Reforming How Physicians Get Paid

Physicians should be put on a prospective payment system, where they get paid a set fee for each patient and each condition they treat, not a fee for every test or procedure they order. That recommendation, which parallels the system set up for hospital payments several decades ago, comes from former Center for Medicare and Medicaid Services adviser Peter Bach of Sloan-Kettering Memorial Hospital in an op-ed in today's New York Times.

While Bach correctly points out the perverse incentives that fee-for-service medicine establishes for physicians who own their own diagnostic and procedure clinics, his suggested reform is a half-measure that won't solve the deeper problem: the failure of many physicians to use best available evidence to inform their medical practice. Indeed, prospective payments may encourage some doctors to skimp on needed care, which can actually increase costs to the system in the long run.

He also doesn't address the issue of specialty care. Most serious conditions involve patients getting handed off from their general practitioner to specialists. Would the entire case come under the prospective payment? If so, would the primary care physician be reimbursed for managing the patient's complicated journey through the medical system, or would each specialist get a prospective payment? If the latter, it's hard to see where the proposed reform would lead to significant savings -- or better health care.

The evidence is overwhelming that the best and most cost-effective care comes from organizations like Kaiser Permanente and the Mayo Clinic where physicians are on salary and operate in teams. In the auto industry, Toyota taught that lesson to General Motors decades ago. Arnold Relman, the former editor of the New England Journal of Medicine, made teamwork a central motif of his call for reorganizing medical practice in his most recent book, "A Second Opinion."

On Tuesday, the Century Foundation announced that it has set up a panel of prominent physicians, bioethicists, and health care policy advocates led by senior fellow Maggie Mahar to propose ways of holding down health care costs and improving quality. I hope they take on the reorganization of physician practice, even though their initial list priorities did not include it.

Every high technology business depends on skilled workers to deliver high performance. The best performing organizations have carefully thought through how they organize and pay those skilled workers. In medicine, that process has barely begun.

Getting rid of the piece-work system is only a start, and prospective payments isn't the answer. Ultimately, very complicated and expensive cases are insurance problems, not situations whose outlier costs can be controlled through incentive schemes aimed at better individual case management.

Here's just a partial list of some of the questions that need to be addressed: Should specialty group practices be integrated into larger organizations that encompass all medical specialties, where a team of physicians is available to review every complex case? Should there be two- or three-to-one spread between the incomes of physicians with differing skills? Should physician ownership of facilities to which patients get referred ever be allowed?

I'm sure that researchers more familiar with the daily practice of medicine could come up with a half dozen more questions worth considering. There is no magic bullet fix for the lack of coordination that leads to improper care and waste in American medicine. Only thoroughgoing reform of how medicine gets practiced in the U.S. will get at the tangled roots of health care's high cost and low quality.

Diet Advice

A newly released Israeli study showed that moderately obese folks put on diets for two years lost more weight on the Mediterranean (fish, olive oil, wine, 9.7 pounds lost) and low-carbohydrate diets (10.3 pounds lost) than on a low-fat diet (6.4 pounds lost). The Mediterranean diet was best for lowering the bad-to-good cholesterol ratio, while the low-carb diet worked best for improving diabetics' fasting glucose levels.

Comment: Great comparative research. As for me, I'll take the Mediterranean diet. I need the bread to soak up the olive oil, and who can say no to a glass of red wine with that? It also suggests that while variety may be the spice of life, it's the kiss of death when it comes to weight control. Even well-off Americans eat Thai food one night, Mexican the next, an all-American beef-centered meal the next, and so on. And it doesn't matter if they are eating at home or out. It's a recipe for weight gain. Better to pick a healthy style of eating, no matter what it is, and stick with it.

Bon appetit.

Fat Kids? Feed 'em Statins and Supplements

The American Academy of Pediatricians provoked an instantaneous uproar yesterday after releasing new guidelines calling for screening kids for high cholesterol and prescribing statin drugs if diet and exercise interventions don't work. The New York Times' Tara Parker-Pope was forced to print a reaction story today that included all the critical comments left out of the previous day's report.

“What are the data that show this is helpful preventing heart attacks?” asked Dr. Darshak Sanghavi, a pediatric cardiologist and assistant professor at the University of Massachusetts Medical School. “How many heart attacks do we hope to prevent this way? There’s no data regarding that.”

Nor, Dr. Sanghavi added, are there data on the possible side effects of taking statins for 40 or 50 years.

Other doctors said the recommendation would distract from common-sense changes in diet and exercise, which are also part of the new guidelines.

“To be frank, I’m embarrassed for the A.A.P. today,” said Dr. Lawrence Rosen of Hackensack University Medical Center in New Jersey, vice chairman of an academy panel on traditional and alternative medicine. He added: “Treatment with medications in the absence of any clear data? I hope they’re ready for the public backlash.”

How hard would it have been to include those perspectives in the original story?

Here's something else that was left out of all the stories. A lot of bloggers, and even Parker-Pope in today's story, focused on possible financial ties to statin manufacturers of the seven physicians who wrote the guidelines for the AAP. I briefly checked out that possibility yesterday since the AAP in-house journal Pediatrics, which published the guidelines, failed to include a conflict of interest disclosure statement even though the journal has a policy requiring such statements.

I didn't come up with much on statins. But Jatinder Bhatia, who sat on the committee and was prominently quoted by Parker-Pope in her first story, has disclosed elsewhere that he is consultant and speaker for Mead Johnson, a unit of Bristol Myers-Squibb best known for its line of infant formulas (Enfamil). It also makes supplement-enhanced foods aimed at young kids. The AAP itself has numerous financial ties to manufacturers of enhanced foods.

Is that relevant? Should it have been disclosed? Here's a couple of other lines from the guidelines:

Increasing the intake of soluble fiber can be helpful in reducing plasma LDL concentration. . .

Plant stanols and sterols are added to a number of products, including spreads and margarine, orange juice, yogurt drinks, cereal bars, and dietary supplements. These compounds lower the absorption of dietary cholesterol and, in adults, have been shown to reduce cholesterol concentration by approximately 5% to 10% with minimal adverse effects.

Mead Johnson makes kid foods with added fiber. Yoplait markets a line of "heart healthy" yogurts. I don't know if Dannon does, but that firm is clearly a competitor of Yoplait. Besides Bhatia's ties to Mead Johnson, Nicolas Stettler, another panel member, sits on the board of the Dannon Institute, a non-profit research wholly funded and housed within the Dannon Yogurt Co.

While everyone is focused on the statin angle, the subtext here may be functional foods. Ads touting "heart healthy" brands for fat kids -- now recommended by the nation's pediatricians -- may be just around the corner.

Just what they need. More food advertising.

Going Beyond Hospital Report Cards

Death rates for hospitals, adjusted for patient sickness, are often used to measure quality of care. Hospitals with high adjusted death rates are then identified as needing improvement. This method has two problems, however: (1) the risk-adjusted death rates include both preventable and unpreventable deaths, and the percentage of preventable deaths is unknown; and (2) many preventable deaths occur at hospitals with average or below average death rates. Thus, these hospital "report cards" can only be a starting point in determining how to reduce the number of preventable deaths.

A study recently published in Circulation analyzed a sample of 347 inpatient deaths following bypass surgery in Toronto hospitals and determined that as many as one-third of the deaths could have been prevented with better care. The researchers also showed that the hospitals' report card grades were not correlated with the rates of preventable deaths. Even in the hospital with the lowest risk-adjusted mortality rate, about 20 percent of deaths were preventable. Preventable deaths occurred frequently among both low and high risk patients, and were actually more common in lower-risk patients. A large proportion of preventable deaths were related to problems in the operating room (86 percent) and intensive care unit (61 percent), and the study produced a list of specific improvements needed in the care of bypass surgery patients.

The method used in this study is one that could be used in other situations to improve quality of care, even in hospitals that are already performing well. In the study, experienced cardiac surgeons who were blinded to patient, surgeon, and hospital reviewed the medical records of the patients who died following surgery to identify preventable deaths. Two reviewers examined the records for each death, and a third reviewer was used when the two reviewers disagreed. For each preventable death, specific improvements in quality of care were identified that could have prevented the death. The use of reviewers who were expert in cardiac surgery allowed the reviewers to identify and provide solutions to the problems identified in preventable deaths.

In an accompanying editorial, Yale cardiologist Harlan Krumholz emphasized that the post-bypass death rates in Toronto hospitals were already low and the system "could have been content with its successes." Krumholz noted that high-profile medical mistakes that clearly cause harm represent only a small portion of the causes of preventable deaths. Thus, an important feature of the study was that the investigators did not require that a preventable death be one that the medical record reviewer was certain was preventable, but only one where the reviewers felt that the likelihood that it could have been prevented was greater than 50 percent. This standard was designed to identify more deaths where care was not optimal so as to maximize the potential for quality improvements.

How can the number of preventable deaths be reduced? Krumholz advocates that hospitals routinely and systematically identify problem areas that contribute to bad outcomes. Quality improvements that reduce or eliminate these problems should reduce the number of preventable deaths, even though it generally will not be possible to determine the particular deaths that were prevented. Krumholz notes that there is a need for a shift in culture so that assessments of preventable deaths are part of the expectation of every hospital, provider, and patient. "How else will we attain the goal of creating the high-reliability, high-performance institutions that we prefer for our practices and that our patients deserve?"

-- PM

Next Week's Battle over Medicare

The Health Affairs blog has a long article by inside-the-Beltway analyst Robert Laszewski foreshadowing next week's battle between physicians and the insurance industry over Medicare legislation, which must be passed or physicians will be forced to absorb a major paycut. His conclusion -- "the sky is falling" -- comes from his belief that the Democrats in Congress will cut Medicare Advantage payments to pay for maintaining physician salaries. His analysis is definitely worth reading.

