Thursday, July 29, 2010

Health Care - If I Could Change Just One Law

My wife and I are on a very nice summer cruise on the Seabourne Odyssey in the Black Sea. The main celebrity on the cruise is former Governor and Senator Bob Graham (Dem - Fla.) We had dinner with him and his wife last night, and a very nice couple from Santa Monica, one of whom sits on the Board of Cedars-Sinai Hospital in LA. We discussed many things, among them health care. Aaron, the Board Member, said that foundations seemed like a nice solution to him, especially since it was a good deal for the doctors, who got to have a salary. It was an amiable dinner and no noses were bloodied. But as I objected to corporate medicine, I was asked by the Senator if I could point to any examples of what I would favor in the US currently. I had to admit I couldn't.

As I thought about it, I thought I could respond to him with a short letter, what I couldn't say in the context of a nice dinner. Although it is repetitive of what I have cited here before, I thought it might be worth posting.

Here 'tis:

Dear Senator Graham:

Thank you for having dinner with us last night. It was a treat.

I was embarrassed to admit to you that I couldn’t cite an example of a good model of care somewhere in America that could be emulated. I had to retreat to “three yards and a cloud of dust.” So let me take just a minute to explain why I couldn’t come forth with a trenchant answer.. In brief, the structural problems of American medicine currently set a very unequal playing field that makes it difficult for excellent and adaptive new entities to form. As it stands now, the playing field is tilted toward large corporations to run medical care, which I don’t think will serve our interests well in the long term. So I think the rules of play need to change before we can get to really good systems of care that meet the objectives of patients and doctors alike.

Current Examples

Many analysts, most popularly Atul Gawande in the New Yorker, have cited the examples of the Mayo Clinic, Geisinger, etc. The problem with these examples is that they are elite and special examples, which have taken decades and more to evolve, and have very selected doctors and administrators. They are not going to be able to be replicated elsewhere – in fact, the experience of the Cleveland Clinic and Kaiser and Mayo is precisely that they find it hard to replicate themselves in other parts of the country.

But even if they could be replicated, would we really want that? They are highly structured and corporate entities. This kind of entity usually does not deliver the kind of personal care that our people are used to and want. Large institutions just can’t. As sociologist Eliot Freidson pointed out years ago in “Profession of Medicine,” as you get larger groups, the doctors are more keyed into the opinions and norms of their fellow professionals and even administrators, and less to the patients they serve. It’s only human. So we get what we call “institutional care” rather than personal care. Many patients really wonder if their doctors in these settings really care about them personally, and know them for who they are.

Current Forces

But even if these models are not replicable, we are getting more and more large medical entities forming as American medicine evolves very quickly. Conglomeration has gripped the industry, as hospitals have formed large chains and local monopolies, some large multi-specialty groups have formed, and these large conglomerations have become price-givers instead of price-takers vis-à-vis insurance companies. Using the RBRVS Medicare price system, hospital monopoly and large group contracts have been at a rate of 160% or even 200% of Medicare. Typical physician practices by contrast are at from 100% to maybe 130% of Medicare tops.

As an additional problem, the RBRVS Medicare system (their price list) grossly underpays primary care and non-procedural specialists, and overpays hospitals and procedural specialists. Since the private insurance companies also use the Medicare RBRVS as the basis for their payments, this payment imbalance reverberates throughout the system.

These two forces, hospital and specialist conglomeration and RBRVS payment imbalances, shape our current system. Prevention and primary care practices languish while hospitals and large systems are awash in money. They use this money to pay themselves, and to invest in themselves. Hospitals vertically integrate by employing doctors (in California through foundations), and specialty groups add ancillary services (physical therapy, MRI scans, etc.) Some think that foundations are a good deal for doctors since they don’t have to do the administration themselves and they get paid salaries, but this is only attractive based on the alternative of being starved by the current system of payment. The playing field is very uneven.

