Cancer Treatment: Who Profits?
I just finished reading a report published in the NY Times on June 12, 2007 entitled Incentives Limit Any Savings in Treating Cancer by Alex Berenson. When you read things like this you really can get mad about what is going on in American medicine.
There will always be the good, the bad, and the ugly. The biggest problem we have in medicine is figuring out which is which. You are welcome to read this brief article but here is the summary: Boy meets girl, boy marries girl, and they live happily ever after. Oh, I'm sorry, that was the government's view on the state of health care.
The summary is actually the following: You are going to die. You are going to die with no money. Along the way a lot of people already way richer than you will get even more richerer (new word I made up...). What is even more interesting is that since you are going to die relatively quickly, these greedmeisters get to repeat it all over again, and again.
I recall in political science courses in college a phrase "Hard cases make bad law." What I learned was that a legal case presented before the Supreme Court that was difficult to decide and had many twists to it eventually led to a decision by the court that produced bad policy or generated reactive law making in response. No one really wants a hard case to determine policy.
In the same sense, difficult medical conditions make for bad public health policy-making. Let me give you examples. A simple case: If an otherwise healthy person is just starting to get a heart attack and you can give them a medication that prevents the heart attack from getting worse and saves their life then that drug should be approved for use to be given in all these situations regardless of price. Easy Case. Good Policy.
Here is a different one: A patient who is 87 with terminal cancer ("C" word) with a life expectancy of six months can be given a $75,000 drug that has a 30% chance of extending their life expectancy an average of three months. That's a hard case. That's a really hard case. What kind of policy can we make from this? Do we treat or not treat based on age? Should $75,000 of Medicare dollars be spent on an 87 year old for a "chance" to live three months?
More importantly, who makes that decision? If you had the money and it was your mother or grandmother, do you buy the drug? Why does it cost that much anyway?
Unfortunately, in the world of cancer treatment, it is these difficult decisions that are more common than the easy ones. This does not mean we can't weed out the rats from basement of cancer care though. Let's go back to the article in the NY Times and look at some issues.
The general thrust of the article was that since Medicare has cut back on the reimbursement to oncologists (non-surgical cancer specialists) then the treatment of these patients was being moved from the comfort and quality of these offices to hospital settings (presumably less personal and caring) as the doctors were claiming that they either broke even or lost money on the treatment of these patients.
The article points out that before the Medicare reimbursement decreased, doctors were making huge profits for giving chemotherapy to anyone at all cost and the financial incentives pushed more chemotherapy treatment.
On one side: This is obviously true. If there is a built-in profit to chemotherapy one time then you double your profit giving it a second time. I can do more math on this but the point is clear. There is no bonus put on spending time with the patient or thinking about their care - only in running more patients through the door.
On the other side, the article refers to the differential between the cost of the drug to the doctor's office and the price that Medicare reimbursed as "profit." I think the NY Times needs a basic lesson in economics.
The money the doctors collected from Medicare is called the gross revenue. The cost of the drug is referred to as a direct cost. The doctor has a ton of other costs to deliver the drug. These include the intravenous, the salary for the chemotherapy nurse, the furniture, the electricity, the malpractice, the receptionist, and the phone bills - the list goes on and on. If you are in a really caring cancer center that also has psychiatric social workers to help you and nurse educators on staff, the costs increase.
The difference between the gross revenues collected from Medicare and ALL these costs is called profit. The article points out that the current Medicare fee schedule pays for 6% above the cost of the drug. I would have to assume that a plate of Twinkies cost more than 6%, let alone all those other services.
Analysis: Somewhere between both sides a negotiated agreement may be possible. A reasonable amount of built-in revenue must be built in but again - who decides what is reasonable? We have serious problems in this situation because we have a lot of difficulty with a multi-tier healthcare system where the rich can get all the cool services and the poor get treated in a dungeon.