Scanning for Dollars

The front page of the New York Times this morning has a don't miss article on the financial incentives behind using CT scans to look for heart disease. Medicare's decided in March to begin paying for the test despite no evidence that it saves lives (see this GoozNews post). The lobbying campaign by a newly created physicians guild that invests in CT scanning clinics is discussed in the last few paragraphs of the story. That campaign was aided by "entrepreneurial guidelines" touting the procedure, discussed in this GoozNews post.

Here are the two key quotes from the story:

"It's incumbent on the community to dispense with the need for evidence-based medicine."

--Dr. Harvey Hecht, Manhattan cardiologist and CT scan advocate

"There are a lot of technologies, services and treatments that have not been unequivocally shown to improve health outcomes in a definitive manner."

--Dr. Barry Straube, chief medical officer, Medicare

Alas, the article does not clearly describe the option that Straube and the Center for Medicare and Medicaid Services rejected in agreeing to pay for the scans. During Mark McClellan's tenure at the agency, he instituted a "coverage with evidence development" program. That in-between option would require physicians using heart CT scans to send in results and monitor their patients over time, sending that follow-up data into the agency, too. This would create a database that could be analyzed to see if CT scans for heart disease and subsequent follow-up care actually reduced the incidence of heart disease mortality.

"We didn't need to be talking about registries and the research," said Daniel S. Berman, president of Society of Cardiovascular Computed Tomography, a society of 4,700 physicians whose sole purpose is to promote CT angiograms, according to the article.

We don't need no stinkin' evidence. We don't need no stinkin' registries. We don't need no stinkin' research.

New leadership at CMS in the next administration at a minimum must insist on creating electronic registries for every new technology that it pays for where there is not yet clear cut evidence that it works. It also should set firm deadlines for manufacturers to submit well-controlled clinical trials offering definitive proof -- or the payments authorized under the coverage-with-evidence-development policy should be revoked.

When Late Is No Better Than Never

The special interest feast that is Medicare legislation gets its day in the media sun today after the House overwhelming passed a bill whose primary aim is to keep physician payments level instead of forcing them to absorb scheduled cuts. The bill also eliminated a proposed competitive bidding program for medical durable equipment that could have saved the agency billions of dollars annually.

That giveaway drew condemnation from the New York Times' editorial page and economics columnist David Leonhardt. Alas, where was the paper of record when some good folks up on Capitol Hill were trying to role back this rip-off of the senior citizen health care program?

The Hill broke the story in early May; I blogged about it here. A little attention from the MSM (mainstream media) over the last month-and-a-half would have helped. The Washington Post, the Wall Street Journal, and USA Today, my other morning reads, failed to even mention the story, while local papers like the Cleveland Plain Dealer rushed in to report the "success" of local companies who overcharge the system.

Major news outlets need to rethink their roles in an era when news has become an ubiquitous commodity and the Internet has made immediacy the coin of the realm. Editorials and columns are here today, gone tomorrow, and are largely irrelevant when they come after the fact. The media's ability to conduct extended investigations are fast disappearing (when was the last time you saw a five-part series in a daily paper?).

The only way for newspapers (or news websites and blogs that employ full-time journalists) to be relevant in the Internet era is to take up causes. Bring back crusading journalism! If there is an obvious injustice out there, especially one involving special interests ripping off the public purse, the way to counter their power is to hammer away day after day at the issue. What good does it do to let us know the day after the vote that Congress sanctioned another giveaway? And if you're a local paper, take on those special interests, even if they're from your home district. A few local jobs are not worth the larger costs to society.

Hoist on His Own Petard

Every once in a while, something appears in the press that make me laugh out loud because of its mistakes and contradictions. Today's column by Scott Gottlieb in the Wall Street Journal achieved that dubious distinction.

The column's core claim was that Congress in its annual reauthorization for Medicare is trying to turn medical decision making over to the "bureaucrats" at the Center for Medicare and Medicaid Services by cutting excess payments to Medicare Advantage plans, the insurance industry's answer to senior citizen health care. Congress launched the Medicare Advantage experiment in 2003 by giving its sellers a 13 percent increase over the costs of traditional Medicare.

And as a result, Gottlieb tells us, Medicare has just "20 doctors and 40 total clinicians (including nurses)" making coverage decisions, while private insurers "employ thousands of doctors, nurses and pharmacists, many experts in new technologies."

I thought to myself: What a miracle! Medicare with significantly less overhead has created a system whose overall costs rise at about the same rate (and sometimes slower) than private insurance, while it consistently maintains higher satisfaction rates in surveys of its users.

Thanks Scott! You just made THE central argument that favors making Medicare the default plan for covering the uninsured.

Then we're told that a recent Price Waterhouse Coopers survey showed that private plans spend four times more than Medicare on "consumer services, provider support, and marketing." Medicare would need to hire 4,500 clinicians to keep pace with the effort private insurers pour into "answering the telephone to adjudicate individual issues."

Isn't it possible that all those people calling private plans are asking why they were turned down for coverage? Or are they wondering if something will be covered? And since Medicare doesn't have such people, doesn't that suggest that Medicare doesn't generate the same level of complaints and queries? My mom, who passed away in April at age 86 (Gottlieb used a friend's dad as his sole anecdote, so I feel comfortable getting personal here), went through six years of declining health and was under constant physician supervision. Over that entire time period, the only coverage questions our family had involved the private drug plan she used.

Again, thanks Scott! Chalk up another argument for Medicare for All.

Next he complains that Medicare doesn't have a single oncologist on staff, yet its rules include 165 "restrictions" on the use of cancer drugs and diagnostic tests. As my teenage daughter would say, "hellooooo."

Did this blog not just cover the fact that Medicare has radically expanded its authorization for use of cancer drugs by putting off-label decision making in the hands of compendia writers in the private sector, many of whom are on the payrolls of the companies that make the drugs? Aren't cancer drugs the fastest rising component of Medicare spending, slated to nearly double by 2015? When I talk to oncologists (and I frequently do), what I hear about is the rapidly rising cost of drug co-pays for their patients, not about restrictions on the marginally useful products coming out of industry's labs.

The column concludes by returning to its original agenda: Congress is moving to cut the Medicare Advantage plans' 13 percent bump over traditional care, which proponents claim goes to pay for extra "benefits." As Scott so amply demonstrated earlier in the column, those aren't benefits, those are insurance industry costs.

Medicare (Dis)Advantage is proving day by day that it cannot compete with Medicare on costs, on service, or on customer satisfaction. The solution is easy. Level the playing field, Dr. Congress, and let the marketplace decide. And thanks Scott for giving them all the ammunition they need to argue their case.

Taxing Cigarettes Reduces Heart Disease

(HBNS) -- If more states introduce tobacco control programs for their residents who are regular smokers, the number of U.S. deaths due to coronary heart disease might drop, finds a new study that looks at an ongoing Massachusetts initiative.

A connection exists between coronary heart disease and cigarette smoking, and the new study determines how a reduction in smoking affected the number of related deaths in Massachusetts between 1993 and 2003. The state introduced its Massachusetts Tobacco Control Program (MTCP) in 1992, which received funding through a special cigarette tax, and the researchers say they expected to find it helped control the rate of smoking.

“California was the first state to have a statewide program like the MTCP and they witnessed substantial declines,” said lead author Zubair Kabir, who at the time of the study was a research fellow at the Harvard School of Public Health. “So it was not surprising that Massachusetts, the second state, would see such declines as well, which reflect the impact of a comprehensive, integrated and — at the time — well-funded program.”

The study appears in the August issue of the American Journal of Public Health.

Kabir and his colleagues examined data from daily smokers ages 25 to 84. They found that between 1993 and 2003, coronary heart disease mortality declined 31 percent — from 199 deaths to 137 deaths per 100,000 persons each year. Smoking prevalence declined from 20.5 percent to 14.5 percent

Based on these results, the researchers calculated that 425 fewer coronary heart disease deaths were attributable to decreased smoking during the 10-year period. They concluded that expanding comprehensive tobacco control programs, such as MTCP, to other states could avoid more tobacco-related disease deaths.

Audrey Ferguson, health promotions manager at the American Lung Association of Indiana, agreed with the authors’ conclusion.

“The American Lung Association strongly supports comprehensive statewide tobacco control efforts, including increased tobacco taxes and smoke-free workplace legislation,” she said. “We recognize that tobacco use does not affect just the lungs or the heart of the tobacco user. Everyone would see health benefits from a comprehensive tobacco control plan.”

The MTCP was not immune to roadblocks, however. According to Kabir, budget cuts stalled state funding for the program in 2002, but it is now active again.

Nevertheless, he added that, “Although funding has risen somewhat since 2002, now around $12 million per year, it is nowhere near the levels seen at the height of the program in the late 90s.”

Overutilization

"The United States spends substantially more per person on health care than any other country, and yet U.S. health outcomes are the same as or worse than those in other countries." So begins a commentary by Ezekiel J. Emanuel, a bioethicist at the National Institutes of Health, and Victor R. Fuchs, the well-regarded health care economist at Stanford University, which appears today in the Journal of the American Medical Association.

Welcome to the fray, gentlemen.

I don't need to go over the various statistics and health outcome anomalies covered in their essay, most of which have appeared at one time or another on this blog, in recent books like Shannon Brownlee's "Overtreated" and Nortin M. Hadler's "Worried Sick," or in the most recent reports of the Congressional Budget Office, which I reported on here and here. Bottom line: about 30 percent of health care expenditures are a waste, medically unnecessary, and, for all intents and purposes, a make-work program for physicians, drug companies, device companies, hospitals and everyone else on the health care 16-percent-of-GDP-and-rising gravy train.

So let's cut to the chase and go to their discussion about solutions. "Changing Americans' affinity for new technology is somewhere between difficult, impossible, and undesirable," they write shortly after agreeing that much of what is new isn't really better than the old.

How about changing physician training and practice so they are less dependent on commercial forces, less likely to generate high-priced specialists, and short-change primary care? Calls for changing physician education are "usually ignored," the soberly write. "Rapid reforms of medical education and training, even when widely acknowledged as essential, are uncommon."

