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Health

New Government Data On Hospital Services Proves That Americans’ Medical Bills Are Completely Random

The Center for Medicare and Medicaid Services (CMS) released highly-anticipated data on Wednesday that outlines what hospitals across America charge for common inpatient medical services. The takeaway from the new numbers? There is no rhyme or reason to what different hospitals charge for the same procedures across geographic regions (or even within the same region), and prices can fluctuate by over $100,000 in the most extreme cases.

The CMS data is comprised of charge records from over 3,300 hospitals spanning 306 localities, and detail the costs of many of the most common inpatient procedures, such as treatments for heart failure, chest pain, respiratory infections, and lower limb replacements. The Huffington Post has a helpful graphic mapping the prices that hospitals throughout the New York and New Jersey areas charge patients for treating chronic obstructive pulmonary disease (COPD), which helps illustrate just how significant the disparities can be:

These numbers confirm a recent Time Magazine investigative report that found much of the same trend throughout the U.S. And the biggest victims of this rampant price variation — and apparent price-gouging — are the poor, the uninsured, and the underinsured. Public entitlements such as Medicare are relatively protected, since the government has the power to negotiate blanket prices and reimbursement rates for specific services. But private insurers — and, of course, the uninsured — don’t have that same capacity, making them subject to the whims of the hospitals they do business with. In essence, that means that poor people’s medical and financial stability are left up to pure luck, dependent on whether or not the hospital they visit charges reasonable rates.

As Obama Administration officials explained, there isn’t any feasible economic reason for this cost variation — and reformers are hoping that the publication of the data will shame hospitals into changing these practices and acting in good faith:

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Health

Even Wealthier Americans Are Worried About Paying For Their Health Care After They Retire

(Credit: The Chronicle Online)

According to a new study commissioned by Bank of America Corp’s Merrill Lynch, health problems and health care are the top concerns for the Americans who are approaching retirement. Even among wealthier Americans — defined in this survey as those who have more than $250,000 in investable assets — health care expenses represent the most pressing financial concern they anticipate having during their retired years.

When asked to rank their financial worries for retirement, respondents overwhelmingly selected health care expenses as their biggest concern. Over 50 percent of the Americans in the wealthier group, as well as nearly 40 percent of those who were defined as less wealthy, said they were most worried about struggling to afford their health costs:

Health problems, rather than financial success, were also ranked as the top reason that the retired respondents decided to stop working. That could point to the fact that many Americans aren’t saving up as much money as they would like to before retiring. That’s consistent with previous research that shows that the Great Recession has negatively impacted older Americans’ ability to retire. Almost two-thirds of working Americans now report they’re planning to delay their retirement, and most Americans say they’re putting off retiring so they can continue to access health benefits through their employer-sponsored insurance plans.

Medical costs have been soaring across the entire health care sector — and, since end-of-life care is typically expensive, that trend especially impacts retired seniors. The median cost of living in a nursing home is now more than twice as much as a private college tuition. High medical costs end up bankrupting one in four U.S. seniors, despite the coverage offered under Medicare.

Health

How A Pharma Giant May Have Bribed Pharmacies, Swindled Transplant Patients, And Defrauded The U.S.

Novartis Pharmaceuticals Corp. isn’t having the greatest year — and things just got much worse for the drug giant. In a civil suit that builds on a separate, sealed whistleblower case, federal prosecutors charged Novartis on Wednesday morning with paying out kickbacks in an effort to get pharmacies to switch kidney transplant patients’ anti-transplant rejection generic drugs with the brand-name Novartis product Myfortic.

The scope of Novartis’ alleged fraud is staggering. In the civil complaint, prosecutors charge that the company’s U.S.-based wing “used a program of rebates and discounts to boost sales of its anti-rejection drug.” Since Myfortic is far more expensive than its generic counterparts, this market share-gouging cost government health entitlements such as Medicare and Medicaid “tens of millions of dollars in reimbursements to pharmacies for which they were never entitled,” with Myfortic sales at companies that received the bribes totaling over $100 million. Some of those pharmacies allegedly received kickbacks making up a full 20 percent of their total Myfortic sales, while the U.S. government drove an outsized 47 percent of the drug’s total sales by specialty pharmacies.

