Category: Health Care Finance

Impact of the Sequester on Health Care: By the Numbers

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By: Katie Booth 

The looming sequester will have a significant impact on health care, including cuts to Medicare, FDA, CDC, NIH, and Affordable Care Act programs. Budget cuts could slow down the drug approval process, impede the tracking of infectious diseases, and lead to layoffs for hundreds of thousands of workers in the health care sector. Read on for sequestration by the numbers…

Medicare:

  • Medicare cut by 2% ($11 billion) (not set to begin until April 1st, 2013, unlike other sequestration cuts, which are set to begin on March 1, 2013)
  • Physicians’ payments cut by 2%
  • Hospital Medicare reimbursement cut by $5.8 billion
  • Hospitals could end up with especially large cuts under the sequester because other parts of healthcare system run on longer term contracts
  • Loss of almost 500,000 health care sector jobs in the first year of the sequester according to an American Medical Association and American Hospital Association study, including job losses for 40,000 practitioners such as physicians and dentists

FDA:

  • FDA cut by 8% ($318 million)
  • FDA public funding cut by $206 million
  • FDA industry user fees cut by $112 million (for an interesting discussion of user fee cuts and the sequester, see Patrick O’Leary’s Bill of Health blog post)
  • Cuts by department (assuming 8% across-the-board cuts): $71 million to Foods, $39 million to Human Drugs, $17 million to Biologics, $11.3 million to Animal Drugs, and $26.5 million to Devices
  • Longer drug approval process is likely
  • Layoffs and furloughs likely
  • 2,100 fewer food safety inspections

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Final Tally on Insurance Marketplaces

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By Nicolas Terry

The Commonwealth Fund, here, has a very useful update on state choices for their marketplace types. The importance of these exchanges is noted by the authors: “The Congressional Budget Office estimates that by the end of next year some 9 million people will have enrolled in plans offered through their state marketplace, rising to 25 million by 2022. The majority of the enrollees will also receive premium subsidies.”
The final tally?
  • State-run: 17 plus DC
  • State-federal partnership: 7
  • Federally-facilitated: 26

The High Cost of Health Care: Why Some Pay $240 for a $9 Bottle of Pills

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By Jonathan J. Darrow

An earlier post discussed the equivocal efficacy of Propecia (finasteride) as a baldness remedy, ending with the provocative assertion that, efficacy aside, “there is little reason for anyone ever to buy or consume Propecia (finasteride), or any doctor ever to prescribe it, since a much cheaper and identical chemical sold under the trade name Proscar (finasteride), is available.” This post continues the discussion, addressing one small component of the rising cost of healthcare—the cost of finasteride.  It explores why consumers pay as much as $240 for a bottle of Propecia (finasteride) when a $9 bottle of an equivalent, FDA-approved supply of the identical chemical is readily and legally available at nearby stores.

In the exorbitantly priced landscape of prescription drugs, there is at least one low-cost oasis: Wal*Mart.  Though some find reason to criticize the discount store, few would disapprove of the dozens of prescription medications Wal*Mart offers for an unbeatable $4 for a 30-day supply.  Cost-sensitive consumers can purchase everything from blood thinners to antidepressants to antibiotics at this price, while a 90-day supply is only $10 (and this price includes shipping to your doorstep).  A handful of drugs that cannot be sold at $4 per month sell for a still-modest $9.  For the 300 or so drugs on Wal*Mart’s list, this means there is no longer a need for $10 co-pays or snowy treks to the pharmacy in 15 degree weather.  That’s right: the Wal*Mart total price is less than most insurance company co-pays.  Finally, a major industry player seems to have put effective downward pressure on prescription drug prices.  Read More

Contrasting Views: Recent Publications on Access to Medicines

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by Adriana Benedict

Last week, the World Health Organization (WHO), World Intellectual Property Organization (WIPO) and World Trade Organization (WTO) released a trilateral study on Promoting Access to Medical Technologies and Innovation: Intersections between public health, intellectual property and trade.  According to the official summary of the book, the publication is aimed at policy makers and is divided into four parts:

I. Fundamentals: the background of health policy and medical technology, the work of the three organizations, the burden of disease that challenges health policy, and the factors shaping that policy.  Much attention has been paid to diseases such as HIV/AIDS, malaria and tuberculosis, but noncommunicable diseases such as cancer, diabetes and heart diseases are a rising challenge.
II. The Policy Context: the international framework, linking health policy, intellectual property and trade, the contributions of economic analysis, and the use of traditional medical knowledge in research.
III. Innovation in Greater Detail: the evolution of research and development, alternative ways of promoting innovation for neglected diseases, the role of intellectual property rights, with examples.
IV. Access: how to ensure pharmaceuticals and other medical technology reach the people who need them: pricing policies, taxes and import duties, procurement, regulation, technology transfer, local production, patents, compulsory and voluntary licences, trade agreements, and competition policies, etc.

In her remarks at the launch of the publication, WHO Director-General Dr. Margaret Chan emphasized the importance of the public interest not only in public health, but also intellectual property and trade policy.  Importantly, Dr. Chan noted that it “is worth considering” an extension of the TRIPS Agreement (WTO Agreement on Trade-Related Aspects of Intellectual Property) transition deadline (currently set to July 1, 2013) for least-developed countries (LDCs) to implement the agreement’s provisions.

