Medicare, the free market, and a drug that doesn’t work

This story will make you discouraged about BOTH the government AND the free market when it comes to healthcare.  Peter Whoriskey reports:

The U.S. health-care system is vastly overspending for a single anemia drug because Medicare overestimates its use by hundreds of millions of dollars a year, according to an analysis of federal data. The overpayment to hospitals and clinics arises because Medicare reimburses them based on estimates rather than the actual use of the drug.

The government for years has tried to rein in spending on the prescription drug, Epogen, which had ranked some years as the most expensive drug to taxpayers through the Medicare system.

Medicare’s current estimates are based on Epogen usage in 2007 for dialysis treatments. But since then, use of the drug has fallen 25 percent or more, partly because of Food and Drug Administration warnings about its perils and partly because Congress removed the financial incentives for clinics and hospitals to prescribe the drug. Because Medicare continues to reimburse health-care providers as if the dosing levels haven’t changed, the significant savings in doses has not translated into savings for the U.S. Treasury.

The amount of the overspending is more than $400 million annually, according to calculations done separately by The Washington Post and experts.

“I think we probably left money on the table,” said Rep. Pete Stark (D-Calif.), a critic of the way the drug had been used who helped shepherd through legislation that removed the financial incentives for bigger doses beginning in 2011.

The overpayment for Epogen reflects both the promise and difficulty of large-scale government reform of health-care spending.

For years, Epogen was one of a trio of anemia drugs — all manufactured by Amgen, a California biotech firm — that cost Medicare as much as $3 billion annually. Overall U.S. sales of the drugs exceeded $8 billion.

Nearly two decades after the drugs were first approved in 1989, their purported benefits were found to be overstated, and the FDA issued a series of stern warnings about their potentially deadly side effects, such as cancer and heart attacks.

At least some of their popularity stemmed from the fact that hospitals and clinics made lots of money using them: The spread between what they paid for a dose and what Medicare paid them to administer one reached as high as 30 percent, according to the Medicare Payment Advisory Commission.

The incentives drove up usage. By 2007, about 80 percent of dialysis patients were getting the drugs at levels beyond what the FDA now targets as safe.

Congress pushed Medicare to revise its payment system to remove the incentives for larger doses. Under the new system for dialysis patients, Medicare pays a set fee for a bundle of dialysis services and drugs.

via Medicare overspending on anemia drug – The Washington Post.

So Medicare reimbursed based on ESTIMATES rather than actual usage?  And hospitals and doctors prescribed the drugs so much in part because “they could make so much money using them”?

Of course, the reason the drugs were so lucrative is because Medicare paid so much for them, so it’s the unholy alliance between the government and the private sector–which is at the heart of Obamacare– that is to blame.  Still, this dashes further the assumption that our medical treatment is always based on objective considerations of patient care.

Are business practices that work in other profit-making enterprises fitting for health care?  For example, why are all of these prescription drugs being advertised on television?  Are patients now “consumers” who are expected to demand certain medicines from their physicians, in which case, what happens to objective determinations in the practice of medicine?  Or are the physicians the target of these marketing campaigns, in which case, again, what happens to objective determinations in the practice of medicine?

Medicare reform?

Demagoguing Medicare reform proposals.  From the Washington Post fact checker:

“The Republicans have a plan to end Medicare as we know it. What they would do is they would take the people who are younger than 55 years old today and tell them, ‘You know what? You’re on your own. Go and find private health insurance in the health-care insurance market. We’re going to throw you to the wolves and allow insurance companies to deny you coverage and drop you for pre-existing conditions. We’re going to give you X amount of dollars and you figure it out.’ ”

— Rep. Debbie Wasserman Schultz (Fla.), chair of the Democratic National Committee, May 29, 2011

Something about the debate over Medicare prompts eye-popping rhetoric. A few weeks ago, it was Health and Human Services Secretary Kathleen Sebelius saying the Republican plan for Medicare would let cancer patients “die sooner.” This weekend, on CBS’s “Face The Nation,” Wasserman Schultz said Republicans would “throw you to the wolves.”

We’ve previously taken Republicans to task for claiming their plan is “a system just like members of Congress and federal employees have.” Not so. We also criticized Sebelius for her assertion. So where does the DNC leader stand in this collection of conflicting claims?

The Facts

The current Medicare system, in place since the mid-1960s, is essentially a government-run health care program, with hospital and doctors fees paid by the government, though beneficiaries also pay premiums for some services as well as deductibles and coinsurance. The new system envisioned by House Republicans would transform Medicare into a competitive market for people who are now younger than 55.

Retirees would get from the government what Rep. Paul Ryan (R-Wisc.), the chairman of the House Budget Committee, calls “premium support” — a set payment adjusted to inflation; they would use that money to pick from a range of plans offered by insurance companies through what is termed a Medicare exchange. Democrats tend to refer to this payment by the more ominous-sounding word “voucher.”