Okay. How about curbing aggressive marketing to physicians by drug companies and other providers? "Such changes alone are unlikely to have a large effect on overutilization." Malpractice reform? "Reform would affect only some defensive practices."

So what is the most effective reform in their eyes? "More value-based co-payments, modeled on current tiered pharmaceutical benefits, that link the amount patients pay to effectiveness and cost of alternatives. . . this is not an all-or-nothing rationing scheme, but rather an ethical way to have patients experience costs but not at the expense of important outcomes."

Ah, I see. The market will save us through higher co-pays. I am dubious. When I go to the doctor, I rely on my learned intermediary to tell me what is necessary. Must I, Patient, now become I, Health Care Consumer, when I am sick and vulnerable? Must I conduct an internet search of the latest articles on PubMed and the U.S. Preventive Services Task Force database before determining if I should shell out an extra $30 for that test or drug? Or, should I simply reject these offered treatments because my insurance company decided they deserved a higher co-pay?

But more significantly, why am I, Patient, being asked to make these decisions at all? How many years of medical school do I have under my belt? Isn't that my doctor's job? Why don't they recommend the creation of a reimbursement scheme for the learned intermediaries who order up every diagnostic test, drug, and procedure which will encourage the doctors to use the most effective and cost-effective care? If we can have a three-tier co-pay scheme for patients, why not a three-tier reimbursement for doctors and hospitals? Market signals would work just as well for producers as for consumers, would they not?

Can't go there yet, say Emanuel and Fuchs. "Many more experiments are needed" before payers can implement pay-for-performance, bundled payments, partial capitation, value-based payment or "other payment methods to promote prudent use of resources."

Curiously, Emanuel and Fuchs make no mention of creating a comparative effectiveness agency to let patients and physicians alike know what works best. They simply presume that somebody -- the insurance companies that they admit waste $50 billion a year in excessive administrative costs, or the Center for Medicare and Medicaid Services, which is routinely defanged by Congress or special interests, who successfully lobby to get their new technologies paid for -- will be able to set appropriately tiered co-payments that will send consumers the market signals and hold down costs.

It is now a generally accepted fact that 30 percent of all health care expenditures are wasted. This statistic is hammered home year after year by the Dartmouth Atlas of Health, which compares outcomes in low-spending areas of the country to outcomes in high-spending areas and finds they are usually about the same. The implication of their work is that it is going to take a radical overhaul of the way medicine is practiced -- by physicians, by hospitals, by suppliers -- if the nation is ever going to put a brake on its ever-rising health care costs.

Emanuel and Fuchs understand the problem. Indeed, their essay this morning reflects what is rapidly becoming the conventional wisdom, which is summed up in their headline: "The Perfect Storm of Overutilization." Alas, like all too many diagnosticians of the rising health care costs crisis, they shy away from the radical prescriptions it will take to cure the disease.

Evidence-Based Medicine in Russia

My last morning in Moscow, I had breakfast with a senior faculty member of the Russian Academy of Medical Sciences. Vasiliy Vlassov wants to bring evidence-based medicine to a land still enamored of the "salt cure" for lung diseases. Talk about an uphill struggle! The Scientific American website earlier today posted my story about our conversation.

Health Wonk Review

The latest Health Wonk Review is up on the Health Affairs Blog. Check it out!

Single-Payer in Taiwan

Congressional Quarterly carries a long article extolling Taiwan's single-payer health care system, which was only adopted in 1995 with the help of U.S. academics. Worth reading.

CMS Endorses Hiding Conflicts of Interest from Public

Last Friday, the Center for Medicare and Medicaid Services adopted a policy that makes a mockery of the concept of conflict of interest disclosure and will only serve to further obscure how the pharmaceutical industry is skewing the practice of medicine.

Last Friday, CMS announced it will begin allowing oncologists to refer to the National Comprehensive Cancer Network's guidelines and drug-use compendium when they seek reimbursement for the off-label use of anti-cancer drugs. The Center for Science in the Public Interest, in a belated public comment, had protested inclusion of the NCCN compendium because it does not disclose the individual conflicts of interest of physicians who write its guidelines.

To see the full CMS decision, you can go here. The relevant paragraph on the conflict of interest issue reads:

It incorporates a process for public identification and notification of potential conflicts of interest of the compendia's parent and sibling organizations, reviewers, and committee members, with an established procedure to manage recognized conflicts. The policy . . . (has) public disclosure the listing of all potential conflicts of interest and full disclosure of every organization that has provided funding to NCCN on their website. Member dues pay staff and operating costs, while industry grants pay distribution costs.

In fact, the compendium does not publicly disclose potential conflicts of interest as such disclosures are routinely made in the medical and scientific literature. Therefore, what CMS has posted on its website is a deliberate obfuscation.

As I pointed out here, the NCCN compendium does not list the conflicts of interest of individuals on its publicly available guidelines. It only lists all the companies that gave money or research grants to ANY of the physicians who served on the committee. The individual ties between specific companies and specific physicians are not revealed. This is the same strategy used by the American Society of Clinical Oncologists, which represents the nation's 20,000 oncologists, to hide conflicts of interest during its annual meeting, which just concluded in Chicago.

This policy turns disclosure on its head and renders it meaningless. It deliberately hides from the public, patients and practicing physicians the individual financial ties that oncology's thought leaders have to pharmaceutical firms. Congress should investigate whether it wants the decision to spend Medicare tax dollars driven by such a transparently non-transparent process.

Boosting Health Care in Siberia

It's amazing to realize one can fly three time zones east of Moscow and still be only half way across Russia. That's where I found myself this week on assignment for Scientific American. My destination was Tomsk Oblast, a state as large as Texas with only a million people. Tomsk is three-quarters swamp, chock full of oil and gas, and suffering from the Russian scourges of rampant alcoholism, unemployment and a tuberculosis epidemic.

While reporting the tuberculosis story, I discovered an interesting health care program put in place by the Putin administration. I couldn't help but think that it could be used by any country interested in delivering low-cost health care services to under-served communities. You can read about it in this story on the Scientific American website.

CMS Decision on Compendia Looms

Billions of dollars in Medicare payments will be at stake this week when the Center for Medicare and Medicaid decides whether or not to add three additional drug compendia to the one that physicians already use to justify reimbursement for off-label use of cancer chemotherapy drugs. The projected decisions dates were June 2-4, according to an official I interviewed earlier this month.

Last Thursday, I sent this letter to CMS asking them to hold off on making the decision until one of the compendia -- published by the elite National Comprehensive Cancer Network -- lets the public and patients know if the physicians who wrote it have ties to manufacturers whose drugs they are evaluating.

So far, no reporter has picked up on this story (I first wrote about it here.) I find this curious. I've read a number of stories in recent months about the high cost of newer anti-cancer drugs, and how people are going broke or deep into hock trying to afford the co-pays. Newer anti-cancer biologics like Genentech's Avastin often carry price tags nearing $10,000 a month. If the use is listed in an approved compendia, Medicare and Medicaid will pay some or even most of that cost. Private insurance companies often follow Medicare's lead on payment issues.

But patients in private plans (those under 65) often have to pay a quarter or more of that price as a co-pay. They rarely have the research skills to determine if taking those drugs is the best thing to do given their dire circumstances. They usually rely on their oncologists. And their oncologists rely on these compendia to come up with off-label regimens for their desperate patients, who are often in the final stages of their ultimately fatal disease.

The evidence for including many of the off-label uses in these compendia is thin. Many, at best, add just a few months of life, often with harsh side effects. Yet they must be taken throughout the final months or even years of the diseases' progress.

It is always a close call whether or not to include these possible uses in compendia that lists both on and off-label uses. If it wasn't, the companies would have gone to the Food and Drug Administration and sought approval for that indication. Is it too much to ask on behalf of patients, doctors, and taxpayers that physicians without ties to the manufacturers make the compendia inclusion decisions? If CMS isn't willing to go that far, is it too much to ask that an agency facing long-term fiscal instability at least require that the physicians who write the compendia tell us which drug companies they work for?

Billions of dollars a year are at stake in the decisions that are slated to be made next week. Hopefully, someone on Capitol Hill is paying attention.

Defending Prevention

Last February, the New England Journal of Medicine ran a potentially misleading review of the cost-effectiveness of illness prevention strategies that may have led many casual readers (such as the editors of the Washington Post Health section) to conclude that most health-improving measures -- such as aggressive counseling for people who are either overweight or smoke -- cost more in the long run than they are worth. This morning, the Journal of the American Medical Association carried a proper antidote by Steven H. Woolf of Virginia Commonwealth University, who is fast becoming a leading expert on prevention techniques for improving the nation's health.

Woolf admits that personal behavior is difficult to change, and many intervention strategies for preventing disease cost more money for the health care system than they save. But he takes direct aim at the NEJM article claim that "drew similarities between the cost-effectiveness ratios of prevention and disease treatments, all but ignoring the much lower cost-effectiveness ratios of the preventive services that guidelines advocate."

But touting those physician-delivered prevention services that are cost-effective is not the core of his argument. The health care system is the improper vehicle for delivering the most cost-effective preventive services and strategies, he argues. "Behavior change occurs where people live -- at home, work and school -- but the community offers little infrastructure for modifying lifestyle."

Advertising, school lunches, restaurant menus, entertainment media, convenience technologies, and the built environment discourage physical activity and promote consumption of calorie-dense foods, large portions, tobacco, and alcohol. Social conditions (eg, inadequate education, impoverished communities) impose additional barriers.

Boosting prevention is only partially a question of how our society allocates its health care system resources. A properly defined prevention campaign requires tackling issues that lay beyond the health care system. Imagine calorie counts on every fast-food and chain restaurant menu. Imagine rejuvenated big city public health departments sending skilled nutritionists bearing dietary advice and training into low-income neighborhoods suffering from some of the nation's highest obesity rates.