If the allegations are true, then not only did Novartis brazenly defraud the United States government — the corporation and its co-conspirators also compromised public safety and patient health. As the civil complaint states, “Hundreds, possibly thousands, of transplant patients have undergone switches in their medication as a result of the recommendations from pharmacies that were based on undisclosed financial, rather than independent critical, considerations.”

Medicare and Medicaid fraud by pharmaceutical companies is the main driver of Justice Department settlements under the False Claims Act — the same statute that Novartis is being sued under. In 2012 alone, the Justice Department nabbed $3 billion from doctors and pharmaceutical companies that swindled the public entitlement programs by charging the government more than their services were actually worth. In fact, in 2010, Novartis had to settle a separate case involving kickbacks and misuse of drugs, paying out $420 million in criminal and civil damages. The newest slate of charges against the drug giant prompted Manhattan U.S. Attorney Preet Bharara to call Novartis “a repeat offender.”

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Justice

What We Miss About George W. Bush And The Neoconservatives


Today marks the official dedication of the George W. Bush Presidential Center, an event that is already sparking reexaminations of the Bush legacy. In reality, Bush left office unpopular and he earned that unpopularity. President Bush presided over the near collapse of the American economy. He neglected a war that was thrust upon us to fight a war that he never should have begun. His judicial appointments consistently place conservative ideology before the law. And his administration flouted the laws banning torture. On the eve of President Obama’s first election, only 23 percent of Americans approved of Bush’s job performance.

More than four years later, Bush’s record of unnecessary wars and economic catastrophe speaks for itself. And yet, Republicans have largely decided that the lesson of his failed presidency is to tack even further to the right. In comparison to today’s GOP, George W. Bush appears downright moderate:

None of these nods to moderation can outweigh the battered economy Bush left behind, or the misguided war he prosecuted, or the legacy of Chief Justice Roberts and Justice Alito. But there is no need to lionize President Bush in order to recognize that he was a different kind of conservative than the purist ideologues that have come to dominate the GOP since he left the White House.

During the Bush years, the term “neoconservative” became little more than a pejorative thrown around to describe the kind of misguided thinkers that brought America in to the Iraq War. On domestic policy, however, neoconservatives were often the most sensible wing of the Republican Party. As neoconservative icon Norman Podhoretz once explained, “the neo-conservatives dissociated themselves from the wholesale opposition to the welfare state which had marked American conservatism since the days of the New Deal,” and while they certainly wished to place limits on the scope of government, their limits did not rest on “issues of principle, such as the legitimate size and role of the central government in the American constitutional order.” In this sense, the neoconservative philosophy that dominated the Bush Administration was a sharp break from the conservatism of the early Twentieth Century that saw protecting workers and basic programs such as Social Security and Medicare as fundamentally anti-American and unconstitutional.

One unfortunate consequence of Bush’s failed presidency is that it appears to have also discredited the relatively sensible faction within the Republican Party that dominated the Bush Administration and created a power vacuum that even more virulent forms of conservatism could rush into. Both the Tea Party, with its calls to declare the progress of the Twentieth Century unconstitutional, and the rise of Paul Ryan, with his assault on the American safety net, are demonstrations of the much more radical forms of conservatism eager to fill the void left after Bush’s fall from grace.