What HCR Could Have Done

While the Health Care Reform law successfully attacked many insurance practices that disadvantaged patients, it is completely silent on the insurance company practices that disadvantage small scale physician practices – exactly the practices that people are used to getting their care from, and exactly the practices that are least responsible for the rise of health care costs.

It is quite understandable that the Reform did not reach to the provider-side and stayed only on the patient-side. It was hard enough to get the bill passed as it was. But if political realities were different, what could the law have done?

Perhaps most importantly, the HCR law could have taken steps to even playing field. Currently, only the large conglomerated groups can negotiate with the insurance companies as a single entity. If a group of doctors want to negotiate the same way as these conglomerations, they too need to conglomerate themselves. That would mean, however, that they would lose the very individuality they are seeking to retain. The HCR law could have mandated an exemption from anti-trust law that would enable groups of doctors to negotiate as one with the insurance companies, just like the big boys. This would have leveled the playing field, at least somewhat. There are other steps that could be taken, but this would be the big one.

Personally, this is precisely the situation that we pediatricians find ourselves in the San Francisco East Bay. We have a fairly smoothly functioning group of pediatricians and pediatric specialists, and we would like to bargain collectively with the insurance companies. But because we are forbidden from doing this, we are picked off one by one by the insurance companies, while at the same time they are richly rewarding the large groups such as Sutter Foundation (tied to a dominant hospital chain), and Palo Alto Medical Foundation, which is allied with Sutter. In the oft-repeated words of my step-daughter, “Not fair!” These large clinics have no apparent superiority in services, they simply have more market power, delivered to them by federal anti-trust law.

Is It Just a Retrograde Dream?

Is this a retrograde dream, yearning only for the old, professionally rather than corporate dominated days? Maybe. But there is a theoretical work from the Harvard Business School, Redefining Health Care, that points out that an ideal system would not be an integrated network such as Kaiser or Mayo. At Kaiser, for instance, if the primary care doctor is acting as an agent for the patient, there is little choice of specialist – the patient is sent to the Kaiser cardiologist, or Kaiser neurosurgical clinic. It might be good or not, but it’s theirs. The HBS study says that it would be much better if the primary care doctor could choose among multiple specialty alternatives that compete with each other. This is not so much different from the system we are used to, but that is rapidly disappearing.

[Here is an example (not exactly what I was talking about, but close) close to my home: ValleyCare Hospital in Pleasanton, California, has recently established a Foundation, employed all the obstetricians who practice at the hospital, brought in new pediatricians (all new to the area and graduated in medical schools in foreign countries), and ordered the OB’s to refer all newborns to these new pediatricians. Patient interest? Not really. It’s corporate power interest.]

What the HCR Law Does Do

The HCR Law does look for some experimental changes, most notably the formation of Accountable Care Organizations (ACO’s). The ACO would get paid a set amount for various episodes of care, both within and outside the hospital. The major target for the ACO would be cost reduction by stimulating more coordination among providers. It might work, but there will be major fights among hospitals and doctors for control, and the hospitals will most likely win. If costs are actually reduced, good. We certainly need cost reduction. But this is an untried and slender reed to base major health reform on.

Many analysts have said, however, that the major underlying problem of our current system is the weakness of primary care. The average age of primary care doctors is constantly rising as younger doctors choose the better paid specialties. The HCR law funds more training slots and forgives some loans of graduates who choose primary care and practice in underserved areas. But to make an analogy, they are funding swimming lessons (training) but they are not warming up the pool (the practice of primary care) so that people actually want to go there. So these efforts are likely to be of small value.

The new HCR law does give more power to MedPAC, the agency that sets Medicare payments. They now can set rates that Congress would have to veto, rather than simply making suggestions to Congress, which is susceptible to special interest (hospitals, specialists) pressures. But, of course, this is simply one element.