This causes doctors to be pitted against patients. While some suggest that we can actually determine a fair market rate or that we need to change the financial incentives there are some pretty darn obvious questions staring right at us: Why in the world do these drugs cost so much, why do we allow the pharmaceutical companies to set ridiculously exhorbitant prices and reap absurdly exhorbitant profits, and why do we allow the insurance companies to dictate who gets treatment?
Forget about pointing to doctors and clinics that make money. Forget about pointing to patients who think they want everything for free because they think it's a right. Try this on for size. The doctors should make money because they are being entrusted with serious questions and issues and the patients should get treated for a heckuva a lot less than they are paying now.
Try some basic arithmetic. I am too busy ranting about this crazy drug-and-insurance-company-controlled system to do it but can someone out there compute this? Add up the yearly gross revenues of the top fifty pharmaceutical companies and top fifty insurance companies in America. Take 10% of that revenue (for example a direct tax on gross revenues of pharmaceuticals and insurance companies) and apply it to a national insurance fund. Would that make a dent in getting the millions of Americans with no health care coverage the proper care they need? Will 15% do it? Will 20% do it?
If we really care about the uninsured or those who do not have proper access to cancer care and all medical care why are we wasting time trying to save nickels with decreased reimbursement to doctors or denying coverage to patients? The drug and insurance companies have been given governmental license to print money at our expense. Isn't it about time we got it back from them?
Get out your calculators.
Dr. K.
Related Topics:
Technorati Tags: cancer, health care
There will always be the good, the bad, and the ugly. The biggest problem we have in medicine is figuring out which is which. You are welcome to read this brief article but here is the summary: Boy meets girl, boy marries girl, and they live happily ever after. Oh, I'm sorry, that was the government's view on the state of health care.
The summary is actually the following: You are going to die. You are going to die with no money. Along the way a lot of people already way richer than you will get even more richerer (new word I made up...). What is even more interesting is that since you are going to die relatively quickly, these greedmeisters get to repeat it all over again, and again.
I recall in political science courses in college a phrase "Hard cases make bad law." What I learned was that a legal case presented before the Supreme Court that was difficult to decide and had many twists to it eventually led to a decision by the court that produced bad policy or generated reactive law making in response. No one really wants a hard case to determine policy.
In the same sense, difficult medical conditions make for bad public health policy-making. Let me give you examples. A simple case: If an otherwise healthy person is just starting to get a heart attack and you can give them a medication that prevents the heart attack from getting worse and saves their life then that drug should be approved for use to be given in all these situations regardless of price. Easy Case. Good Policy.
Here is a different one: A patient who is 87 with terminal cancer ("C" word) with a life expectancy of six months can be given a $75,000 drug that has a 30% chance of extending their life expectancy an average of three months. That's a hard case. That's a really hard case. What kind of policy can we make from this? Do we treat or not treat based on age? Should $75,000 of Medicare dollars be spent on an 87 year old for a "chance" to live three months?
More importantly, who makes that decision? If you had the money and it was your mother or grandmother, do you buy the drug? Why does it cost that much anyway?
Unfortunately, in the world of cancer treatment, it is these difficult decisions that are more common than the easy ones. This does not mean we can't weed out the rats from basement of cancer care though. Let's go back to the article in the NY Times and look at some issues.
The general thrust of the article was that since Medicare has cut back on the reimbursement to oncologists (non-surgical cancer specialists) then the treatment of these patients was being moved from the comfort and quality of these offices to hospital settings (presumably less personal and caring) as the doctors were claiming that they either broke even or lost money on the treatment of these patients.
The article points out that before the Medicare reimbursement decreased, doctors were making huge profits for giving chemotherapy to anyone at all cost and the financial incentives pushed more chemotherapy treatment.
On one side: This is obviously true. If there is a built-in profit to chemotherapy one time then you double your profit giving it a second time. I can do more math on this but the point is clear. There is no bonus put on spending time with the patient or thinking about their care - only in running more patients through the door.
On the other side, the article refers to the differential between the cost of the drug to the doctor's office and the price that Medicare reimbursed as "profit." I think the NY Times needs a basic lesson in economics.