Health

After Making $2 Billion In Profits, Insurer Complains It Doesn’t Get Enough Government Money

By all appearances, UnitedHealth Group is having a stellar year. The mammoth company, which is the largest health insurer in America and the biggest manager of private Medicare Advantage plans, announced on Thursday that despite a 14 percent decline in earnings, it had still made a profit of $2.1 billion — and that was just in the last fiscal quarter. UnitedHealth also won a major policy victory at the beginning of this month when the Obama Administration reversed course on its plan to cut reimbursements to Medicare Advantage plan providers by two percent. In fact, the Administration went the entirely opposite direction and announce it would raise these rates by 3.3 percent — a swing of 5.3 percent in UnitedHealth’s favor. Apparently, that isn’t enough for the insurance company. UnitedHealth is now threatening to reduce its involvement in managing Medicare plans, claiming that its government reimbursements are still too low.

“We did not expect the fastest growing, most popular and most effective Medicare benefit option serving America’s seniors to be underfunded to this extent in 2014,” UnitedHealth Group CEO Stephen Hemsley said on a conference call with investment analysts. He went on to clarify that the company will likely have to pull out of the Medicare market as it “reshape[s] Medicare networks and benefits to respond to the continuing underfunding of this [Medicare Advantage] program.” But Hemsley’s claims conflict with the company’s own earnings report, as well as the questionable performance of private insurance plans that service Medicare beneficiaries.

Conservatives often claim that having private insurers, rather than a public entity, manage programs like Medicare helps cut costs and make care more efficient. That’s why they have held up programs like Medicare Advantage and used it as a model for dismantling traditional Medicare to turn the public entitlement into a private insurance voucher. But as numerous studies and government reports have shown, private insurers game the Medicare Advantage program as much as they can by encouraging seniors to cherry-pick their health plans relative to their health. That allows companies like UnitedHealth to pay out less in benefits by offering healthier seniors alluring rates — but it raises prices for everybody in the traditional Medicare program by siphoning off less costly beneficiaries. And yet, Medicare Advantage still consistently comes in over-budget while regular Medicare manages to save money. Profit-motivated announcements like UnitedHealth Group’s today help explain why that is.

Obamacare contains cuts to these excess payments to private providers, consequently preserving the more generous and efficient traditional Medicare program. While those cuts are likely the source of Hemsley’s ire, he shouldn’t fret too much. Since Obamacare’s began being implemented, enrollment in Medicare Advantage has actually gone up, while seniors’ premiums have gone down.

Health

STUDY: Doctors Do Fewer Unnecessary Tests And Procedures When They’re Told How Much It Costs

According to a new Johns Hopkins University School of Medicine study, doctors who know the cost of the medical tests and procedures that they perform tend to choose to do fewer of them then those who don’t. That ends up sparing patients from unnecessary testing and preventing Medicare from paying unnecessary reimbursements.

The study involved observing two different groups of doctors and lab technicians at Johns Hopkins Hospital over two separate time periods, while giving them different amounts of information about the Medicare fee associated with the procedures they were ordering:

In the study, physicians and others who ordered lab tests through the computerized order entry system at the Johns Hopkins Hospital were tracked over a six-month period in late 2008 and early 2009 and then again for another six months in late 2009 and early 2010 on how they ordered a selected group of 61 lab tests. Roughly half were chosen from the most frequent tests ordered at the hospital, and the other half, the most expensive. [...]

[Researchers] found that, in the test group, when prices weren’t made available, the providers ordered 3.7 tests per patient day, but later, when the prices were linked, the number of tests per patient day fell to 3.4, a drop of nearly 8.6%.

In contrast, the number of tests in the control group, those without pricing in both test periods, rose by 5.1%.

Test costs followed a similar path. For the test group with prices, the cost per patient day fell $3.79, for a drop of 9.6%. Meanwhile, in the control group, charges per patient day rose by $0.52 per patient day, or by 2.9%.

The results are encouraging from both a public health and a financial perspective, since unnecessary testing and procedures do nothing to improve patient care — and in some instances, can even make it worse — and lends to America’s record public and private health care spending.

