Doctors Can Change Opioid Prescribing Habits, But Progress Comes In Small Doses

KFF Health News, August 15, 2019

After guidelines for operations were issued in October 2017, surgeons in Michigan reduced by nearly one-third the number of pills they prescribed, with no reported drop in patient satisfaction.

This article was first published on Wednesday, August 14, 2019 in Kaiser Health News.

By Julie Appleby and Elizabeth Lucas

When they started practicing medicine, most surgeons say, there was little or no information about just how many pain pills patients needed after specific procedures.

As a result, patients often were sent home with the equivalent of handfuls of powerful and addictive medications. Then the opioid crisis hit, along with studies showing one possible side effect of surgery is long-term dependence on pain pills. These findings prompted some medical centers and groups of physicians to establish surgery-specific guidelines.

But questions remained: Would anyone pay attention to the guidelines and would smaller amounts be sufficient to control patients' pain?

Yes, appears to be the answer to both — in some measure — according to a study that encompassed nearly 12,000 patients in 43 hospitals across Michigan. The researchers published details of their work in a letter Wednesday in the New England Journal of Medicine.

Seven months after specific guidelines for certain operations were issued in October 2017, surgeons reduced by nearly one-third the number of pills they prescribed patients, with no reported drop in patient satisfaction or increase in reported pain, according to the research.

"We're not trying to deny patients narcotics," said Dr. Joceline Vu, one of the paper's authors and a general surgery resident at the University of Michigan. "But there's an acceptable level where people are still happy and still have their pain under control, but we have dropped the number to a minimum."

Overall, doctors prescribed eight fewer pills per patient — from 26 to 18 — across nine common surgical procedures, including hernia repair, appendectomy and hysterectomy, based on guidelines from the Michigan Opioid Prescribing Engagement Network (Michigan OPEN), a collaboration of hospitals, doctors and insurers.

Patients also reported taking fewer pills, dropping from 12 to nine on average across those procedures, possibly because they were prescribed fewer in the first place.

Still, while researchers say the study offers considerable reason for encouragement, it illustrates how hard it is to change prescribing habits. In May 2018, at the study's conclusion, the average number of pills prescribed exceeded the most up-to-date recommendations for all nine procedures.

And that's in Michigan, where there has been a concerted push to change prescribing habits. Most states don't have such a broad effort ongoing.

"There is a misconception that this is all fixed," said Dr. Chad Brummett, co-director of Michigan OPEN and one of the researchers on this study. "I do think people are still overprescribing. Definitely."

The guidelines come amid ongoing concern about the opioid crisis and a continued examination of the role prescription drugs played in its escalation.

The likelihood of persistent opioid use rises with the number of pills and the length of time opioids are taken during recuperation from surgery. But there's another avenue of concern. When doctors write scripts with a generous number of pills, the chance that patients won't take them all increases, along with the potential for the unused pills to make their way from medicine cabinets to the street, or to fall into the hands of other family members.

"That can be a bigger concern for many of us," said Vu. "It seems that in surgery, for whatever reason, we wrote prescriptions for a lot more opioids than people actually needed."

The Michigan OPEN guidelines recommended amounts based on how much pain medication patients actually took following surgery.

Other institutions developed their own surgery-specific prescribing principles, including Johns Hopkins Medicine in Baltimore and the Mayo Clinic in Minnesota. Although they use different methods to determine the number of pills, most ended up with similar parameters, often in the range of zero to 20 pills, depending on the procedure.

All the prescribing directives apply to patients with acute pain, such as those who had surgery, not people with chronic pain, Vu and other researchers emphasized. Even so, chronic-pain patients argue that the focus on setting postsurgical prescribing levels has made it far more difficult for them to get treatment.

"These patients feel besieged … and say, 'I need these pills to get out of bed in the morning'," said Vu. "This project and study is not about chronic pain. It's about preventing harm to healthy people coming in for surgery."

What are some of the guidelines? Michigan, in its initial recommendation, called for no more than 10 pills equivalent to 5 milligrams of oxycodone for a minor hernia repair, and no more than 20 for a minimally invasive hysterectomy.

The resulting changes offer important context.

Before the guidelines, for instance, patients with minor hernia repair operations were being prescribed 29 pills, according to the study. That fell to 14 by May 2018, which is still four more pills than the guidelines suggest.

For a hysterectomy, though, patients received 31 pills before the guidelines and 19 after, just below the "no more than 20" recommended. And following their initial guidelines, Michigan OPEN revised its recommendations, further lowering the range amounts to zero to 10 for hernia repair and 0 to 15 for a hysterectomy.

In sheer numbers, opioid prescribing rates in the U.S. peaked in 2010, but remain among the highest in the world, according to studies and other data. The postsurgical prescribing falloff seen in Michigan does not likely reflect a broader trend, especially where there is less emphasis on such guidelines.

An analysis of national Medicare data by Kaiser Health News and Johns Hopkins Bloomberg School of Public Health, for example, found only a small drop — one to two pills on average, per patient — in postsurgical prescribing across seven different procedures from 2016 to 2017.

The KHN/Hopkins analysis originally found that prescribing from 2011 to 2016 was well above levels now recommended by organizations like Michigan OPEN and the Hopkins medical center. For example, Medicare patients took home 48 pills in the week following coronary artery bypass; 31 following laparoscopic gallbladder removal; 28 after a lumpectomy; and 34 after minimally invasive hysterectomies.

According to postsurgical guidelines spearheaded by Hopkins last year, those surgeries should require at most 30 pills for a bypass; 10 pills for minimally invasive gallbladder removal, lumpectomy and minimally invasive hysterectomy.

In July, when 2017 Medicare data became available, KHN and Hopkins did an additional analysis, which showed, on average, small decreases in the number of pills taken home from the pharmacy by patients in the first week after leaving the hospital. But the drop was smaller than the reductions seen in Michigan.

For example, nationwide prescribing following bypass surgery averaged 45 pills, a drop of three; after a hysterectomy, the drop was four pills from the six-year average, to 30; and lumpectomy patients took home five fewer pills, for an average of 23.

"Those reductions are not sufficient," said Dr. Marty Makary, the surgeon who spearheaded the development of guidelines at Johns Hopkins Bloomberg School and whose staff helped perform the Medicare analysis for KHN. "The data represents prescriptions as recent as a year and a half ago, and we're three years into the opioid crisis. We're talking about mopping up the floor while the spigot is still on."

(Use our interactive tool
Search individual prescribing habits by doctor name or associated hospitals based on data analysis by Kaiser Health News and Johns Hopkins Bloomberg School of Public Health. Read our methodology)

Julie Appleby: jappleby@kff.org, @Julie_Appleby

Elizabeth Lucas: elucas@kff.org, @eklucas

Trump Administration Hits Brakes On Law To Curb Unneeded Medicare CT Scans, MRIs

KFF Health News, August 14, 2019

Critics worry the delays come at a steep cost: Medicare paying for millions of unnecessary exams and patients subject to radiation for no medical benefit.

This article was first published on Wednesday, August 14, 2019 in Kaiser Health News.

By Phil Galewitz

Five years after Congress passed a law to reduce unnecessary MRIs, CT scans and other expensive diagnostic imaging tests that could harm patients and waste money, federal officials have yet to implement it.

The law requires that doctors consult clinical guidelines set by the medical industry before Medicare will pay for many common exams for enrollees. Health care providers who go way beyond clinical guidelines in ordering these scans (the 5% who order the most tests that are inappropriate) will, under the law, be required after that to get prior approval from Medicare for their diagnostic imaging.

But after physicians argued the provision would interfere with their practices, the Trump administration delayed putting the 2014 law in place until January 2020, two years later than originally planned.

Even then, the Centers for Medicare & Medicaid Services (CMS) slated next year as a "testing" period, which means even if physicians don't check the guidelines, Medicare will still pay for an exam. CMS also said it won't decide until 2022 or 2023 when physician penalties will begin.

