Author Archive

Medicare Should Revoke Drug Dealers’ License to Steal!

Nearly 39 million Medicare beneficiaries, including seniors and the disabled, have subsidized drug coverage thanks to the Medicare Modernization Act (MMA) of 2003. Medicare drug plans are popular with seniors. Although subsidized by Medicare, Part D plans are offered by private insurers and compete with each other for seniors’ patronage.

When Congress passed the Medicare Part D drug program back in 2003, it inadvertently created a license to steal. Prescription drug abuse costs health plans nearly $75 billion per year — about two-thirds of it from public programs such as Medicare and Medicaid. That makes Uncle Sam the biggest illicit drug dealer in the country! Prescription drug fraud and abuse also drives up seniors’ premiums as well as boosts costs for taxpayers and health plans that administer seniors’ drugs benefits.

Questionable drug use typically involves addictive painkillers that create a heroin-like euphoria. More than 16,000 people die annually from abusing pain relievers — double the number that die abusing cocaine and heroin combined. For every death, there are 10 people admitted to a treatment program for substance abuse and 32 emergency room visits. For each person who overdoses, 130 chronically abuse prescription drugs and 825 casually use them for nonmedical purposes.

The HHS Office of the Inspector General (OIG) reports that some individuals themselves are abusing the drugs. In other cases, they attempt to obtain drugs they don’t need in order to profit by reselling them. This is especially true of narcotic pain relievers derived from opium poppy plants. Substantial numbers of narcotic pain relievers are diverted to the illicit market where their “street value” far exceeds their pharmacy costs. For instance, the OIG reports the “street” price of Oxycodone is a dozen times the normal retail price at a pharmacy. Its agents report that a bottle of Oxycodone is worth $1,100 to $2,400 per bottle if sold on the streets of Northern California.oxy

Haha Gotcha! Medical Pricing

By almost any measure, the U.S. health care system remains dysfunctional. If you apply some of its common practices to other industries, they sound ridiculous. Consider this hypothetical thought experiment. Suppose you made an appointment at a local dog kennel for them to keep your dog, Bowser, while you were on vacation. You asked if they could bathe and groom Bowser just prior to your return. As is standard practice, you probably had to sign a consent form agreeing to pay for the boarding and any additional fees insured. Maybe the grooming fees weren’t guaranteed ahead of time, but you were assured they were nominal and normal for the services. Among the forms you were asked to sign, there was some fine print that said should your dog become ill, the services of a veterinarian would be arranged at your expense.

During his stay Bowser seemed lethargic and a little anxious — and he wasn’t very interested in his food. Maybe you assumed this is normal for a dog left at a kennel for a week. But Doggie Spa & Canine Resort cannot take any chances. It called in a pet behavioral therapist to assess Bowser’s condition. The doggie shrink brought along a colleague for a second opinion. The pet behavior therapist recommended Bowser be walked twice a day to lift his spirits. However, another veterinarian — an orthopedist — had to assess Bowser’s gait to make sure he was healthy enough to be walked. A pet nutritionist analyzed Bowser’s diet and assessed his food intake. She sent a stool sample to a lab for analysis of food absorption. She ultimately decided that spoon-feeding Bowser might encourage him to eat.

Upon your return you pick up your dog expecting to pay for boarding, bathing and grooming. You know Bowser was well-taken care of, but the fees were much higher than expected. Within days of your return, itemized bills from vendors begin to arrive. The person who bathed your dog sent a separate bill from Doggie Spa’s bathing fee. A different bill from the person who applied the shampoo is in your stack of mail. Yet another bill arrives from the groomer. You discover the groomer also brought along an assistant groomer. She too submits a bill. The pet nutritionist and the lab both sent bills. A bill even arrived from another person who walked your dog twice a day while you were away. Spoon feeding Bowser twice a day for a week incurred 14 separate dietitian charges. Indeed, the pet behavioral therapist swung by Doggie Spa on his way home every night to make sure Bowser was doing OK — and you got charged for each visit. Worse, you discover some of the people who sent you a bill charged far, far more than the pet resort’s regular vendors. The on-call vendors called other vendors to assist. But these out-of-network vendors are not bound by Doggie Spa‘s standard rates, they can charge anything they want. You discover Doggie Spa actually encouraged these upcharges so it too could bill a separate facilities fees for them. Arranging for the dog activity therapist to assess your dog; that generated a separate charge for both the Doggie Spa and the dog walker.

Narrow Networks Found to Save Money

National health expenditures are rising faster than the economy. Most economists believe this is due to perverse incentives that encourage unnecessary medical spending. More than 30 years ago the RAND Health Insurance Experiment showed that patients spend nearly one-third less when exposed to significant cost-sharing. Yet, health plans continually look for new ways to save money in the absence of a health care market where patients act like consumers.

One such cost-saving method is the increasing use of so-called narrow networks, where health plans restrict the choice of providers in return for lower premiums. Narrow networks are sort of like when you were in high school and your mother took you to Walmart to buy a pair of jeans. She may have refused to shop for jeans at the mall where she knew they would be more expensive. Obama Administration advisor, Jonathan Gruber, wrote about the use of narrow networks in Massachusetts health plans. He found that patients used fewer resources when required to see general practitioners rather than specialty care. According to Gruber:

For Sale Cheap: Your Private Medical Information

Have you ever gone to a party and had the urge to peek inside your host’s medicine cabinet? (Neither have I!) Imagine what could be of interest in there. For those nosy souls who are tempted, you don’t even have to attend a party! It’s all for sale online. Bloomberg published an article about how Big Data is snooping in your medicine cabinet and selling the information to marketers. Here’s the gory details:

Dan Abate doesn’t have diabetes nor is he aware of any obvious link to the disease. Try telling that to data miners.

