What Trump’s Plan to Negotiate With Pharma Should Tell Us

By JK WALL

Donald Trump’s proposal to allow the federal Medicare program to negotiate prices with drug companies should be a wake-up call for the pharmaceutical industry.

Trump is leading in the polls for the Republican nomination and is even drawing the support of Tea Party conservatives who, just a year or two ago, never would have supported a candidate endorsing such strong government intervention into a private-sector industry.

Characteristically, Trump didn’t give a lot of detail about his plans. He claimed $300 billion in savings per year (about 10 times more than is realistic). But that doesn’t matter. If the leading GOP presidential candidate—a man who has proved masterful at reading the public mood and playing to it—has signed on to this idea, it proves that change has come.

I know that many veterans of the pharmaceutical industry think they have seen this horror movie before and know how it ends. There have been several past public furors over the price of prescription drugs, and each one gradually faded without major disruption for drugmakers. But this time feels different.

Trump’s proposal is just the latest indicator of the increasing bipartisan support for government action on drug pricing is one reason why things are different this time.

One reason for that is this is the first big drug price controversy since Medicare Part D kicked into effect 10 years ago. That means this issue is not only hammering seniors—the most sympathetic and most-likely-to-vote segment of the population—but it also affects the federal budget.

Republicans in Congress, if you haven’t noticed the past few years, are not eager to run up federal spending. Remember Marco Rubio saying in October that some drug companies are engaging in “pure profiteering” and that high prices could “bankrupt our system”?

Another reason the drug price controversy is different this time is that consumers are more exposed than ever to high drug prices. One out of every four Americans covered by an employer is in a high-deductible health plan, according to Mercer’s latest survey. That up from just 3 percent in 2006. And pretty much everyone buying coverage on the Obamacare exchanges is in a high-deductible health plan.

High deductibles mean all those patients are exposed to the full brunt of high-cost drugs.

So then it’s no wonder that 77 percent of Americans said in an October tracking poll by the Kaiser Family Foundation that the top health priority of the president and Congress should be “making sure that high-cost drugs for chronic conditions … are affordable to those who need them.” Even 73 percent of Republicans agreed with that statement.

Nearly two-thirds of Americans—63 percent—supported “government action to lower prescription drug price.” Such actions also drew support from a majority of Republicans, 56 percent.

If the drug price controversy is different this time, it means the response from pharma needs to be different. At least if the industry wants to avoid draconian limits on its ability to reap rewards from its most innovative research.

One interesting idea floated on this blog recently by Dr. Soeren Mattke, a senior scientist at RAND Corp., was for the industry to voluntarily limit price growth on mature drugs.

“A solution could be for the research-based companies to adopt a voluntary code of conduct that would limit price increases on established products to inflation or to the cost of inputs,” Mattke wrote, adding, “This would be a small step for multi-billion dollar companies, but a giant leap towards becoming a respected partner when decisions about the future of healthcare are being made.”

Here’s another idea: create an industry-wide information service for patients and their doctors that combines the findings of comparative effectiveness studies with price information. Such a service would extend pharma’s medical commitment to deliver the right medicine to the right patient at the right time into the financial realm, delivering the right-cost medicine for each patient’s circumstances.

If drug companies were working hard to make sure heart patients who only need and can only afford a low-cost generic statin get it, or that diabetes patients who only need and can only afford metformin don’t get sold a high-priced diabetes drug, they would have a lot more credibility  charging higher prices for medicines those patients need when their conditions worsen beyond first-line therapies.

Last, pharma companies could ramp up the donations and discounts they give patients—and not just to the poorest customers. Indianapolis-based Rx Help Centers has been having success getting drug companies to give discounts or, via their foundations, donations to moderate-income patients. These patients have commercial insurance—yet still face crippling costs from a high-cost prescription drug.

If drug companies voluntarily removed the sting off their high-cost medicines for both poor and working-class Americans, they’d likely be accomplishing both their missions: promoting health and promoting profits—because they would fix a problem before public outcry makes politicians do it for them.

J.K. Wall is a reporter and editor at the Indianapolis Business Journal, where he has covered health care since 2007.

Tay-Sachs disease

Tay-Sachs disease: A genetic metabolic disorder caused by deficiency of the enzyme hexosaminidase A (hex-A) that results in a failure to process a lipid called GM2 ganglioside that accumulates in the brain and other tissues. Abbreviated TSD.

The classic form of TSD begins in infancy. The child usually develops normally for the first few months, but head control is lost by 6 to 8 months of age; the infant cannot roll over or sit up, spasticity and rigidity develop, and excessive drooling and convulsions become evident. Blindness and head enlargement occur by the second year. The disease worsens as the central nervous system progressively deteriorates. After age 2, constant nursing care is needed. Death generally occurs by age 5, due usually to cachexia (wasting away) or aspiration pneumonia. There are several forms of TSD. With juvenile TSD and adult TSD, the person has somewhat more hex-A and hence a later onset of clinical disease than with infantile TSD.

All known forms of TSD are inherited in autosomal recessive manner and are due to mutation of the gene for the alpha subunit of hex-A that is on chromosome 15q23-15q24. The frequency of TSD is relatively high in Ashkenazi Jews, particularly those whose ancestors came from Lithuania and Poland. This is believed due to founder effect, mutation in one of the founders of this group of people. Knowledge of the biochemical basis of TSD now permits screening for carrier status and prenatal diagnosis.

The disease is named for the English physician Waren Tay and New York neurologist Bernard (Barney) Sachs who made key early contributions to the rocognition of this disease. In 1881 Tay described an infant he had seen with progressive neurological impairment and the "cherry-red spots" in the retina
characteristic of TSD. Sachs saw a child in 1887 and the child's
sister in 1898 with the cherry-red spots and "arrested cerebral
development" and in 1910 he demonstrated the presence of accumulated
lipid in the brain and retina.

TSD was once called amaurotic familial idiocy (a term to avoid) and today it is also known as type 1 GM2-gangliosidosis, B variant GM2-gangliosidosis, hexosaminidase A deficiency, and hex-A deficiency. See also: Sandhoff disease.

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Love and Measurement

By WESTBY FISHER, MD

Many of us recall the final scene of Mad Men where Machiavellian dealmaker, philanderer, and ad mogul Dan Draper sits in lotus position finding either true inner peace or the next cynical direction from which to profit. This scene came to mind as I read another apparent conversion experience by Robert M. Wachter, MD in his recent opinion piece in the New York Times on how the metric measurement business fails physicians and teachers.

Remarkably, Dr. Wachter, once the Chairman of the  American Board of Internal Medicine (ABIM) that is responsible for "continuously" measuring, re-testing, and re-certifying US physicians, seemed to pivot from his former self by quoting a few of Avedis Donabedian's words on quality assessment suggesting "the secret of quality is love." Unfortunately, Dr. Wachter conspicuously failed to acknowledge the full context of Donabedian's words.

"I think that commercialization of care is a big mistake. Health care is a sacred mission. It is a moral enterprise and a scientific enterprise but not fundamentally a commercial one. We are not selling a product. We don’t have a consumer who understands everything and makes rational choices — and I include myself here. Doctors and nurses are stewards of something precious. Their work is a kind of vocation rather than simply a job; commercial values don’t really capture what they do for patients and for society as a whole.

"Systems awareness and systems design are important for health professionals but are not enough. They are enabling mechanisms only. It is the ethical dimension of individuals that is essential to a system’s success. Ultimately, the secret of quality is love. You have to love your patient, you have to love your profession, you have to love your God. If you have love, you can then work backward to monitor and improve the system. Commercialism should not be a principal force in the system. That people should make money by investing in health care without actually being providers of health care seems somewhat perverse, like a kind of racketeering." – Avedis Donabedian

I suppose if he can transition from a physician executive to a "down to earth" Bob Wachter, MD hitting "high notes" as Elton John at the Mandalay Casino while simultaneously profiting from a company that now under federal investigation for overbilling Medicare, why not?  Such is our current reality of politics, medicine, and corporate cronyism.