In summary, I can’t point to a model that will work. I can only say that the course we are set on – large scale corporate control of medicine with emphasis on specialist care – will be a radical departure for American medicine, and will turn out to look far more like socialized medicine (very large scale, clinics, etc.) than most of us, patients and providers, would really want. There are some steps that could have been taken, and still could be taken, to allow us to evolve in a way that might give Americans and American doctors care with a human instead of a corporate face. To choose this path, the field must be leveled, and only government can do this.

Budd Shenkin

Monday, July 5, 2010

Lying Scumbags and Health Insurance

Some of you will recall that we had health reform earlier this year. Some of it eliminated egregious practices by health insurance companies, which is very good. Who could believe that in the United States of America a company could rescind a health insurance policy once the patient became ill? Maybe that tells us more about our country than we would like to know.

But insurance companies don’t just interface with patients; they also interface with us, the doctors. Health insurance companies are equal opportunity companies – they treat us just the way they like to treat patients, and this side of the pathology of American medicine went completely untouched by Health Reform. Alas. Just this week a fine example of insurance pathology visited itself upon me. It has been uncomfortable.

The issue in question is this: immunizing children with vaccines has always been important, but in recent years many new vaccines have been introduced. These new vaccines are not only numerous, they are costly. When I first started in practice a vaccine cost about $5 apiece; now some are in the $100-$200 price range, some of them requiring three shots for the series.

Happily, the new vaccines are very effective. In fact, they are so effective that pediatricians and hospitals now care for many fewer illnesses. Financially speaking, I’m not certain of the ultimate effect for health insurance companies and pediatricians. Health insurance companies pay for vaccines, but they also have to pay for fewer sick office visits and hospitalizations. They don’t win on the new vaccines that prevent genital warts and subsequent cervical cancer years later, but I bet they are winners for vaccines that prevent pneumonia, septicemia, and meningitis. I used to have several cases of meningitis per year, now not at all. My intuition tells me that they make money on the deal, but I can’t be sure.

I’m also not sure of the financial balance for us as practitioners. We can make money on giving the vaccines (if the insurance companies allow us to – that’s one of the points of this post), but we certainly care for fewer sick children – thank God, of course. It really depends on how well we are paid for our vaccination services. (Children’s hospitals, on the other hand, simply lose the income of caring for sick kids. But I never feel sorry for those inefficient, union-bedeviled, nurse-bedeviled financial sinkholes called hospitals.)

Thus, our work as pediatricians has changed. Vaccines have become less of a sideline for us, and more of the main show. In business terms, they have become a full-fledged service line for pediatricians. It’s good – getting paid for keeping kids healthy rather than tending to them when they are sick. But this substitution has changed the business model of pediatrics. If we don’t make money on this important business line, we will be out of business. Most pediatricians are not great business people, and most pediatricians don’t yet realize this. The more savvy pediatricians do realize this, and our section of the American Academy of Pediatrics put together “The Business Case for Vaccines.” This paper calculated that paying us 117-128% of the vaccine cost would cover overhead. That calculation is certainly too low (leave it to pediatricians to shortchange ourselves), because they neglected important elements of vaccine loss, which happens in every office – from omissions in billing, lost vials, parents deciding at the last minute they don’t want the vaccine after all even after it has been prepared, a kid grabbing the dose and throwing it away, just kicking a dose under a table, whatever. But even if the number is too low, there it is, a number to be respected.

In contrast to pediatricians, however, Insurance companies, understand their business pretty well, at least in the short run. They are, after all, pretty much exclusively business enterprises, rather than professional care givers plus businessmen as pediatricians are. Insurance companies see the increased price of vaccines and try to figure out how to lower their costs. It’s not their business to figure out how to keep pediatricians in business – it is up to pediatricians to take care of themselves and their incomes. The insurance companies also don’t figure it’s their business to fix the American health care system, which is very deficient In primary care mainly because primary care docs don’t get paid nearly as well as specialists. For insurance companies, if they can economize on the cost of vaccines and still reap their benefit of fewer sick bills, it’s a wonderful life.