Critics worry the delays come at a steep cost: Medicare paying for millions of unnecessary exams and patients subject to radiation for no medical benefit.

A Harvard study published in 2011 in the Journal of Urology found "widespread overuse" of imaging tests for men on Medicare who were at low risk for prostate cancer. And a University of Washington study in the Journal of the American College of Radiology that reviewed 459 CT and MRI exams at a large academic medical center found 26% of the tests were inappropriate.

"These delays mean that many more inappropriate imaging procedures will be performed, wasting financial resources and subjecting patients to services they do not need," said Gary Young, director of the Northeastern University Center for Health Policy and Healthcare Research in Boston. "If this program were implemented stringently, you would certainly reduce inappropriate imaging to some degree."

Doctors order unnecessary tests for a variety of reasons: to seize a potential financial advantage for them or their health system, to ease fears of malpractice suits or to appease patients who insist on them.

The law applies to doctors treating patients enrolled in the traditional fee-for-service Medicare system. Health insurers, including those that operate the private Medicare Advantage plans, have for many years refused to pay for the exams unless doctors get authorization from them beforehand. That process can take days or weeks, which irks physicians and patients.

CMS Administrator Seema Verma has sought to reduce administrative burdens on doctors with her "patients over paperwork" initiative.

CMS would not make Verma or other officials available and answered questions only by email.

A spokeswoman said CMS has no idea how many unnecessary imaging tests are ordered for Medicare beneficiaries.

"CMS expects to learn more about the prevalence of imaging orders identified as 'not appropriate' under this program when we begin to identify outlier ordering professionals," she said.

'It Takes Four Clicks On A Computer'

 

An influential congressional advisory board in 2011 cited the rapid growth of MRIs, CT scans and other imaging and recommended requiring doctors who order more tests than their peers to be forced to get authorization from Medicare before sending patients for such exams. In the 2014 law, Congress tried to soften the effect by asking doctors billing Medicare to follow protocols to confirm that imaging would be appropriate for the patient.

A growing number of health systems have used clinical guidelines to better manage imaging services, studies show. The University of Virginia Health System found that unnecessary testing fell by between 5% and 11% after implementing such recommendations.

Virginia Mason Health System in Seattle in 2011 set up a system requiring its physicians — most of whom are on salary — to consult imaging guidelines. It would deny claims for any tests that did not meet appropriate criteria, except in rare circumstances. A study found the intervention led to a 23% drop in MRIs for lower back issues and headaches.

Dr. Craig Blackmore, a radiologist at Virginia Mason, said he worries that, unlike the efforts at his hospital, many doctors could be confused by the Medicare program because they have not received the proper training about the guidelines.

"My fear is that it will be a huge disruption in workflow and show no benefit," he said.

In 2014, AtlantiCare, a large New Jersey hospital system, began grading physicians on whether they consult its guidelines.

"Some doctors see this tool as additional work, but it takes four clicks on a computer or less than a minute," said Ernesto Cerdena, director of radiology services at AtlantiCare.

Not all Medicare imaging tests will be subject to the requirements. Emergency patients are exempt, as well as patients admitted to hospitals. CMS has identified some of the most common conditions for which doctors will have to consult guidelines. Those include heart disease, headache and pain in the lower back, neck or shoulders.

Robert Tennant, director of health information technology for the Medical Group Management Association, which represents large physician groups, said the law will unfairly affect all doctors merely to identify the few who order inappropriately.

"For the most part, doctors are well trained and know exactly what tests to perform," Tennant said.

The association is one of several medical groups pushing Congress to repeal the provision.

American College Of Radiology's Role

 

The law required the federal government to designate health societies or health systems to develop guidelines and companies that would sell software to embed that information into doctors' electronic health record systems.

Among the leaders in that effort is the American College of Radiology, which lobbied for the 2014 law and has been issuing imaging guidelines since the 1990s. It is one of about 20 medical organizations and health systems certified by CMS to publish separate guidelines for doctors.

The college wanted "to get ahead of the train and come up with a policy that was preferable to prior authorization," said Cynthia Moran, an executive vice president of the radiology group. About 2,000 hospitals use the college's licensed guidelines, more than any others, she said. And the college profits from that.

Moran said the licensing money helps the college defer the costs of developing the guidelines, which must be updated regularly based on new research. She said the college gives away the guidelines to individual doctors upon request and sells them only to large institutions, although she notes they are not as easy to access that way compared with being embedded in a doctor's medical records.

Phil Galewitz: pgalewitz@kff.org, @philgalewitz

Charity Care Spending By Hospitals Plunges

KFF Health News, August 13, 2019

The decline was true of for-profit hospitals, so-called nonprofit hospitals and those designated as city, county, district or state hospitals.

This article was first published on Tuesday, August 13, 2019 in Kaiser Health News.

By Harriet Blair Rowan

alifornia hospitals are providing significantly less free and discounted care to low-income patients since the Affordable Care Act took effect.

As a proportion of their operating expenses, the state's general acute-care hospitals spent less than half on these patients in 2017 than they did in 2013, according to data the hospitals reported to California's Office of Statewide Health Planning and Development.

The biggest decline in charity care spending occurred from 2013 to 2015, when it dropped from just over 2% to just under 1%. The spending has continued to decline, though less dramatically, since then.

The decline was true of for-profit hospitals, so-called nonprofit hospitals and those designated as city, county, district or state hospitals.

Health experts attribute the drop in charity care spending largely to the implementation of the federal Affordable Care Act, popularly known as Obamacare. The law expanded insurance coverage to millions of Californians, starting in 2014, and hospitals are now treating far fewer uninsured patients who cannot pay for the care they receive.

With fewer uninsured patients, fewer patients seek financial assistance through the charity care programs, according to the California Hospital Association.

Cori Racela, deputy director at the Western Center on Law & Poverty, countered that many people still need financial assistance because — even with insurance — they struggle to pay their premiums, copays and deductibles.

"The need for charity care has changed," she said, "but it still exists."

The data on charity care comes from most of the state's general acute-care hospitals but does not include Kaiser Permanente hospitals, which are not required by the state to report their charity care totals. (Kaiser Health News, which produces California Healthline, has no affiliation with Kaiser Permanente.)

For 2017, California Healthline used data from 177 nonprofit hospitals, 80 for-profit hospitals and 54 city, county, district or state hospitals. The breakdown was similar for the other years, with slight fluctuations.

Nonprofit hospitals, whose charity care spending dropped from 2.02% of operating expenses to 0.91% over the five-year period, are required by state and federal law to provide "community benefits" in exchange for their tax-exempt status.

They can meet that requirement beyond providing free and discounted care in a variety of ways: They can offer community public health programs, write off uncollected patient debt and claim the difference between what it costs to provide care and the amount that they are reimbursed by government insurance programs.

Nonprofit "hospitals get tax-exempt status, but they don't get it for free," said Ge Bai, associate professor of accounting and health policy at Johns Hopkins University. Charity care "is part of the implicit contract between hospital and taxpayers."

Bai sees the reduced spending on charity care as part of a trend of nonprofit hospitals acting more like their for-profit counterparts.

Many nonprofit hospitals "no longer consider charity care their primary mission," she said. "They are making more and more money but they are dropping their charity care."

The state and federal governments set no minimum requirements for charity spending by hospitals, although the California Attorney General has created standards for a few nonprofit hospitals that have changed ownership in recent years.

Jan Emerson-Shea, a spokeswoman for the California Hospital Association, said hospitals are giving back to their communities in ways beyond charity care.

"You see charity care declining, but Medi-Cal losses are increasing," Emerson-Shea said. She pointed to the growing shortfalls many hospitals report from caring for more patients covered by the public insurance program. "Every Medi-Cal patient we treat we lose money on."

Medi-Cal, the state's Medicaid program for low-income residents, increased its rolls by 5.6 million — or about 70% — from 2013 to 2017.

