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Health Care

The Price We Pay: What Broke American Health Care–and How to Fix It

Dr. Makary is a surgeon and teacher at Johns Hopkins Bloomberg School of Health. I can’t imagine anyone not coming away from this book without a deeper understanding of the health care business and why it costs so much. Here are some of the problems and a few solutions that stood out for me:

Price gouging: The story of a woman who had a balloon sinus procedure that is generally ineffective, lasting about 45 minutes in the doctor’s office, who got a bill for $21,000, equivalent to what it costs for open heart surgery at Johns Hopkins. Medicare pays less than $1,000 for a standard joint replacement surgery, “yet one in six U.S. hospitals charge more than $90,000 for it.” One in five Americans currently has medical debt.

Uneven billing: Henri, a student from France, was told an operation for his father’s heart attack, would cost $150,000; his father went back to France, where it cost about $15,000. Researchers at the University of Iowa surveyed hospitals, and found that the half who would even answer quoted a range of from $44,000 to $448,000. There was no correlation with quality of care or poverty level. Baby delivery in Boston ranged from $8,000 to $40,000.

Surprise billing: “While networks served a purpose, they are now the very reason we have surprise bills.” When investigating a bill for a friend, the billing representative told Makary, “The law allows us to charge whatever we want. If we want to charge a million dollars, she has to pay it”

Over treatment/ Unnecessary procedures: Makary and colleagues did a survey of 2100 doctors, who on average believed “21% of everything done in medicine is unnecessary.” He relates that heart stenting was in decline, replaced by better medications. However, vascular procedures were a “cash cow,” and some doctors found a new way to use their skills. They prospected for customers, by working as screeners for peripheral artery disease (measuring blood flow in the legs) at health fairs at churches. (They identified about 1100 churches, synagogues, and mosques that served as vascular screening centers, unaware they were being used.) Leg artery procedures can generate $100,000 in one day when a doctor owns the facility. In the vast majority of cases, there is no evidence to support the procedure. This is perfectly legal.

Overmedication: “More than half of Americans are now on four or more medications, according to Consumer Reports.” Makary’s research team found the average person on Medicare is on twelve medications.

Middlemen: He describes: “The game creates a giant middle layer of health care; the repricing industry, dedicated to negotiating bills among three or four parties after care is delivered” “One study found that for every ten doctors, the average U.S. hospital has seven nonclinical full-time equivalent (FTE) staff working on billing and insurance functions.”

Law suits, garnishing wages, liens on homes: A Carlsbad NM hospital was responsible for about 95% of lawsuits at the courthouse. Because the itemized details of the inflated charges are redacted, and only the total due was listed, the judge had little choice but to find for the hospital. This affects the credit score, thus increasing things like mortgage interest rates. Some hospitals mark up their bills by 2 to 23 times what Medicare would pay, and hospitals playing the markup game were also the most likely to sue. The bills that lead to lawsuits for many hospitals represent less than 1% of their revenue. “Half of metastatic (Stage 4) breast cancer patients in the United States report being pursued by a collection agency.” Downright dirty: “The bill collectors told Meghan there was no need for her to show up in court….She knew that if she didn’t show up, the judge would find for the plaintiff by default.”

Charity care: “Throughout the 1960’s, the Internal Revenue Service gave tax-exempt status to non -profit hospitals on the condition that these hospitals provide free or highly discounted care to patients that could not afford it.” In 1969 they changed it to a “community benefit standard,” which creates a debate about what this means. In 2014, the IRS required nonprofit hospitals to indicate who was eligible for free or discounted care, not engage in “extraordinary collection actions” until “reasonable efforts” were made to determine eligibility for financial assistance.

Pharmacy benefits: Pharmacy benefit managers (PBMs) who one industry observer said, “collectively manage pharmacy benefits for 266 million Americans, routinely fleece American businesses using clever shell games.” “The Spread” is the difference between what the PBM pays a pharmacy and what they invoice a health plan for. “A PBM can set any copay for patients regardless of the medication or the true cost.” This is perfectly legal. “It’s the business model of most of today’s PBMs.” “Secrecy is how everyone in the drug supply chain makes so much money.” “Pharmacies are gagged under their PBM contract to not disclose what they are paid by the PBM.” “Approximately 80% of Americans get their medications through a PBM. PBMs can be integrated with insurance companies, making it hard to switch PBMs. In 2018 “the spreads” of the PBMs being paid by taxpayer money in the state of Ohio was $224 million.

