing — our chosen method for attempting cost control — absolutely demands opacity. Open, honest accounting would defeat the entire process.
I of course am not saying that any particular person or entity designed the accounting travesty to be like this; it evolved over a period of years, as new rules and regulations were progressively glommed on to the growing mess. No individual, anywhere, understands the system, or can figure out how much a particular medical procedure or service actually “costs.”
But this kind of accounting system is unbelievably helpful to our current healthcare system, and there is no real impetus to make it more transparent, or to simplify it in any way. You can hide a lot of covert rationing in these sorts of accounting “systems.”
Or as I’ve always put it, health care is a black hole down which you can pour any amount of money.
Serious question, as I’m not all that well read on the subject. How does this differ from the healthcare systems in countries like Canada? I would suspect that they are missing the “robust free market” part, or that they come to the US for that. And what would the role of private insurance be in such a system? Would this help restore the distinction between insurance and routine healthcare that we’ve lost? I agree that the challenge would be ensuring that the free market part of the plan exists without restriction. Too many people have come to believe the fiction that healthcare is a “right”.
Two points:
First, much of the pricing opacity and variation seems to be due not to rationing but the opposite: hidden cross-subsidies. At least some degree of overcharging is to compensate for other patients who are paying much lower prices for any number of reasons.
Second, I work with healthcare systems that practice “overt rationing” (my job is to get them to include high-priced drugs into their formularies). In many cases, the inherent complexity of any reasonable rationing scheme means that neither practitioners nor patients often understand whether a specific treatment is available or why a request for treatment is accepted or rejected. The (centrally-made) decision may be based on clear, consensus guidelines derived from evidence-based medicine, but the steps to the actual decision are so numerous that doctors often take the approach of “I have no idea whether this will get approved, let’s just send it to the government insurer and see what they decide”.
I still agree that we should prefer the “overt” to the “covert”. But overt is still pretty darn opaque…
As I understand it, in Canada they have a single payer system that purports to cover “everything,” but that rations by queue and by not approving certain expensive services. People are free to go elsewhere for care if they want, but I don’t believe there is an extra-governmental insurance (or care) option.
Under the system I have proposed, the “free” government care would be an explicitly openly rationed system. I.e., here’s a list of what we cover, and here’s a list of what we don’t. You citizens who want to be covered for more than what we cover can buy additional health insurance on the open market. These “new” insurance products would behave more like real insurance is supposed to behave, and would not cover any routine care.
And I agree with you that the idea that healthcare is a right is an extremely toxic idea, that virtually precludes any system that requires (or even allows) any degree of individual responsibility.
Hey Doc, thanks for taking your time to “speak” with us about this. Under your proposal, wouldn’t the “free”/government paid healthcare absorb all the inexpensive exams and procedures and thus leaving only the expensive stuff to be covered by private policies? Would those policies then become very, very expensive? Or is it that because private policies would not have to cover those areas of healthcare that may be cheap but are used by the vast majority of the population and therefore carry a hefty price tag for the insurance companies that they could avoid…keeping their costs in check and enabling a more affordable coverage for higher cost health issues needed by a far less extensive segment of the population? Has anyone done the actuary work on this?
Nobody has done any work on this. It’s just me shooting off my mouth.
But as I see it, the basic universal health plan would be under political pressure to cover as much stuff as the budget would allow. However, everything paid for would have to be covered by actual tax revenue, and not by deficit spending. So there would be political wrangling over what to cover, and lots of it. But the rationing would be there for all to see.
What is not covered by the universal health plan would be made explicit. So citizens could take the covered/not covered services into account as they choose whether or not to buy additional. health insurance, and if so, which products to buy. Insurance companies would hopefully respond with a range of products at a range of price points, deductibles, etc., but all these products would begin to resemble actual insurance instead of what passes for health “insurance” today.
Just to make it clear, I have no illusions that my proposal is anything like politically feasible at this time. But I think it’s important to begin to imagine systems that could be implemented in the future if a critical mass of Americans should ever decide that something other than single-payer (or the heavily regulated non-single-payer we’ve all enjoyed for decades) is needed.
I’m on Medicare with a supplemental policy and had surgery this year. Just got my Medicare statement. Hospital billed 31K; Medicare and supplemental paid $3500. I owe nothing. Bizarre system.
Even on a small scale, the system invites ridicule. I am insured via a Medicare Advantage plan. Recent visit to dermatologist was covered by my $40 co-pay at the time of the visit, and the good doc destroyed a few troublesome lesions with liquid nitrogen in a process that took perhaps 5 minutes tops. Aside from the visit, this procedure was billed to my insurance at $340, for which the “allowable” amount was $81, of which my 20% co-insurance was $16 and change. Bizarre system indeed.
The bills will keep coming. Just put them in a file and do not pay. It could take months and months. The surgeon’s bill and the anesthesiologist bill and on and on. I made the mistake of paying a bill that the hospital claimed I owed. After I received notice from my plan F carrier that they paid the bill I called the hospital. Excuses was all I got and I still haven’t gotten my refund. It was not a lot of money so I haven’t pressed the issue. But to your point, the same as I made earlier, what is billed is not what is paid and what is paid is actually what the cost is. Figuring out the costs is confusing and and opaque.