Racela, of the Western Center on Law & Poverty, would like to see changes in California's charity care rules to address high out-of-pocket costs.

And she wants hospitals to abide by the state law that requires them to inform patients that they may be eligible for charity care based on their income.

"There is still a big unmet need for charity care across the state," Racela said.

This KHN story first published on California Healthline, a service of the California Health Care Foundation.

Harriet Blair Rowan: hrowan@kff.org, @HattieRowan

Class-Action Lawsuit Seeks To Let Medicare Patients Appeal Gap in Nursing Home Coverage

KFF Health News, August 12, 2019

Observation patients may have to pay a larger share of the hospital bill than if they were admitted to the hospital. Plus, they have to pick up the tab for any nursing home care.

This article was first published on Monday, August 12, 2019 in Kaiser Health News.

By Susan Jaffe

Medicare paid for Betty Gordon's knee replacement surgery in March, but the 72-year-old former high school teacher needed a nursing home stay and care at home to recover.

Yet Medicare wouldn't pay for that. So Gordon is stuck with a $7,000 bill she can't afford — and, as if that were not bad enough, she can't appeal.

The reasons Medicare won't pay have frustrated the Rhode Island woman and many others trapped in the maze of regulations surrounding something called "observation care."

Patients, like Gordon, receive observation care in the hospital when their doctors think they are too sick to go home but not sick enough to be admitted. They stay overnight or longer, usually in regular hospital rooms, getting some of the same services and treatment (often for the same problems) as an admitted patient — intravenous fluids, medications and other treatment, diagnostic tests and round-the-clock care they can get only in a hospital.

But observation care is considered an outpatient service under Medicare rules, like a doctor's appointment or a lab test. Observation patients may have to pay a larger share of the hospital bill than if they were officially admitted to the hospital. Plus, they have to pick up the tab for any nursing home care.

Medicare's nursing home benefit is available only to those admitted to the hospital for three consecutive days. Gordon spent three days in the hospital after her surgery, but because she was getting observation care, that time didn't count.

There's another twist: Patients might want to file an appeal, as they can with many other Medicare decisions. But that is not allowed if the dispute involves observation care.

Monday, a trial begins in federal court in Hartford, Conn., where patients who were denied Medicare's nursing home benefit are hoping to force the government to eliminate that exception. A victory would clear the way for appeals from hundreds of thousands of people.

The class-action lawsuit was filed in 2011 by seven Medicare observation patients and their families against the Department of Health and Human Services. Seven more plaintiffs later joined the case.

"This is about whether the government can take away healthcare coverage you may be entitled to and leave you no opportunity to fight for it," said Alice Bers, litigation director at the Center for Medicare Advocacy, one of the groups representing the plaintiffs.

If they win, people with traditional Medicare who received observation care services for three days or longer since Jan. 1, 2009, could file appeals seeking reimbursement for bills Medicare would have paid had they been admitted to the hospital. More than 1.3 million observation claims meet these criteria for the 10-year period through 2017, according to the most recently available government data.

Gordon is not a plaintiff in the case, but she said the rules forced her to borrow money to pay for the care. "It doesn't seem fair that after paying for Medicare all these years, you're told you're not going to be covered now for nursing home care," Gordon said.

No one has explained to Gordon, who has hypoglycemia and an immune disease, why she wasn't admitted. The federal notice hospitals are required to give Medicare observation patients didn't provide answers.

Even Seema Verma, the head of the Centers for Medicare & Medicaid Services, is puzzled by the policy. "Better be admitted for at least 3 days in the hospital first if you want the nursing home paid for," she said in a tweet Aug. 4. "Govt doesn't always make sense. We're listening to feedback." Her office declined to provide further explanation.

Patients and their families can try to persuade the physician or hospital administrators to change their status, and sometimes that strategy works. If not, they can leave the hospital to avoid the extra expenses, even if doing so is against medical advice.days as a hospital inpatient to qualify for nursing home coverage is written into the Medicare law. But there are exemptions. Medicare officials don't apply it to beneficiaries in some pilot programs and allow private Medicare Advantage insurers to waive it for their patients.

Concerned about the growing number of people affected by observation care, Medicare officials created a "two-midnight" rule in 2013. If a doctor expects a patient will be sick enough to stay in the hospital through two midnights, then it says the patient should generally be admitted as an inpatient.

Yet observation claims have increased by about 70% since 2008, to more than 2 million in 2017. Claims for observation care patients who stay in the hospital for longer than 48 hours — who likely would qualify for nursing home coverage had they been admitted —rose by nearly 159%, according to data Kaiser Health News obtained from CMS. Yet the overall growth in traditional Medicare enrollment was just under 9%.

Justice Department lawyers handling the case declined to be interviewed, but in court filings they argue that the lawsuit accuses the wrong culprit.

The government can't be blamed, the lawyers said, because the "two-midnight" rule gives hospitals and doctors — not the government — the final word on whether a patient should be admitted.

The government's lawyers argue that since Medicare "has not established any fixed or objective criteria for inpatient admission," any decision to admit a patient is not "fairly traceable" to the government.

Like Gordon, some doctors also complain about observation care rules. An American Medical Association spokesman, who spoke on condition of not being named, said the "two-midnight" policy "is challenging and illogical" and should be rescinded. "CMS should instead rely on physicians' clinical judgment to determine a patient's inpatient or outpatient status," he added.

HHS' Office of Inspector General urged CMS to count observation care days toward the three-day minimum needed for nursing home coverage. It's No. 1 on a list issued last month of the 25 most important inspector general's recommendations the agency has failed to implement.

The Medicare Payment Advisory Commission, which counsels Congress, has made a similar suggestion.

However, Colin Milligan, a spokesman for the American Hospital Association, is more positive about the "two-midnight" rule. It "recognizes the important role of physician judgment," he said.

Medicare isn't dictating what physicians must do, said a physician who has researched the effects of observation care. "It's a benchmark upon which to base your decisions, not a standard or a mandate," said Dr. Michael Ross, a professor of emergency medicine at Emory University School of Medicine in Atlanta. He supervises observation care units at Emory's five hospitals and was chairman of a CMS advisory subcommittee on observation care.

Other physicians claim that since HHS pays hospitals and doctors to treat Medicare patients, the agency's policies weigh on their decisions.

"One of the hardest things to do is to get physicians to predict what will happen with patients — we like to hedge our bets and account for all possibilities," said Dr. Tipu Puri, a physician adviser and medical director at the University of Chicago's medical center. "But we're being forced to interpret the rules and read between the lines."

In the meantime, observation care patients who get follow-up care at a nursing home may soon receive a puzzling notice. A Medicare fact sheet issued last month "strongly encourages" nursing home operators to give an "advance beneficiary notice of non-coverage" to patients who arrive without the required prior three-day hospital admission.

But that notice says they can choose to seek reimbursement by submitting an appeal to Medicare — an option government lawyers will argue in court is impossible.

Susan Jaffe: Jaffe.KHN@gmail.com, @SusanJaffe

To Save Money, American Patients And Surgeons Meet In Cancun

KFF Health News, August 12, 2019

Hospital costs in the U.S. are so high that it made financial sense for a surgeon from Milwaukee and a patient from Mississippi to meet at a private Mexican hospital.

This article was first published on Monday, August 12, 2019 in Kaiser Health News.

By Phil Galewitz

CANCUN, Mexico — Donna Ferguson awoke in the resort city of Cancun before sunrise on a sweltering Saturday in July.

She wasn't headed to the beach. Instead, she walked down a short hallway from her Sheraton hotel and into Galenia Hospital.

A little later that morning, a surgeon, Dr. Thomas Parisi, who had flown in from Wisconsin the day before, stood by Ferguson's hospital bed and used a black marker to note which knee needed repair. "I'm ready," Ferguson, 56, told him just before being taken to the operating room for her total knee replacement. For this surgery, she would not only receive free care but would receive a check when she got home.

