The ACP Advocate Blog

by Bob Doherty

Tuesday, February 23, 2010

On blogging . . .

Last week, I was honored to learn that the ACP Advocate blog was selected by voters in a national competition as the Best Health Policy/Ethics blog of 2009. Yesterday, ACP issued a news release announcing the award, in which I am quoted as saying that the blog "seeks to inform and entertain readers and to elicit thoughtful commentary from across the political spectrum, not just from ACP members but from others with an interest in health policy."

Awards and recognition are nice, but what I enjoy most is making readers aware of interesting ideas, studies, and commentary that otherwise might not have come to your attention.

I don't try to be impartial, but I try to be fair. I strive to present a range of views, grounded in ACP policies but informed by my own experiences as someone who has been involved in health policy and advocacy for 31 years.

Blogging requires a thick skin. Many of you have told me when you disagree with me - often vehemently. That is okay - I have no interest in this blog being an echo chamber of whatever people think I want to hear. And your commentary gives me an opportunity to explain things better.

For instance, one of the frequent commentators on this blog is "Arvind." He also is one of my toughest critics. He posted this just the other day:

"I find that somehow you are speaking from both sides of your mouth. These two statements could not be any more illustrative - 'the cost of health care is rising faster than families, small businesses, and taxpayers can afford' and 'And because of continued cuts in payments that do not cover their costs, most physicians are not accepting new Medicare and Medicaid patients.' Can anybody explain how 'health care costs' can go out of control when Medicare pays so little that it does not even cover cost of providing care?"

The explanation is that health care costs are rising much faster than growth in the economy and family incomes, and Medicare expenditures also are increasing rapidly because of increases in the volume (numbers) and intensity (resources expended on each person) - even though Medicare payments for each service may not be keeping up with practice costs. Eligibility and enrollment expansions also will increase spending on programs like Medicare and Medicaid. Recessions tend to increase enrollment in and spending by government programs. Pandemics, like H1N1 pandemic, also increase demand for and spending on health care.

Specifically, Chris Fleming blogs in Health Affairs that "Medicare spending is expected to have reached $507.1 billion in 2009, an increase of 8.1 percent from 2008. . .Growth in spending on physician and clinical services is expected to have accelerated to 6.3 percent in 2009, up from 5.0 percent in 2008. Total expenditures are expected to have reached $527.6 billion in 2009. The expected increase is driven primarily by Medicaid spending in this category, which is projected to have grown 10.3 percent in 2009, compared to 8.9 percent in 2008. Projected private spending in this category also accelerated. . .due in part to care associated with the H1N1 virus.

"Total hospital spending is expected to have grown from 4.5 percent in 2008 to 5.9 percent in 2009, reaching $760.6 billion in 2009. This reflects a projected acceleration in hospital spending by public payers - up from 6.2 percent in 2008 to 8.0 percent in 2009 -due to increased enrollment. It also reflects growth in private hospital spending. .

"Prescription drug spending growth is expected to have grown 5.2 percent in 2009, reaching $246.3 billion. This 2.0 percentage point acceleration from 2008 is due to an increase in per person use of drugs, driven by the need for antiviral drugs to treat H1N1, and by higher price growth in brand-name drugs. By 2019, prescription spending is projected to reach $457.8 billion, with spending growth expected to accelerate over the projection period due primarily to increases in drug prices."

I can understand why a practicing physician like "Arvind" would take issue with the idea that health spending is going up when Medicare payments aren't keeping up with his costs. But the fact is that spending is going up because physicians (and hospitals) are treating more people and doing more for them, and more patients are getting ever more costly prescriptions. This is true, even though many doctors, especially primary care physicians, are underpaid for what you do.

Today's question: What does the growth in spending say to you?

5 Comments :

Blogger Arvind said...

I am honored by your mention. However, my critiques are primarily derived from my practice experiences - starting in 1994 with rural IM practice in a town with one main street, two traffic lights, a 20-bed hospital and the mighty Mississippi river,receiving fruits and vegetables as payments, to IM faculty in NYC, to group practice of Endocrinology in Philly, and finally a solo practice of Endocrinology (last 8 years) in one of the worst areas to practice (SE PA-yes near the ACP HQ) in terms of reimbursement and costs of doing business. I have learnt a lot from the bruises I have had over the past 15 years. So, when someone comes along singing praises of governmental programs, I feel it is my duty to portray the real-life picture to the readers.

Now, coming to your question, you hit the nail on the head. It is ultimately volume and complexity of procedures that are driving up expenditures in Medicare. The prime reason for this is because of the price-fixing that Medicare engages in, thereby not allowing free-market forces of quality, supply and demand to dictate the cost and choice of services. I recently heard a great example from a GI colleague - when asked how he is planning to respond to the elimination of consultation codes by CMS, he simply stated "I will just do more scopes". This is what price-fixing creates. Those of us that don't perform procedures, and do not believe in volume-based practice, are loved by our community, but eventually perish because it does not pay to provide high quality service, when the AMA and the payers have converted our service into a commodity. Subsequently, one can simply multiply such commodities and increase revenue exponentially if one can play the "game" better than the payers.