Group purchasing organizations: Hospitals usually farm out their purchasing to specialists, GPOs, who may be in another city or state. This gives the hospital purchasing leverage. “Today, GPOs ask manufacturers to pay them pay-to-play fees for product placement in their catalogs.” This is “particularly problematic when GPOs invite a manufacturer to pay a premium fee to become a sole supplier.” “U.S. hospitals that purchase through a GPO went from 68% in 2000 to 98% by 2014.” “In 1987, after intense lobbying by the industry, group purchasers were granted an exception to the anti-kickback law, known as a safe harbor exemption.” “GPO kickbacks inflated health care costs up to $37.5 billion annually.”

Ambulance service: Some entrepreneurial folks found a business model of providing air ambulance service separate from the hospital; see also comments under the headings of gouging, surprise bills, and suing. “80% of the more than half a million air ambulance flights a year…are not emergencies but are much more like routine transfers.” “In the 1980’s, there were fewer than 100 air ambulance helicopters nationwide. In 2016, there were 1,045.” (Companies can’t bill Medicaid or Medicare for more than the government pays. but no limit on other people) Cash strapped patients can be seen at the Emergency Room entrances exiting Uber or Lyft vehicles.

Lobbying: “Health care stakeholders spent $514 million lobbying Congress in 2016”

Wellness programs: From 1990 to 2000, the number of workplace health promotion programs doubled. “Wellness companies often make recommendations that go against task force guidelines.” Genetic or biometric screening sounds good, but can lead to problems, such as data breeches or anxiety around false positives. Sometimes the “screening-industrial complex” uses medical providers as a way to bring in business. “The evidence we do have does not show that these programs are effective.” However, some programs have value—fitness club memberships, yoga classes, medical second opinion services, or accurate nutrition science and lifestyle treatments for illnesses.

Some good guys:
<<Michael Hansen, Nebraska Hospital Association, promotes healthy living projects in an average socioeconomic community and stays without debt.

>>Dr. Rushika Fernandopulle, Iora Health with his “relationship-based” care, with nurses, social workers, nutritionists, and other experts, teaching lifestyle changes with a team approach.

>>Jeffrey Rice, who founded Healthcare Bluebook to collect pricing data from partnering employers who self-fund their health care and used data to establish a fair price amount.

>>Jose Oliva et al from Florida who passed a law requiring hospitals to show the average amount they are being paid for procedures, rather than the (inflated?) amount they charge.

>>David Contorno, who rejected the kickback system of health insurance brokerage to recommend options based only on the best value for employers, in spite of retaliation from his industry.

>>Dave Chase who created a process called Health Rosetta to set standards for the health care brokers industry.

>>”A new federal law passed in 2018 ended the common practice of prohibiting pharmacists from helping patients find less expensive options.”

>>Danny Toth, who does undercover work about pharmacy insurance and helps employers renegotiate contracts to be more fair.

Transparency: It is nearly impossible to know in advance what a patient will pay. Insurance discount rates for hospitals vary, and are secret. “There’s good reason for the fog—it’s lucrative.” HOWEVER, one study showed: “Centers that initiated full price transparency saw a 50% increase in patient volume, a 30% increase in revenue, and an increase in patient satisfaction.”

“Improving Wisely”: Disturbed by seeing doctors with troubling patterns of deviation from standard practice in areas such as C-section surgery, knee replacements, and trying physical therapy before back surgery, Makary and colleagues gathered data to provide feedback to all doctors who used that procedure, letting them know how they compared with their peers. Doctors liked the feedback, and 85% of the “outliers” changed their ways for the better. There is now a “Practicing Wisely” project that runs metrics in big data for health care organizations to see where their doctors stand in relation to certain benchmarks.

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