The hospital costs of the American medical system are so high that it made financial sense for both a highly trained orthopedist from Milwaukee and a patient from Mississippi to leave the country and meet at an upscale private Mexican hospital for the surgery.

Ferguson gets her health coverage through her husband's employer, Ashley Furniture Industries. The cost to Ashley was less than half of what a knee replacement in the United States would have been. That's why its employees and dependents who use this option have no out-of-pocket copayments or deductibles for the procedure; in fact, they receive a $5,000 payment from the company, and all their travel costs are covered.

Parisi, who spent less than 24 hours in Cancun, was paid $2,700, or three times what he would get from Medicare, the largest single payer of hospital costs in the United States. Private health plans and hospitals often negotiate payment schedules using the Medicare reimbursement rate as a floor.

Ferguson is one of hundreds of thousands of Americans who seek lower-cost care outside the United States each year, with many going to Caribbean and Central American countries. A key consideration for them is whether the facility offers quality care.

In a new twist on medical tourism, North American Specialty Hospital, known as NASH and based in Denver, has organized treatment for a couple of dozen American patients at Galenia Hospital since 2017.

Parisi, a graduate of the Mayo Clinic, is one of about 40 orthopedic surgeons in the United States who have signed up with NASH to travel to Cancun on their days off to treat American patients. NASH is betting that having an American surgeon will alleviate concerns some people have about going outside the country, and persuade self-insured American employers to offer this option to their workers to save money and still provide high-quality care.

NASH, a for-profit company that charges a fixed amount for each case, is paid by the employer or an intermediary that arranged the treatment.

"It was a big selling point, having an American doctor," Ferguson said.

The American surgeons work closely with a Mexican counterpart and local nurses. NASH buys additional malpractice coverage for the American physicians, who could be sued in the United States by patients unhappy with their results.

"In the past, medical tourism has been mostly a blind leap to a country far away, to unknown hospitals and unknown doctors with unknown supplies, to a place without U.S. medical malpractice insurance," said James Polsfut, the chief executive of NASH. "We are making the experience completely different and removing as much uncertainty as we can."

Medical tourism has been around for decades but has become more common in the past 20 years as more countries and hospitals around the world market themselves to foreigners.

There are, of course, risks to going outside the country, including the headache of travel and the possibility that the standards of care may be lower than at home. If something goes wrong, patients will be far from family and friends who can help — and it might be more difficult to sue providers in other countries.

Chasing Lower Costs
 

The high prices charged at American hospitals make it relatively easy to offer surgical bargains in Mexico: In the United States, knee replacement surgery costs an average of about $30,000 — sometimes double or triple that — but at Galenia, it is only $12,000, said Dr. Gabriela Flores Teón, medical director of the facility.

The standard charge for a night in the hospital is $300 at Galenia, Flores said, compared with $2,000 on average at hospitals in the United States.

The other big savings is the cost of the medical device — made by a subsidiary of the New Jersey-based Johnson & Johnson — used in Ferguson's knee replacement surgery. The very same implant she would have received at home costs $3,500 at Galenia, compared with nearly $8,000 in the United States, Flores said.

Galenia is accredited by the international affiliation of the Joint Commission, which sets hospital standards in the U.S. But to help doctors and patients feel comfortable with surgery here, NASH and Galenia worked to go beyond those standards.

That included adding an extra autoclave to sterilize instruments more quickly, using spacesuit-like gowns for doctors to reduce infection risk and having patients start physical therapy just hours after knee- or hip-replacement surgery.

I. Glenn Cohen, a law professor at Harvard and an expert on medical tourism, called the model used by NASH and a few other similar operations a "clever strategy" to attack some of the perceived risks about medical tourism.

"It doesn't answer all concerns, but I will say it's a big step forward," he said. "It's a very good marketing strategy."

Still, he added, patients should be concerned with whether the hospital is equipped for all contingencies, the skills of other surgical team members and how their care is handed off when they return home.

Officials at Ashley Furniture, where Ferguson's husband, Terry, is a longtime employee, said they had been impressed so far. The company offers the option of overseas surgery through NASH at no cost — and with an incentive.

"We've had an overwhelming positive reaction from employees who have gone," said Marcus Gagnon, manager of global benefits and health at Ashley, a Wisconsin-based company with 17,000 employees. Ferguson was the company's 10th insured person to go to Cancun.

Ashley also has sent about 140 employees or dependents for treatments at a hospital in Costa Rica, and together the foreign medical facilities have saved the firm $3.2 million in health costs since 2016, he said.

"Even after the incentive payments and travel expenses, we still save about half the cost of paying for care in the United States," Gagnon said. "It's been a nice option — not a magic bullet — but a nice option."

NASH's strategy has its skeptics.

"Building a familiar culture in a foreign destination may be appealing to some American consumers, but I do not see it as a sustainable business," said Irving Stackpole, a health consultant in Rhode Island. "It's not unusual for people thinking about this to have doctors, family and friends who will see this as a high-risk undertaking."

Stackpole said only a limited number of Americans were willing — even with a financial incentive — to travel abroad because most perceive the care won't be as good.

'You Are Nuts For Doing This'
 

Ferguson's knee started causing her trouble two years ago, and last fall a doctor recommended replacing it. She is on her feet most of the day assembling furniture toolkits at her job at American Furniture Manufacturing in Ecru, Miss. Terry Ferguson mentioned the Cancun option he had heard about at work. The couple pay $300 a month in premiums for family health coverage.

"I had a friend say, 'You are nuts for doing this,' but Dr. Parisi trained at Mayo, and you can't do any better than that," Ferguson said before the surgery. Also, having an American doctor meant that if something went wrong, she could file a malpractice suit in the United States, she added.

IndusHealth, Ashley's medical travel plan administrator, arranged for her to get a physical exam, knee X-rays and heart tests near her home to make sure she was a good candidate for surgery. It even had her see a dentist to make sure she didn't have an infection that could complicate her recovery. Parisi reviewed some of those records before Ferguson headed to Cancun.

The company also coordinated her medical care and made travel arrangements, including obtaining passports, airline tickets, hotel and meals for the couple.

In Mexico, the day before surgery, Ferguson had more X-rays and had her blood drawn. After lunch, the couple met with Noemi Osorio, a nurse, who reviewed Ferguson's schedule and showed her the physical therapy facilities. Later, they met Parisi and the rest of the medical team.

"My job is pretty easy," Parisi told her. "How you do over the next five or 10 years depends on how well you work with the physical therapy."

The surgery began at 8:20 the next morning. Dr. Daniel Rios, an orthopedic surgeon who practices full time in Cancun, worked with Parisi. Rios, who had done a fellowship at Brigham and Women's Hospital in Boston, checked on Ferguson for several days after the operation.

By 9:30 a.m., the operation was over, and at 11 a.m. she left the recovery area. Parisi checked on her there. "Everything went great," he told her before heading to the airport for his 2:30 flight home.

Parisi said that the lack of English proficiency among some surgical staff members created "momentary delays" but that the bilingual surgical assistant helped.

A little more than three hours after the surgery, Ferguson was in her hospital room, and a physical therapist came and helped her out of bed. Using a walker, she gingerly took some steps to test out her new knee. By the next morning, she was on crutches walking the hallway and was discharged before noon. She stayed at her hotel 10 additional days while having physical therapy twice a day at the hospital.

"It's been a great experience," she said two days after the surgery. "Even if I had to pay, I would come back here because it's just a different level of care — they treat you like family."

Phil Galewitz: pgalewitz@kff.org, @philgalewitz

Where Tourism Brings Pricey Health Care, Locals Fight Back

KFF Health News, August 9, 2019

In an area where average emergency room claims reached 842% of Medicare rates, residents of a Colorado county found relief by joining forces and negotiating prices directly with the local hospital.

This article was first published on Friday, August 9, 2019 in Kaiser Health News.