It was nearly four short years ago that Dr. Wachter wrote that we needed the ABIM's Maintenance of Certification program "more than ever." Perhaps the lucrative Digital Party in medicine was just too big for the ABIM leadership and the members of its Foundation to ignore. At the time, those in Wachter's World held the view that assuring physician quality meant physicians not only had to be re-certified every ten years but soon had to participate in some form of the ABIM's measurement program every two years for the sake of  "external stakeholders and a troubled public."  As a result, physicians were required to perform unproven practice improvement exercises, perform un-monitored research on themselves, and become glorified data entry personnel to continuously "maintain" their "board certification" or risk losing their right to practice. All of these exercises were subsequently revealed to be primarily for the medical industrial complex's extraordinary monetary gain and undisclosed political activities.  Such "love," indeed.

The expanded ABIM board certification requirements after 1990 have served as the goose that laid the Golden Egg for condo purchases, chauffeur-driven Mercedes rides, spousal travel fees, undisclosed corporate consulting arrangements, corporate mergers, political influence and the program's continuing transition to Assessment2020 – much of these occurring while Dr. Wachter served as a Director or Chairman of the ABIM. For the ABIM and its parent organization, the American Board of Medical Specialties (ABMS), success in the digital medical world still appears to mean the doctor-patient relationship has to be owned, bartered, and commoditized to serve their bottom line without really understanding all that this entails to the doctor, their patients, and the credibility of our profession.

If Bob Wachter, MD is a true physician advocate and is now having a genuine conversion experience, he would be speaking out about these abuses of physicians' trust. In fact, as the "Most Influential Physician Executive and Leader 2015," he would be leading this charge. Or perhaps I am missing something.

Meanwhile, despite all of the fast-paced changes in health care under way, the same rubber soles continue to speed down linoleum hallways, call lights blink, keyboards pound, family meetings are held with tears shed, young physicians wonder how they'll pay their educational debt, productivity quotas expand, administrative meetings multiply, patients grow furious about their rising premiums, co-pays and deductibles, physician autonomy and morale withers, and patient access to their doctor shrinks.

Fortunately, rather than standing idly by, practicing doctors are mobilizing. They are realizing that the bloated and costly bureaucratic arm of our profession has lost its way and are working to restore its integrity. Practicing physicians are finding they have a voice and are not powerless against these corporate entities that unjustifiably risk compromising their ability do their job. With these efforts, members of Wachter's World are beginning to realize they're at risk of losing their golden goose:

Last week, Andy Slavitt, Medicare’s acting administrator, announced the end of a program that tied Medicare payments to a long list of measures related to the use of electronic health records. “We have to get the hearts and minds of physicians back,” said Mr. Slavitt. “I think we’ve lost them.”

Despite these concerns of a few of our bureaucratic medical policy elite, practicing physicians remain little more than an account to be landed, a work to be optimized. To them, practicing physicians represent an opportunity to invest in new corporate ventures like Health2047, no doubt for the "love" that's involved. The respectful partnership that practicing physicians would like to have would not include the many corrupt financial practices and undisclosed conflicts of interest of the AMA and the ABMS specialty board credentialing system, their collaborating subspecialty societies, and numerous for-profit physician reporting businesses. They invoke ethics, morals, and "love" at their own risk.

In my career, I'm unaware of a broader breach of the trust of working physicians and of medical ethics by fellow colleagues than by those who secretly created the ABIM Foundation in 1989 and then funneled over $55 million of testing fees collected from working physicians while hiding its existence from physicians and the public until 1999. Yet many in our academic and bureaucratic physician community continue to support this testing agency that appears to have been expanded solely for political, corporate, and personal gain, and are indifferent to them using strongman tactics with physicians. What a perverted form of "love."

This system must change.

As health care moves forward in these uncertain times, a few of Donabedian's (other) words on quality assessment, uttered a month before his death, are prescient:

"It is the ethical dimension of individuals that is essential to a system’s success. … Commercialism should not be a principal force in the system. That people should make money by investing in health care without actually being providers of health care seems somewhat perverse, like a kind of racketeering."

Perverse indeed.

Right now there are residents who have no idea how they'll ever pay off their educational debt and millions of patients who can't afford insurance or their drugs. If the House of Medicine can't look inward at its own bloated, self-serving, bureaucratic ranks of the ACGME that are sucking the life from direct patient care, what does this say about the prognosis for US health care?

As Tina Turner once sang, "What's love got to do with it?"

Rheumatoid arthritis

Rheumatoid arthritis: An autoimmune disease characterized by chronic inflammation of joints. Rheumatoid disease can also involve inflammation of tissues in other areas of the body, such as the lungs, heart, and eyes. Because it can affect multiple organs of the body, rheumatoid arthritis is referred to as a systemic illness. Although rheumatoid arthritis is a chronic illness, patients may experience long periods without symptoms. Also known as rheumatoid disease.

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Antibiotic

Antibiotic: A drug used to treat bacterial infections. Antibiotics have no effect on viral infections. Originally, an antibiotic was a substance produced by one microorganism that selectively inhibits the growth of another. Synthetic antibiotics, usually chemically related to natural antibiotics, have since been produced that accomplish comparable tasks.

In 1926, Alexander Fleming discovered penicillin, a substance produced by fungi that appeared able to inhibit bacterial growth. In 1939, Edward Chain and Howard Florey further studied penicillin and later carried out trials of penicillin on humans (with what were deemed fatal bacterial infections). Fleming, Florey and Chain shared the Nobel Prize in 1945 for their work which ushered in the era of antibiotics.

Another antibiotic, for example, is tetracycline, a broad-spectrum agent effective against a wide variety of bacteria including Hemophilus influenzae, Streptococcus pneumoniae, Mycoplasma pneumoniae, Chlamydia psittaci, Chlamydia trachomatis, Neisseria gonorrhoea, and many others. The first drug of the tetracycline family, chlortetracycline, was introduced in 1948.

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Employer Sponsored Insurance: Unfair and Unaffordable

By ROGER COLLIER

For all those Americans faced with higher health insurance premiums or less coverage (that’s most of us), the temptation is to blame the Affordable Care Act. Maybe instead we should be blaming the one thing the ACA didn’t significantly change: employer sponsored insurance—the norm for most working Americans.

Although the ACA imposed some new standards for coverage, ESI employers remain free to dictate most insurance details, the tax-exclusion of ESI benefits is largely unchanged, ESI premiums are still generally independent of income, and small employers can still offer ESI or not.

Unfortunately for millions of workers, it’s a model that’s increasingly neither affordable nor equitable. What seemed a reasonable approach fifty or sixty years ago when healthcare costs were far lower is now one of the most regressive health insurance systems in the industrialized world.

The Kaiser Family Foundation’s most recent employee benefits report demonstrates the problem.

Average ESI premiums are now $6,250 for an individual and $17,500 for a family. Most workers must pay part of the premium, with contributions averaging rather more than $1,000 for individuals and around $5,000 for family coverage. Most employees are also faced when they need care with substantial deductibles, averaging $1,300 for an individual and two or three times that for a family. (These figures are averages; in many cases, especially for smaller firms, the numbers are much higher.)

The out-of-pocket costs for premium contributions and deductibles may be tolerable for a manager earning $200,000 annually but can be a catastrophe for a$55,000 median income worker with a family. A look at the numbers for two typical employees shows just how unfair ESI has become.