But even more interesting is the study’s implications for physician medical culture and Medicare fraud. The Justice Department makes much of its settlement money from doctors who cheat Medicare through practices such as “self-referrals” for unnecessary testing and “upcoding” the cost of their Medicare patients’ services in order to return a profit. There have been some early rumblings in health care reform circles that Obamacare’s provision requiring providers to use electronic health records (EHRs) could actually lead to even more fraud by offering physicians an easier way to cheat the system. However, the Johns Hopkins study suggests that most doctors will actually make more prudential decisions when armed with exact information, so if EHRs are linked with exact Medicare fee data, it could actually make care more efficient, safe, and cost less to entitlements like Medicare.

Health

How A Small Tweak To Medicare Could Net The U.S. Hundreds Of Millions In Savings Every Year

A new government report from the Department of Health and Human Services (HHS) finds that Medicare Part D — the prescription drug benefit that helps eligible seniors afford the medication they need — could have made over $111 million in 2009 alone with a simple change to the way it pays insurers. The findings illustrate that smart systemic tweaks to Medicare’s payment structure could significantly reduce the program’s costs without the need to slash benefits for elderly Americans.

Medicare Part D currently subsidizes the cost of medications on private prescription drug plans — but as the program is structured right now, those private plans can make money off of payments from the federal government without having to provide benefits. Under current law, Medicare has to make advance payments to seniors’ prescription drug plan provider at the beginning of every month. So even if a senior doesn’t submit a claim for drug coverage that month, their plan provider still gets paid.

There’s nothing wrong with that; it’s just how insurance works. But the 2003 law that created the drug benefit also allows private Part D plans to “invest these Medicare funds in interest-bearing instruments until the funds are needed to pay for drug costs and administrative services.” That allows private insurers to take federal Medicare dollars, invest them in an account that garners interest, and then keep netting those interest profits until the beneficiary submits a claim and forces the insurer to pay out. There are no limits to how much money insurers can make off interest payments in this fashion.

And as it turns out, this is costing the government millions of dollars in potential savings every month. The HHS report found that in calendar year (CY) 2009, Part D plans held onto — and profited off of — federal Medicare funds for an average of 20 days before having to pay out pharmacy claims. The auditors go on to explain that if the situation were simply reversed, and the federal government was allowed to hold on to and invest those funds for 20 days before having to pay the private insurer, then Medicare would have netted “$111.2 million of interest income in CY 2009.” Although the Center for Medicare Services claims that such a policy change would just lead Part D providers to raise the price of their bids to the government, the report points out that any decreased savings from such a move would be offset by “the higher interest earned by Medicare trust funds” compared to that earned by Part D plans.

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Health

GOP Congresswoman Proposes Restoring Funds For Cancer Drugs After Realizing Sequester’s Damage

Conresswoman Renee Ellmers

On Tuesday, Rep. Renee Ellmers (R-NC) introduced H.R. 1416, The Cancer Patient Protection Act of 2013. According to a press release on Ellmers’ congressional webpage, the bill would reverse sequester cuts to Medicare funding for physician-administered chemotherapy drugs, which she calls “an unintended consequence of sequestration,” and reimburse doctors for any cuts that have affected them since the beginning of the month. The sequester’s two percent cut to Medicare Part B has been forcing community cancer clinics to turn away thousands of Medicare beneficiaries and deny them their treatments.

Although the congresswoman — a registered nurse — claims that the cuts to oncologists administering chemotherapy are simply an “unintended consequence,” they are anything but. The Budget Control Act, which included the sequester, specifically states that Medicare is subject to an across-the-board two percent cut. That’s about as intentional as you can get.

What Ellmers is really saying is that she didn’t realize exactly what those cuts would mean for the well-being of real Americans once they were actually implemented. She voted for the Budget Control Act back in 2011 and was still arguing the merits of sequestration earlier this year. “I do believe [the sequester] will start a very important process that will help our economy to start to grow. The debt that we have at the federal level is our biggest threat for our country,” she told the Washington Post in February.