By Julie Appleby

Colorado's ski resort areas in Summit County have a high cost of living, among the highest in the country. The people who visit these places — Keystone, Breckenridge and Copper Mountain ­— can afford it.

Many of those who live and work there can't, especially when they get sick.

In addition to expensive rent, they pay some of the steepest health insurance premiums in the nation. Hospital costs are also pricey, with most business generated by tourists, skiers and outdoors enthusiasts.

But locals may soon get a break after a group, fed up with the costs, negotiated a deal with the hospital system. The group, which came to be known as the Peak Health Alliance, expects to be able to offer its members premiums next year that are at least 20% less than current rates.

About 6,000 people, among them individuals as well as employees of local businesses and the county government, can buy coverage through the alliance, which cut a deal for a discount of about one-third off the local hospital's list prices (although at least one expert thinks they could have done a lot better).

"It wasn't for the faint of heart," said Tamara Drangstveit, who ran a county social services organization before becoming Peak's executive director and, effectively, one of the lead 

Fed up with high hospital prices even after insurers' negotiated discount, more employers are cutting out insurance middlemen and engaging in what is known as "direct contracting" with medical providers. They cut their own deals.

Direct contracting is a hot topic among employers because they are "up in arms about insurers not keeping prices in check," said Chapin White, a Rand Corp. researcher who studies the tremendous variation in hospital prices. The citizens here in Colorado are taking the approach to the grassroots level.

What Peak did — starting with painstakingly gathering data about exactly what hospitals in the region were being paid by insurers, employers and consumers — might be an answer for some.

Such efforts may be helped by Congress, which is considering barring secrecy clauses in hospital and insurance contracts that can prevent employers from learning exactly how much insurers pay. The Trump administration is also considering proposals to require more public disclosure of negotiated hospital prices.

And, according to press reports, the experience with Peak may go statewide. Colorado's insurance commissioner and Gov. Jared Polis say they are considering an alliance that could bring together state employees, individuals and private employers in a similar health care purchasing network.

"It feels like the curtain is going up on health care costs and prices," said Cheryl DeMars, CEO of The Alliance, a group of 240 self-insured private sector employers that directly contracts with hospitals in Wisconsin, northern Illinois and eastern Iowa.

While interest is growing, experts caution that direct contracting won't work in many places.

"It won't have impact in urban areas where no one has significant market share, but it could work in rural areas where there is a dominant employer or some other large group," said Gerard Anderson, a professor at Johns Hopkins University in Baltimore who researches health care costs.

First Step: Get Price Information

It takes a great deal of effort — and some luck — to peer behind the curtain.

"The people buying the plans, employers and workers, are often barred from viewing the contracts insurers have negotiated on their behalf … so they don't know if they are reasonable," said White at Rand.

The Peak Health Alliance in Colorado was lucky that the state is one of at least 18 that have made public some medical care price information from insurers. It also gathered similar information from local self-insured employers' insurance plans.

Peak was able to compare the payments made to Centura Health, which owns the local hospital and others in the state, to what Medicare would pay.

"We found the average emergency room claim was 842% of what Medicare would pay — and our outpatient rates were 505% higher than Medicare," Drangstveit said.

That helps drive up premium costs. It isn't unusual, Drangstveit said, for families who don't qualify for a federal subsidy through the Affordable Care Act to face $2,500 monthly premiums with an $8,000 annual deductible. Many area residents go uninsured or are forced to make hard financial choices.

"The stories we hear are heartbreaking," said Drangstveit.

Second Step: Negotiate With The Hospital

Lee Boyles, CEO of Centura Health's St. Anthony Summit Medical Center in Frisco, said he wasn't surprised by the findings of Peak's analysis.

Charges are high, he said, reflecting the cost of living, as well as the need to maintain round-the-clock trauma coverage, emergency helicopter service and physicians who specialize in the kind of head and limb injuries that can result from mountain sports.

Plus it's the only hospital in town. Others are a 70-mile drive down the mountain in Denver.

Unlike some hospitals elsewhere with similar exclusivity, Centura was willing to bargain.

"We were going to do what's right for our community," said Boyles.

It also helped that granting discounts to locals wouldn't affect the bottom line much.

Residents account for only about 15% of the hospital's business, Boyles said, which is a far smaller portion than at a typical hospital.

Tourists and sports enthusiasts — many well-heeled, with good insurance — make up the largest share of the hospital's business. Thus, any new prices negotiated with Peak would not apply to most of the hospital's business.

The deal reached with Peak, Boyles said, represents a discount of about one-third off the hospital's "list prices."

Third Step: Keep Pushing

Anderson at Johns Hopkins said shaving this amount from already high charges isn't much of a break. A discount pegged to Medicare rates, plus a bit for overhead and profit, would be better, he said.

In a report released in May, Rand used claims data from employers in 25 states to show a huge variation in prices paid to specific hospitals and show a huge variation between the prices paid by employers to those facilities and how much Medicare would allow for the same services.

To be sure, hospitals have long argued that Medicare doesn't cover their costs. The Rand study found that employers paid an average of 241% of Medicare rates in 2017, but some saw rates three times those paid by the federal program or more.

Gloria Sachdev, CEO of the Employers' Forum of Indiana, a group working to lower health care spending there, cautioned that price transparency alone is not a panacea.

Her organization, which commissioned the study, is pressing for more quality and cost data as well as tougher negotiations by its insurers.

"We need to take the driver's seat," said Sachdev.

Julie Appleby: jappleby@kff.org, @Julie_Appleby

Federal Experts' Advice On HPV Vaccine Could Leave Adults Confused

KFF Health News, August 8, 2019

Public health advocates say new HPV guidelines don't provide doctors and patients clear guidance about who in this expansive age group are good candidates. 

This article was first published on Thursday, August 8, 2019 in Kaiser Health News.

By Michelle Andrews

Vaccination decisions are usually pretty straightforward. People either meet the criteria for the vaccine based on their age or other factors or they don't. But when a federal panel recently recommended an update to the human papillomavirus (HPV) vaccine guidelines, it left a lot of uncertainty.

The panel recommended that men and women between ages 27 and 45 decide — in discussion with their health care providers — whether the HPV vaccine makes sense for them.

But some public health advocates criticize that advice because it doesn't provide doctors and patients clear guidance about who in this expansive age group are good candidates. They worry that many people may get immunized who won't benefit, adding needless cost to the health care system and possibly shortchanging people overseas, where the vaccine is in short supply.

"My concern is that there will be a whole lot of people or doctors recommending this vaccine," said Debbie Saslow, managing director of HPV and gynecological cancers for the American Cancer Society. "But I think that the benefit is so small and we just don't have guidance."

The human papillomavirus is the most common sexually transmitted infection in the United States; nearly everyone who's sexually active will get it at some point. People typically clear the virus on their own and often don't even realize they've been infected. But in some people, HPV remains in the body and may cause several types of cancer as well as genital warts.

Every year, HPV causes more than 33,000 cancers, including more than 90% of cervical cancers as well as cancers of the vagina, vulva, penis, anus and the area at the back of the throat called the oropharynx, according to the Centers for Disease Control and Prevention.

More than 40 types of HPV affect the genital area. Merck's Gardasil 9, the vaccine used in the United States, provides protection against nine types, which together are associated with the majority of HPV-related cancers and cause 90% of genital warts.

Because HPV is so common among people who are sexually active, the best time to vaccinate is before people start having sex and risk being exposed to the virus. The CDC's Advisory Committee on Immunization Practices recommends HPV vaccination for all 11- and 12-year-old girls and boys. Catch-up immunizations for young people outside that age window are recommended through age 21 for men and 26 for women (the proposed HPV vaccine update would change the catch-up vaccination guideline for men to align it with the age-26 cutoff for women).

In its June meeting, the immunization committee, which includes public health experts, recommended widening the vaccination window to include adults between 27 and 45.