The $200,000 manager with a family receives a tax-free benefit worth $22,400 in after-tax dollars, while the $55,000 worker gets only a $20,100 benefit. While both pay a $5,000premium contribution, it’s just2.5 percent of the manager’s salary,but almost four times this percentage of the worker’s pay. An even biggerinequity comes with the deductibles: incurring a typical $4,000 family deductible may be unwelcome for the manager, but it’s a crisis for the worker facing a choice between forgoing urgently needed care and financial disaster.

And it’s getting worse.

Each annual rise in healthcare costs requires employers to decide between increasing their share of premium costs and passing more of the burden onto their workers. Arecent survey of projected 2016 employer benefits illustrates what’s occurring. Faced with average 6 percent premium increases over 2015 levels (assuming no change in coverage), the typical employer is choosing to bear just a third of the increase, while dealing with the other two-thirds by simultaneously raising employee contributions and reducing coverage (usually by increasing deductibles).

Based oncurrent trends,in ten years’ time ESI premiums will average around $10,000for individuals, with employees paying close to $2,000, and some $30,000 for family coverage, with employee contributions near $9,000. Deductibles are expected to rise even more steeply, as employers try to control costs andalso avoid the Affordable Care Act’s delayed “Cadillac tax,” intended to curb overly generous coverage, but now likely to hit many more workers than originally expected.

If recent years’ pattern of close-to-inflation wage increases continues over the next decade, the well-paid manager (at $250,000 a year by 2025) will be able to afford the $9,000 family premium contribution and a potential deductible of $5,000 or more, but the average worker (at a projected $69,000) may find these costs impossible to bear. Two comparisons shows the unfairness.The manager will receive a benefit worth $38,500 and the worker one worth $4,000 less. Meanwhile, the manager will pay 3.6 percent of income as premium contribution and the average worker a big13 percent. (For lower-paid workers, the percentage will be even greater.)

Simple arithmetic shows thatby 2025, the combination of premium contributions and deductibles is likely to result inmany workers having to spend up to a quarter of their income to get any care at all.

The Affordable Care Act may have made healthcare available to more Americans, but in its attempt to minimize disruption for the majority of employees, it perpetuated a system that is increasingly unfair and unaffordable for those same workers and their families. (It’s also a system that healthcare economists have criticized for hurting smaller employers, reducing employment flexibility, damaging the overall economy, and doing far too little to encourage insurer competition.)

A fundamental re-think is needed. If we want employee health insurance to be fair and affordable, we must abandon the ESI system’s one-size-fits-all approach to premiums and deductibles. As in virtually every other industrialized nation, the cost of health insurance should be tied in some way to income.

Better yet, we should eliminate the employer role entirely. Replacing ESI and its unfair tax subsidies with coverage selected by individuals – not employers — would have several advantages. Insurance would no longer be tied to employment or be dependent on employer decisions, the true costs of healthcare would be more apparent, the bias against small businesses would be eliminated, employees would have more choices, insurer competition would be enhanced, and – most important of all – coverage costs could fairly reflect family income.

Roger Collier is the founder of the Campaign for a Rational Healthcare System (www.rational-healthcare.com). He was formerly CEO of a national healthcare consulting firm.

Ten Most-Read GrantWatch Posts Of 2015

During 2015, these were the most-read posts from Health Affairs Blog’s GrantWatch section on health philanthropy.

Perhaps you missed reading one of these? Why not check them out today?

Note: Bloggers’ affiliations are as of the time they wrote the post.

1. “Defeating The Zip Code Health Paradigm: Data, Technology, And Collaboration Are Key,” by Garth Graham, president of the Aetna Foundation, and colleagues MaryLynn Ostrowski, executive director, and Alyse Sabina, national program director of the foundation. (August 6, 2015)


2. “Independence—It’s What Older People Want,” by Terry Fulmer, who became president of the John A. Hartford Foundation in 2015. (November 30, 2015)


3. “To Reduce Unnecessary Care, Choosing Wisely Moves From Awareness To Implementation,” by Daniel Wolfson, executive vice president and chief operating officer of the ABIM Foundation, and Susan Mende, a senior program officer at the Robert Wood Johnson Foundation. (June 30, 2015)


4. “Do Americans Understand Long-Term Care?” by Lee-Lee Prina, senior editor/GrantWatch, at Health Affairs. This post is about a survey funded by the SCAN Foundation. (July 16, 2015)


5. “Bridging The Gap Between Behavioral And Primary Health Care For Low-Income Patients,” by Rachel Wick, a program officer at the Blue Shield of California Foundation. (May 16, 2015)


6. “Advancing Integrated Behavioral Health Care In Texas And Maine: Lessons From The Field,” by Becky Hayes Boober, a senior program officer at the Maine Health Access Foundation, and Rick Ybarra, a program officer at the Hogg Foundation for Mental Health. (August 11, 2015)


7. “The State Of Medicaid In New York: Progress And The Road To Value-Based Payments,” by Katharine (“Kate”) McLaughlin, communications director at the Health Foundation for Western and Central New York. (October 19, 2015)


8. “Using Innovative Community Partnerships To Address The Social Determinants Of Health: Report From The Colorado Health Symposium,” by Brian Castrucci, chief program and strategy officer at the de Beaumont Foundation; Christopher Smith, a senior program officer at the Colorado Health Foundation; Chris Kabel, a senior program officer at the Kresge Foundation; Rachel Keller Eisman, a practice manager at the Advisory Board Company; and Amy Slonim, a senior program officer at the Robert Wood Johnson Foundation. (August 19, 2015)


9. “Measuring What Matters: Using Data To Drive Action,” by Alonzo Plough, vice president, research-evaluation-learning and chief science officer at the Robert Wood Johnson Foundation. (July 24, 2015)


10. “A Foundation Delves Into Health Care Price Transparency,” by M. Gabriela Alcalde, vice president of policy and program at the Foundation for a Healthy Kentucky (May 21, 2015).

Have you thought about writing a post for the GrantWatch section? If you decide to do so, submit it here: http://healthaffairs.org/blog/submit-a-post/

See a full listing of GrantWatch posts here.

Ulcerative colitis

Ulcerative colitis: A bowel disease that is characterized by inflammation with ulcer formation in the lining of colon (large intestine). Its cause is unknown. The end of the colon (the rectum) is generally involved. When limited to the rectum, the disease is called ulcerative proctitis. The inflammation may extend to varying degrees into the upper parts of the colon. When the entire colon is involved, it is referred to as pancolitis or universal colitis. Symptoms include intermittent rectal bleeding, crampy abdominal pain, and diarrhea. Many patients experience long remissions, even without medication. Ulcerative colitis may mysteriously resolve after a long history of symptoms. Direct visualization (via sigmoidoscopy or colonoscopy) and biopsy of the lining of the bowel is the most accurate diagnostic test. Treatment of ulcerative colitis involves medications and/or surgery; changes in diet can sometimes help.

MedTerms (TM) is the Medical Dictionary of MedicineNet.com.
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Data Socialism

By SAURABH JHA, MD

In an unusually candid editorial in the NEJM, Longo and Drazen say that data sharing may be problematic because some researchers fear that the data could be used to by others to disprove their results. The editors predicted a new class of researchers who use data created by other researchers without ever taking the trouble to generate data themselves – research parasites.

With this editorial, the NEJM has firmly established itself as descriptive (the way the world is), rather than normative (the way the world ought to be). I, for one, find this move rather refreshing. I have been pumped to a diabetic state by the saccharine naivety of the hopey-changey, “we need this and that” brigade. The editors merely said what some researchers secretly think, and how many actually behave.