Giving people the tools to help themselves lose weight is the first step in the process of reversing the nation's obesity epidemic. (A new study, also published in today's JAMA, showed the rate of childhood obesity has finally stopped growing, but about a third of all kids are still either obese or overweight, about triple what it was in the 1960s and 70s.)

Woolf's hope is that the demonstrable effect that deteriorating health is having on longevity and the economy will generate the political will to act. "Self-interest (living longer and healthier) and common interest (economic stability) may inspire the personal sacrifice of getting healthy and the collective sacrifice (by the private sector and the state) of mobilizing the resources to make it happen," he concludes.

CBO Wants to Play Major Role in Health Care Debate

Congressional Budget Office chief Peter Orszag told a Health Affairs forum yesterday that his office plans to play a major role in next year's health care reform debate. He now has 47 analysts working on a series of major reports that will give Congress a menu of options for holding down rising health care costs in the nation's Medicare and Medicaid programs. They will be released shortly after the fall election.

"It may be that policy makers don't want to deal with cost growth," he said. "but at least we can give them a list of 20 options."

While recognizing that government programs represent only half of health care expenditures, and that private spending is rising just as fast as public spending, Orszag said that rules adopted for Medicare in particular can determine how medicine gets practiced throughout the system. And the cost-savings potential is huge, he said.

"Thirty percent of health care services delivered do not improve health outcomes," he said. "That's $700 billion a year. There is not another area in economics that presents such an opportunity. That's five percent of GDP."

That prompted one questioner to articulate the famous nostrum that one man's waste is another man's paycheck. To which the head of the non-partisan CBO replied, "we need evidence, and we need incentives to drive patients to go for better care, not more care."

Perhaps his most interesting observation involved how to structure reform. Rather than focus on economic incentives like tax breaks that at best drive behavior at the margin, he said reformers should pay close attention to the psychological and social dynamics of how people make their personal health care choices.

For instance, insurance programs should be structured so that people default into the lowest cost option that delivers the best care. Most people, he said, do not choose their health care plans, they default into them. "Inertia is an incredibly powerful force in human behavior and ignoring that is just not an option," he said.

On a down note, he added his voice to the growing conventional wisdom that prevention measures will not generate savings for the health care system. All candidates for president have made prevention promotion a central motif in their health care plans, claiming that it will save the health care system money in the long run by promoting healthier lifestyles and arresting ill-health before it progresses to chronic disease.

In the candidates representatives' panel that followed, Harvard University's David Blumenthal, who is advising Sen. Barack Obama, said the key to determining which prevention steps make sense (those most often cited by prevention advocates are direct interventions to help smokers quit and to help obese people adopt better eating and exercise lifestyles to prevent diabetes) is cost effectiveness research that accurately measures the benefits of such programs.

"We know much secondary prevention is within the range of what makes sense in terms of cost effectiveness," he said.

George Washington University's Jeanne Lambrew, an informal adviser to the Clinton campaign, emphasized the need for the nation to create a "best practices institute," which could encourage physicians and public health agencies to adopt such cost-effective prevention measures.

Former CBO chief Douglas Holtz-Eakin, who is advising Sen. John McCain, signaled the Republicans, if elected, will fight against creation of new agencies to generate cost-effectiveness studies and develop authoritative best practices guidelines. These new agencies will be able to identify not just cost-effective prevention measures, but should help lower costs by highlighting those technologies that are both pricey and less effective and therefore shouldn't be reimbursed by payers.

"We need decentralized information sharing," the Republican presumptive nominee's adviser said. "We need to build a system that seeks out information about profitable prevention measures, one that is decentralized, not government run."

Two New Books Well Worth Reading . . .

The New England Journal of Medicine asked Steffie Woolhandler and David U. Himmelstein, long-time advocates of single-payer national health insurance, to review two new books that offer radical prescriptions on two issues that are central to meaningful health care reform: the corporate takeover of modern medicine and the perverse incentives that encourage physicians to overtreat the worried well. You need a subscription to read the review, but needless to say, it was quite positive. Here are the titles, available in finer bookstores or from your favorite online seller:

The Corrosion of Medicine: Can the Profession Reclaim Its Moral Legacy? By John Geyman. 344 pp. Monroe, ME, Common Courage Press, 2008. $24.95.

Worried Sick: A Prescription for Health in an Overtreated America. By Nortin M. Hadler. 353 pp. Chapel Hill, University of North Carolina Press, 2008. $28.

I'll know this blog has made the big time when publishers start sending me review copies in the mail. Ditto to editors looking for reviewers.

Doc Pay: Salaries v. Fee-for-Service

Health care reform entails more than health insurance reform, although you wouldn't know it by listening to the candidates of both political parties. Achieving affordable universal coverage will depend on holding down the relentless rise in health care costs, and that will depend on changing the way health care is delivered. Reform must include changing the way physicians are reimbursed.

The current system relies on fee-for-service medicine, which encourages doctors and hospitals to do more services to increase revenue. And its primary beneficiaries are high-paid specialists, who rely on the 21st century equivalent of the time-and-motion studies used by factory engineers in the early 20th century to create compensation schemes for skilled workers.

Under such schemes, the amount of time needed to perform each task in a complicated project (like a tool-and-die maker cutting a new mold for a machine tool) is multiplied by a rating of the skill needed to perform each task. That's then multiplied by the pay scale to come up with the relative value of each worker's time. So in the steel foundry where I worked in the late 1960s, the tool-and-die makers earned 50 percent more than the molders, and twice as much as the laborers.

Medicine uses the same system to determine physician compensation. An American Medical Association committee dominated by high-paid specialists determines the "relative value" of the skills needed to perform, say, eye surgery compared to analyzing a rare eye disease that might be easily treatable with a drug, or shouldn't be treated at all.

The result is wide variability in physician income, and a huge incentive for doctors to enter specialties that not only get high rates for each procedure but can game the system by doing far more procedures than the original time-and-motion studies suggested they could. Sometimes that is a result of improved technology. More often, it is simply the result of ramming more patients through the procedure mill. Today's Wall Street Journal had an enlightening chart showing the resulting disparities in physician income:

Alas, the story offered an inadequate analysis of what needs to be done. Instead of discussing the relative value system and giving voice to critics who suggest scrapping it entirely, the story talked about a looming shortage in sub-specialties that are paid like general practitioners (non-surgical eye specialists in the story). The implication was that insurers need to raise these sub-specialties' relative pay to attract young doctors to the field.

Arnold Relman, the former editor of the New England Journal of Medicine, in his new book "A Second Opinion" offered a different approach. Yes, different physicians have different skill sets and some take longer training than others. That should be recognized in pay scales.

But, he suggests, the more important reform is that physicians be organized into group practices that encompassed all the necessary specialties. And they should be paid not by the number of patients they see or can run through their individual offices, but by skill, experience and their relative importance to improving patients' overall health.

This would give a huge boost to general practitioners and docs who coordinate care. And it would eliminate the perverse incentive that encourages specialists like radiologists and invasive cardiologists to overprescribe many diagnostic tests and surgical interventions.

The Rise of the Uninsured Insured

Today's New York Times leads with a story documenting inadequacies in a growing number of health insurance policies. Rising co-pays, deductibles and caps on coverage are leaving many families with huge and unpayable bills despite thinking they were insured for serious or sudden illnesses. Here's a major anecdote worth highlighting:

Shirley Giarde of Walla Walla, Wash., was not prepared when her husband, Raymond, suddenly developed congestive heart failure last year and needed a pacemaker and defibrillator. Because his job did not provide health benefits, she has covered them both through a policy for the self-employed, which she obtained as the proprietor of a bridal and formal-wear store, the Purple Parasol.

But when Raymond had his medical problems, Ms. Giarde discovered that her insurance would cover only $22,000, leaving them with about $100,000 in unpaid hospital bills.

Even though the hospital agreed to reduce that debt to about $50,000, Ms. Giarde is still struggling to pay it — in part because the poor economy has meant slumping sales at the Purple Parasol. Her husband, now disabled and unable to work, will not qualify for Medicare for another year, and she cannot afford the $758 a month it would cost to enroll him in a state-run insurance plan for individuals who cannot find private insurance.

Here, writ small, is a description of everything wrong with today's insurance market and the conservative approach to health care reform.

* The individual insurance market is notorious for selling inadequate policies that do not cover the true cost of serious illness. Policies that cover just $22,000 of a $122,000 hospital bill aren't insurance in any meaningful sense of that word. They are more properly categorized as a "bait and switch" scheme to defraud the unwary. The Federal Trade Commission should take note.

* Individual "health savings accounts" can never generate enough savings to cover such shortfalls. Moreover, while the newspaper account doesn't reveal how or why Raymond Giarde "suddenly" developed congestive heart failure, HSAs also make it less likely that he would have sought out preventive care long before he developed the disease.

* State programs for the uninsured are far too expensive to provide a meaningful alternative for the uninsured. At $758 a month or $9096 a year, Washington's plan appears to be charging the full cost of family insurance.

Now let's turn to the health care plan of presumptive Republican nominee John McCain annnounced last week and see how it would help this family.

* The $5,000 tax credit for families would not have covered the cost of even the state-run pool for the uninsured, much less a decent family plan. Indeed, it was $250 a month short.

* McCain would expand HSAs, which would be no help to a family like the Giarde's facing a $50,000 hospital bill not covered by inadequate insurance. Given their inability to afford the state plan and the fact their faltering business was already struggling to afford their existing plan, how likely is it that they would have also put aside a few hundred dollars a month for first-dollar coverage decisions like preventive care? Isn't it more likely that, if they had the money, they would have used it to buy adequate coverage for serious illnesses like Mr. Giarde's?

Would McCain's promised Guaranteed Access Plan to make state programs to cover the uninsured affordable have made the difference for this family? His proposal lacks any details. But as I said earlier this week, his advisers' claim that it would cost a maximum of $10 billion nationwide lacks any credibility. That's just $200 per uninsured person in the pool. For every Giarde (someone who suffers from a serious or chronic illness), there would need to be over 600 people who didn't cost the system a dime. How likely is that?