The 42-year-old information technology worker’s name recently showed up in a database of millions of people with “diabetes interest” sold by Acxiom Corp. (ACXM), one of the world’s biggest data brokers. One buyer, data reseller Exact Data, posted Abate’s name and address online, along with 100 others, under the header Sample Diabetes Mailing List. It’s just one of hundreds of medical databases up for sale to marketers.

Pesky Patients Asking Awkward Questions: Doc, Do I Really Need That?

A recent New York Times article lamented that employers are increasingly offering employee health plans that cover few medical expenses until a fairly high deductible has been met. About one-third of large employers offer only a high-deductible plan. Many other employers encourage enrollment in high-deductible plans by offering low employee contributions. As a result, more employees are covered by high-deductible plans and workers increasingly have to reach for their wallet before insurance kicks in.

As news stories often do, the article used a tear-jerker of an anecdote to drive home its point. The subject of the story was Anita Maina. Although her monthly premiums were only $34 per month, her deductible was $6,000 and her health savings account not well-funded. Here’s the story:

Anita Maina was working on an arts and crafts project she found on Pinterest — creating a table out of wood and cork — when she ripped off a fingernail while removing staples from a piece of wood.

But she ultimately skipped the [office] visit since she had not met the $6,000 deductible on her health plan, and she knew she probably did not have much left in her health savings account…

The New York Times article even included a photo of Ms. Maina with her injured finger!

es

Another Bogus Attack on Wisconsin Medicaid

The Wisconsin Legislative Fiscal Bureau analysis estimates the state is losing about $100 million a year by not expanding its Medicaid eligibility as much as allowed under the Patient Protection and Affordable Care Act (ACA). This mudslinging by Wisconsin Governor Scott Walker’s gubernatorial challenger is disingenuous and ignores the fact that Wisconsin made a better choice by allowing many of its low-income uninsured to access private coverage with federal subsidies.

Over the past several years state legislators have grappled with the pros and cons of Medicaid expansion under the ACA. The carrot dangled in front of state legislators is financial; states that agree to expand Medicaid eligibility to 138 percent of the federal poverty level (FPL) can expect the federal government to reimburse states for most of the cost for newly eligible enrollees. Critics of Medicaid expansion counter that the savings are front-loaded in the early years, whereas state costs begin to rise in later years when it’s too late for states to back out. Whereas the federal government will pay 100 percent of the costs through 2016, the feds begin ratcheting the matching rate down to 90% by 2019.

Cost-Conscious Patients: Why Is That a Bad Thing?

An article in Modern Healthcare discusses the uneasy feeling doctors experience when patients ask awkward questions about the medical care recommended for them. Among the uncomfortable questions doctors are expected to answer: “How much is that going to cost?” “Do I really need that MRI?” “Why do I have to get that?” “Can it wait?”

Imagine how any other profession would respond when the purveyors of goods and services are expected to suffer the indignity of customers quizzing them about the merits, demerits and costs of their products. Oh, I forgot, every other profession does suffer the indignity of having to convince buyers that their services are valuable.

Hits and Misses

Women jogging

Jogging may be good for your heart: But endurance runners are more likely to die from heat stroke than a heart attack.

Big shrink is listening: A smart phone app that monitors your voice for signs of manic/depression.

There’s little reliable evidence that fish oil helps prevent heart disease.

Ridiculous study or common sense? Eating fruit and vegetables is associated with greater flourishing in daily life.

Your dog wears a watch: Why your dog seems to know what time it is.

CMS Views Medicare Solvency through Rose-Colored Glasses

The 2014 Trustees Report was released on Monday, July 28th. The Center for Medicare and Medicaid Services (CMS) press release paints a rosy picture, but fails to discuss the bad news that is hidden in plain sight.  According to the cheerleaders at CMS, the health of the Medicare Hospital Insurance Trust Fund has improved since last year. The Trust Fund purportedly will remain solvent until 2030 — four years longer than projected in the 2013 Trustees’ Report. The press release partially credits the 2010 landmark law, the Patient Protection and Affordable Care Act (ACA) with controlling the growth of Medicare spending.

The Trustees Report is supposed to project future Medicare spending based on current law. But, that also means the official projection includes provisions meant to slow spending growth that the Trustees know are unlikely to occur. In years past, the Trustees tended to ignore these uncomfortable facts. Around 2010 the Office of the Actuary at CMS took the unprecedented step of producing an Alternative Scenario report explaining that the assumptions in the Trustees Report were unrealistic, and the projection were most assuredly wrong. That raised eyebrows in the policy world. This year, the alternative scenarios (i.e. conditions that are more likely to occur) crept up from the appendix (at the back) and landed uncomfortable on page 2, with the authors explaining:

Paging Dr. Google

Laptop and StethoscopeThe Wall Street Journal reports that Google has begun a project called the Baseline Study to collect individual health information and correlate this with diseases conditions over time. The Google project leader, Andrew Conrad, is best known for his work on quick, cheap HIV screening of blood donations. At Google, Conrad supervises a team of 70-to-100 people, made up of physiologists, biochemists, and experts in optics, imaging and molecular biology. The goal is to amass a behemoth database of hundreds of different sample observations from thousands of individuals, including biology, genetics, blood chemistry, etc. and analyze how it correlates to disease patterns. According to the Journal:

The study may, for instance, reveal a biomarker that helps some people break down fatty foods efficiently, helping them live a long time without high cholesterol and heart disease. Others may lack this trait and succumb to early heart attacks. Once Baseline has identified the biomarker, researchers could check if other people lack it and help them modify their behavior or develop a new treatment to help them break down fatty foods better…