Once, I asked the PI of an RCT a specific question about outcomes. I received a reply within seconds. The PI sent me a pdf of the data. The email ended with that banal academic signature “Best, MD.”

I was flattered by the promptness of her response – many PIs who publish in high impact journals don’t bother replying. Then I discovered she sent me the supplementary appendix, which was also available online. Unsurprisingly, my question was not answered. But it was not supposed to be answered. The unpublished data, which included the answer to my question, was going to be used by the PI for more papers in high impact journals, as it should be.

Another time I asked an economist to share an economic model of a technology, which I did not believe was as cost-effective as he said it was. After a few evasive responses, when it became apparent that I was not getting the message through my thick skull, he replied, “sorry I can’t show you my model. I spent my PhD developing it.” If he thought that I was a data parasite gagging to prove him wrong he was, to put it plainly, spot on.

Put The ‘Network’ In Measures Of Network Adequacy

According to the Urban Institute more than 11 million people were enrolled in Affordable Care Act (ACA) marketplace health plans in 2015. While enrollment numbers tell us how many people are covered, they do not necessarily tell us whether all 11 million people have access to care.

Reports in The New York Times have identified situations where newly enrolled individuals have had difficulty accessing needed specialist care. Recent academic studies have underscored these problems, finding that many plans may not include any of a particular type of specialist or may include a relatively small portion of specialists in a given area.

Network adequacy is generally defined as sufficient number and types of providers to ensure reasonable access without delay. Defining “sufficient” and “reasonable,” however, is challenging. The Medicare program and many state regulators measure network adequacy with respect to time and distance traveled by patients, but standards vary. State definitions of a reasonable distance varies considerably from a 30-minute drive or 20 miles for primary care (Delaware) to 75 miles for specialty care (Texas) reflecting local context.

In light of the growing evidence on narrow networks, out-of-date network directories, and challenging access to covered providers, the Centers for Medicare and Medicaid Services (CMS) recently called for the creation of better measures of network adequacy in its November Notice of Proposed Rulemaking (NPRM) for the 2017 Benefit and Payment Parameters for marketplace health plans. Network adequacy measures could not only be used by regulators, but also provide important information to consumers interested in signing up for or switching plans. CMS floated one potential measure of network adequacy: a proportion of providers covered in a geographic area. Measuring network adequacy, however, is inherently complex.

The tools of social network analysis may provide a useful foundation for moving forward. A. James O’Malley defined social network analysis as a field that “studies the structures of relationships linking individuals (or other social units, such as organizations) and interdependencies in behavior or attitudes related to configurations of social relations.” Social network analysis reminds us that network adequacy is not only about the individual health care providers who are included in a health plan but also about the relationships between these providers.

Social network analysis has been applied to assess relationships between pairs of providers, to determine the position of a particular provider within the broader network context, and to study the network as a whole. Furthermore, social network analysis reminds us that provider relationships are dynamic — changing over time. We describe two insights from the existing work on social network analysis that may be incorporated into and used alongside of traditional measures of network adequacy.

Network Connections

Consumers may want the broadest possible access to providers. However, they also want to know that they are receiving well-coordinated care. Research at the intersection of health services research and social network analysis indicates that providers who share many patients with one another are more likely to have referral relationships and share clinical information. Seeing doctors who share clinical information may lead to patients receiving higher quality and lower cost care.

Examining not only the specific providers that are included in a health plan network but also how frequently providers in a plan network share patients with one another may be an important consideration for patients concerned about coordinated care. Importantly, such a measure does not necessarily mean a given pair of providers would coordinate care or coordinate care well, but this information would provide a sense for how frequently providers work together. Information about the number of patients providers share with one another may be measured using historical health plan claims data. These data could be supplemented with Medicare fee-for-service claims and other private plan data to provide a more complete picture of how often providers share patients.

Using this information, CMS, state regulators, and marketplace administrators could create several measures of network connections such as the proportion of provider pairs in the health plan network that share above a certain threshold of patients or the average number of patients shared between providers (where more shared patients indicates a stronger connection). Given high copays associated with seeing out-of-network providers, measuring the frequency a health plan’s providers share patients with out-of-network providers may be informative for patients worried about being referred out of network for their care.

To facilitate interpretation, regulators could consider presenting health plan network connection measures relative to what is observed in the most popular state government health plan or the Medicare fee-for-service program in that geographic area. It would also be reasonable for network connection measures to focus on connections between primary care providers and specialists (rather than on connections between specialists).

Stability Over Time

Are the providers listed today going to be the same providers that I need next month? McKinsey found exchange plans included more hospitals between 2014 and 2015 in their networks. To our knowledge, changes over time in health plans’ outpatient provider networks have not yet been examined — but they should be. By using multiple years of a health plan’s provider network data, CMS or other regulators can assess the average turnover rate per plan — both overall and by specialty. A stable plan network should ensure consistency both for patients and for providers’ ability to make in-network referrals.

Such stability can be quantified as the percent change (including providers who left as well as those who entered the health plan’s network). Stability could also be specialty specific, which may be particularly important for individuals with chronic conditions.

One could imagine more complex measures which incorporate both network connections and stability to assess how often pairs of providers work together over time. With one in four US adults managing two or more chronic conditions, many will likely need to see multiple providers regularly. For the successful, long-term management of their health, these patients would benefit greatly from measures of whether one’s health care team will continue to work together within the same plan.

A Critical Opportunity

Advances in data collection, statistical methods for relational data structures, and access to powerful computing servers could revolutionize how we can measure health plan network adequacy. State all-payer databases, for example, provide new, powerful, and nearly comprehensive data sources. Electronic medical record data are also a promising data source for assessing the patient sharing relationships between providers.

Moreover, network adequacy is inherently multidimensional. For consumers, it’s not enough to just assess the number of providers or distance to a provider. After all, a health plan directory could be chock full of dermatologists when you actually need an oncologist. It’s also not enough for a plan to cover the most doctors if those doctors rarely work together.

Not only would network adequacy measures be useful to consumers in selecting an appropriate plan, these measures could also be used by state and federal regulators to oversee health plan adequacy. Network adequacy measures can be used to set a floor with respect to what kind of limited network is too limited. These measures can also offer opportunities for health plans to differentiate themselves in a crowded field, balancing demands for broad access with the need for coordinated care and stable networks over time.

In this NPRM, we see a potentially powerful opportunity to influence how health plans design their provider networks. Health plans will focus substantial resources on what is measured and publicly reported. If CMS focuses only on plan breadth then that is what health plans will focus on, at the expense of other important factors. If, on the other hand, we deploy measures aimed at capturing and synthesizing networks’ complex and dynamic nature, health plans will have an incentive to offer high-value networks and consumers will have the tools to make more informed choices.

Why Are Physician Engagement Scores So Dismal?

By RICHARD GUNDERMAN, MD

Many hospitals around the nation have been stung by dreadful physician engagement scores. Engagement is a problem not only for demoralized physicians, but for healthcare organizations, their employees, and everyone they serve. They should take note, because low levels of engagement are associated with higher physician turnover, increased error rates, poorer rates of patient cooperation in treatment, and lower levels of patient satisfaction.

Definitions of engagement vary, but it generally includes pride, loyalty, and commitment. When engagement scores are low, physicians take little pride in the hospital, would not recommend it to a job-seeking colleague, and believe that the hospital’s mission and vision are not in sync the needs of patients. On the other hand, engaged physicians are more likely to perform better in every area, including patient care, education, and research, which benefits everyone.

To better understand the roots of poor physician engagement, I recently sat down for a conversation with a large group of students from the Indiana University Kelley Business of Medicine MBA program. Its students are practicing physicians from around the country who have realized that to improve patient care they need to become better leaders. Many work in hospitals that have identified engagement challenges and are attempting to develop solutions to the problem.