Health Wonk Review

A new one is up at the Medical Humanities blog. Check it out!

HSAs -- Another Wasted Subsidy for the Well-Off

No one should be surprised by the Government Acccountability Office report out yesterday showing that the six million Americans who opened Health Savings Accounts have an average household income two-and-a-half times the national average ($139,000 versus $57,000). The economics of tax breaks compels it.

In theory, HSAs were designed for people with high-deductible insurance plans to cover unanticipated but large medical expenses. But they work like Individual Retirement Accounts (IRAs). The government allows a household to deduct a dollar from income for every dollar it deposits in an HSA.

But high income families benefit much more than low income families from such schemes. Why? Because high income families pay at a higher tax rate. So, if that family with $139,000 in income is in the 31 percent tax bracket, every dollar deposited in an HSA saves it 31 cents in taxes. But if that family with $57,000 in income is in the 15 percent tax bracket, every dollar deposited in an HSA only saves it 15 cents. In that sense, it is like the home mortgage deduction, whose benefits also go disproportionately to people who have the largest mortgages and pay the highest amount of interest on their homes.

Reps. Pete Stark (D-CA) and Henry Waxman (D-CA) are pushing legislation that would require proof that withdrawals from HSAs are actually going for health care. But that wouldn't change the fact that 40 percent of people with high-deductible plans haven't opened these accounts, and won't. For people in the lower middle class or the poor who have to buy a high deductible plan because they work for a lousy employer who either doesn't provide health insurance or only offers high-deductible or high co-pay plans, how likely is it that there will be room in their budgets to also sock away a couple hundred dollars a month for a rainy day health care fund?

HSAs are another gimmick based on the illusion that consumer choice is the best way to rein in rising health care costs. Make patients have "skin in the game," and they will make wiser choices, the theory goes.

Yet as many studies have shown, consumers don't make wise choices when forced to spend their own money on health care. In the short run, they skimp on routine and preventive care, which only makes it more likely that they will develop chronic conditions. And when either chronic disease or a medical crisis occurs, HSAs are quickly exhausted and become irrelevant in determining what kind of care people choose.

HSAs are nothing but another health care plan for the well-off that undermines preventive care. The next Congress should repeal this wasteful subsidy, not tinker with its rules.

McCain's Plan

What was most notable about presumptive Republican nominee John McCain's health care plan unveiled Tuesday was the campaign's unrealistic assessment of its impact on people with life-threatening conditions like cancer, the millions of Americans with chronic disease like diabetics, or preventive care. Instead of promising to expand insurance, as the Democrats are offering, McCain fully embraced the individual private insurance model cooked up by conservative think tanks overly enamored of free market medicine, which no place on earth other than the U.S. takes seriously.

Like President Bush's proposal which the Democratic Congress dismissed out-of-hand, the McCain plan would end the federal subsidy to employers for providing health insurance and give it as a tax credit to individuals ($2,500) and families ($5,000). This is about half what a family plan costs today, leaving the average family of four needing to pay around $400 a month for coverage comparable to what they now have.

You don't have to be a rocket scientist to see that in today's economy, many relatively healthy families who are currently uninsured will choose to underinsure, buying plans without first dollar coverage (whoops, there goes preventive care), with high deductibles and co-pays for routine care (huge extra bills for people with chronic disease), and that limit coverage for expensive cancer drugs (the so-called Tier 4 drugs) and put a cap on total coverage.

The plans authors claimed many employers would continue to provide insurance to retain their best employees. Don't they believe their own free market rhetoric? By removing the tax break, they would create a powerful incentive for even the most well-heeled companies to cap their health care expenses by offering flat payments in addition to the government credit. Over time, as health care costs continued to rise, more and more Americans through their individual choices would find themselves in the chronically underinsured pool.

McCain's answer to the uninsured and underinsured that his plan would leave behind is a new health care welfare system. Er, I mean a safety net. The campaign would create a federal-state program (capped, he reserved his strongest language for his refusal to create an unfunded mandate) that paid for uncompensated care delivered at hospitals. According to the New York Times, McCain's top domestic policy adviser, Douglas Holtz-Eakin, estimated the federal share would be about $7 billion and $10 billion.

I doubt that estimate would fly at the Congressional Budget Office that Holtz-Eakin used to run. With 47 million uninsured, with millions of people already underinsured because of the inadequacies in their employer-provided plans, and with millions more choosing to become underinsured because of the inadequacy of the tax credits offered in McCain's plan, can he really think the federal portion of the safety net will amount to just one-half of one percent of our annual health care bill?

If they actually capped it at $10 billion, that wouldn't be a safety net. That would be Swiss cheese in a sandwich without bread, lettuce or meat.

More Evidence of Our Collapsing Health Care System

If you didn't see the story in yesterday's Wall Street Journal on hospitals demanding upfront payments for cancer treatment, it is must reading. It documents what can happen when individuals have to buy their own insurance and get seriously ill after purchasing "limited insurance" policies.

But Isn't That Socialized Medicine?

It was one of those storied occasions impossible to pass up. The President of the United States gathered leaders from both political parties on the White House lawn to honor a true medical genius, Dr. Michael E. DeBakey, the surgeon who was one of the first to conduct coronary bypass surgery. DeBakey, the child of Lebanese immigrants who turns 100 this year, did most of his pioneering work at Baylor in Texas, giving President Bush a few laugh lines at his home state's expense.

But then it was DeBakey's turn. From his wheelchair, he offered these words to the Congresspersons in attendance as they contemplate tackling health care reform:

I want to make a suggestion to the Congress about health care. I know that you have been working on this for many, many years. In fact I was one of President Kennedy's strongest supporters when he came out with Medicare when the medical profession was strongly against. I thought it was a great idea. I still think it's a great idea. Unfortunately, it's practical effect has not been that great. So I know you have sought a better health care plan for the needy. And unfortunately it has been elusive. But there is a model you should look at that I'm thoroughly familiar with because when I was in the military, I was assigned by the Surgeon General to the committee that (Gen. Omar) Bradley and (Rear Admiral Jean Hodgkin) Hawley worked on in fixing up the Veterans Administration. We made many suggestions that resulted in a superb medical service. I've been familiar with the medical services of the Veterans Administration since then. In fact, I developed their research program. I assure you that you can't find a better model. For one thing, its quality of care is superior. And for another, it provides that care at half the cost of other agencies both in and out of government. So you see how efficient it is. So there must be something about what they are doing that we could use to expand our program in health care for the needy.

I wonder what the president thought as DeBakey uttered those words. I wonder if Congress was listening.

As Longevity Declines in Poor Areas

States Raid Tobacco Settlement Money

Life expectancy is dropping in rural parts of the U.S., a harbinger of what may lie ahead for the rest of the country, according to researchers who published the study in today's issue of PLoS Medicine.

The authors looked at county level data for two broad spans of time: the two decades after the election of John F. Kennedy; and the two decades after the election of Ronald Reagan. Here's what they found (the green areas indicate counties adding life expectancy compared to the national average with dark green being the largest increases; the light orange indicate areas whose life expectancy stayed the same -- which was below the national average, which increased as a whole; and the dark orange indicate areas where life expectancy was falling):

The authors blamed high rates of smoking, rising obesity rates and associated diseases (cancer, chronic obstructive pulmonary disease, Type II diabetes). They also noted that the last two decades of the 20th century marked a period of stagnant wages and rising income inequality, with the hardest hit areas being those left behind what has generally been considered a period of rising prosperity.

The lead author, Christopher Murray, an epidemiologist at the University of Washington, suggested the alarming data called for targeted public health campaigns to combat the physiological causes of declining longevity: smoking, obesity and sedentary lifestyles.

Which brings me to a less reported news item from yesterday: the American Legacy Foundation, which is the national organization that gets money from the 1998 tobacco settlement to run anti-smoking campaigns, will be in court later this week in an effort to stop Ohio from raiding its tobacco settlement trust fund to help balance the state budget. The southern tier of Ohio counties are among those whose life expectancy were either stagnant or declining as its economic fortunes declined.

Most cash-strapped states have already funneled their tobacco settlement money into the general revenue coffers. Only 11 states established trust funds to ensure the money was used for public health. Now Ohio is seeking to become the first to undermine those trusts.

Gov. Ted Strickland (D), who is sometimes mentioned as a potential vice presidential candidate for either potential Democratic nominee, says he needs the money for an economic development program, which, like most such state efforts, is designed to lure business to the state with special incentives. But as Michael Roizen, a nationally known wellness expert at the Cleveland Clinic told an audience at Case Western Reserve University last week, "If you want to do something to help, you write the damn governor and tell him he gets more jobs by keeping the money there and cutting down medical costs so we can afford to have jobs in the state."

So here's what it has come to in the good old U.S.A.: a declining state (sort of like Pennsylvania, where primary voters will be voting today), desperate to attract jobs, takes money away from citizens who are trying to reverse the effects of having no jobs in the first place.

Of course, if the anti-smoking campaign were taking place in Iraq, there'd be plenty of taxpayer money available to do both. On the other hand, when it comes to declining longevity, the Iraqis have a lot more to worry about than their sky-high smoking rates.

New Health Wonk Review

Want a single place to read about the latest and best of the health care blogosphere? Maggie Mahar of the Health Beat Blog has her excellent take in the latest edition of the Health Wonk Review. Check it out!

Frontline Special: "Sick Around the World"

I had the pleasure of getting to know T.R. Reid of the Washington Post when we were both stationed in Tokyo. Tomorrow night, he presents the first of his series "Sick Around the World" on PBS' Frontline. Check out this trailer, and you'll be sure to watch:

How Not to Run a Comparative Effectiveness Agency

A version of this article first appeared on the Guardian (UK) website.