I was quoted that. Now, the insurance company has the power to say “we are going to pay a 10th of that” but I do not.
If you are advocating people don’t have insurance, please lay out for me exactly how that works in costs and savings.
Oh? Those choices are what exactly?
I am not going without insurance. That year I had already banked on a “Bronze” Plan with the idea that with payments each month, my out of pocket expenses would have to be over $12,000 to make the Gold or HMO worth it. Well, I hit that mark that year.
You understand they will not even schedule a procedure until they get paid, right?
On purpose.
The Federal Law should be that all pricing is posted on the internet, along with any deals anyone has. So if BCBS pays 10% of billed, that is public. No secret deals. At all.
Someone is bound to sue…invasion of privacy or HIPPA law or something.
A Christian medshare group might be something to look into.
The heart failure initiative/directive is the perfect example of dumb central planners decreeing a result without permitting any input on how to achieve it. There are many many simple cheap things that could be done at the input level to help with CHF management costs, but are simply not done because…. well, there isn’t any money in it for health care providers.
For example, suppose someone is in early stages, getting lasix and ACE inhibitors to manage the disease and control water weight. Why not give each patient a digital scale, and have the nursing assistant call every day at the same time to get a weight reading? If the trend starts to show upward movement, the lasix can be titrated up a bit long before you get into hospitalization event territory. All better CHF management would do is save money, not make any for the device manufacturers, though a college med device design class could come up with a cheap set of sensors and RF links in about a month, ready for production at about $100 cost. And there are a lot of home care diet interventions as well- no-salt-added pizza crust mixes, etc.
There are a lot of basic health care actions that would save a lot of cost, but don’t lihe any pockets, so no one has any incentive to pursue them. That makes a lot more sense than the central planners simply decreeing a lower cost and using rationing to get there.
There are actually a lot of ways for companies to make money doing the kinds of useful things you suggest, but the regulatory hurdles for getting such useful products to market are often nearly prohibitive.
About 10 years ago I was the CMO of a startup that developed a product (think of a band-aid with physiologic sensors that talked to the Internet) that detected impending heart failure. We showed in a clinical trial that our sensors, with our algorithms, could predict when a patient with HF was about to get in trouble (typically, 2 – 10 days before hospitalization), often before they noticed symptoms.
FDA would not let us market our product until we did a lengthy randomized outcomes trial showing improved survival. Because clinical outcomes depended on numerous factors we could not control (what doctors did with the information we gave them, whether patients complied with instructions, etc.), we estimated the trial would take 5 years and cost a couple hundred million dollars. Our investors, wisely, pulled the plug.
We ended up repurposing our technology into a heart rhythm monitoring device, and sold out to a big device company. So we did OK financially, but I consider the effort to have been a failure, and my eyes were opened as to how difficult it will be to get non-traditional technology to patients. Unless it is a me-too product, you’d better have very deep pockets and lots of time.
There was an article (or “interview”) in the WSJ a couple of months ago about (with) a woman whose company was creating and making inexpensive tests and testing devices for preventative care. For third world countries. I thought, why can’t we have them here and, you know, save folks money? I figured it was regulations.
Applying new technologies to simplify and streamline healthcare will be a very heavy lift. The system is built to prevent such a thing.
Simplifying the regulatory morass in healthcare will be more difficult than it would be to simplify the tax code. Too many players (pharma, device companies, insurers, bureaucrats, doctors, licensing boards, etc.), depend entirely for their way of life on the current system, and will fight (invoking fairness, patient safety, licensing concerns, etc.) to prevent any truly novel solutions.
Regulations not only slow progress in and of themselves, but regulations give birth to scores of important entities whose survival utterly depends on the survival of the regulatory structure. Any real change soon becomes nearly impossible.
The FDA exists to stop new things from coming to market.
To the extent this is true (and I agree it is one of their functions), the FDA is merely doing the bidding of virtually every other important entity within the healthcare system.
Even the big pharma companies and medical device companies that frequently complain about the FDA approval process would balk at any substantial change. The current arrangement creates a huge protective moat to exclude most truly disruptive entities, and the big players have evolved the complex business models necessary to survive (and thrive) with things the way they are.
Again, there are many parallels between the healthcare system and the tax code.
This, and its political analog, are colloquially known as “the swamp.”
It is still evil, and I cannot imagine working for any part of that system and sleeping at night. Like Pharmacy Boards, no one cares about the client, only whatever their pet peeve is. Nothing should be a consideration before patient care. Not. One. Thing. Any other formulation is nothing short of choosing to let people die.
Rich, I agree- remember that I am from the U of Minnesota, which has a huge med devices footprint, and was where Medtronic started (founded by the father of one of my grade school classmates, BTW). The FDA has to be changed from a regulatory agency to an information gathering, producing, and disseminating agency; at some point, it will be, probabltyt forced by medical tourism or a Trump-style presidency with non-traditional medical reformers as heavy influencers rather than a focus on Wall Street, Energy, and the EPA.
Note that the stuff I described above involved zero Class II or Class III devices; everything would be available from Amazon. The problem is that there is exactly no one in the care delivery or payment system today who gives a rip about systemic costs.
…and anything else involving government…