Bad as they are, health insurance companies have their own pressures. They are being squeezed by consolidated hospital systems that are price-givers rather than price-takers, and by large integrated multi-specialty groups, such as Sutter Foundation and Palo Alto Medical Foundation here in Northern California. The insurance companies figure that they need those contracts, and as a result they pay those providers very, very well. In addition, I think corporations like to do business with other corporations, rather than a different kind of entity completely, which doctors in private practice are.

So, the health insurance companies give here and take there. Private practice primary care docs, however, are prevented from negotiating together by antitrust laws, despite the fact that the health insurance companies on the other side of the table are very consolidated. The results of these negotiations are then predictable.

Right now, this business drama is playing itself out with a new vaccine, called Prevnar-13. The old version, Prevnar-7, protects against 7 types of pneumococcus, a virulent pathogen that causes pneumonia, sepsis, meningitis, and ear infections. The new Prevnar-13 adds six more serotypes of the bacteria to the protected list. Pediatricians buy the new version for 30% more. Most insurance companies are raising their payments appropriately. Anthem Blue Cross – that’s right, the same company that proposed 39% premium increases to patients right at the end of the health care debate, thus helping immeasurably to pass the legislation – wants to pay us 5.6% less for this more expensive vaccine.

The decrease in payment is partly because we have had a pretty good contract for the last three years after some very tough negotiating. But it’s also because Blue Cross has been bought out by Anthem, and Anthem plays even harder ball than Blue Cross used to, and they were very bad boys and girls indeed.

Clearly, since our new business model depends on vaccine delivery as a major service line, we can’t accede to this new fee schedule. They will hit us first for Prevnar-13, and then come after the rest of the vaccines. So we have to be strong in negotiating, and possibly even terminate our contract. This would be a major step to be taken only with lots of forethought, but if they are persistent, it may be necessary. It’s uncomfortable, but it’s business. In fact, for me personally, it’s very uncomfortable, not my favorite part of the business. But on the other hand, I’m not one to back down. Quite the opposite. You don’t screw around with Budd Shenkin.

All companies are not the same. There is no one way to do business. A company can be businesslike and aim for profit, but also be civil, honest, and look for common elements. In the negotiation three years ago, I emphasized how common our interests are. They sign the patients up and we have to make sure they are well served and happy. Together, the insurance company and Bayside have the common competitor of Kaiser – we both have to give patients a reason to come to us. They listened then, maybe bought it, maybe didn’t. I heard that what really clinched it was they were convinced that if we didn’t get a decent deal we were going to terminate.

On the other hand, a company can be dirty and demeaning. Guess where this story is going now.

First of all, at the beginning of the year Anthem Blue Cross stopped paying us for an emergency care code (a billing code is how we get paid), 99058. They just said they weren’t recognizing that code anymore. Can you believe they can do that unilaterally? I actually don’t think they can, and maybe we can take them to court over that – just the kind of diversion from our main business of running our practice that we need. Doesn’t it sound like the way they have treated patients, with rescissions, etc.? Then I just found out this week that, at the same time they stopped recognizing the 99058 emergency code to all their contractors, they raised the amount they are paying for vaccine administration (we get paid separately for the vaccine itself and for administering it). Amazingly, while they took away our emergency fee, they didn’t revise our payment for this fee upward. Dirty pool.

So now we’re fighting over payment for the new vaccine. Here is how it is going. You know how doctors complain about the part of managed care where they have to justify their plan of treatment for patients to an under-educated insurance company employee? It’s an insulting process to the doctor, not only because of the educational discrepancy – why should a doctor have to get permission from a clerk? - but even more because of the social power discrepancy. The usual roles have been reversed in a sociological anomaly. It’s like my objection when I go to a doctor’s office and some 25 year old high school grad comes to the waiting room and shouts out, “Budd?” It’s Dr. Shenkin, you twit.