We live in an age where the answer to many questions is available with the click of a mouse. But when it comes to health care, asking what works best gets a sick person text messages from the Tower of Babel.

If you’re in your 60s and have a slow-growing prostate tumor, should you cut it out, take a drug, stick in a radiating seed, or just watch and wait? Ask a surgeon, a urologist, a radiologist and general practitioner that question, and you might get four very different answers.

As a result, patient care – and cost – varies wildly across the U.S., usually with little difference in outcome and often driven by what local hospitals offer and what physician specialties predominate in an area. Professional medical societies, patient advocacy groups and government agencies publish competing and often conflicting policies to guide clinical practice, while money from companies with a stake in their decisions permeates the entire system, including, all too often, the guidelines offered by the U.S. government.

To cut through the cacophony of competing advice, health care reformers in the U.S. are pushing for a comparative effectiveness agency to provide physicians, patients and insurers with authoritative analyses of what works best in medicine. Much of the oomph behind the push for comparative effectiveness (CE) research is coming from the companies that pay the bills.

And with estimates of waste in the health care system approaching 30 percent (that’s $600 billion annually), who can blame them? It seems like a relatively painless way to convince doctors that they ought to abandon less effective therapeutic approaches that needlessly drive up costs. “Look, here’s what you’ve been doing and its outcomes are not as good as this other (drug, device, procedure, test) that they’re using over here; why don’t you switch to what works best?” an authoritative agency could say. “And if what works best costs less, everyone will be better off.”

Well, not exactly everyone. If your income depends on peddling pricey products and procedures – and that includes many specialist physicians and most drug, biotech, and medical device manufacturers – discovering that an “innovative” new product is no better and maybe even worse than something that is already out there is not in your financial self interest.

Opposition from those groups has usually been enough to kill serious consideration of a CE Agency in the U.S., especially one comparable to the National Institute for Clinical Excellence, which conducts comparative analyses (including cost-benefit analyses) for Great Britain. While NICE has no real power to enforce its findings, it has become the de facto gatekeeper of care standards for the cash-strapped British National Health Service, which must live within government constrained budgets.

But the era where special interests succeed in thwarting the creation of CE agency here appears to be ending. Both Democratic Party candidates have made it a centerpiece of their health care reform strategies. Here's why. Covering all or most of the uninsured without cost controls will add anywhere from $50 billion to $100 billion a year in new health care spending. Under their plans, employers who don’t provide coverage would be subjected to new payroll taxes to cover the uninsured. Unless other costs are controlled, those new taxes would be prohibitively high.

Incorporating CE analyses into coverage decisions would the best way to offset some of those costs, with the savings distributed to everyone who buys insurance. A Commonwealth Fund study released in December estimated the health care system could save $358 billion over ten years by using CE analyses – anywhere from one-third to two-thirds the cost of covering the uninsured.

The movement gained a powerful ally in January when the slow-to-move but prestigious Institute of Medicine issued its own report, “Knowing What Works in Health Care: A Roadmap for the Nation.” It called for a “single entity” to produce “credible, unbiased information about what is known and not known about clinical effectiveness.”

A CE program, the report said, should develop a common standard for evaluating evidence and writing guidelines, and set priorities for conducting its own systematic reviews based on improving health and eliminating “undesirable variation.” It should also consider economic factors, including the cost of treatment.

Unfortunately, when it came to insulating the proposed agency from commercial pressure, the IOM report came up short. The priorities of the CE program should be developed by a committee “chosen to minimize committee bias due to conflicts of interest.” In a separate section on developing clinical practice guidelines, the report called on panels to “include a balance of competing interests and diverse stakeholders, publish conflict of interest disclosures, and prohibit voting by members with material conflicts.”

This is a prescription for paralysis for which disclosure is no cure. If commercial interests have any voice in the design of the studies, the committees' deliberations, or their decisions, it will doom the agency to either issuing innocuous guidelines or risk losing its credibility when affected parties charge bias influenced stronger recommendations.

Powerful forces are already mobilizing to make certain any comparative effective agency established by Congress remains a toothless tiger. When Sen. Max Baucus (D-MT) introduced legislation in March, Pharmaceutical Research and Manufacturers of America vice president Ken Johnson
said the agency should be “structured to promote better patient health and timely patient access to needed therapies, and avoid denying or delaying patients’ access to beneficial care, as what often occurs in Europe and Australia.” The Advanced Medical Technology Association, which represents device makers, insists that “governance of any public-private entity should include representation of all stakeholders.”

This theme was echoed in a recent article in the Journal of the American Medical Association, which likened a potential CE Agency to a Federal Reserve Board for medicine. Its authors – two prominent health care economists and National Institutes of Health bioethicist Ezekiel Emanuel, who also happens to be the brother of a powerful Congressman – also called for putting “stakeholders” on the board and having input into its studies.

This builds what economists call agency capture (when a regulated industry has undue influence over the agency set up to regulate it) into the very structure of the organization. No banks sit on the Fed’s board. And its studies are conducted by researchers who are scrupulously clean of financial ties to the banks they regulate.

It’s one thing to give stakeholders a chance to advice the process – just as they have input through comment and testimony into any regulatory proceeding. But to allow industry representatives to sit on the board, and ask clinicians with conflicts of interest to conduct its studies, would undermine the new agency’s credibility at the start – and doom it to being just another babbling voice in the health care wilderness.

It's Volume, Stupid

The new Dartmouth Atlas of Health features a careful mapping of differences in treatment of elderly Medicare patients with chronic disease in the last two years of life. Why do such patients in Los Angles who wind up UCLA's Cedar-Sinai Hospital cost more than twice as much as patients in Minnesota who wind up at the Mayo Clinic? As I noted in this space a few weeks ago, it's not just prices (and in some cases, it's not prices at all), it's the quantity of services consumed, which, according to the Atlas, is largely driven by the quantity of hospital beds, physicians and other "inputs" available. In health care, it would seem, supply creates its own demand.

Sadly, there was zero attention given to this insightful report in this morning's national press. The best comment I've seen so far came from Rob Cunningham on Health Affairs blog. (That journal is where much of Atlas architect Jack Wennberg's work has appeared over the years). Cunningham pulls from the report the lesson that beefing up primary care is not a magic bullet for holding down costs.

“Simply increasing the number of primary care physicians alone will not improve coordination. Spending on ambulatory visits, many of them to primary care physicians, is positively correlated with (hospital) inpatient days and inpatient physician visits,” Cunningham quotes the authors. “There are no tradeoffs.” Yet the study strongly endorsed the movement toward giving primary care physicians "medical home" responsibilities for coordinating chronic disease care. Cunningham concludes: "Perhaps the next step is to understand how primary care works in low-spending areas."

Anyone seriously interested in health care reform ought to read this year's Atlas, entitled "Tracking the Care of Patients With Severe Chronic Illness." That's what I intend to do over the next few days. That task should be made easier by the fact that Shannon Brownlee of the New America Foundation provided editorial assistance to its authors. She drew heavily from Wennberg and his colleagues' work in her new book, "Overtreated," available from fine bookstores everywhere.

(A personal note: I will be largely offline for the next week due to a death in the family.)

Reform Woes

The New York Times this morning carries the second story in three days cataloguing difficulties in reforming the U.S. health care system. Today's story reports on an experimental Medicare program that involved private firms running call centers staffed by nurses to encourage elderly patients with chronic disease to stick to their treatment regimens. Unless there is a dramatic change over the next few months, the programs will end up costing Medicare as much as they save, with the possibility that they will even cost more than they save.

What's the companies' solution? Like most private firms involved in managing health care, their solution is to cherry pick the patient population they'd like to serve. According to George B. Bennett, the chief executive of Health Dialog:

He wants Medicare to give the companies more flexibility to manage patients in ways they say have already been proven to work among the employees they cover in commercial plans. Such measures, he said, include giving the insurer a bigger role in selecting the patients, with an eye toward identifying the ones most likely to be helped.

Other experts quoted in the story suggested these call centers are inadequate to the task. They recommend adopting the "medical home" strategy, where primary care physicians are reimbursed directly so they can hire staff to follow-up with their patients and coordinate their care.

It also would help alleviate the primary care shortage, which was chronicled in Saturday's Times in a story that looked at Massachusetts and its experiment with universal coverage (that is still far from universal). Hundreds of thousands of newly insured persons are scrambling to find primary care physicians, with many having difficulty. Others report long waits to get their first visit to receive treatments for chronic conditions that have gone unaddressed due to lack of insurance.

One statement in that story struck me as quite off the mark. "Whether there is a national shortage of primary care providers is a matter of considerable debate," the story claimed. "Some researchers contend the United States has too many doctors, driving overutilization of the system."

That mischaracterizes the critique. The U.S. doesn't have too many doctors, it has too many specialists -- about 70 percent of the total. In Europe, the ratio is almost exactly reversed -- 70 percent primary care and 30 percent specialists.

Physician payment policy is at the heart of this mismatch. In the U.S., insurers, whether Medicare or the private sector, pays for each individual service provided. Physician pay scales, set by a committee of the American Medical Association, give the highest rewards to specialties like intervention cardiology, radiology and surgeons, and the lowest rewards to primary care docs. Put the two together and you get a powerful economic incentive for young doctors to enter specialty practice and eschew primary care.

A medical home plan that gave primary care docs extra pay for coordinating individual care for patients with chronic diseases (which account for about 70 percent of all health care costs) would begin to redress that imbalance. But, like companies running call centers, it probably wouldn't generate major savings for the system, at least not in the short run.

To squeeze out short-run savings to cover the uninsured, government programs need to develop a strategy to eliminate some of the wasteful use of drugs, procedures and tests that now permeate the system. There's a growing consensus to set up a comparative effectiveness agency in the U.S. to combat that waste. But even this long overdue reform can run off the tracks if it isn't done the right way, an issue I'll address later this week.