Challenged to explain declining physician engagement scores, the group pointed first to a lack of transparency. Many hospitals, they said, collect a great deal of information about the performance of their medical staff, but share little information in return. One physician described the situation in terms of a “one-way mirror,” in which data on physician performance are widely circulated, but the performance of the organization and its non-physician leaders remains largely opaque.

Another key problem, according to the group, is the fact that so many hospital administrators do not take care of patients. In contrast to physicians and nurses, whose work revolves around patients, hospital administrators typically have business backgrounds. Even health professionals who play leadership roles often “haven’t cared for patient in years,” said one participant. “This makes it difficult for them to understand what medicine is like on the front lines, and they seem out of touch.”

The group also pointed to the different standards by which physicians and hospital administrators are evaluated. The most important criteria of physician performance naturally revolve around patient care, while administrators are typically judged first on financial performance. This misalignment can frustrate both sides – physicians feel that administrators care about nothing but money, and administrators feel that physicians don’t understand the system-wide challenges the hospital faces.

Said one participant, “For many occupants of the hospital C-suite, the central operating principle is, ‘No margin, no mission.’ This means that, no matter how noble the hospital’s mission statement, revenue must exceed costs or the hospital will close.  In too many cases, though, ‘No margin, no mission’gets transformed into, ‘The margin is the mission.’” Financial priorities begin to take precedence over why the organization exists in the first place – to care for patients.

The group pointed to the growing bureaucratization of healthcare, driven in part by consolidation among healthcare organizations.  As hospital systems grow, their decision makingtends to rely more on impersonal policies and procedures and less on relationships.  Said one participant, “This is frustrating to health professionals,whose careers are devoted tobuilding trust.”  Many fondly recall a day when decision was based more on relationships than on policy and procedure manuals.

Another participant added, “To a hospital administrator, the corporation’s annual report might seem the most important thing, and the center of the universe might appear to be the hospital executive suite. But to health professionals, it is patients. When administrators put their own programs first, they inevitably seem out of touch with reality.” This can be especially frustrating when administrators come and go in just a few years, while many physicians maintain much longer commitments.

The physician-MBAs offered a number of suggestions for improvement.  One is for hospitals to start treating health professionals as partners in care. This means, among other things, ensuring that decision making involves strong representation by physicians, nurses, and others who care for patients on a day-to-day basis. When they are not present, even seemingly well thought-out initiatives can prove dangerously at odds with patient care.

Another suggestion is to ensure that hospital boards are well populated with people who regularly care for patients. It is all well and good to have health professionals involved in daily tactical decision making, but if they are not also present when organizational priorities are set and strategies are crafted, a sense that organizational management is out of touch with reality is likely to arise. As one participant put it, “Would any law firm operate with a board comprised almost entirely of physicians?”

A third is to pair each administrator with a health professional who understands what day-to-day patient care is like. The goal here is to ensure that administration and health professionals work in partnership, not only during formal decision-making sessions such as board meetings, but throughout each work week. This is likely to produce a much higher level of mutual understanding, which is precisely what many physicians think is lacking at the moment.

The ultimate goal here is not to make physicians and other health professionals happier, but to take better care of patients. Said one participant, “Physician engagement isn’t just about whether doctors happen to be happy or not. It’s about integrity. It does no good for the hospitalto make lots of money and reward its executives handsomely if the people who care for patients distrust it. Improving engagement scores is ultimately about ensuring that health professionals believe in their work.”

Richard Gunderman is a professor of radiology at Indiana University and a contributing writer at The Atlantic.

Larynx

Larynx: A tube-shaped organ in the neck that contains the vocal cords. The larynx is about 5 cm (2 in.) long. It is part of the respiratory system and is located between the pharynx and the trachea. Humans use the larynx to breathe, talk, and swallow. Its outer wall of cartilage forms the area of the front of the neck referred to as the Adam's apple. The vocal cords, two bands of muscle, form a V inside the larynx. Each time a person inhales, air goes into the nose or mouth, then through the larynx, down the trachea, and into the lungs. When a person exhales, the air goes the other way. The vocal cords are relaxed during breathing, and air moves through the space between them without making any sound. The vocal cords tighten up and move closer together for speech. Air from the lungs is forced between them and makes them vibrate, producing the sound of a voice. The openings of the esophagus and the larynx are very close together in the throat. When a person swallows, a flap called the epiglottis moves down over the larynx to keep food out of the windpipe. Also known as voice box.

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Health Affairs Briefing: Vaccines

As Seth Berkely, CEO of Gavi, the Vaccine Alliance, notes in an interview in the forthcoming issue of Health Affairs, "Vaccines do not deliver themselves." They also don't finance their own development or distribution, educate the public about their benefits, or eliminate income disparities in access to health services. The complex environment in which vaccines are discovered, produced, and delivered is the theme of the February 2016 issue of the journal.

You are invited to join us on Tuesday, February 9, 2016, at a forum at the National Press Club in Washington, DC, featuring authors from the new issue.

WHEN:

Tuesday, February 9, 2016

9:00 a.m. – 12:30 p.m.

WHERE:

National Press Club

529 14th Street NW

Washington, DC, 13th Floor

Register Today!

You may follow live Tweets from the briefing @Health_Affairs, and join in the conversation with #HA_Vaccines.

Panels will cover: The Value Of Vaccines, Sustainable Financing Of Vaccines, Delivering Vaccines, and Childhood Vaccines In The US.

Among the confirmed speakers are:

• Jon Kim Andrus, Executive Vice President, Sabin Vaccine Institute, on Combining Global Elimination Of Measles And Rubella With Strengthening Of Health Systems In Developing Countries


• Robin Biellik, Member, European Regional Measles/Rubella Verification Commission, on Slow Progress In Finalizing Measles And Rubella Elimination In The European Region


• Logan Brenzel, Senior Program Officer, Bill and Melinda Gates Foundation, on EPIC Studies: Governments Finance, On Average, More Than Fifty Percent Of Immunization Expenses, 2010-11


• Joseph L. Dieleman, Assistant Professor, Global Health, Institute for Health Metrics and Evaluation, University of Washington, on Vaccine Assistance To Low- And Middle-Income Countries Increased To $3.6 Billion In 2014


• Judith Kallenberg, Head of Policy, Gavi, The Vaccine Alliance, on Gavi's Transition Policy: Moving From Development Assistance To Domestic Financing Of Immunization Programs


• Abigail Lowin, Student, Columbia Law School, on A Tale Of Two States: Mississippi, West Virginia, And Exemptions To Compulsory School Vaccination Laws


• Michael McQuestion, Director, Sustainable Immunization Financing, Sabin Vaccine Institute, on Routes Countries Can Take To Achieve Full Ownership Of Immunization Programs


• Glen Nowak, Professor and Director of Center for Health & Risk Communication, Grady College, University of Georgia, on Exploring The Impact Of The US Measles Outbreak On Parental Awareness Of And Support For Vaccinations


• Sachiko Ozawa, Assistant Scientist, Department of International Health, Johns Hopkins University Bloomberg School of Public Health, on Return On Investment From Childhood Immunizations In Low- And Middle-Income Countries, 2011-20


• Carol Pandak, Director, PolioPlus, Rotary International, on The Global Polio Eradication Initiative: Progress, Lessons Learned, And Polio Legacy Transition Planning


• David B. Ridley, Dr. and Mrs. Frank A. Riddick Associate Professor of the Practice of Business and Economics, and Faculty Director, Health Sector Management Program, Fuqua School of Business, Duke University, on No Shot: US Vaccine Prices And Shortages


• Jason L. Schwartz, Assistant Professor, Department of Health Policy and Management, Yale School of Public Health, on When Not All that Counts Can Be Counted: Economic Evaluations And The Value Of Vaccination


• Angela K. Shen, Senior Science Policy Advisor, National Vaccine Program Office, US Department of Health and Human Services, on Country Ownership And Gavi Transition: Comprehensive Approaches To Supporting New Vaccine Introduction

Health Affairs is grateful to Merck, Takeda, PATH, and the Leona M. and Harry B. Helmsley Charitable Trust for their generous support of the issue and event.

