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The Wall Street Journal published a piece on a hospital's investigation into its prices. They had been raising prices annually and they priced knee-replacement surgery at an average of more than $50,000 in 2016. When the hospital investigated, they found their costs to be close to $10,000.
It's unclear if the cited costs were only variable costs (e.g. personnel time), or if it included an allocation of fixed costs for such as the hospital building and administrative overhead. It is interesting that the hospital operated for so many years without knowing the costs of its procedures. The disconnect between prices and costs suggests that the hospital probably operated in a non-competitive market and was therefore able to raise prices without much effective resistance.
As the cost of healthcare grows more quickly than inflation, businesses will increasingly be forced to reckon with it. The article talked about the hospital being approached by an employer group to lower its prices, and that the two were able to come to an agreement.
Earlier, I noted that CMS proposed simplifying reimbursement for office visits. One of the purported reasons was to reduce the amount of paperwork that doctors have to go through in order to be reimbursed. The New England Journal of Medicine published an excellent piece that analyzes some of the new proposal's impact to physician incomes. Understandably, while physicians are interested in having to deal with less paperwork, they are much less keen on getting paid less.
Somewhat at the crux of this issue is standardization and fraud: if everyone understood and abided by the standards, there could be finer granularity of reimbursement without Medicare having to worry about additional levels of documentation. However, since people differ in their understanding of what constitutes a more complex visit and since it is tempting for many physicians to claim a higher level of reimbursement than warranted, we can understand Medicare's desire for higher levels of documentation for higher pay. At the same time, that documentation generally does not go to help patient care. It will be interesting to see how this proposal plays out and whether the medical community will generally want status quo or reduced paperwork (and pay).
Kaiser Health News reports on an interesting shift in attitude towards single-payer healthcare among doctors. It appears that many of the younger physicians are "accepting" of more government involvement to help ensure that more people can have healthcare. The article notes that opposition to single-payer healthcare remains steadfast among older doctors.
The attitudes among the general population also seem to be shifting. There's an interesting quote in the article:
"'Few really understand what you mean when you say single-payer,' said Dr. Frank Opelka, the medical director of quality and health policy for the American College of Surgeons, which opposes such a policy. 'What they mean is, "I don't think the current system is working."'"
There can be many different variations on exactly how healthcare access can be expanded (and even what single-payer healthcare might mean), but it seems that more people are coming to the conclusion that our current system is not the best for people in general.
Along with the changes noted in last week's blog post, CMS proposed some changes to how physicians will be compensated. Kaiser Health News offered some analysis regarding the effects of the proposed changes.
CMS touted the changes as a way that providers can save time, since there should be less complexity and less paperwork. Interestingly, CMS is proposing to pay primary care providers and specialists the same amount for a typical office visit. People in the industry have been concerned about the increasing disparity between the compensation for primary care doctors as compared to that of specialists (causing more and more providers to specialize, leading to a shortage of primary care doctors). This change might slow that trend.
Regardless, the article canvases a number of physicians and demonstrates that it can be difficult to fully appreciate the impact of policy changes like these, in part, because it is difficult to predict how providers might change their practice in response. A number of providers appear to be asking for a pilot to better understand the effects.
The Centers for Medicare & Medicaid Services (CMS) filed a lengthy document outlining a number of changes to its payment policies.
Of note, on page 19 of the document, CMS proposes to pay the same amount for the same procedure, regardless of whether the procedure was done in a hospital or in an outpatient setting (the new policy is known as "site neutrality"). Earlier, hospitals had made the case that they should be compensated more because they maintained equipment and access to more intensive care facilities if the need ever arose. Because of this differential, some had accused hospitals of buying up physician practices with the express intention of being able to collect more revenue for the same procedures by labeling the venues as hospitals.
On page 638, the document outlines the continued interest in transparency of pricing information, requiring, for example, hospitals to post their prices online in a machine-readable format (starting at the beginning of 2019).
The comment period goes through September of this year.