Example of pricing difficulty in health care
September 25, 2023
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An underlying philosophy of our work is that right care means different things to different people. We also recognize that doctors are multidimensional people. So, instead of trying to determine which doctors are "better" than others, we offer a variety of filter options that individuals can apply to more quickly discover providers that fit their needs.
September 25, 2023
KFF Family News reported on a trend among health systems to charge patients for some secure messages with their providers. Traditionally, patients (or insurance plans) would pay for office visits and procedures, and not phone calls or secure messages. However, as more care moves online -- especially in light of the COVID-19 pandemic -- health systems have wanted to impose fees for some online communication.
Understandably, providers who spend a lot of time being thoughtful in their responses should be compensated for their time. Additionally, some health systems are likely trying to dissuade patients from asking frivolous questions or ill-prepared questions. It is customary for certain interactions (e.g. prescription refill requests) to not take much time and therefore not incur a charge. However, it is difficult to craft a policy around when to charge a patient. It appears that some health systems handle it by the amount of time that a provider spends; however, patients generally do not know ahead of time whether a provider will spend more or less than that threshold.
Aside from the question of how to charge patients, there is a separate question of whether health systems should charge patients. Online messaging can improve care, and uncertainty around whether a patient will be charged for an interaction might dissuade the patient from reaching out, even when appropriate.
September 17, 2023
As another data point of how the health care industry is not really a free market, KFF Health News reported on the California legislature passing a bill to increase the minimum wage of health workers. The new minimum wage ramps up to $25 an hour in 2028 for some health facilities, whereas large health facilities and dialysis clinics will see the $25 an hour minimum in 2026. For reference, the minimum wage in California is currently $15.50 an hour. Workers who are affected include "certified nursing assistants, patient aides, and food service workers."
Understandably, the employers who will need to pay the higher wages complained about the bill, with some estimating the bill to cost $8 billion annually. While the exact impact may be difficult to estimate, it does seem that the cost of health care in California will increase. It remains to be seen whether the accessibility of services will meaningfully diminish, or whether the legislature will end up subsidizing healthcare employers. Interestingly, the California Nurses Association also opposed the bill, citing the risk that it might cause employers to lower wages for nurses.
September 11, 2023
The shortage of primary care doctors has been years -- if not decades -- in the making. KFF Health News reported on the percentage of doctor visits that are for primary care declining from 62% in 1980 to 38% in 2013. Many people blame the reimbursement system for valuing specialty care over primary care, and therefore attracting more medical school graduates into specialty fields. At the same time, many feel that primary care is valuable because it can identify and address issues before they become severe enough to warrant the more expensive specialty care. The article also pointed out how current payment structures essentially force primary care providers to squeeze patients into a much tighter schedule, leading to less satisfied patients and likely worse quality of care.
Theoretically, prices paid for doctors' services would fluctuate in a free market and self-correct such that scarcity of primary care would drive prices up, attracting more doctors to the field. However, health care is not a free market. Relative values of one procedure compared to another procedure are determined by a committee, and the payers (health insurance companies) are dominated by large players, making it difficult for small provider offices to negotiate and switch. Even still, if it is indeed true that primary care can save the overall system money, it seems that some payers would figure out how to capitalize on the current trends and perform better than some other competitors. For now, the industry is watching Medicare try out value-based care, which probably better recognizes the value of primary care compared to the older fee-for-service model.
September 03, 2023
The Inflation Reduction Act allows the federal government to negotiate prices that Medicare pays, and the current administration has released its list of first ten targets. Up until the Inflation Reduction Act, Medicare was prohibited from negotiating drug prices. KFF Health News published an informative piece about this milestone. Negotiated prices are slated to take effect in 2026.
Understandably, pharmaceutical companies (or associations on their behalf) have filed lawsuits to stop the legislation from taking effect. The legislation requires that manufacturers not only negotiate, but also furnish data relevant to the negotiation. The extent to which manufacturers can refuse a price that Medicare asks for seems unclear. If a manufacturer is able to refuse a price, it will be interesting to see if Medicare will end up caving to public pressure for the coverage of specific medications.
August 27, 2023
In the US, licenses to practice medicine are granted at the state level by state licensing boards. Therefore, state licensing boards also tend to be responsible for investigating and adjudicating complaints about malpractice or unprofessional behavior. KFF Health News published an article describing some of the struggles that the California Medical Board is experiencing: "The board opened only about 1,000 investigations out of nearly 10,000 complaints last year." Perhaps more telling: "Critics have complained for years that the medical board doesn't hold doctors accountable often enough. Families that file complaints against doctors frequently go years without updates on the status of investigations, and often aren't told why when their complaints are rejected."
Apparently, the issue is a lack of funding: "The simple reality is that the board is not able to pay its bills," the board said in a statement. The medical board has had to borrow $18 million from the Bureau of Automotive Repair. The $79 million budget sounds like a fair amount, but the board has pointed out that it has "little control over staffing costs. Its 169 employees work for the state and are covered by labor agreements negotiated by statewide employee unions."
A legislator has proposed raising licensing fees, along with some other changes. The California Medical Association has objected to the extent of the fee increase. Devising an ideal solution is difficult since, without knowing more details, it is unclear if the board is efficiently spending its funds. It is not difficult to imagine a bureaucracy that grows more when it is fed more. Nevertheless, the status quo does not inspire a tremendous amount of confidence.