Wasserman Schultz did not say voucher, but her statement suggests that people would be handed a check (“X number of dollars”) and then have to go out and find a plan that they can afford. She also said the plan would “allow insurance companies to deny you coverage and drop you for pre-existing conditions.”

Neither of those claims are true. The system as envisioned by Republicans would operate much like the Medicare prescription drug plan currently does. The government would not give people a check or anything like that; the government would handle the funds, just as they do under the drug plan. As the nonpartisan Congressional Budget Office said when it examined the plan, “The premium support payments would go directly from the government to the plans that people selected.”

Meanwhile, different plans approved by Medicare would compete for business, as under the drug plan. Moreover, the GOP proposal specifically says that to participate in the Medicare exchange, insurance companies would have to accept all retirees.

via Wasserman Schultz’s bogus claim that the GOP Medicare plan will ‘throw you to the wolves’ – The Fact Checker – The Washington Post.

Actually, the proposal sounds like the Democrats’ health care program that everyone will be on! If that is so, why are (1) Republicans for it, and (2) why are Democrats against it?

Medicare crisis

Part of the new federal  health care plan will be funded by cuts to Medicare, the existing government program that pays for health care for the elderly.  Already, though, an increasing number of doctors are  refusing to take on Medicare patients because the payments are too low.  And starting on January 1 those payments are scheduled to be cut  a whopping 25%.   From The Washington Post:

Want an appointment with kidney specialist Adam Weinstein of Easton, Md.? If you’re a senior covered by Medicare, the wait is eight weeks.

How about a checkup from geriatric specialist Michael Trahos? Expect to see him every six months: The Alexandria-based doctor has been limiting most of his Medicare patients to twice yearly rather than the quarterly checkups he considers ideal for the elderly. Still, at least he’ll see you. Top-ranked primary care doctor Linda Yau is one of three physicians with the District’s Foxhall Internists group who recently announced they will no longer be accepting Medicare patients.

“It’s not easy. But you realize you either do this or you don’t stay in business,” she said.

Doctors across the country describe similar decisions, complaining that they’ve been forced to shift away from Medicare toward higher-paying, privately insured or self-paying patients in response to years of penny-pinching by Congress.

And that’s not even taking into account a long-postponed rate-setting method that is on track to slash Medicare’s payment rates to doctors by 23 percent Dec. 1. Known as the Sustainable Growth Rate (SGR) and adopted by Congress in 1997, it was intended to keep Medicare spending on doctors in line with the economy’s overall growth rate. But after the SGR formula led to a 4.8 percent cut in doctors’ pay rates in 2002, Congress has chosen to put off the increasingly steep cuts called for by the formula ever since.

This month, the Senate passed its fourth stopgap fix this year – a one-month postponement that expires Jan. 1. The House is likely to follow suit when it reconvenes next week, and physicians have been running print ads, passing out fliers to patients and flooding Capitol Hill with phone calls to persuade Congress to suspend the 25 percent rate cut that the SGR method will require next year.

via Doctors say Medicare cuts forcing them to shift away from elderly.

Does anyone have a solution for this?

Medicare doctors

Not every doctor accepts medicare patients.  Many doctors only accept a few.  The same is true of medicaid patients.  This is because government payments are less than the going rate for their services.  This could become a problem.

The number of doctors refusing new Medicare patients because of low government payment rates is setting a new high, just six months before millions of Baby Boomers begin enrolling in the government health care program.

Recent surveys by national and state medical societies have found more doctors limiting Medicare patients, partly because Congress has failed to stop an automatic 21% cut in payments that doctors already regard as too low. The cut went into effect Friday, even as the Senate approved a six-month reprieve. The House has approved a different bill.

• The American Academy of Family Physicians says 13% of respondents didn’t participate in Medicare last year, up from 8% in 2008 and 6% in 2004.

• The American Osteopathic Association says 15% of its members don’t participate in Medicare and 19% don’t accept new Medicare patients. If the cut is not reversed, it says, the numbers will double.

• The American Medical Association says 17% of more than 9,000 doctors surveyed restrict the number of Medicare patients in their practice. Among primary care physicians, the rate is 31%.

The federal health insurance program for seniors paid doctors on average 78% of what private insurers paid in 2008.

“Physicians are saying, ‘I can’t afford to keep losing money,’ ” says Lori Heim, president of the family doctors’ group.

via Doctors limit new Medicare patients – USATODAY.com.

We’ve got to cut medical expenses, we keep saying.  That means doctors will get less money.  But what if doctors won’t work for what we want to pay?  Shouldn’t doctors, like other economic players, be able to set the fees the market will allow?  Or should they be forced to serve anyone who comes into their offices?


CLOSE | X

HIDE | X