Those Profitable Non-Profit Hospitals

Facts from an eye-opening page one story in the Wall Street Journal this morning on the "surpluses" being generated by "non-profit" hospitals (to look up the IRS 990 forms filed by the non-profit hospital in your area, visit http://www.guidestar.org/):

* No fewer than 25 nonprofit hospitals or hospital systems now earn more than $250 million a year. 77 percent of nonprofit hospitals are in the black compared to 61 percent of for-profit hospitals.

* Ascension Health, a Catholic nonprofit system that runs 65 hospitals, mostly in the Midwest and Northeast, reported net income of $1.2 billion in its fiscal year ended June 30, 2007, and cash and investments of $7.4 billion. That's more cash than Walt Disney Co. has.

* In 2006, Northwestern Memorial on Chicago's Gold Coast spent $20.8 million on charity care -- less than 2 percent of its revenues. By comparison, the hospitals run by Cook County, where Northwestern Memorial is located, spent 14 percent of revenues on charity car

* At John H. Stroger Jr. Hospital -- formerly known as Cook County Hospital -- 56 percent of patients don't have any insurance when they are admitted. At Northwestern Memorial, the percentage of uninsured patients is less than 5 percent.

* Northwestern Memorial CEO Gary Mecklenberg earned $16.4 million in 2006.

Health Wonk Review -- April 3, 2008

The latest survey of the "best of the web" on health care commentary has been posted on The Health Care Blog. Check it out, as well as the site, where industry consultant Matthew Holt and Brian Klepper provide insightful commentary on health care industry trends.

Physicians for 'National Insurance' -- Survey

The most interesting aspect of the new physician survey published in today's Annals of Internal Medicine is the trend. It shows broad support (59 percent) for a national health insurance plan where five years ago, only slightly less than half of physicians surveyed backed national health insurance. Fully 28 percent strongly support a single plan, while 31 percent generally support it. Outright opposition shrank from 40 percent to 32 percent.

Who were those opponents? Specialty surgeons, anesthesiologists and radiologists -- the highest paid physicians in the nation -- were the only sub-groups where a majority of respondents opposed national health insurance. Psychiatrists, pediatricians and emergency room docs were the strongest supporters, with shrinks clocking in at a whopping 85 percent support rate.

Overall opposition fell to 25 percent when physicians were asked if they supported incremental reform, such as both Democratic Party candidates are proposing. Curiously, support fell, too, to 55 percent.

Take away? There may not be much political upside to eliminating single-payer from the dialogue, at least as far as most physicians are concerned. (Does "national health insurance" translate into "single-payer" in most physicians' minds? I'm curious what the numbers would be if they used that term instead). Anyway, those that are against reform -- the well-paid specialists who tend to dominate the debate -- are just as opposed to incrementalism as they are to a single national plan.

Never forget that groups like the American Medical Association opposed Medicare and the first employer-provided health insurance plans, too. Like the child of a difficult pregnancy, the best organized docs -- these days, those are the high-paid specialists -- have always been pulled crying and kicking into the future.

Analyzing Hillary Care II From a SP Perspective

I'm a regular reader of Don McCanne's daily postings from Physicians for a National Health Program, the nation's premier advocate for single-payer health insurance. Today, Don analyzes the health insurance thoughts of Sen. Hillary Clinton that appeared a recent New York Times interview (to get on his mailing list, send an email to: quote-of-the-day@mccanne.org):

Q: Let's talk for a minute about the formulation of your plan. I'm interested in how seriously you considered proposing a single payer system and at what point in that discussion did you decide to propose an individual mandate?

MRS. CLINTON: You know, I have thought about this, as you might guess, for 15 years and I never seriously considered a single payer system. Obviously, I listened to arguments about its advantages and disadvantages, and many people who I have a great deal of respect for certainly think that it is the only way to go. But I said, as you quoted me, that we had to do what would appeal to and actually coincide with what the body politic will and political coalition building was. So I think if you look at most public opinion surveys, even from groups of people who you would think would be pretty positive towards single payer, Americans have a very skeptical attitude. They don't really know that Medicare is a single payer system. They don't really think about that. They think about these foreign countries that they hear all these stories about, whether they're true or not, which they're often not. And so talking about single payer really is a
conversation ender for most Americans, because then they become very nervous about socialized medicine and all the rest of this. So I never really seriously considered it.

Q: Last question. You talked earlier in the interview about how your plan maintains the private insurance system. But in October, at the forum of the Kaiser Family Foundation, you were asked whether your plan to make government insurance, a Medicare-type plan, available to all was a backdoor route to a single payer system, and you said, "What are we afraid of? Let's see where the competition leads us." So is it okay with you if the market ultimately dictates that the U.S. system sort of morphs into a single-payer system? And if so, doesn't that arm the Republicans with exactly what you were talking about, this claim that it's socialized medicine?

MRS. CLINTON: No, because I think what we would be offering would be a Medicare-like system, which is something people are familiar with, and you know whether we would call it Medicare 2.0 or whatever we would call it. And we'd see whether people want that or not. And where it morphs to, I think this whole system will morph. I mean, look at where Medicare started and where it is today. In large measure, some of the problems we have are because of the way it evolved. But I think from my perspective, having this Medicare-like alternative really does answer the desires of people. And there's a significant minority who want quote a single-payer system. It at least gives them the feeling it's not for profit, they're not paying somebody a billion dollars for raising their premiums 200 percent and all the rest of the problems that we face with the for-profit system. You get the costs of overhead and administration down as much as possible. I believe in choice. Let Americans choose and what better way to determine that than letting the market have some competition and you know see where it does lead to.

Q: And if the choice is a single-payer system, that's fine by you?

MRS. CLINTON: You know, I think that would be highly unlikely. I think that, you know, there's too many bells and whistles that Americans want that would not be available in kind of a bare-bones Medicare-like system but I think it's important to have that competition.

Comment: Competition between a bare-bones Medicare-like plan versus private
bells-and-whistles insurance? What kind of framing is that!?

In her proposal, is she really advocating for a public Medicare-like option that provides only bare-bones coverage? That's certainly not the model that single payer advocates propose.

Is she suggesting that the private insurance industry will be able to provide us with an insurance product that includes all of the bells and whistles at a premium that is affordable? If such a plan were to be offered it would have a very small market limited to only the wealthiest of us. Insurers typically shun small markets.

It's not like she doesn't understand the numbers. Let's look at what else she said in this interview:

****

MRS. CLINTON: The average family policy cost in America today is $12,000. That is, you know, considerably, you know, that's like 25 percent of the median income in the country, right? So people are paying a lot of money. Now, employers defray a lot of that cost but it comes out of wages so you've got this unfortunate situation where we've had flat wages, declining incomes, rising health care costs, so even though your share of that $12,000 family policy might be say 50 percent, or whatever it would be, you're doubly paying for it because you're also paying for it in lost wages.

Q: You've also said you would cap premiums. But you haven't said where you would cap them.

MRS. CLINTON: You know, I think we could do it somewhere between five and 10 percent of income.

****

Or maybe she doesn't understand the numbers. If she does, she has implied that most of the premium will have to be paid through the tax system.

If we're going to use the tax system anyway, then why waste resources on our fragmented, multi-payer system that falls far short on most of our goals for reform? That would be a terrible misuse of public funds.

What health care financing system would be a better use of public funds? A single payer national health program is specifically designed to provide comprehensive health care for absolutely everyone at a cost that is affordable for each individual, and with an efficiency that would be much more appropriate for a publicly-funded program. That's where we need to go.

The Social Determinants of Ill-Health

This morning, let's consider the case of Fay Derricote, an obese, 44-year-old former government contract worker confined to a wheelchair with multiple sclerosis. For the first time in her life, she has good health insurance -- provided by Medicare because she is disabled.

That's precisely what her former employer, the food service firm that ran a government cafeteria in the nation's capital, didn't provide her while she was working, according to this morning's Wall Street Journal. "How Government Adds To Ranks of Uninsured: Many Outsourced Federal Jobs Don't Offer Health Insurance," the headline read.

Sadly, the story's focus on a federal subcontractor contributes to the unenlightened anti-government bias that muddies public debate in this country. How is government outsourcing of jobs to contract firms that fail to provide health insurance any different than the Fortune 500 firms that do the same thing? The 47 million uninsured Americans -- most of whom work for a living -- aren't all employed by government subcontractors. The reporter could just as easily have made the same point using the janitorial services that clean the privately-owned office buildings that house Washington's thousands of private sector lobbyists.

Still, every element of Derricote's case sheds light on the health insurance debate. Unlike most private sector subcontractors, the law requires government subcontractors to make a payment in lieu of insurance so workers can buy their own policies. In her case, that would have come to an extra $3.16 an hour on top of the $7 an hour she earned as a cashier. But a loophole in the law exempts employers in industries that don't typically provide insurance.

Now she has wonderful insurance, courtesy of the very same government that didn't require her employer to insure her. Had she been treated two years earlier, according to her doctor, he might have been able to slow the progression of her disease and gotten her back in the workforce.

It's outrageous, of course, that her lack of insurance delayed care and contributed to the growing disparities in health that, according to this new chart book from the Commonwealth Fund, have worsened in recent years. If we're going to have an employer-based system of providing health insurance in the U.S., doesn't it make sense to require all jobs either provide that benefit or pay into a government fund that becomes the default insurer (the Democratic approach)?

The idea of putting money in people's paycheck so they can buy insurance as individuals or families (the Republican approach) makes no sense for low-income people like Derricote. As the story pointed out, when employers use that approach, most low-wage workers use the money to pay rent, buy food or meet other day-to-day necessities. What would you do if you earned $14,500 a year?

But the story, and the debate over health insurance that marks the two sides in the presidential campaign, did not address the most significant element in her story. What were the social factors that led this relatively young woman to balloon to 289 pounds before a doctor at her place of employment -- the Department of Health and Human Services! -- warned her to go on a diet before she got really sick. His mere warning led her to lose 55 pounds, but it was too late.

