Friday, December 27, 2013
Health Care Reform
The affordable care act is rapidly reconfiguring a massive segment of the entire US economy. Most estimates I've seen indicate that 1/6 of spending in the United States is on health care. With the most comprehensive, rapidly evolving, often times unpredictable change rippling through a system most of us encounter in a very personal way, there are going to be winners and losers, and they are likely to be very vocal about it.
Imagine if the captain of the Titanic had seen the iceberg prior to the impact that sank the massive ship and tried to turn the boat with emergency maneuvers. I imagine passengers would be knocked against the wall, dishes would fall, the boat would lean heavily, people would grab for anything stable. Confusion and panic would abound.
I feel like I am living in that moment in healthcare right now.
I wanted to blog about how this reform is affecting my care for patients and the patients I care for. It is a post that is necessarily limited in scope but it is also very personal and specific. Like many prior posts on controversial topics, I want to do my best to leave politics out of it. You may try to guess my political persuasion but I will tell you up front that I am not a believer in either political party.
So far, the changes seem mostly focused on reforming how care gets paid for rather than how care is actually delivered. I want to explain how the money works because so much of the debate appears disconnected from reality.
Private practice oncology is under attack. Despite the fact that cancer care delivered in the outpatient setting is 30% less expensive than the exact same care provided within hospitals that may be only several yards away, current policies are making it nearly impossible to maintain viable outpatient oncology clinics. If these trends persist, you will see access to care diminish regionally. While providers in major cities may find ways to keep patients coming through the doors, practices in more rural areas are closing at an alarming rate.
The infrastructure it requires to continue delivering care cannot be reasonably supported by physicians in small groups. When there are only 1-3 doctors in a group, the revenue cannot continue to cover the costs of maintaining infusion nurses, insurance verification, reception, pharmacy, back office, clinic nursing and so forth. While that will disproportionately affect smaller areas, I've written previously about "Doctors going broke" in urban Southern California. Small groups are getting snatched up by hospitals and struggling to remain independent. This will have a bad ripple effect for access to care for many patients.
I am concerned because the way I see the change progressing, I think these trends may be accelerated. Many of the healthcare changes have been referred to as "bumps along the way." For any of you who have hit a speed bump while driving 90 miles an hour, you know those bumps can be very destructive. Now before you Canadians and Europeans get all smug, I hope you can respect that our health care system has evolved very organically over quite a few years. Change is hard - bear with us.
Cancer care is extremely expensive. Single doses of drugs that may need to be given every three weeks can cost thousands of dollars. Effective pills can cost more than several hundred dollars each - which really starts to add up if you take it daily forever (see post about drug costs).
With the new exchange plans, it appears to me that much of the middle class will be considerably more financially vulnerable if they get sick. If you do not qualify for the generous subsidies given to individuals who earn less than a specific threshold, you may be on the hook for $5000-10,000 deductible repeated annually (on top of premiums). I can tell you that will be impossible for many of the patients that I see.
So what am I supposed to do if a patient comes to see me and simply cannot afford the visit or the treatment? While I am wired to believe I should see any patient no matter what the circumstances, there are limits. I can put myself out of business very quickly if we perform more charity care than we can afford. If a patient does not or cannot pay, what am I supposed to do? Our office tries to do just about anything to work with a patient or their family, but sometimes things are never going to be collected and we call that, "bad debt."
I think most patients are unaware of how drugs are delivered in outpatient oncology clinics. My office literally purchases all the drugs we plan to administer. This is a lot like going shopping for groceries - when we purchase them, payment is due immediately. Normally we do make this purchase 24-48 hours before the patient is to be seen in clinic. Often drug is arriving in my office at the same time as my first patients for the day.
When the patient comes to clinic, we check blood counts, ask about symptoms, etc. Provided everything seems right, we then administer an "intravenous loan" to the patient which is the cost we paid for the drug. Over the next 30-90 days, we try to get the insurance and the patient to repay the loan. If that system breaks down, the money we paid for the drug never comes back. Even single doses of some expensive drugs can be a genuine nightmare if we don't get reimbursed. Imagine loaning your car to someone and then finding out they were not going to bring it back. Sometimes those same individuals come back asking for another car (treatment) as if keeping the first one wasn't a major problem. If "bad debt" percentage goes up even a little, it is a huge problem. This is a number we monitor extremely closely because of the enormous impact it makes. I worry that "bad debt" will skyrocket when patients become financially responsible for more of their care.