The money the doctors collected from Medicare is called the gross revenue. The cost of the drug is referred to as a direct cost. The doctor has a ton of other costs to deliver the drug. These include the intravenous, the salary for the chemotherapy nurse, the furniture, the electricity, the malpractice, the receptionist, and the phone bills - the list goes on and on. If you are in a really caring cancer center that also has psychiatric social workers to help you and nurse educators on staff, the costs increase.The difference between the gross revenues collected from Medicare and ALL these costs is called profit. The article points out that the current Medicare fee schedule pays for 6% above the cost of the drug. I would have to assume that a plate of Twinkies cost more than 6%, let alone all those other services.
Analysis: Somewhere between both sides a negotiated agreement may be possible. A reasonable amount of built-in revenue must be built in but again - who decides what is reasonable? We have serious problems in this situation because we have a lot of difficulty with a multi-tier healthcare system where the rich can get all the cool services and the poor get treated in a dungeon.
This causes doctors to be pitted against patients. While some suggest that we can actually determine a fair market rate or that we need to change the financial incentives there are some pretty darn obvious questions staring right at us: Why in the world do these drugs cost so much, why do we allow the pharmaceutical companies to set ridiculously exhorbitant prices and reap absurdly exhorbitant profits, and why do we allow the insurance companies to dictate who gets treatment?
Forget about pointing to doctors and clinics that make money. Forget about pointing to patients who think they want everything for free because they think it's a right. Try this on for size. The doctors should make money because they are being entrusted with serious questions and issues and the patients should get treated for a heckuva a lot less than they are paying now.
Try some basic arithmetic. I am too busy ranting about this crazy drug-and-insurance-company-controlled system to do it but can someone out there compute this? Add up the yearly gross revenues of the top fifty pharmaceutical companies and top fifty insurance companies in America. Take 10% of that revenue (for example a direct tax on gross revenues of pharmaceuticals and insurance companies) and apply it to a national insurance fund. Would that make a dent in getting the millions of Americans with no health care coverage the proper care they need? Will 15% do it? Will 20% do it?
If we really care about the uninsured or those who do not have proper access to cancer care and all medical care why are we wasting time trying to save nickels with decreased reimbursement to doctors or denying coverage to patients? The drug and insurance companies have been given governmental license to print money at our expense. Isn't it about time we got it back from them?
Get out your calculators.
Dr. K.
Related Topics:
Technorati Tags: cancer, health care
9 Comments:
This is so true! After dealing with cancer and the experience of working in a oral surgery setting, as well... I've seen how insurance and pharm. companies overcharge. They are the ones that need to make the changes, but that would cost them money and they can't allow that. It should be a crime, but they seem to be making the rules. The question is "How do we correct this?" and most of us don't even know where to start.
Tell me about it. Why does it cost almost $240.00 for 9 of my migraine pills? Can someone tell me that? And now my insurance company tells me that I can only get them refilled every 15 days when I used to be able to get them refilled every 9 days. Pretty soon they'll only let me get them refilled every 30 days. I get migraines alot even though I'm on a migraine preventative. I go through cycles. Anyway, they are inherited. My mother gets them and she can't afford the medication at all. She suffers through them so I help her with the medication if I can. She has had the medication prescribed so I know she can take it, she only takes a diuretic for other medication (she's 72). She's on Medicare, she's on the Medicare Drug Plan but because basically she's healthy, she has lousy drug coverage and cannot afford the out of pocket cost of that certain medication. Now, that's a crime. No one should suffer through a migraine headache in my opinion. So, I definately agree that the Drug Companies are out of price control and also the insurance companies but alas, I also do not know where to start. The politics involved stop most of us in our tracks. I think it would take some people from all areas to put their heads together and come up with a plan. Just keep out anyone from the Pharmaceutical Companies and Insurance Companies and Politicians and you might have a plan. Linda Kennedy
I believe the investors in the pharmaceutical and insurance industries drive the profiteers. They are the RICH who can afford the cool care. The capitalist society does not believe that all people are equal, it believes that anything done for monetary profit is moral and ethical. If it were not profitable to invest in pharmaceuticals and insurance, they would not be driving the prices so high. If there was a cap placed on how much profit a company was allowed to make past one billion dollars and that the rest had to be given to the care givers in compensation for knowing how to treat sick people, or to turn away people who use medicine for profit(frivilous lawsuits etc.) The nation would be better. There are times morality has to be legislated through the pocket book to return people to their right minds
Emerging data is showing that there is a continuing problem with the Chemotherapy Concession. A system which rewards medical oncologists for being pharmacists. Choosing drugs for cancer patients based on profits to the medical oncologist.