In stark contrast, last week the Journal of Economic Perspectives released an empirical study by two Federal Reserve economists calling for the abolition of the patent system. Read More

Twitter Round-Up (1/20-1/26)

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By Casey Thomson

Though simply the consequence of bad translation, the story of the Harvard geneticist George Church looking for a woman to act as surrogate for a Neanderthal clone shocked the internet bioethics world. A look at the problems with this hypothetical situation is just one of the components of this week’s Twitter Round-Up.

  • Frank Pasquale (@FrankPasquale) linked to an opinion piece discussing the reasoning behind the United States’ place in the world rankings of life expectancy at different stages of life. The news is a big hit to ideas of American exceptionalism: according to a report by the National Research Council and the Institute of Medicine, Americans have a substantially higher death rate for those younger than 50 as compared to Western Europeans, Canadians, Japanese, and Australians, but once they reach the age of 80, they have some of the longest life expectancies globally. (1/20)
  • Arthur Caplan (@ArthurCaplan) shared his article on why Neanderthal cloning is a bad idea, both in terms of safety and in terms of avoiding cruelty. (1/22)
  • Arthur Caplan (@ArthurCaplan) posted a news story on the reopening of bird flu experimental procedures for vaccine creation. Caplan was quoted in the article as stating: “I have no issue with restarting the research but some issue with where they are going to publish it and where they present it because bad guys can use it too.” (1/23)
  • Daniel Goldberg (@prof_goldberg) included an evaluation as to the medical disparities occurring in Colorado, particularly between races. The article emphasized in its conclusion that the existence of the disparities themselves is quite clear, but discussion on how to erase such differences is noticeably absent. (1/23)
  • Michelle Meyer (@MichelleNMeyer) retweeted a post that attempted to quantifiably compare the quality of care in Medicare options, namely whether Medicare Advantage plans 1) will eventually shortchange patients by skipping out on care quality because of profit motive or 2) have incentives to improve care quality because of the newly implemented systematic quality monitoring, where poor ratings impact them financially. The author found that most existing data makes the second theory more compelling, though the amount of data regarding the subject in general is largely lacking. (1/24)
  • Michelle Meyer (@MichelleNMeyer) also shared a link to an explanation of the intricacies of “personalized regulation” in medicine, which aims to preserve patient choice in an era leaning more and more towards paternalistic medical oversight. Understanding that patients may choose to make rational decisions that diverge from the community or committee consensus is key towards improving medical care to better reflect patient wants, and rights. (1/24)
  • Arthur Caplan (@ArthurCaplan) included a story on the large imbalance in misconduct reports in research between the genders. Men overwhelmingly led the charge, with only nine women out of the 72 faculty members who committed research misconduct. (1/24)
  • Michelle Meyer (@MichelleNMeyer) additionally shared a letter written by the Editor of The Hastings Center’s Bioethics Forum on the reasoning behind publication of a controversial article on the social pressures leading to obesity. The letter calls for the importance of recognizing that publication means that an article contributes to the larger debate on an issue, though does not affirm that the publication medium agrees with the views espoused within; it also encouraged responses to the ideas of the article. (1/25)
  • Stephen Latham (@StephenLatham) posted a video link from Comedy Central on the perils of WebMD and vegetarianism. (1/25)

Note: As mentioned in previous posts, retweeting should not be considered as an endorsement of or agreement with the content of the original tweet.

Sebelius v. Auburn Regional Medical Center: Hospitals Allege Medicare Intentionally Underpaid Providers–And Got Away With It

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By Katie Booth

In the Supreme Court’s recent decision in Auburn Regional Medical Center, the Court held that a suit against HHS by eighteen hospitals alleging intentional underpayment of Medicare reimbursements was barred by a 180-day internal agency deadline for appeals of reimbursement decisions. The rub is that the hospitals only found out about the underpayments, which allegedly occurred from 1987 to 1994, in March of 2006. These underpayments affected thousands of hospitals and added up to billions of dollars. Yet under Auburn, since the hospitals did not sue within 180 days of the underpayment (or even within an extended three-year window for “good cause”), they cannot recover. The Court in Auburn rejected the hospitals’ argument that equitable tolling should apply, finding instead that “the presumption in favor of equitable tolling does not apply to administrative appeals of the kind here at issue.”

The Auburn decision raises important questions about the ability of the federal government to intentionally underpay healthcare providers. In oral argument, the lawyer for the hospitals characterized HHS’s actions as “intentional concealment . . . [and] misconduct by the Secretary, that caused the statute of limitations time to be missed.” While there are good reasons not to disturb decades-old reimbursement decisions, it is sobering that the federal government can intentionally conceal underpayments and—if it conceals the underpayment for only 180 days—never have to reimburse the injured party. This situation presents a striking contrast “to 42 CFR § 405.1885(b)(3) (2012), which permits reopening of an intermediary’s reimbursement determination ‘at any time if it is established that such determination . . . was procured by fraud or similar fault of any party to the determination.’” In other words, HHS can reopen reimbursement decisions if a provider intentionally conceals important information, but not vice versa.

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