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A NPR reporter recounted her experience bringing her mother to an emergency room to treat the aftermath of a fall. Despite her familiarity with Medicare as a health policy reporter, the experience still presented new questions that she spent time unraveling for her audience. Generally, Medicare pays for rehabilitation care after someone is hospitalized, so why did it not cover the reporter's mother's rehabilitation care?
It turns out that Medicare only pays for rehabilitation care after what's known as an inpatient visit of at least three days, and while the reporter's mother was in the hospital for over three days, she was considered to be under observation for enough of the time that she did not qualify for rehabilitation care. The reporter's investigations uncovered that hospitals are given incentives by Medicare to classify visits as observational rather than inpatient (inpatient visits are more expensive to Medicare).
Each piece of Medicare regulation might have made sense in isolation: if someone is only being observed, then Medicare shouldn't pay the more expensive rate for the more intensive treatment. It's unclear to me why Medicare might require an inpatient visit of a certain length before agreeing to pay for rehabilitation care. Presumably, the intention was something along these lines: if the visit were too short, then the patient likely had developed medical conditions over a period of time, and the conditions were largely unrelated to whatever brought the patient to the hospital, and the patient should pay for the rehabilitation of the long-term care, and not Medicare. Putting these regulations together, however, leads to some unexpected outcomes that can be very costly to patients.
Kaiser Health News reported on a vast pricing difference for two CT scans for the same patient in two different settings: in an imaging center and in an emergency room. The patient, on a high-deductible plan, owed $268 for the scan in the imaging center and $3,394 for the scan in the emergency room. The company owning the medical center that had the emergency room stated that care done in the emergency room context is more expensive because of the staffing and infrastructure requirements to provide emergency medical care for a wide variety of circumstances.
To the extent that someone has to go to the emergency room (which wasn't strictly necessary in this case, although it was advised by a nurse practitioner), the patient really doesn't have much choice. For example, a patient might be incapacitated or suffering from a time-sensitive condition like a stroke. For other cases, however, enrollment in high-deductible health plans and awareness of these high prices may cause some patients to shift their behavior. Shift in patient behavior might end up supporting less traditional venues such as urgent care centers.
The New York Times outlined some interesting dynamics that are emerging in the world of primary care. For a long time, people went to their primary care physician for their first line of care. While their physicians might have had inconvenient hours (requiring patients to take time off of work), patients might have had few other choices. As urgent care centers and retail clinics have become more popular and have offered more convenient hours and locations, patients have started to engage with these new formats for their primary care. The traditional physician groups have taken notice and some have started to adapt by offering such formats themselves.
Where consumers have a choice and where suppliers have an incentive to better meet consumer needs, healthy market dynamics will often drive the suppliers to offer better value (in this case, more convenient venues). There appears to be some question as to whether or not the quality of care is the same across these different formats. If quality metrics (and results) were readily available, consumers might be able to make an even more informed choice.
In 2010, after observing high volumes of charges for urine drug screenings, the Centers for Medicare & Medicaid Services (CMS) limited their billings. Some clinics responded by replacing simple cup testing with more specialized machine testing. While urine cup testing allows for the screening and billing of multiple drugs in one pass, the machines allow for each drug to be billed individually to Medicare. This paved the way for the opening of lucrative pain clinics, which derived most of their profits from urine drug screenings. A report from Kaiser Health News investigated Medicare billing practices related to drug testing.
The report found that, despite the efforts of CMS, the number of urine tests paid for by Medicare has continued to rise. Testing for a select number of drugs, including opiates and synthetics, cocaine, amphetamine or methamphetamine, and phencyclidine (PCP), numbered nearly 20 million in 2014. For the same drugs, this is in increase in testing volume by about ten times from 2009 and more than twenty times from 2005.
This rise continues while the medical necessity of urine screenings remains questionable, with a lack of clear guidelines for frequency of testing and insufficient data to support the usefulness of testing. Urine testing can be used as a means of monitoring pain prescriptions and preventing or catching abuse. But who exactly gets tested, how often, and for which drugs is left to the physician to decide, and individual physicians may not agree on the same standards for what is medically necessary. Some might suggest weekly drug screenings, while others would argue weekly screenings are too frequent. Additionally, urine screenings rarely detect new drugs such as the illegal hallucinogenic PCP, and data on drug abuse detected by urine testing is hard to come by. Some pain doctors make the majority of their Medicare income from drug tests, but it may not be easy to determine whether this is a symptom of a drug abuse epidemic or a symptom of unnecessary drug testing.
The line between medically necessary and unnecessary is not clearly defined, and unfortunately the high volumes of billings for urine screenings suggest that some providers have taken advantage of the system for the sake of profit. Although CMS has tried to address this, without clearer standards for drug screenings, there may still be room for abuse of the system.
In an interview with Kaiser Health News, current Food and Drug Administration commissioner Scott Gottlieb expresses hopes to increase access to lower-cost alternatives to drugs by reducing roadblocks to competition in the drug market.
One of the FDA's considerations is the 180-day exclusivity period generic manufacturers. Following the expiration of a branded drug's patent, one generic manufacturer can be granted a period of 180 days in which no other generic alternative can enter the market. In some cases, brand-name manufacturers and generic manufacturers can strike deals in which the former pays the latter to not enter the market at all. The brand-name manufacturer can earn profit that exceeds the amount paid, and other potential generic competitors are still blocked from entering the market. As a result, the original manufacturer extends the period during which no competition exists for its drug.
The FDA is also looking into the possibility of generic manufacturers purchasing drugs from the European market without having to perform bridging studies. Bridging studies are done to prove the European drugs are the same as those in the American market. Generic manufacturers need to purchase large quantities of branded drugs in order to develop alternatives, but brand-name manufacturers often prevent generic companies from doing so. Turning to the European market may help generic companies circumvent this issue.
The FDA also aims to increase the rate at which new drugs are approved for market entry. In 2017, 46 new drugs were approved - the highest figure in 21 years. However, when drugs are approved quickly, the degree to which these newer drugs can improve quality of life or extend lifespan is more questionable. Still, the FDA commissioner believes that a high standard for new drugs can be maintained while avoiding more extensive and costly development processes.
By encouraging a free market for competition, helping to facilitate the drug development process, and increasing the rate at which drugs are approved, the FDA aims to address the issue of extremely high pricing of prescription drugs.