Medicare Itemizes Its $103 Billion Drug Bill

The federal government popped the cap off drug spending on Thursday, detailing doctor-by-doctor and drug-by-drug how Medicare and its beneficiaries spent $103 billion on pharmaceuticals in 2013.

The most frequently prescribed drug was Lisinopril, a generic used to treat high blood pressure and help patients survive after heart attacks. The drug was prescribed or refilled nearly 37 million times by more than 7 million Medicare beneficiaries at a cost of $307 million.

The brand drug Nexium, used to treat acid reflux and related stomach ailments, cost the most: $2.5 billion for 1.5 million Medicare patients, who filled 8 million prescriptions and refills. The total cost included what was paid by Medicare, beneficiaries and third party groups such as supplemental health plans. The cost covered not just the drug ingredients but also sales tax and dispensing fees. It did not, however, include manufacturer rebates.

Federal officials said they hoped that disseminating the data would lead to new revelations about the prescribing patterns of doctors and for particular drugs. The database identifies doctors by name.

Niall Brennan, the chief data officer for the Centers for Medicare & Medicaid Services, said agency analysts have been examining the data for several years but that “the data is larger and diverse enough that other outside folks may develop insights that we have missed.”

Dan Mendelson, the CEO of Avalere, a Washington, D.C., consulting firm, said the data could provide patients with new questions about their prescription history when they visit their physician. “It’s really important to stimulate conversations that get patients more actively engaged in their care,” he said.

However, he noted that some doctors may not take kindly to a more inquisitive patient and longer conversations. “In the shorter term, I think it will irk some physicians,” he said.

The database tracked 3,450 different drugs prescribed by a million doctors, nurse practitioners, medical students, dentists and other providers.

The most expensive drug per prescription was Carbaglu, a man-made enzyme used to treat people with high ammonia levels in the blood caused by a rare disorder, according to a Kaiser Health News analysis of the data. The drug was dispensed only 24 times, but at nearly $60,000 per claim it cost the government $1.4 million.

Among drugs dispensed to at least 10,000 beneficiaries, the most expensive was Revlimid, which treats anemia in people with blood or bone marrow disorders, KHN found. It is used for some cancer patients. Dispensed for 24,637 patients, Revlimid cost $8,778 per claim. That totaled more than $1.3 billion.

Drug prescribing varied considerably among states, KHN found. Rhode Island and Nebraska had the most claims per Medicare beneficiary, averaging 4.6 per patient. Delaware had the lowest number, with the average number of claims per beneficiary at 3.3.

The CMS data is likely to be used in conjunction with other datasets the government has previously released, including what procedures individual doctors billed to Medicare and how much those cost. Analysts are also sure to look for relationships between drugs commonly prescribed by doctors and another Medicare database showing payments physicians received from drug companies for research, gifts, speaking fees, meals or travel.

The Pharmaceutical Research and Manufacturers of America called the data misleading. “Significant price negotiation exists in Part D and results in rebates of as high as 20 to 30 percent for branded medicines,” the association’s president, John Castellani, said in a written statement. “These savings are not reflected in the data. Rebates have been a significant factor in keeping Part D program costs hundreds of billions of dollars below original estimates, while still offering beneficiaries steady premiums and a robust choice of plans.”

The American Medical Association also cautioned that the data could be misinterpreted.

“The data does not account for varying strengths or dosage levels of the medications or varying patient needs,” the association said in a written statement. “For example, a physician could prescribe a low dose of a medication and at a later time need to prescribe another, stronger dosage for the same patient if the low dose isn’t meeting their need or if the patient has an adverse react.”

The government noted that the top 10 most commonly prescribed drugs were generic and the 10 most expensive drugs were all brand name. The finding is not surprising since some brand name drugs are protected from competition by their patents.

An analysis Medicare released with the data found that in some parts of the county brand drugs were dispensed much more frequently than generics. Doctors in the western part of the country, including Washington, Oregon, Idaho and Nevada, and parts of in the Midwest leaned heavily toward generics, which tended to be dispensed between 78 percent and 81 percent of times. Brand drugs were favored in much of Texas and Alaska, where generics were dispensed in between 65 percent and 75 percent of cases.

Federal officials also calculated how prescription patterns varied among medical specialties. Family practice doctors prescribed the most drugs, followed by internal medicine doctors. Among the biggest medical specialties, psychiatrists prescribed the most expensive drugs, averaging $104 for a prescription or refill. While hematologists and oncologists were not among the top prescribers, their drugs averaged $550 per claim. The average cost of all prescriptions or refills was $75.

The data does not present a complete picture of physician prescribing. Most notably, it includes only those drugs for 36 million beneficiaries that were billed to Medicare’s Part D program, which make up 68 percent of all the people on Medicare. It does not reflect the prescriptions doctors wrote for privately insured patients or those on other government programs such as Medicaid. It also reveals nothing about the quality of these treatments or what kind of patients each doctor saw.