But rather than give the thumbs-up for everyone in that age group, the panel said people should engage in "shared clinical decision-making" with their health care professional to decide if the vaccine is right for them.

"ACIP made this type of recommendation because most people in this age group are not likely to benefit from getting the vaccine," Kristen Nordlund, a spokeswoman for the CDC, wrote in an email.

The vaccine won't protect people against types of HPV to which they've already been exposed, and many sexually active people have been exposed to at least some HPV types by their late 20s.

That makes it tougher for the vaccine to have an impact in this age group. According to an economic modeling study presented at the ACIP meeting, under current guidelines that recommend immunization through age 26, 202 people would have to be vaccinated to prevent one case of HPV-related cancer. When the recommendations are broadened to include people through age 45, the number that would have to be vaccinated to prevent one case of cancer increases exponentially to 6,500.

However, it's unlikely that people in the older group have been exposed to all nine types of HPV the vaccine protects against.

"There's some sense that you can get some protection against some future cancers," said Dr. William Schaffner, professor of preventive medicine and infectious diseases at Vanderbilt University School of Medicine, who is the ACIP liaison for the National Foundation for Infectious Diseases.

Yet, patients — and their doctors — would be hard pressed to know if immunization would be beneficial.

"The problem is that no individual person is likely to know which individual type of HPV they've been exposed to," said Dr. Christopher Zahn, vice president of practice activities at the American College of Obstetricians and Gynecologists.

Vaccine experts have some suggestions about which people older than 26 might consider getting the three-shot series. They include people with multiple sex partners and those who are newly single and dating after being in a monogamous marriage or relationship.

Jennifer Sienko is in a better position than most people to evaluate whether to get the vaccine. She is co-director of the National HPV Vaccination Roundtable, a coalition of groups aimed at reducing HPV cancers that is hosted by the American Cancer Society.

But she was recently surprised when a new doctor asked the 40-year-old if she wanted the vaccine. She opted against it.

Sienko, who lives in Chicago, has been married to her second husband for three years, and that contributed to her decision. But perhaps, she said, it would have been different when she was single for a time.

"So there may have been a window where, had the vaccine been indicated for older women, perhaps between my marriages I would have looked into that," she said.

The CDC is reviewing the ACIP recommendation. If it approves the recommendation, experts hope the CDC will provide further guidance on determining who the vaccine is appropriate for.

If the CDC approves broadening the age for the vaccine in consultation with a health care provider, most insurers would cover the costs, which can run a few hundred dollars per dose. Under the Affordable Care Act's preventive coverage rules, patients generally won't have to pay anything out of pocket for it.

Michelle Andrews: andrews.khn@gmail.com, @mandrews110

Are Trump's Top Medicaid Regulators Ignoring Major Problems?

KFF Health News, August 7, 2019

The CEO of Centene, a company now entangled in a broader federal inquiry, met with Sen. Bob Casey to allay concerns that patients are being neglected.

The article was first published on Tuesday, August 6, 2019 in ProPublica and The Dallas Morning News.

By J. David McSwane, ProPublica, and Tom Benning, The Dallas Morning News.

The ranking member of the Senate health committee has complained for months about the Trump administration's failure to look into Medicaid contractors that have reaped big profits while sometimes failing to provide crucial patient services.

So last week, Sen. Bob Casey, D-Pa., called in the top boss of Centene, the nation's largest Medicaid managed care company. He wanted to question the company about reports that its Texas subsidiary denied life-sustaining care to sick and disabled children — in one case, leaving a baby in foster care to suffer a catastrophic brain injury.

The meeting with longtime Centene CEO Michael Neidorff did not go well, according to Casey.

"I thought they would try to persuade me that they were going to do better, but they didn't seem interested in that at all," Casey told ProPublica and The Dallas Morning News in an interview. "I just couldn't believe it."

Casey said the Centene official denied providing inadequate care and cast blame for failures on foster parents and nurses.

Centene declined to make Neidorff available for an interview and emailed a brief statement in response to questions about the meeting with Casey.

"Centene and its subsidiaries care deeply about each and every member we serve," the email read. "We work tirelessly to ensure we provide the appropriate level of care for our members."

Under Neidorff, Centene has grown from a tiny health network in the Midwest into a $60-billion-a-year health care empire, backed almost entirely with taxpayer money. The company cares for more than 8.5 million Medicaid patients.

The company came under criticism last year after an eight-part investigation published in the Morning News examined whether Centene and other Medicaid managed care companies were skimping on care to bolster profits. The series raised questions about Centene's Texas subsidiary, Superior HealthPlan, and its handling of the case of D'ashon Morris, a Texas toddler who was born with severe defects and was living in a foster home.

The series, titled "Pain & Profit," reported that D'ashon was denied 24/7 nursing care and suffered brain damage after a medical incident that occurred while he did not have his nurse around. (Read the full story here.)

The Morning News reported that state health officials had found the Centene subsidiary in violation of state and federal Medicaid rules and recommended the company face steep fines for what happened to the child. But top Texas health officials never assessed those fines, the Morning News reported.

D'ashon's adoptive mother sued the Centene subsidiary in Texas state court. That case is tied up in the Texas appeals court, where the Centene subsidiary has argued that the lawsuit should be dismissed because D'ashon and his mother are stifling the company's right to free speech.

During hearings in the state Capitol, Superior representatives denied that the company's refusal to provide 24/7 nursing was improper.

After his meeting with the Centene official, Casey sent a strongly worded letter to Seema Verma, a former health consultant appointed by President Donald Trump to run the Centers for Medicare and Medicaid Services.

In the letter, Casey called Centene's response to questions about D'ashon's case "callous."

He also asked Medicaid officials to dig further into Centene's business practices and to provide documentation on any response to the Morning News investigation.

"It's another indication that the regulatory approach here by the administration is, at best, suspect," Casey said.

A CMS spokesman said that Texas officials have shared with the agency an "action plan they intended to take to address the concerns raised," adding that CMS is in regular communication to ensure the state improves.

"CMS has received Sen. Casey's letter and will respond to his office directly," spokesman Brian Leshak said in an email.

Casey's position as the top Democrat on two Senate panels overseeing federal health programs gives him the standing to raise questions about the Medicaid managed care system.

It's not unusual for company officials facing a federal audit or investigation to meet with members of Congress to address concerns, but it is unusual for such meetings to spill into public view.

Casey said he sent the letter to CMS because of what he called Centene's "cold and clinical" defense of what happened in D'ashon's case. He said it gave him concern about how the company cares for other patients — and what, if anything, regulators are doing when things go wrong.

Last month, more than a year after the Morning News story was published, Centene officials provided Casey's office with a one-page rebuttal titled: "The Dallas Morning News got it wrong."

The company's explanations include that D'ashon's foster mother was a trained nurse. But, as the Morning News reported, she was on an approved vacation at the time of D'ashon's injury, and he had been placed in a different foster home.

The company also said D'ashon's foster mother should have restrained the baby, but the Morning News previously reported that Texas foster care officials confirmed restraints would have required a doctor's order, which she did not have.

"It was all blame shifting and pointing to other factors," Casey said of Centene's letter.

Casey said the meeting left him wondering why federal regulators weren't doing more.

"It might even be worse than asleep at the wheel," he said of CMS under Verma's watch.

"They may be awake at the wheel but choosing consciously to say, 'We're going the other direction.'"

Without commenting on specific cases, the CMS spokesman said the agency routinely monitors states and intervenes when necessary.

Problems with this privatized Medicaid model have grabbed headlines in other states, too. And advocates in those states said they haven't heard much from CMS, which they say is a shift from the Obama administration.

In Iowa, for instance, The Des Moines Register reported failures to provide care and chronicled patients who had been caught in that state's broken medical appeals system.

Rob Sand, Iowa's state auditor, wrote to state officials in June that two large managed care companies had "significantly harmed" two paraplegic patients by refusing to provide services they needed.