A joint Michigan/Harvard study authored by Drs. Joseph Newhouse and Craig C. Earle, entitled, "Does reimbursement influence chemotherapy treatment for cancer patients," confirmed that before the new Medicare reform, medical oncologists chose cancer chemotherapy based on how much money the chemotherapy earned the medical oncologist. A survey by Dr. Neil Love, "Patterns of Care," showed results that the Medicare reforms still were not working. It was still an impossible conflict of interest.
Federal laws bar drug companies from paying doctors to prescribe medicines that are given in pill form and purchased by patients from pharmacies. But companies can rebate part of the price that doctors pay for drugs which they dispense in their offices as part of treatment. Doctors receive the rebates after they buy the drugs from the companies. But they also receive reimbursement from Medicare or private insurers for the drugs, often at a markup over the doctors' purchase price.
A patient wants a physician's decision to be based on experience, clinical information, new basic science insights and the like, not on how much money the doctor gets to keep. A patient should know if there are any financial incentives at work in determining what cancer drugs are being prescribed.
The government wasn't reducing payment for cancer care under the new Medicare bill. They were simply reducing overpayment for chemotherapy drugs, and paying cancer specialists the same as other physicians. The government can't afford to overpay for drugs, in an era where all these new drugs are being introduced, which are fantastically expensive.
Although the new Medicare bill tried to curtail the Chemotherapy Concession, private insurers still go along with it. What needs to be done is to remove the profit incentive from the choice of drug treatments. Medical oncologists should be taken out of the retail pharmacy business and let them be doctors again.
Dear Greg:
The problem is that the current Medicare system underpays oncologists for the time spent delivering the care. medicare rates or so brutally below any ense of free market rates on a hourly basis it is amazing that an oncologist can even stay in business.
I agree that the selling of drugs within the practice may not appear to be the "job" of a docor but the oncologist just does not crack open a vial and toss it to the patient. there is preparationg of the medicationa and constant monitoring. Medicare is unwilling to properly compensate physicians for this.
Your contention that:
"The government wasn't reducing payment for cancer care under the new Medicare bill. "
is not true. If current reimbursement was determined based on known reimbursement for the drugs then taking that out of the picture is a reduction.
For the record- If we reduced the f=patment for a follow-up visit from the current $33.10 the oncologist would have to pay Medicare to see the patient.
All the Harvard researchers can sit in their Ivory offices and talk all they want about conflicts but I assure you none of them actually practiced medicine, saw a patient or took a call from a sick patient at night. Their opinions are smart but but be taken in the context of their insulated world.
Doctor K.
I am simply concerned about the undisputable fact that the structure of the current reimbursement system is indefensible. It rewards oncologists for administering chemotherapy. It does not reward oncologists for spending a half hour explaining to the patient why he/she is more likely to be harmed by chemotherapy than to be helped by it.
There are an enormous number of uncompensated services that physicians provide to their patients that are not billable and for which there is no possibility of being compensated. If oncologists didn't make the profits from the drugs that they purchase and infuse, they still would be able to provide those services. They'd just have less money left over after providing those services.
All physicians (indeed all small businesspeople, which is what physicians are) have things they do in their business which are directly profitable and things they do in their business which are very unprofitable but unfortunately necessary.