So, this is what I have been going through. There is the local Anthem Blue Cross employee, a not very nice young woman who declares their policy to me in imperious tones. When I object in writing and declare myself insulted, she becomes more fearful and conciliatory and we consult superiors, I make phone calls that go unanswered, and finally reach someone, who sets up a call with the VP of Reimbusement Strategies, a man whom I will call John Doe, because my attorney wife informs me that identifying exactly in writing the person I will refer to as the Lying Scumbag might lead to legal troubles, despite the unquestionable accuracy of the charge.

So in my quest for fair payment for Prenar-13, I have to endure a one-hour conference call with the young imperious rep, the nicer superior who is unaware of these issues but wants peace, and the Lying Scumbag. The Lying Scumbag then proceeds to lie like a scumbag. He tells me that the American Academy of Pediatrics has approved of their payments – a claim made earlier by the young imperious rep. “Oh, yeah?” I say. I was elected to the Board of the AAP Section on Administration and Practice Management (SOAPM), and selected for the Committee on Child Health Financing (COCHF). Who exactly gave that OK?

The Lying Scumbag gives one source as the California Pediatric Council. Another is the national AAP representative for private payers. I know he is being mendacious. I have made sure to inquire, and they have assured me that’s not so. The Lying Scumbag tells me that of the 14 states he covers, I am the only pediatrician who has complained and been dissatisfied. That’s a pretty amazing claim, and clearly counterfactual. He sidesteps my assertion that every other insurance company (except one, CIGNA, so far at least) pays a lot more. I tell him I know he feels this is a triumph for his company, to pay less than others.

The Lying Scumbag quotes our own Business Case on Vaccines to the effect that if you add together the payment for vaccine and administration and get up to 117-128%, that’s enough. The wording of the Business Case could be clearer, but that’s not the case at all. He tells me, “Let me explain to you how this works,” about our own Business Case. The Lying Scumbag then deigns to instruct me on the economics of our practice and how it works. He wonders if he can explain to me the RBRVS system, which governs our payments. He is a young man, full of himself but not very smart, it seems. He tries to snow me. I tell him, stop being patronizing. I’m more of an expert on this than he is. I tell them all that their policy is self-defeating. If they starve us and let the corporate practices thrive, that’s all they will have left to deal with, and how will that be for them? Long silence. They have a mission, which I view as search and destroy. I’m not at the right level of Anthem Blue Cross employee. I’m stuck with someone whose role is to be a Lying Scumbag.

The Lying Scumbag repeatedly refers to a “neutral party” that they consulted that recommended their proposed payment rate. He also tells of the approval he got from the AAP national when he proposed to inform pediatricians how to buy vaccines more cheaply (he’s telling me?) so that Anthem Blue Cross could then pay us less. The Lying Scumbag and his confederates on the phone all inform me that Anthem Blue Cross considers vaccines “just a commodity.” “We’ll pay you for your work, but not for a commodity,” they tell me pointedly. That’s the tone, from these jerks.

So, as I say, market power reigns, corporations take over, pipsqueaks and Lying Scumbags come to the fore, and this is what we have to deal with. There is a market imbalance, and Health Care Reform did not address it. The power imbalance is too much to deal with, since there are a few powerful health insurance companies, and private practitioners are forbidden to combine in negotiations. In addition, while some elements of the AAP are supportive, the Board and the President of the AAP maintain a distance from the fray – God forbid they should get involved with the financial viability of their constituents.

With this kind of market economics prevalent, it’s hard to see how the health care system can improve on the foundation of primary care. And me – I’m trying to stop steaming. I think I’ll try to hire someone to do this negotiating. It’s just too wearisome. I can’t ruin my life dealing with Lying Scumbags and Jerks. And that’s all too much the story with this most heinous of industries, the health insurance industry.

Budd Shenkin