Mary Nelle Trefz, of Iowa's Child and Family Policy Center, said she's been shocked to hear nothing about that from CMS.

"I don't feel, or can't observe, or point to anything, where CMS has stepped in to provide that oversight and accountability," she said.

In March, California's state auditor found that millions of children in that state's privatized Medicaid system weren't being provided services that taxpayers had paid for. Auditor Elaine Howle blamed California health officials' "deficient oversight of the managed care plans."

Andy Schneider, a researcher at Georgetown's Center for Children and Families, and a former top adviser to CMS under the Obama administration, said these episodes come at an inconvenient time for the Trump administration, which is focused on reducing regulation and creating additional eligibility hurdles like work requirements.

CMS has taken a hands-off approach compared with the previous administration, he said.

"These are reports coming from reputable media sources," he said. "They're very concerning, they have to do with the operation of the program, they suggest that something is wrong."

Do you have any tips on what's happening inside CMS? Send them to david.mcswane@propublica.org.

Tom Benning is a reporter in the Washington bureau of the Dallas Morning News.

Drugmakers Master Rolling Out Their Own Generics To Stifle Competition

KFF Health News, August 5, 2019

Critics say authorized generics hurt long-term competition and often perversely increase costs, even in the short term.

This article was first published on Monday, August 5, 2019 in Kaiser Health News.

By Jay Hancock and Sydney Lupkin

When PDL BioPharma's $40 million blood-pressure medicine faced the threat of a generic rival this year, the company pulled out a little-known strategy that critics say helps keep drugs expensive and competition weak.

It launched its own generic version of Tekturna, a pill taken daily by thousands. PDL's "authorized" copycat hit the market in March, stealing momentum from the new rival and protecting sales even though Tekturna's patent ran out last year.

PDL's version sold for $187 a month versus $166 for the competing generic, made by Anchen Pharmaceuticals, according to Connecture, an information technology firm. PDL's brand-name Tekturna runs about $208 a month.

The plan is "to maximize profit at this point," Dominique Monnet, PDL's CEO, told stock analysts in March. With the boost of PDL's house generic, "the economics would still be very favorable to us" even against the generic rival and even if prescriptions plunged for the brand, he said.

Lawmakers who created the modern generic-drug industry in the 1980s never imagined anything like this — brand-pharma companies maximizing profits by appearing to compete with themselves.

But it goes on all the time. In fact, there are now nearly 1,200 authorized generics approved in the U.S., according to the Food and Drug Administration. While these might look like products that would push prices down, authorized generics can be as profitable as, if not more profitable than, brand-name drugs.

"Authorized generics are not generic drugs," Dr. Sumit Dutta, chief medical officer for drug-benefit manager OptumRx, told Congress in April. "The marketing and production of authorized generics is exclusively controlled and directed by brand-drug manufacturers. They do nothing to promote competition."

Last year, authorized generics appeared at the rate of about once a week. High-profile examples in recent years included Mylan's generic version of the EpiPen anti-allergy injector, introduced to soothe public outrage after the company raised the brand price 400%. In March, Eli Lilly said it would launch a less expensive generic of its Humalog insulin, whose branded list price has also soared.

Of all the ways drug companies try to protect sales as patents expire — changing doses, adding ingredients, seeking approval to treat new diseases — authorized generics are by far the most profitable, returning $50 for every dollar invested, research firm Cutting Edge Information calculated in 2015.

Brand-drug companies say authorized generics increase competition even if they're not an independent product.

This "reduces prices and results in significant cost savings," said Holly Campbell, spokeswoman for the Pharmaceutical Research and Manufacturers of America, or PhRMA, the brand-drug lobby. "Congress should reject attempts to delay, restrict or prohibit authorized generics."

But critics say authorized generics hurt long-term competition and often perversely increase costs, even in the short term.

Authorized generics don't just steal sales from existing generic rivals. Critics say they erode incentives to make generic drugs, partly by thwarting the intent of Congress to let one company temporarily have generic business to itself after a brand patent expires.

Tactics like this can "stave off generic competition and make sure that generics can't get much of a foothold when they do get to market," said Robin Feldman, a professor at the University of California Hastings College of the Law, who studies pharma policy. "That's the game. And drug companies have become masters at this."

Authorized copycats may help explain why relatively few true generics are reaching the market despite a surge in approvals, analysts say.

The 1984 Hatch-Waxman Act founded the modern generic business by establishing rules for safety and competition, including granting six months of market exclusivity to the first generic rival to each brand. The idea was to give the first mover a profitable head start to attack the established pill.

Few realized the law left room for brand companies to launch their own generics at the same time as or even earlier than rivals, often slightly lower in cost and nearly indistinguishable to patients and doctors from the brand as well as any independent generics.

PDL acquired Tekturna from Novartis via an affiliate in 2016 and soon learned that Anchen was planning a generic. It moved quickly to fight back.

PDL's authorized generic version of Tekturna "was timed to secure us the benefit of being first to market," before Anchen's version was even on the shelves, PDL's CEO, Monnet, told analysts. "We believe this provides [PDL] with a distinctive competitive advantage."

PDL was so confident the authorized generic, called aliskiren, would produce substantial revenue without much effort that it got rid of its Tekturna salesforce of 60 people.

"There's a lot of parts of the system that just automatically switch" to generics, whatever the source, said Maxim Jacobs, who follows PDL's stock for Edison Investment Research. So even if the authorized generic isn't much cheaper than the brand, "it's almost like a no-brainer" to roll one out, he said.

Monnet was unavailable for an interview, a spokesperson said. Anchen did not respond to requests for comment.

Oddly enough, authorized generics can be more profitable than the brand-name drug even if their list prices are much lower, OptumRX's Dutta told Congress. That's because they usually aren't subject to rebates that flow from the drugmaker to middlemen such as OptumRX and effectively lower a brand's revenue.

"These authorized generics often result in net prices higher than the brand drugs they replace," he told Congress. "Authorized generics are just another tactic for drug manufacturers to improve profitability."

The list price for the authorized generic of Humalog insulin is half the brand's — $137 versus $275. That apparent discount offered limited relief to uninsured patients paying cash and generated spirited headlines saying Lilly had lowered the price significantly.

But the move won't cost Lilly any money, said another senior pharmacy benefits executive who asked for anonymity to speak candidly about a vendor. After rebates, $137 is about what the drug giant nets for Humalog now, the executive said. And it's still far higher than what insulin costs in other countries.

"It's a parlor trick," the executive said. "They're bending to political pressure, but are they taking any money out of the system? They're not."

Lilly's Humalog generic, called insulin lispro, and Mylan's EpiPen copycat departed from the traditional playbook by launching well before patents for those brands expired. The companies were trying to calm outrage over rising prices rather than fend off generic rivals, analysts said.

Generic Humalog "was made available to help people paying full retail price for their insulin" because of coverage gaps or lack of insurance, said Lilly spokesman Greg Kueterman.

The mere threat of an authorized generic can also smother competition.

A 2013 Supreme Court ruling challenged deals in which brands blatantly paid rivals to keep generics off the market. So pharma firms came up with an alternative: They could would hold fire on an authorized clone if generic firms agreed to delay launching their products or gave some other concession, according to the Federal Trade Commission.

Both sides win. The brand stretches its monopoly beyond the life of the patent, while the generic firm avoids facing an authorized rival later on.

Authorized generics can generate outsize profits in yet another way: as a method to game Medicaid contracts that costs taxpayers hundreds of millions of dollars a year, according to investigators for the Health and Human Services Department.

Brand-pharma companies routinely "sell" authorized generics to a corporate affiliate at a sharp discount, establishing an artificial wholesale price, said Edwin Park, a research professor who studies Medicaid at the Georgetown University Center for Children and Families.

Because of complex discounting formulas, this strategy minimizes rebates the drugmakers owe to Medicaid, found HHS's Office of Inspector General.