To ensure that people could not identify beneficiaries, Medicare omitted prescriptions that were based on 10 or fewer claims per doctor. That excluded 13 percent of claims.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

An Obamacare Payment Reform Success Story – One Health System, Two Procedures

To understand how the health law is supposed to fix the mediocre, overpriced, absurd medical system, you could read wonky research papers on bundled payments and accountable care organizations.

Or you could look at what’s going on at Baptist Health System in San Antonio.

Under the potent lure of profit, doctors, nurses and managers at Baptist’s five hospitals have joined forces to cut costs for hip and knee replacements, getting patients on their feet sooner and saving taxpayers money.

“Everybody was aligned on this,” said Michael Zucker, Baptist’s chief development officer. “What we’ve seen is just incredible from a cost savings standpoint.”

Baptist made money doing what used to be industry heresy: reducing patients’ use of the medical system.

The hospital group made a deal with Medicare, the huge government program for seniors, as part of an ambitious array of experiments authorized by the Affordable Care Act.

Medicare let Baptist take responsibility for the whole process of replacing knees and hips, from admission to surgery to rehab and anything else that happened within a month. (Normally the system, essentially tied with Methodist Health System as the region’s biggest, manages only what happens within its doors.)

Then Medicare lowered the average amount of what it pays for all that care by 3 percent, giving Baptist a lump sum for each patient getting the procedures. If the system and its orthopedic surgeons reduced costs below that price, they could keep the difference and divvy it up so long as quality didn’t suffer. If costs went up, Baptist was on the hook.

This is a purified form of the health law’s recipe to save health care: Get hospitals, doctors and other providers to work together. Cap their costs. Offer incentives to save and penalties for breaking the budget. Repeat.

A preliminary study of the tests at Baptist and elsewhere, overseen by the health law’s Center for Medicare & Medicaid Innovation, found substantial savings along with shorter patient stays in the hospital and lower use of expensive nursing facilities afterward.

But even the focused program at Baptist may be hard to reproduce elsewhere, experts caution. Successfully applying the model to other diseases and the entire health care system is an even longer shot.

Even so, policymakers have bet heavily on such arrangements as the solution to the medical-cost spiral. Medicare aims to make half its reimbursements through such “alternative payment” methods by 2018, officials said this year.

At Baptist, which is owned by Tenet Healthcare, the first step was basic financial education. Doctors are famously clueless about what taxpayers, employers and consumers have to pay for the care they prescribe.

“The public is like, ‘Wow, you guys have no idea what that costs.’ We never really did,” admitted Sergio Viroslav, a participating orthopedic surgeon.

Baptist surgeons, who select which artificial joint to use, were shocked to find out how much more some devices cost than others. Once they had a stake in the total bill they became more discriminating shoppers.

Metal hip and knee prices started plummeting “the second the flashlight got lit on the implant makers,” Viroslav said. No manufacturer wanted to be the most expensive.

Surgeons were also surprised to learn that almost half the expense of joint replacement can come from physical therapy, home nurse visits and temporary nursing home stays after the surgery.

Dr. David Fox never paid much notice to the birthday cards that rehab nursing homes sent him. Now that the knee-and-hip surgeon knows what they were making on his referrals, “it’s no damn wonder” they were so nice, he said.

These days Baptist doctors are likely to order home therapy rather than a nursing home stay unless it’s clearly needed. For the nursing homes they do use, they’re more likely to stay in touch, coordinate care and reduce expensive readmissions, they say.

Simply getting independent surgeons to work with their own hospital system and give it financial control took some doing.

“Hospitals and doctors don’t trust each other,” said Fox. “There’s not an orthopedic surgeon out there that trusts his hospital. You can’t find one. If you do he’s lying.”

But at Baptist the parties met, sometimes reluctantly, to discuss how to cut costs, help patients recover quickly and apply science-based rules to recuperation.

Is Warfarin the best blood thinner for a particular patient? How much? What kind of compression stockings should be ordered to stop swelling and clots? Is a cane needed? One rubber tip? Or four?

Doctors and nurses had always asked those questions but never in such a disciplined way.

Compensating diverse caregivers to work together on an episode of treatment such as knee replacement is called bundled payment. Baptist has been through two bundled-payment experiments with Medicare.

One began before the health law was passed and focused only on costs inside the hospital, not on what happened later. That saved $284 per patient.

Zucker declined to give detailed figures on the new test. But adding savings incentives for joint-replacement and post-hospital care saved more than $1 million the first year, he said. At the same time, patients recovered more quickly, with fewer complications and resulting readmissions to the hospital, he added.

Such results mean hospitals and doctors “are thinking much more holistically” about care, not just focusing on their own roles, said Rob Lazerow, a practice manager at the Advisory Board Company who consults with hospitals on payment reform.

Baptist keeps part of the savings and shares part with the orthopedic surgeons — a bonus of up to half their surgery fee if they maintain the highest quality measures and their patients do well. The loss to the nursing homes and other post-discharge providers was their gain.