That’s a shift from the recent rhetoric from Ellmers’ GOP colleagues. Republicans in Congress have been largely brushing off the sequester cuts, claiming their impact has been exaggerated and they aren’t actually a big deal. But now that the cuts are forcing schools, aviation centers, health care providers, and countless other organizations that receive federal funding to make tough decisions in the face of sequestration — decisions that affect Republican constituencies just as much as they affect Democratic ones — it’s becoming clear that abstract numbers on a balance sheet have tangible, real-world effects.

Health

The Median Cost Of Living In A Nursing Home Is Almost 2.5 Times The Average Private College Tuition

According to CNNMoney, the median cost of living in private nursing homes and assisted living facilities has ballooned by 24 percent and 23 percent, respectively, over the last five years. The median annual cost of private nursing home care is now $83,950 — almost two and half times the mean tuition at private not-for-profit colleges in 2010-2011.

Semi-private room costs in nursing homes have risen to $75,405 per year, and even a stay at an assisted living facility — where patients do not receive anywhere near the level of care that they would at a private nursing home — now tends to cost over $41,000 per year. As Bob Bua, vice president of long-term care provider Genworth, explained, employees at nursing homes “rarely get pay decreases, food rarely costs less, rent rarely goes down — it’s an ever-increasing cycle.”

The CNNMoney article points out that less costly alternatives include hiring home health care aides and other live-in assistance. The median price for those services have only risen at about one percent per year over the last half decade to about $44,000 annually. But considering health aide salary data released last month, even that comparatively low price is a figure that is greatly inflated by organizations providing assistance services to the elderly. Home health aid — the fastest-growing job in America — pays less than $10 per hour, meaning that a full-time worker makes only around $20,000 per year.

These new numbers underscore the financial and medical strain put on elderly Americans due to the ever-increasing cost of health care services. Despite generous coverage under Medicare, high out-of-pocket costs bankrupt one in four American seniors because medical services themselves cost so much money. And more than half of Americans will delay their retirement so as not to lose health benefits — a consequence of America’s entrenched system of employer-sponsored insurance.

Health

As Drug Prices Continue To Soar, Big Pharma Reaped $84 Billion In Profits Last Year

The price of brand-name drugs has skyrocketed over the past several years, leading increasing numbers of Americans to switch over to cheaper generic drugs. But even those generic drugs are also increasingly costing Americans more money, as chain pharmacies across the country hike their prices to charge up to 18 times the drugs’ original cost. There’s one clear winner in this equation: the giant pharmaceutical companies that are raking in the profits.

Over the past decade, the 11 largest global drug companies reaped about $711 billion in profits, according to a new analysis from the Health Care for America Now (HCAN) advocacy group. In 2012 alone, the drug companies’ annual profits totaled nearly $84 billion. The organization’s analysis credits much of these profits to the federal policy that prevents Medicare from negotiating directly with drug companies — which allows Big Pharma to price gouge the government program’s prescription drug benefit, known as Medicare Part D:

Medicare’s prescription drug coverage is essential for seniors — and since Obamacare has helped ensure that more prescription drugs are now covered under Medicare Part D, millions of seniors have saved $6 billion on the medication they need. But, since Medicare is unable to negotiate bulk purchasing discounts, Big Pharma continues to overcharge the federal program for those drugs. HCAN points out that pharmaceutical profits soared around 2006, when Medicare Part D was first put in place.

Pharmaceutical companies often claim their huge profits are necessary because that money goes toward innovative drug research and development. But one recent study found that drug companies actually spend 19 times more on advertising their products than they do on investing resources to develop new ones. And some areas of scientific research, like the development of new vaccines to replace some old antibiotics that have become increasingly less effective over time, have largely stalled because Big Pharma isn’t as willing to invest money in less-profitable ventures.

While companies should obviously make some kind of profit from their products, HCAN points out that Big Pharma’s prices far exceed what people in other countries are paying for the exact same drugs. The United States’ per capita drug spending is about 40 percent higher than in Canada’s, 75 percent higher than Japan’s, and nearly three times higher than Denmark’s.

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