Temporomandibular joint (TMJ)

Temporomandibular joint (TMJ): The joint that hinges the lower jaw (mandible) to the temporal bone of the skull. It is one of the most frequently used joints in the entire body, moving whenever a person eats, drinks, or talks.

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Data Parasites?

By DAVID SHAYWITZ, MD

In just four years, it seems, data science has devolved from the “sexiest job of the 21^stcentury” to a community of “research parasites.”

The latest assessment is courtesy of an editorial in the New England Journal of Medicine (NEJM), written by editor-in-chief Jeff Drazen, along with Dan Longo.

Essentially, Longo and Drazen argue that while the Platonic ideal of rich data sharing is lovely, reality is not so pretty.

First, Longo and Drazen allege, researchers who weren’t involved in gathering the original data often lack essential appreciation for how it was gathered, and thus may misinterpret it, as they “may not understand the choices made in defining the parameters.”

Second–and this is really the heart of the issue–Longo and Drazen worry that a new class of research person will emerge—people who had nothing to do with the design and execution of the study but use another group’s data for their own ends, possibly stealing from the research productivity planned by the data gatherers, or even use the data to try to disprove what the original investigators had posited. There is concern among some front-line researchers that the system will be taken over by what some researchers have characterized as “research parasites.”

Instead, Longo and Drazen urge would-be data scientists to work collaboratively with the original investigators, and to share co-authorship, and cite as an exemplar a paper in the current issue of the NEJM where just this model was successfully pursued.

My Twitter feed exploded in response to this editorial:

Michael Eisen, geneticist at UC-Berkeley: “One of the most shockingly anti-science things ever written.”

Sek Kathiresan, cardiologist/geneticist at MGH/Broad: “Shocking to see disparaging term ‘research parasite’ to describe use of data often created w/ public funds.”

Michael Hoffman, computational genomicist at the Princess Margaret Cancer Centre, Toronto: “Fear that others may use data ‘to try to disprove what the original investigators had posited’ is a dangerous misunderstanding of science.”

In contrast, I was delighted to see this editorial.

Not because I agreed with it–my heart is truly with the data scientists–but because I was grateful that someone had the courage to articulate a perspective I’ve come to believe is shared by the vast majority of academic researchers, but publicly voiced by no one–until now.

The result: a classic case of stated preference vs. revealed preference, where every academic researcher dutifully claims to be interested in sharing their data widely and freely, but somehow, tend not to actually do this.

Why? I’m sure the reasons vary, but somewhere near the top of the list is that most researchers perceive very little upside in generously and richly sharing their raw data. At a minimum, it’s regarded as a thankless hassle (one of the reasons negative results are often not published, and one of the reasons submissions to public resources like ClinVar usually come in much slower than many might anticipate), and beyond that, someone may look at the data differently and come to a different conclusion.

True, that might be how science is supposed to work–there is that–but it’s incredibly difficult to motivate individuals to act in a fashion they view–not unreasonably–as against their self-interest.

This may not be how the world should work–but is how it often seems to work, and without some acknowledgement of this perspective, efforts to spur data sharing among academic investigators will simply consume everyone’s time and arrive at high-minded conclusions not likely to be actioned.

The perfect example of this: our endless discussions about sharing data from electronic health records (EHRs). Everyone publicly agrees data should be shared easily, but somehow, progress is almost unimaginably slow–almost as if the key stakeholders really aren’t that interested in seeing it happen (see my comments about data silos here, and interoperability here).

Imagine how much better off we might be if a hospital executive wrote a similarly honest editorial about reluctance to share EHR data for competitive reasons. True, the author would be pilloried and then fired, but at least the candid perspective might meaningfully inform the national conversation.

I would like to live in a world where research data is shared in the expansive fashion envisioned by Atul Butte, rather than as described by Drazen and Longo. I would like to live in a world where clinical data is shared in a generous, intuitive and friction-free manner, rather than needing to pried forcibly out of an EHR.

But until and unless we come to grips with the gritty, human, competitive reasons why data aren’t shared, we’re headed to a future of righteous proclamations–and little data movement.

David Shaywitz is based in Mountain View, California. He is Chief Medical Officer at DNAnexus, a Mountain View based company and holds an adjunct appointment, Visiting Scientist, in the Department of Biomedical Informatics at Harvard Medical School. 

Gestational diabetes

Gestational diabetes: A diabetic condition that appears during pregnancy and usually goes away after the birth of the baby. Gestational diabetes is best controlled by dietary adjustment. Gestational diabetes can cause birth complications. One complication is macrosomia, in which the baby is considerably larger than normal due to large deposits of fat; such a baby can grow too large to be delivered through the vagina. Gestational diabetes also increases the risk of low blood sugar, low serum calcium and low serum magnesium in the baby immediately after delivery. The key to prevention is careful control of the mother's blood sugar levels. If the mother maintains normal blood sugar levels, it is less likely that the fetus will develop macrosomia, hypoglycemia, or other chemical abnormalities.

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CMS Releases Final 2017 Actuarial Value Calculator And Methodology, 2016 Enrollment Updates

Late in the day on January 21, 2016, as the city of Washington prepared to shut down for a massive snowstorm, the Centers for Medicare and Medicaid Services (CMS) released the Final 2017 Actuarial Value Calculator and Methodology and the Department of Health and Human Services Office of Assistant Secretary for Planning and Evaluation (ASPE) released another report on 2016 HealthCare.gov enrollment.

The 2017 Actuarial Value Calculator Methodology (released together with the calculator itself) describes how insurers offering non-grandfathered health plans in the individual and small group market are to calculate the actuarial value (AV) of those plans during 2017 for determining the plans’ metal level. The AV calculator arrives at an empirical estimate of the AV of a particular plan as a percentage of the average spending of a standard population for the essential health benefits.

Although CMS considered a number of potential changes to the 2016 AV calculator, and is considering further changes for 2018, the final 2017 AV calculator is essentially unchanged from 2016. The calculator implements a couple of technical changes and a couple of technical corrections, but the only significant change is that it updates the maximum out-of-pocket limit to $7,200, the estimated 2017 MOOP limit.

Among changes that CMS considered but is not implementing were reallocating costs among benefit categories to recognize rising drug costs, combining mental health/substance abuse disorder outpatient services with primary care and specialist office visits for some purposes to recognize mental health parity requirements, and changing the way coinsurance is handled for plans with separate medical and drug deductibles. The 2017 AV calculator uses the same rate for calculating medical trend as the 2016 AV calculator — 6.5 percent.

The AV calculator methodology starts with utilization and cost sharing data representing a standard population, which are derived from claims data from the Health Intelligence Company (HIC) database for calendar year 2010 trended forward. Spending and claims information has been derived from the database for 14 medical and four drug service categories. These data are adjusted in several ways to better approximate the current individual and small group population and then used to develop four sets of “continuance tables” that describe the distribution of claim spending for the standard population for the four metal levels.

Although the population in the current individual and small group market is assumed to be similar to that in the standard population database, the 2017 AV calculator will continue to adjust to account for the higher spending of the approximately 320,000 individuals who have moved from state and federal high-risk pools into the individual market. It will also adjust for the additional cost of pediatric oral and vision care and habilitative services, which were not generally covered in the individual and small group market prior to 2014.