A typical surgery fee is $1,200 per knee, so hitting all the goals could generate as much as $600 more for a doctor.

“If I do 35 patients a month all of the sudden it’s real money to me,” said Fox — potentially $21,000 a month, although no doctor maxes out the incentive on every patient.

Such “shared savings” with medical providers who were once oblivious to costs are key, said Dr. David Nash, dean of Thomas Jefferson University’s School of Population Health.

“If you change the economic incentives you will change physicians’ practice behavior,” he said.

Knee and hip replacements are relatively easy to manage. They can be scheduled. Doctors have a pretty good idea of what will happen. A more ambitious attempt at reform is trying capped, bundled payments with heart attacks, pneumonia and other conditions that might come with more wild cards.

Even more aspiring is the accountable care organization. Providers in ACOs receive incentives — from Medicare, commercial insurers or perhaps employers — to keep large populations healthy and reduce the cost of care for every kind of ailment.

That’s a much taller order, and results have been mixed.

But what’s going on at Baptist shows what might be possible, experts said.

Standardizing procedures, avoiding overpriced hardware and coordinating care always did make sense for hip and knee replacements. Now, four decades after such surgery became routine, some hospitals and doctors seem to agree.

“That was really good that we did that,” said Viroslav. “It really helps doctors get better. It kind of forced them to look at their practice.”

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

More Evidence That Health Plans Stint On Birth Control Coverage

Women’s health advocates were thrilled when the Affordable Care Act became law in 2010, because it required insurance companies to cover a broad array of women’s health services at no additional out-of-pocket cost beyond premiums.

Five years later, however, that requirement is not being enforced, according to two new studies. Health insurance plans around the country are failing to provide many of those legally-mandated services including birth control and cancer screenings.

The studies by the National Women’s Law Center looked at health plan coverage documents and consumer complaints in 15 states. One of the studies focused on contraception, while the other looked at a range of women’s health issues, including maternity care, breast-feeding support and other services.

“We found some very clear violations of the law,” said Karen Davenport, the group’s director of health policy. Among the companies named as not complying with the law’s requirements in at least some states are Aetna, Cigna, Physicians Plus and Anthem Blue Cross Blue Shield.

For example, Physicians Plus, a plan offered in Wisconsin in 2014, limited coverage of prenatal vitamins to women under the age of 42. And several companies in the study refused to provide coverage for birth control for women over age 50, despite the fact that many women are able to get pregnant long after that.

The report on required coverage of birth control found numerous instances where health plans impermissibly try to impose cost-sharing on all except generic products. There are, however, no generic intrauterine devices, and in some cases women have a medical need for brand-name products. Many plans in the study also failed to cover costs associated with birth control, such as follow-up appointments, researchers found.

One woman in Washington D.C., who complained to the organization’s “CoverHer” hotline, said she was told her IUD would be covered, then, after it was inserted, her claim was denied. “The insurance company says I can appeal their decision by writing a letter telling them how the decision ‘made me feel,’” she said, according to the report.

The study’s authors called for more and better enforcement of the rules regarding women’s health coverage. “We don’t need legislation,” said Sharon Levin, who runs the group’s reproductive health policy program. “We have that. We need better enforcement.”

The insurance industry disputed the reports’ conclusion that the problem is widespread. “This report presents a distorted picture of reality,” said Karen Ignagni, President and CEO of America’s Health Insurance Plans, the industry’s primary trade group. “Health plans provide access to care for millions of women each day and receive high marks in customer satisfaction surveys. To use highly selective anecdotes to draw sweeping conclusions about consumers’ coverage does nothing to improve the quality, accessibility, or affordability of health care for individuals and families,” Ignagni said.

Researchers examined publicly available documentation for more than 100 separate policies in 15 states for plan years 2014 and 2015, including plans in states running their own insurance exchanges and those using the federal HealthCare.gov. It found that more than half of the plan documents described coverage at odds with the health law.

The findings in the birth control report are similar to those in a report released earlier this month by the Kaiser Family Foundation. That study looked at 20 insurance carriers in five states and found that almost all the plans limited access to some forms of birth control in some way, either by not covering them at all or by charging a copay. (Kaiser Health News is an independent program of KFF.)

One source of confusion is the fact that under federal implementation guidelines, insurance plans may use so-called “medical management” techniques that are aimed at keeping overall costs (and premiums) down.

But Levin said it remains unclear what counts as “acceptable” medical management tools. Some plans, she said, count any contraceptive that uses hormones as a single method. That lumps together pills, patches, and vaginal rings, and then covers just one generic version of the treatment. Yet the law requires plans to make available all FDA-approved methods of birth control without cost-sharing. “We need better clarification” from the federal government, she said.

In at least some cases, consumers and advocates complained to insurers and policies were changed. “Calling and complaining to your insurance company works,” said Levin, noting that Aetna has reversed a decision not to cover the vaginal ring.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.