Congress is eyeing bipartisan legislation to close that loophole, which the Congressional Budget Office estimates would save the federal government $3.15 billion over 10 years.

The next frontier in authorized generics involves harder-to-make biologic drugs, such as generic Humalog, which are made from components of living organisms, analysts say.

Such products tend to be expensive and highly profitable, producing especially strong incentives for brand companies to preserve their franchises.

Makers of valuable biologics such as arthritis drug Humira have avoided the kind of competition from generic-like "biosimilars" that exists in Europe, partly due to patent extensions and litigation settlements.

But once patents do expire, authorized biosimilars are likely to be an integral part of their profit-preservation tactics, analysts say. In February, Lilly asked regulators to clarify their stance on "branded biosimilars" — a clear indication of its interest.

The query is "part of a number of questions Lilly and others have posed" about shifting FDA treatment of biologics, said Lilly spokesman Kueterman.

Jay Hancock: jhancock@kff.org, @JayHancock1

Infusion Treatments For Low Iron Can Deplete Patients' Wallets

KFF Health News, August 2, 2019

Under Medicare, doctors are paid based on the average sales price of the prescribed drug, which critics say gives them an incentive to pick the more expensive option.

This article was first published on Friday, August 2, 2019 in Kaiser Health News.

By Shefali Luthra

Shannon Wood Rothenberg walked into her annual physical feeling fine. But more than a year later, she's still paying the price.

Routine bloodwork from the spring 2018 visit suggested anemia, of which she has a family history. Her doctor advised pills. After two months with no change, the doctor sent Rothenberg to a hematologist who could delve into the cause and infuse iron directly into her veins.

So last July, the 48-year-old public school teacher went twice to a cancer center operated by Saint Joseph Hospital in Denver, where she received infusions of Injectafer, an iron solution.

When the bill arrived in March, after prolonged negotiations between the hospital and her insurer, Rothenberg and her husband were floored.

The hospital had billed more than $14,000 per vial. Since her treatment was in-network, though, her insurance plan negotiated a much cheaper rate: about $1,600 per vial. She received two vials. Insurance paid a portion, but Rothenberg still owed the hospital $2,733, based on what was still unpaid in her family's $9,000 deductible.

"I have twins who are going to college next year. I'm already a bit freaked out about upcoming expenses," she said. "I don't have $2,700 sitting around."

About 9 million Americans on Medicare have gotten iron infusions each year since 2013, the first year for which data is available; that's almost one for every five people covered by the government insurance program for people over 65.

Anemia, the principal outgrowth of low iron levels, can cause headache, fatigue and irregular heartbeat. People with certain medical conditions, such as inflammatory bowel disease and kidney failure, are prone to low iron levels and anemia, which can be severe.

In other countries, doctors usually would not be so quick to resort to iron infusions — especially in healthy patients like Rothenberg, who have no underlying disease and no obvious symptoms.

"It would be extremely unlikely that IV iron would be administered" in Britain, said Richard Pollock, a health economist at the London-based Covalence Research Ltd. who studies iron products.

But one key difference between this country and others is that American physicians and hospitals can profit handsomely from infusions. Under Medicare, doctors are paid in part based on the average sales price of the prescribed drug, which critics say gives them an incentive to pick the newer, more expensive option.

For those with private insurance, hospitals and doctors can mark up prices even more. Intravenous infusions, generally administered in a hospital or clinic, also generate a "facility fee."

That creates a financial incentive to favor the most expensive infused treatments rather than pills or simple skin injections that patients can use readily at home.

Indeed, a Kaiser Health News analysis of Medicare claims found that Injectafer and Feraheme — the two newest (and priciest) infusions on the American market — made up more than half of IV iron infusions in 2017, up from fewer than one-third in 2014. Cheaper, older formulations — which can go for as little as a tenth of the cost — have seen their share of Medicare claims fall dramatically.

Situations like these, which drive up Medicare spending, are why the Trump administration has suggested changing how Medicare pays for intravenous drugs. The administration would tie reimbursements for some IV drugs to the price paid in countries that set drug prices at a national level, in part based on an estimate of their comparative value. This plan has generated sharp backlash from conservative lawmakers and the medical and pharmaceutical industries.

Physicians argue that they simply prescribe the most effective medication for patients, regardless of what the payment system would suggest.

But stories like Rothenberg's, expert research and the government's own Medicare claims data paint a different picture.

"When there's a financial incentive … that might move the physician away from the choice the patient would optimally make, we might be concerned," said Aditi Sen, a health economist at Johns Hopkins Bloomberg School of Public Health, who is researching how doctors prescribe and are paid for intravenous iron treatments.

The example of iron, she added, suggests "a clear financial incentive to prescribe more expensive drugs."

The Iron Market
 

Treatments for iron deficiency are nearly 100 years old. Geritol, a decades-old dietary iron supplement for "iron-poor tired blood," was among the first medicines widely marketed through TV ads in the 1950s and '60s.

The first federally approved iron infusion come to the U.S. market in 2000 — but these treatments have since surged in popularity. For one thing, infusions carry fewer side effects than do pills, which can cause constipation or nausea. And scientific advances have mitigated the risks of intravenous iron, although getting infusions still comes with inconvenience, some discomfort, and the risk of infection at the IV site and serious allergic reactions.

Now, five branded products dominate the American market for IV iron, and three have generic counterparts. They have different chemical formulations but by and large are considered mostly medically interchangeable.

"There's not a huge amount of any difference in the efficacy of iron formulations," said Pollock. So, for value, "the question really does come down to cost."

Doctors are supposed to recommend infusions only if patients don't respond to iron pills or dietary changes.

Instead of steering patients toward "unnecessarily costly" infusions, he said, physicians should determine the underlying cause of low iron and treat that directly.

Injectafer, which Rothenberg received, is one of the most expensive infusions, retailing for more than $1,000 a vial — though hospitals can charge privately insured patients whatever they choose, resulting in her sky-high bill. Insurers then negotiate that hospital "list price" down.

An analysis of private insurance claims conducted by the Health Care Cost Institute, an independent research group funded by insurers, found that in 2017 private health plans on average paid $4,316 per visit if a patient received Injectafer infusions. Feraheme, the next most expensive infusion drug, cost private plans $3,087 per visit, while the other three on the market were considerably cheaper. Infed was $1,502, Venofer $825 and Ferrlecit $412, the institute found in its analysis for KHN.

The share of newer, pricier infusions has crept up in the private market as well as in Medicare. In 2017, 23% of privately billed iron infusion visits involved Injectafer or Feraheme, compared with 13% in 2015, according to the HCCI data.

Nobody told Rothenberg cheaper options might exist, or warned her about the price, she said. The hematologist who treated her did not respond directly to requests for comment.

But Alan Miller, the chief medical director of oncology for SCL Health (Saint Joseph's umbrella organization), told KHN that the hospital stopped using Injectafer in August 2018 — a month after Rothenberg's visit — because of the patient cost burden. The hospital now uses Venofer and Feraheme.

There are some other reasons that doctors might choose the more expensive drug, experts say — not all strictly medical.

Newer, more expensive drugs are more likely to be heavily marketed directly to doctors, said Stacie Dusetzina, an associate professor of health policy at Vanderbilt University.

Walid Gellad, an associate health policy professor at the University of Pittsburgh, said some formulations may be more convenient in terms of how many doses they require, or how long patients have to sit for an infusion. Doctors might use the product they have most of in stock. A certain patient might have a distinctive profile that makes one drug an obviously better fit.

None of those explanations sit particularly well with Rothenberg, whose iron levels are now fine — but who is paying off her $2,700 bill over two years in installments.

"If they had said, 'This is going to cost you $3,000,' I would have said, 'Oh, never mind,'" she said. "It's a big mental shift for me to say I'm supposed to weigh the costs against the health benefits. I'm not supposed to necessarily do what the doctor says."

Shefali Luthra: ShefaliL@kff.org, @Shefalil

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