While some may conclude that giving chemotherapy must be very profitable because of how expensive drug are, keep in mind that they are just as expensive for us to purchase and the government limits how much we can charge for administering drugs. The "average price (ASP) plus 6%" rule for medicare sets caps on prices. Some may argue that 6% could be a lot of money, but keep in mind that has to cover the cost of infusion nurse staff, pharmacy staff, infusion equipment, etc. Furthermore, the sequester knocked that back by 2% to ASP+4% and was the final blow for many oncology practices that had to radically restructure their practices to keep things afloat. If a "2% reduction" to reimbursement rates killed some practices, imagine what happens when bad debt goes from 1% to 7% or more....
In cancer care, it probably isn't a surprise that a lot of our patients are in Medicare - but not all are. Indeed there can be enormous variations depending on whether your community has a lot of older patients or not. For those patients with private insurance, we have to re-negotiate our contracts with insurance companies like Blue Cross, Aetna, etc. every few years. The contracting always starts with Medicare rates then either goes up or down depending on the relative strength of the insurance company or the provider group. Some oncologists have contracts with major insurers that are better then Medicare, some oncologists have contracts that are worse. These contracts then determine how much a service in the office gets reimbursed. The physician offices with one or two docs, simply have zero leverage in these negotiations. They either accept the rates offered to them or they get excluded and made "out of network."
Settling these contracts requires is the full time job (practice expense) of one of our office employees. In recent news reports from California, some of the exchange plans have come in offering rates that are simply too low to enable the doctors to keep their doors open if they were to accept those contracts. That is why you are seeing "skinny networks" or networks with very small groups of providers who are able to accept the contract.
Many patients may simply not understand how much it costs to keep the doors open. If you completely exclude the cost of drugs, and only factor in things like rent, staff compensation, malpractice insurance, etc, and simply add up those costs and divide by the number of patients I see in a day it results in a "cost to see patient" that averages several hundred dollars. Literally, when I walk through the door to see a patient (one who is just coming in and not getting treatment), I have spent several hundred dollars to do so.
Obviously the more patients I see with the same resources, the lower the cost per patient, but you can only take that so far. On an average day, I may see over twenty patients, and on a extremely busy day, I can see thirty. In the last several years, as reimbursement pressures have gotten harder everyone has tried to compensate with seeing larger volume of patients. Unfortunately, as that margin gets closer and closer to zero, you simply cannot humanly make it up by volume. In some cases (contracts) you actually loose money every time you see a patient but you do it because it is the right thing to do. Obviously, the more such patients you see, the faster you reach financial oblivion.
So this is where I have to return to the impending changes. Very soon, patients are going to be more financially responsible for their care than ever before. Enormous deductibles and larger copayments are going to become financially devastating to more and more individuals. As that destruction unfolds, it is going to take down a lot of community practice oncology sites who see their bad debt skyrocket. "Bad debt" is set to explode and I cannot predict how broadly the damage will extend.
Patients are going to avoid care a lot longer hoping that the pain in their side goes away rather than incurring a $4000 personal bill for an ER visit that makes a diagnosis. We will begin to see patients with far more advanced disease because they delayed things too long, or their docs were too busy to get them in quickly enough. Annual deductibles will become an extraordinarily painful reminder of a chronic illness. I have to imagine that CLL patients may fully exhaust their deductible every year. Many people are just not in a position to cough up 10K per year if that is what their plan requires.
While much of the above discussion only applies to the 5 million patients who lost their insurance in the "individual market" and were kicked into the exchanges, next year we see the employer mandate begin. This may impact an enormous number of individuals who get their insurance through their work. Everything that is happening to patients in the individual marketplace is going to happen on a much larger scale when employer plans lose their grandfather status.
Some readers will see this and conclude that it is finally time for a "single payer health system" ie. Medicare for all. Frankly, I predict that come Jan 1 when a lot of individuals discover they don't have insurance because the application process was so broken (Oregon's webpage still has yet to enroll a single patient), you will hear demands to allow these people to "temporarily" be given Medicare coverage. What happens after all to the patient who has paid their premium faithfully and covered their bills with my office for years but now needs treatment and they have lost their coverage because of a broken system?
If we go to single payer though, Medicare will have to be radically restructured. My practice did an analysis of what would happen if every patient we saw suddenly had their contracts revert to "medicare rates." After reviewing the consequences, we all agreed this would be our "Armageddon." We would go from a practice that is surviving to one in which none of the doctors would receive ANY income from working and EVERY DOCTOR would all have to pitch in thousands of dollars PER MONTH keep the doors open.
Naturally, that means we would not be able to keep our doors open in our current structure. The city of Eugene would lose significant access to cancer care and patients might have to drive two hours to find it in Portland - provided it was available there. While that sounds terrible, it is already happening throughout the country in many places and the biggest changes have yet to hit.
I am sorry if this is such a sour post. I know I typically aim for optimism, but I am having a hard time getting there when I think about the changes I am seeing.
Thanks for reading.