Would adequate health insurance have prevented her weight gain? Would the policy have paid for counseling? Would insurance have relieved the stress and time pressures in a life lived earning $7 an hour that contributes to poor dietary habits? Would it have made a dinner that included unsubsidized fish and broccoli less expensive than a trip to McDonald's, where the costs of the red meat, bread, and sugar are kept artificially low through farm subsidy programs? Would it have made her a more informed consumer by putting calorie counts on the menu choices at restaurants or the cafeteria where she worked, where she presumably ate at least one meal a day? Would it have required her employer to give her time during the day to visit the gym, or money to pay for a membership?

Insurance is an important starting point for the national discussion about health. Access to health care is crucial. But unless the nation simultaneously grapples with what are the underlying causes of ill-health in this society, it will never get health care costs under control.

The who and why of the modern day plagues of obesity, high blood pressure, smoking and alcoholism are the undiscussed elephants in the room. These disease precursors are the primary causes of heart disease, diabetes, and most cancers, and their prevalence is closely correlated with inequality, poverty, race, and stress. The chronic diseases that result from these conditions only affect about 30 percent of the population, but they lead to 70 percent of all health care expenditures in the U.S.

The presidential candidates, and everyone running for Congress this year should watch "Unnatural Causes," which kicks off on Thursday this week on most PBS stations. There's still hope that the national discussion about health insurance can be expanded to include the more important discussion about the social determinants of ill-health, the primary reason why our nation lags behind most other industrialized nations in overall life expectancy.

It's The Prices and Volume, Stupid

Nearly five years ago, an article in Health Affairs by a group of leading economists sought to explain the wild disparity in health care spending between the U.S. and the rest of the industrialized world. The U.S. has fewer doctors, hospital beds, and nurses per person than other advanced industrial nations, and Americans see their physicians less often.

So what accounted for the fact that the U.S. spends 60 percent more than any other nation on health while obtaining outcomes -- lower life expectancy and higher infant mortality rates, for instance -- that put it in the second tier of the 30 nations in the OECD? The article's conclusion was encapsulated by its title: "It's The Prices Stupid: Why the United States Is So Different From Other Countries."

Yale political scientist Jacob Hacker drew liberally from that paper in his opinion piece in the Washington Post Sunday calling for a sharply expanded government role in providing health insurance. His plan, sponsored by the Economic Policy Institute, sets up a new government insurance program to cover all the uninsured, all Medicaid patients and a hefty slice of those who now get private insurance from their employers since many would opt for the newly expanded public system to escape escalating costs.

His new plan, he claims, will be able to "cover everyone without driving up costs." How?

By getting a better deal on service prices, drugs and by lowering administrative overhead. Earlier in the piece, he quoted a study that claims the major government program already in existence -- Medicare -- has grown at a slower pace than private health care since 1980. Expanding the government's role could do the same for the rest of the health care system and even save $50 billion a year, he asserted. Although Hacker was careful to distinguish between government-provided health insurance (like Medicare) and socialized medicine, where the government actually owns health care facilities, he goes with the flow (a recent poll revealed the power of Republican talking points: a majority of Americans now think Medicare is socialized medicine) and concluded "maybe socialized medicine doesn't sound so bad after all."

Elements of Hacker/Economic Policy Institute plan have been included in both leading Democratic Party candidates' health care proposals. But would it really be able to reap $50 billion a year in savings, which was projected by The Lewin Group in its analysis of the plan? The recent experience of Medicare isn't promising.

While Medicare cost growth has been slower than private insurers if you measure it from 1980, in more recent years the government program has been experiencing either the same or slightly higher growth. Why? The original "It's The Prices Stupid" paper pointed out that lower costs in Europe had been achieved through the "monopsony (single buyer) power allocated by these systems to the payer side," which "reduces the prices paid to providers for health care, thereby transferring wealth from these providers to the rest of society."

But if your public plan is part of a mixed system where provider groups like organized physicians, hospitals, drug companies, device companies and durable equipment suppliers can collude and can exercise considerable political clout to avoid price controls, it's hard to imagine achieving the same kind of purchasing power efficiencies here. Look at what is happening in drugs, where numerous best-selling drugs are coming off patent and industry's pipeline of new blockbusters has largely come up empty. This should have been an ideal scenario for lowering overall drug spending.

Yet Medicare hasn't been able to capitalize. The law that created the senior citizen drug benefit specifically forbade Medicare from negotiating lower prices. And in the wake of that decision, Big Pharma has been able to offset its losses to generics by raising prices on its remaining blockbusters. A recent survey by the AARP showed that the prices of the top brand drugs rose 7.4 percent last year. Bottom line: despite the shift to generics, overall drug spending held steady, according to a separate survey by IMS Health.

Meanwhile, the biotech industry has provided the playbook for the next generation of price-gouging, which is taking place in the emerging "personalized medicine" markets for cancer and rare disease therapeutics: never allow generics on the market. The Biotechnology Industry Organization has tied up Congress by arguing that any generic biologic is really a distinct molecule and must, therefore, go through virtually all the same safety and efficacy testing as the original molecule. If Congress goes along (if it ever even gets around to passing a bill), the follow-on biologic will have to be priced like a me-too drug. Consumers may see a 10 percent reduction in price, but not the 40 or 50 percent reduction typical of true generics.

Think what such a law would mean for the 5,000 or so Gaucher's disease patients on Genzyme's Cerezyme, whose travails in trying to hold down their $300,000-per-year costs were documented last week by Andrew Pollack of the New York Times. As a Times editorial on Sunday pointed out, that price tag is "hard to take, given that the federal government did much of the scientific work that led to development of the drug and provided contract money that got the company started." (For that whole story, see chapter two of "The $800 Million Pill" by yours truly).

The same thing is going on for the newer anti-cancer drugs, many of which are biologics. The Wall Street Journal last week had an interesting story on the steps insurers are taking to rein in sky-high costs of these new drugs, many of which are only marginally effective (like most anti-cancer drugs). Still, their makers aren't shy about charging $10,000 a month or more in the name of making up for their high research and development costs. It's an argument that Congress buys time after time, aided by hefty campaign contributions, which, as we commented on earlier this month, are now flowing as easily to the Democrats as they did to Republicans when they controlled both chambers.

It's one thing to editorialize, as the Times did Sunday, that "it would be wise to foster generic competition for biological drugs and allow government programs to negotiate for lower prices on drugs with no competitors." It's quite another, given the current political make-up in Washington, to actually achieve it.

But if a Democrat committed to health care reform actually took the White House this fall and enacted something like the Hacker plan, would this expanded government insurance program be able to bargain its way to lower prices? Exercising monopsony power to hold down costs will require redefining what constitutes quality care in the U.S., and that will require changing the way medicine is practiced, much of which is organized around enhancing physician income. Drugs, which account for about 15 percent of total health care spending, are just the tip of the iceberg.

Last fall, the Congressional Research Service published a sobering comparison of U.S. health care spending patterns to the other 29 nations in the Organization for Economic Cooperation and Development (OECD). Did you know that our physicians order 587 coronary artery bypass graft surgeries per 100,000 population compared to an OECD average of 352? (The next highest country after the U.S. was Germany with 357, barely above the average.) Did you know that we have 32 CT scanning machines and 27 MRI machines per one million population compared to an OECD average of 18.8 and 8.8, respectively?

More procedures and more tests equals more fees in our fee-for-service system. Average physician income in the U.S. (after adjusting for differences in the wealth of the underlying economy) was $50,000 a year greater than the OECD average for specialists in 2004 and $30,000 a year higher for general practitioners. Even if you adjust once more for the higher debt that American medical students must take on to get their education (the CRS estimated that at $7,000 to $18,000 a year in debt service depending on whether the physicians take ten or 30 years to pay off their loans), physicians here still earn a hefty premium over their European or Japanese colleagues.

The point is that coming up with $50 billion a year in savings, as estimated by the Lewin Group, isn't just about negotiating a better deal with the drug companies. It's about reining in needless procedures (hospitals as well as the doctors would take the hit there) and reducing the number of questionable tests (durable equipment suppliers would take the hit there), both of which reduce the volume of physician services and, hence, their income.

It's time to amend the title of that long ago Health Affairs article. It's the prices and volume, stupid.

The Shame of CME -- Part II

A few weeks ago, the Journal of the American Medical Association carried an excellent overview of industry influence in continuing medical education, which I wrote about here.

This past weekend's edition of The Cancer Letter (subscription required) carried the latest scandal to hit the field. Last year, that muckraking publication revealed that a prominent lung cancer researcher, in an article that appeared in the prestigious New England Journal of Medicine, had failed to disclose a number of granted and pending patents, including one licensed to General Electric, that involved interpreting CT scans in lung cancer patients. The article, which received widespread coverage in the mainstream media, claimed that using CT scans could dramatically increase the number of people who survive a diagnosis of the disease. I wrote about the specious claims in that article here.

Sound like the patent was relevant to the subject being discussed in the article? Well, last month, after receiving a complaint from a public interst group and an inquiry from The Cancer Letter, the NEJM editors deemed the patents “not relevant” and refused to print a correction.

Now, a follow-up investigation by the publication has uncovered numerous instances when Weill Medical College researcher Claudia Henschke failed to disclose the patents in a series of continuing medical education (CME) seminars, including one held by the Radiological Society of North America (RSNA) a month after the article appeared in October 2006. The NEJM article could also be read for CME credit.

The Accreditation Council for Continuing Medical Education in 2005 adopted strict rules for disclosing granted and pending patents held by any presenter at a CME activity. As Murray Kopelow, the chief executive of ACCME, told The Cancer Letter, "royalties by themselves establish the financial relationship of the person with a commercial interest and create the potential for conflict of interest. Therefore, the relationship is relevant in CME.”

The Center for Science in the Public Interest later this week will ask the ACCME to order all the CME providers where Henschke failed to disclose to send proper disclosures to anyone who participated in those activities. Meanwhlie, Sen.