Using the calculator, insurers proceed to calculate the AV for a plan by entering the metal level they are planning to achieve, the average cost over all enrollees in a plan, any expenses covered by employer contributions to health savings accounts (HSAs) or health reimbursement arrangements (HRAs) (which are considered plan expenditures), and (following detailed rules) plan-covered spending below the deductible, spending levels for MOOP, plan-covered spending between the deductible and MOOP, plan-covered expenditures beyond MOOP, and the effects of tiered-networks. At several steps, the methodology distinguishes between calculations that are used for plans that have separate medical and drug deductibles and calculations used for plans with combined deductibles.

The calculator only considers in-network expenditures. The methodology states that this is consistent with federal rules, and that in fact little utilization occurs out of network. CMS states that AVs calculated including and excluding out-of-network expenditures varied less than 1 percent. Query, however, whether with the rise of very narrow networks, an increasing amount of cost-sharing might take place out of network, and whether a very narrow network silver plan might not impose much higher cost sharing than a broad network silver plan.

Plan Selections After Application Of APTC

The ASPE Research Brief discusses plan selections and average premiums after the application of advance premium tax credits (APTC) in the 38 states using the HealthCare.gov eligibility and enrollment platform for the period November 1 to December 26, 2015.

Of the 3.64 million 2015 enrollees who actively reenrolled in coverage for 2016, 2.18 million (60 percent) switched plans, while 1.45 million (40 percent) remained with the plan they were enrolled in for 2015 or a crosswalk of that plan. The average monthly premium for those who switched plans was $137 but would have been $179 had they stayed with their plan. They thus saved $43 per month by switching. The average premium of those who stayed with their 2015 plan was $145, which might explain in part why they did not switch — they were already getting a pretty good deal.

More than eight in 10 (83 percent) of the 8.52 million 2016 HealthCare.gov consumers qualified for APTC, with an average amount of $294 per person per month. The APTC covered, on average, 72 percent of the gross premium, leaving an average net premium of $113 to be paid by the enrollee. Sixty-six percent of enrollees could have chosen a plan with a net monthly premium of $75 or less and 59 percent a plan with a net monthly premium of $50 or less. This presumably includes, however, bronze as well as silver plans, which would not have been eligible for cost-sharing reductions.

The report includes state level data for the 38 states covered by the report for a number of variables. The percent of all individuals with 2016 plan selections who received APTC varies from 64 percent in New Hampshire to 89 percent in Florida and Wyoming. The average monthly premium before APTC varies from $276 in Utah to $871 in Alaska. The average monthly APTC varies from $738 in Alaska to $189 in Utah.

Will the Pharmaceutical Industry Learn From Past Mistakes?

By SOEREN MATTKE, MD

Awash in negative headlines, public condemnation and government scrutiny, the pharmaceutical industry faces a public relations problem that, left untreated, could bring new regulations or sanctions either from governments or the courts. At the same time, though, the recent scandals over price gouging could offer an opportunity for responsible, research-based companies to distance themselves from the profiteers.

The industry has come under fire at a time of unprecedented innovation. As a physician who trained in the 1990s, I am in awe of the recent breakthroughs. Immuno-oncology drugs like Keytruda (pembrolizumab) and Opdivo (nivolumab) offer hope for patients with previously untreatable cancers. Entresto (sacubitril/valsartan) – the first novel treatment in over a decade for congestive heart failure, a condition deadlier than most cancers – was approved this year. There is a cure for many forms of Hepatitis C with Sovaldi (sofosbuvir) and vaccines for dengue fever and maybe even malaria may become available soon. More patients in developing countries than expected have access to antiretroviral drugs for HIV/AIDS and companies are devoting resources to achieving the same for the new scourge of noncommunicable diseases.

At the same time, some in the industry have been seeking to tackle the image problems. Overeager sales representatives are being reined in. Financial ties to physicians and clinical trial data are being disclosed. The main industry bodies in the United States, PhRMA and BIO, disowned Turing Pharmaceuticals, the company behind the notorious 5,000 percent price increase for Daraprim, a critical drug for certain infections in immunocompromised patients.

But more needs to be done and, in my opinion, the challenge is that most large companies are still being ruled by executives who are laser-focused on quarterly numbers and short-term profit; and lawyers who instinctively prefer established business strategy because its risks are known and manageable. This combination creates a blind spot for the coming tectonic shift in the health care system from fee-for-service to pay-for-value. This shift will radically change how health care is organized and financed over the next decade, and the industry will only get to help shape its future operating environment if it is seen as a responsible partner. Otherwise it will be at the receiving end of fundamental reforms that may well include price regulation in the United States, price negotiations by Medicare or permissions to reimport drugs from other countries.

An important step would be for the “research-based” companies, who truly innovate, to distance themselves from companies that operate like hedge funds, seeking out investment opportunities rather than focusing on research. The hedge fund business model focuses on generic but essential drugs that are only made by one or two manufacturers, because the market is so small, as in the Daraprim example above, or because they are costly to manufacture relative to their price, such as some intravenous drugs.

Companies buy up those assets and then raise prices substantially. Customers have little choice but to accept the new prices, because those drugs are essential and because the weak manufacturing base makes finding alternative suppliers hard. An example is Isuprel, an intravenous drug to treat certain arrhythmias in ICU patients. Isuprel was already a generic product when I trained, but its price increased by over 500% last year after Valeant Pharmaceuticals, a well-known protagonist of the hedge fund model, acquired the rights to it.

In themselves, eye-popping prices for breakthrough drugs do not generate lasting public perception problems, if the prices reflect true innovation. Even notoriously skeptical institutions have come to accept the high price of newly developed drugs. The U.K.’s health technology assessment body, the National Institute for Health Care and Excellence, endorsed Sovaldi, albeit at a discount to the $1,000 per pill list price. The feared Institute for Clinical and Economic Review, an independent evaluation organization in the United States, ruled Entresto’s price about right.

It would not be difficult for the research-based companies to distance themselves from the likes of Valeant, which spends about 5 percent of its revenue on R&D, compared to a typical 20 percent for the research-based companies. Their problem, however, is that they exploit similar, though less radical, pricing strategies for their own established products, just more quietly. So they are unhappy about the attention that companies like Turing draw to price increases, but they are not in a good position to squarely denounce the practice.

A solution could be for the research-based companies to adopt a voluntary code of conduct that would limit price increases on established products to inflation or to the cost of inputs. The short-term hit to profits would help protect the industry from getting thrown in with “hedge-fund pharma.” Moreover, the code of conduct would signal that its subscribers want to be rewarded for improving patients’ lives with innovative products, not for using market power for short-term gains. This would be a small step for multi-billion dollar companies, but a giant leap towards becoming a respected partner when decisions about the future of healthcare are being made.

Soeren Mattke is a senior scientist at the nonprofit, nonpartisan RAND Corporation and the managing director, RAND Health Advisory Services.

Vaccination, children's

Vaccination, children's: Vaccinations given to children. In the US, it is currently recommended that all children receive vaccination against the following unless the child has special circumstances, such as a compromised immune system or a neurological disorder:

Diphtheria, tetanus, and pertussis (whooping cough), as separate vaccinations or in combination as DPT

Haemophilus influenzae type B (HIB)

Hepatitis B

Measles, mumps, and rubella (German measles), as separate vaccinations or in combination as MMR

Pneumococcal infections

Poliovirus

Tetanus (lockjaw)

Varicella zoster virus (chickenpox)

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Supplemental Benefits Under Medicare Advantage

Medicare Advantage has grown rapidly since the 2003 Medicare Modernization Act, and now covers 17 million or 33 percent of the 54 million Medicare beneficiaries — up from 13 percent a decade ago. This option allows seniors and the disabled to receive their Medicare benefits from a choice of private health care plans, instead of a single benefit structure managed directly by the federal government through the Centers for Medicare and Medicaid Services (CMS).