Now, oncologists are basically good people who are compassionate and who want to provide good care, in any case. But to imply that oncologists wouldn't provide good care in the absence of being able to make money running a retail pharmacy is just not true. The motivation to supply good care ranges from the altruistic to the selfish. Over the last 20 years, there has been a lot of per capita abuse of chemotherapy, in terms of cost benefit ratio to the system and toxicity benefit ratio to the patient.
To Greg:
The major true per capita abuse in the chemotherapy world has been by the pharmaceutical companies.
Is it your contention that only hospitals and "centers" should make money from dispensing drugs? There is no difference between the hospital as a business and the oncologist.
Your acceptance of the following problem in your comment:
"There are an enormous number of uncompensated services that physicians provide to their patients that are not billable and for which there is no possibility of being compensated."
shows that all Medicare ever wants to do is lower reimbursement to physicians. Why aren't physicians reimbursed for what you call "an enourmous number of ...services." The reason is because the administrators, politicians, and Ivory Tower consultants never supply those services- their fellows, residents, or interns do. If they had to so it then we may see a change.
I strongly disagree with you when you say:
"Now, oncologists are basically good people..."
Actually, oncologists as a group are pretty amazing people. They chose to deal with the worst types of disease and personal and family pain imaginable. We don't need any "emerging data" to figure that one out.
Doctor K
At a time when most oncologists made the decision to become oncologists, there was no Chemotherapy Concession. Most of them probably had a personal life experience which created the calling to do battle against the great crab. At the time when people make their most important decisions in life, they are in the most idealistic period of their lives.
Evidence-based medicine (which morphed into being pharma-based medicine and HMO-based medicine) uses volumes of studies and "show me" skepticism to answer questions. It sometimes has been successful in changing some beliefs in medicine. Because of it, doctors may have prescibed medication more judiciously. But evidence-based medicine reduces the reliance on expert medical opinion.
Medicine is a personalized service, one built around the uniqueness of each patient and the skilled physician's ability to design care accordingly. Sure, one can read scientific literature and understand statistics, but does it help them to understand how that should influence the treatment of the individual?
It's not just Medicare, private insurance companies aggressively try to use so-called evidence-based arguments to deny payment for diagnostic tests and treatments. How else are they going to make a profit for their corporate executives and shareholders?
Drugs are currently reimbursed at ASP +6% in the onclogy office for Medicare. ASP is calculated after every discount, rebate etc. is calculated. Medicare payments already come 3 months after they are billed and that is saying they don't deny them. Then it takes up to 6 to 12 months. One could get 5 to 6% per year if they put their money in a CD with NO risk. And you are assuming that we collect 100% of the Medicare allowable? Medicare only pays 80% of the allowable, the patient and\or their secondary insurer has to pick up the remaining 20%. If you can't collect at least 14% of that remaining 20% you start losing money. We analyzed our current structure and whether we administer $5, $50, $500, or $5,000 drugs we don't get ourselves any "farther" ahead because the cost burden gets so heavy on the patient that it does not get us anymore "profitable" per se. You can't squeeze "juice from a rock" The only thing it only gets is it gets the patient farther in debt with us and more distraught and us farther behind on our drug bills with the wholesalers. One thing you leave out is drug price increases! ASP is only calculated every 3 to 6 months by Medicare for a drug versus the old AWP process. Not that I am defeding the inherent potential issues with AWP pricing. So if the price goes up 4 to 5% for a drug, which is not that uncommon, you will be pinched to about 1 to 2% for anwyhere from 3 up to 6 months for a drug. And that is if you collect every single red cent from everybody involved knowing full well there will be charges\services you still won't be able to bill for and some people or secondary insurers that just won't foot their portion of the bill. Greg if you could only receive maximum return of 6% on an investment of millions of dollars of capital in a moderatley risky venture I would not consider that "overcharging", I would say get out while you still have your shirt. Many oncologists in our area have already gone over to the Medicare CAP program because they look at these same figures and say anyone who wants to take the risk of being paid for by Medicare on drugs is a fool. And don't get me started on Medicare Advantage plans...
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