Unfortunately for my patients, I can no longer accept new Medicare patients, simply because I will not provide sub-standard care, and cannot afford to allot the time and energy needed for what Medicare is willing to pay me.

As far as costs of drugs go, it cannot be equated with physician costs. Can you tell us why there is no SGR for hospital services or drugs or DME suppliers, and just for physicians? We can attribute that to Pres. Clinton and his legacy. How convenient for him that he gets coronary stenting within minutes. Perhaps if he were a Medicare beneficiary and had to hunt for a specialist, he would understand the real effects of his actions. I would like to hear your take on these two points, Bob. And thanks again, for singling me out. My objectives are not very different than yours, but we believe in very different routes to achieving a similar goal based on our own life experiences.

February 23, 2010 at 10:04 PM  
Blogger ray said...

Why is Acp not fighting tough to get cognitive medicine it's due? Why are RVUs and decision making left to a small board filled with specialists. Medical societies need to act fairly and act like true leaders, every physician knows there is waste but there is no incentive or credit for reining it. Good doctors suffer when they are efficient in their care.2% of medical student choose primary care, so how can you expect to control costs?? Arvind, totally understandable that tough to keep doors open for medicare in current state.

February 25, 2010 at 1:31 AM  
Blogger Rich Neubauer MD said...

The rising cost of medical care (in the global sense) says to me that we as a society need to at some time in the very near future make some tough choices on the just and equitable distribution of health care resources and health care dollars. Health care cannot continue to consume an ever rising portion of our national productivity.

The extremely important point that Arvind makes: that cognitive specialties are not adequately compensated is a somewhat separate but intertwined issue that has to do with how dollars are spent within our system. It should be clear to just about everybody that our current method in this country of compensating for cognitive services is dysfunctional and will only result in further degradation of such services if not addressed. ACP has been strongly advocating for that for a long time.

February 25, 2010 at 8:25 PM  
Blogger Robert J. Sobel, M.D. said...

The experience with unregulated free markets has hardly been one of stable success. As well, market forces are not particularly in play in health care when it comes to the commodities. I agree with Arvind that the physician sector has been regulated disproportionately and the relative growth in reimbursement has been offset by the absurd administrative excesses of managed care and the like. Furthermore, Medicare's unwillingness to reimburse more strategically has allowed a dilution of funding to multiple ancillary services that often add marginal value. Worst of all, private industry has created a managed care doctrine that has divested physicians of true prescribing authority. Instead of being protected from the onslaught of "misinformed" third party notices, we have been squeezed between the waste of pharmacy-benefit misdirection and information technology initiatives that will bankrupt all but the large entities unless significant protections are enacted.

The growth is a reflection of all the factors mentioned so far. It will remain on an unsustainable trajectory unless we bring some sanity to the cost of innovation. There is a value to our service which is impossible to quantify, predict prospectively, or measure through data assessment. Nevertheless, a market (albeit with distortions brought upon by Medicare) exists. What we cannot afford is new drugs and new tests coming in at exorbitant prices, when proof of value is a long way off.

My broken record on Regulated Royalties must be tiresome to some at this point and the patent issues may be insurmountable with the entrenched system we have. Nevertheless, it is currently before Congress to try to bring "transparency" to the PBM business. I would argue this is unnecessary. It is clear what role they are performing and it is based upon flawed theory. If you want physicians and patients to price shop on drugs, you are taking market forces in a dangerous direction. The need to suppress my clinical impressions because cost differentials between drugs are being manipulated for third party profits is an endemic problem that will grow further as cost effectiveness research feeds decision support technology. It is apparently good riddance to independent practice and independent clinical judgements.

Who is buying this rhetoric? Apparently many, as the generic drug to the rescue point of view continues to be heard from the White House to Congress to Blue Cross to the private contractors that Medicare enlists.

Price controls are ugly and incite animosity. Drugs that cost as much as the current generation should incite even more. Let's prorate the payment of the new. A fee schedule that is adjusted periodically and for which organizations can lobby is a form of a market. It does not appear that a free for all is the way to go at this point.

Finally, Bob, congrats on the honor. You've kept the ideas flowing and deserve a lot of credit for addressing your participants clearly and respectfully.

February 25, 2010 at 10:39 PM  
Blogger Steve Lucas said...

In reading the comments I could not help but be reminded of my wife’s and my trips to Europe. Both there, and back in the States, insurance and medical care are common topics with those we meet from the EU.

What is disturbing is the lack of knowledge of those proposing universal coverage based on a European model. First and foremost there are cost controls on all aspects of medical service. Secondly these prices are consistent regardless of who is paying. Thirdly, everyone has insurance.

My reality in traveling and speaking with people from Europe is universal coverage is very basic and limited by geography. Travel outside the EU and you have no health insurance. Want a semi-private room or faster test, you need insurance.

I personally find a great deal of merit in this system. Along with this, private for fee medical services exist, options abound.

What you do not have is the uniquely American idea that all of the people get all of the care, and drugs, they desire at no cost to themselves. This concept of entitlement is driving our cost and is simply not sustainable.

If we are to have universal coverage we must also impose heavy cost and usage regulations.

Steve Lucas

February 26, 2010 at 12:48 PM  

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About the Author

Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

Email Bob Doherty: TheACPAdvocateblog@acponline.org.

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