Much has been written about the relative merits of Medicare Advantage (MA) and Medicare Fee-For-Service from the standpoint of efficiency and care coordination, but less attention has been paid to the supplemental benefits that distinguish MA plans. Policymakers have long been aware of the general categories of supplemental benefits available to enrollees under Medicare Advantage, but little has thus far been done to quantify their specific extent, scope, and availability.

It has been suggested that Medicare Advantage’s supplemental benefits, such as gym memberships, have been designed to attract healthier enrollees. However, CMS data reveals that these are relatively trivial elements of MA supplemental benefit packages. The bulk of supplemental benefits under MA are features of greater value to the sick than to the healthy. In addition to mandatory supplemental protection from catastrophic out-of-pocket costs, the majority of MA plans include preventive dental care, eye care, and hearing assistance.

Moreover, these features are almost as widely available under the subset of MA plans, which charge beneficiaries no supplemental premium — placing them within reach of the poorest beneficiaries, while serving as an indication of the efficiency gain of Medicare Advantage over the traditional fee-for-service structure.

Coverage Gaps Under Medicare Fee-For-Service

Medicare was designed over a half-century ago, along the lines of Blue Cross / Blue Shield health insurance plans of the time. As a result, the program consists of a hospital insurance program (Part A) in addition to a benefit for physician services (Part B), with payments for specific services being hard-wired into statute. Aside from the addition of a (Part D) benefit for prescription drugs, these function to a remarkable degree unchanged — leaving many important elements of modern health care inadequately covered.

Medicare’s separate parts each have their own idiosyncratic cost-sharing structures, imposing potentially unlimited out-of-pocket costs on those suffering from prolonged illness. With cancer drugs now often costing over $100,000 annually, and beneficiaries required to pay 20 percent of these fees, Medicare Part B is an inadequate form of insurance from catastrophic risks. To protect themselves from these expenses, those enrolled in Medicare Fee-For-Service plans may purchase supplemental private Medigap plans, costing an average of an additional $2,196 per year. Yet, though they help limit out-of-pocket costs, Medigap plans also fail to cover services that are specifically excluded from Medicare Parts A and B, such as vision, dental, or hearing.

Changes in vision are a natural consequence of aging — potentially undermining safe driving, mobility, and everyday household tasks. Most seniors will require adjustments to their eyeglass prescriptions, and the American Optometric Association recommends annual eye exams for all aged over 60, but 30 percent of the elderly in Medicare for over five years have not seen an eye care provider. Medicare covers ophthalmological procedures under Parts A and B, but not routine eye exams for eyeglasses or contact lenses.

Hearing problems similarly afflict large numbers of seniors, with 55 percent of those aged 70-79, and 79 percent of those aged 80 and over, suffering hearing loss. Such barriers to communication increase the burden on caregivers, strain relationships, and impede participation in society — yielding isolation with follow on costs for emotional, mental, and physical wellbeing. Although Medicare covers diagnostic hearing exams to see whether medical treatment is required, it does not cover routine hearing exams or hearing aids, or exams for fitting hearing aids.

Routine dental care is also specifically excluded from standard Medicare coverage. Almost a third of those aged over 65 have untreated dental caries, 16 percent suffer from gum disease, while 25 percent lack natural teeth altogether. Aside from the acute pain associated with poor dental health, untreated gum disease can lead to infections, while loss of teeth can yield severe nutritional deficiencies and complications for chronic conditions. A small cavity, which could be treated for $100, can quickly turn into a $1,000 root canal if not dealt with expeditiously. Indeed, when California’s Medicaid program eliminated its comprehensive adult dental coverage between 2006 and 2011, there was a significant spike in visits to hospital emergency departments (EDs) for emergency dental care.

As only 21 percent of Medicare beneficiaries purchase standalone dental insurance, while coverage for the 14 percent also eligible for Medicaid is threadbare to non-existent in most states, the majority of seniors lack dental coverage. Because of this, Americans aged over 65 incurring dental expenses spent an average of $375 on dental care in 2012—71 percent out-of-pocket—with Medicaid accounting for only 1 percent of total costs.

This being the case, some groups have pushed for an expansion of Medicare to include dental coverage, with Democratic presidential candidate Bernie Sanders introducing legislation to cover dental care under Medicare Part B. However, with standard dental insurance in an average market costing around $750 in an average market, adding similar coverage to Medicare could be expected to cost $40 billion per year — with utilization increasing, patients becoming less price sensitive, and existing expenses being taken onto the federal balance sheet.

The addition of a new entitlement of this magnitude is likely not politically realistic. The addition of a Part D prescription drug benefit during an era of budget surpluses was enough of a struggle and only barely succeeded. With the total cost of the Medicare program expected to double over the coming decade, and expenditures projected to continue rising as the baby boomers age thereafter, policymakers seeking to add service to the Medicare benefit must pursue alternatives to attaching new entitlements onto an open-ended fee-for-service system.

Supplemental Benefits Under Medicare Advantage

Every year, Medicare Advantage plans must submit bids denoting the cost at which they propose to provide the standard package of Medicare Part A and B benefits. For 2015, the average bid was 94 percent of the cost of Medicare services being procured directly by the federal government. Plans are therefore able to use these savings to provide “supplemental benefits” to attract enrollees. (Although benchmark amounts provided to MA plans are set slightly above equivalent fee-for-service spending levels, they must bear an additional Health Insurance Tax and implicit 30-50 percent taxes on funds returned to beneficiaries in supplemental benefits.)

MA plans are required to cap yearly out-of-pocket costs for beneficiaries, and must do so no higher than $6,700 — with 56 percent of beneficiaries in plans with out-of-pocket maximums lower than $5,000. The majority of MA beneficiaries are enrolled in plans charging zero additional premium, so they are essentially able to receive the central element of Medigap for no extra charge. Adding a similar cap for beneficiaries outside of MA would likely cost an additional $380 billion over a 10-year budget window, and is therefore also unlikely to be much more politically palatable than was the hastily-repealed Medicare Catastrophic Coverage Act of 1988.

It is possible to employ publicly available CMS data to quantify the specific nature, scope, and availability of other supplemental benefits under Medicare Advantage. Specifically, by combining the 2015 MA Contract Year Plan Benefits Package file with the September 2015 dataset of Enrollment By Plan, it is possible to assess how many MA enrollees are covered by each specific type of supplemental benefit. It is also possible to examine the extent to which these supplemental benefits are covered by the standard benchmark cost of the MA benefit, or merely provided in return for an additional premium.

Summing Up Supplemental Benefits

Supplemental benefits under Medicare Advantage mostly consist of items such as dental, vision, and hearing coverage that are of more value to the sick than the healthy, rather than features such as gym memberships targeting the healthy. And because supplemental benefits are almost as prevalent in zero-premium MA plans as in plans that require an extra premium, they are available to lower-income Medicare beneficiaries.

The relatively small difference in supplemental benefits available in zero-premium and other MA plans suggests that supplemental premiums at the margin might be employed more to reduce cost-sharing than to enhance supplemental benefits. It may also be the case that associated cost-sharing makes supplemental benefits less generous than immediately apparent, as beneficiaries remain required to cover most of the cost out of pocket.

An investigation of the interaction of cost-sharing and supplemental benefits is therefore an appropriate subject for future research, as would be an exploration of the relationship of supplemental benefits to plan bid and enrollment levels.