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Bloomberg published an editorial reporting that House Speaker Pelosi has proposed legislation to limit how much Medicare pays for medications. Under current laws, Medicare is prohibited from negotiating drug pricing. The new legislation would like to limit Medicare's price for medications to 1.2 times the average price paid in certain other industrialized countries. In cases where a drug is not sold internationally, Medicare would like to receive the same pricing that state Medicaid programs receive.
This legislation seems unlikely to pass in the current political climate. However, the editorial pointed out that Congress's assessment is that even with the pricing limits in place, pharmaceutical companies would likely continue their pace of drug discovery, albeit modestly slower (2%-5% less than current efforts, versus the dramatic fallout often claimed by industry).
For at least the past several years, Medicare has been pushing the idea of value-based payments, where instead of paying doctors for procedures, it would pay doctors for patients' health. The idea is that there are some actions that physicians can take earlier on to prevent patients' health from deteriorating to a point that would require expensive procedures. Under the old payment model, doctors generally lacked the financial incentive to perform those preventative measures (which were arguably often undervalued). With the new payment model, the theory is that providers could do better financially if their patients stayed healthier. Last month, The New York Times published a piece that took a look back over the last several years to see if Medicare's shift in payment model made a difference. Unfortunately, the answer appears to be not much difference (one study concluded "no effect from financial incentives of the program on quality of care or patient satisfaction"), perhaps saving "a modest amount of money."
The piece linked to a number of studies to support the overall conclusion. However, it seems like there is insufficient research to conclude whether the entire approach is ineffective (e.g. impossible to create good metrics) or whether it is just the implementation that is flawed (e.g. too little incentive or too many goals in too short of a time).
Another article on the theme of surprise medical bills: Kaiser Health News published a piece earlier about people who might be lobbying against protections from surprise medical bills. While some physicians have objected to at least part of such protections, the authors of the article indicate that some private equity firms have much to lose if protection from surprise medical bills is legislated, but that those firms are employing lobbyists who do their work seemingly on behalf of physicians.
It is unclear whether the current arrangement gives physicians too much power (which might be the case if physicians largely do not feel the need to enter into network contracts because the alternative is more profitable). It might be that large insurers could start a campaign of only contracting with provider facilities that either do not employ out-of-network physicians or that agree to cover the difference between the cost of those physician services and the cost of in-network services. Presumably, such contractual arrangements would result in higher short-term prices, but would probably result in savings over the long run (and probably much more palatable to patients).
Related to an earlier post, some doctors have joined together to voice opposition to California's solution to surprise billing. The video features many different physicians going through various talking points (it would seem more honest for them to just say that they want to be paid more instead of trotting out the line "patients over profits"). Fortunately, the physicians do not object to ending surprise billing altogether, but rather a specific component of California's legislation called benchmarking -- the practice of resolving disputes between providers and payers by referencing the local average (a practice that I thought gave too much power to insurers). The video does underscore its support for New York's version of the legislation.
I found a Vox article that explains how disputes between providers and payers are resolved under the New York law. Instead of referencing local averages, the New York legislation apparently takes its cues from Major League Baseball. Under this model of arbitration, a neutral third-party is appointed, and both the provider and the payer are allowed to each give one number, and the arbiter can only choose one of those two numbers. By not allowing the arbiter to make up a third number, each party has an incentive to temper its own number in hopes that it will be selected. This arbitration model does indeed seem more fair, assuming that both sides believe the arbiters are neutral.
Unfortunately, it seems that New York's law does not protect patients who rely on mistaken information given by the provider's office. For example, if a provider claims to be in-network, but is not actually, apparently, the patient can be on the hook for the out-of-network price. It feels that there should already exist other types of consumer protection laws covering that case.
Kaiser Health News reported that Walmart is continuing its exploration of nudging its employees towards certain healthcare providers. Earlier, Walmart had given employees financial incentives to select certain hospitals over others. Now, Walmart is trying out a pilot program to do so with individual doctors. The pitched idea is that patients that go to higher quality providers can avoid unnecessary care, reducing costs in the long run.
The article mentions risks of alienating providers (many of whom do not like to be graded) and potentially upsetting employees who do not want to change physicians. In isolation, the risks do not seem significant at this point. However, when insurers earlier tried programs known as Pay For Performance where physicians who met certain guidelines were awarded bonuses, the medical community frequently objected and the popularity of those programs faded away. It remains to be seen whether the medical community will accept these criteria, whether many employees will comply, and whether the shift in employee choices will result in cost savings.