Washington Is Tightening Its Grip On Medical Decision-Making

From: Forbes

One of the biggest fears Americans have about the expanding role of government in health care is that bureaucrats — not doctors and patients — will make decisions about what medical care they will, or more likely will not, get.

They should be afraid.  It’s happening now and getting worse.

Government already decides what treatments public programs like Medicare and Medicaid will pay for.  But government is getting more and more involved in micromanaging medical care, making sweeping decisions that can’t possibly take into account a patient’s unique needs.  This runs completely counter to the trend in medical practice toward personalized care.

Here are two recent examples of the trend toward greater government intrusion into medical decisions involving actions by the Centers for Medicare and Medicaid Services (CMS), the federal agency that runs these two gigantic programs.  One proposed new CMS rule involves treatment for patients receiving kidney dialysis, and another decision involves “competitive bidding” for medical devices.

Dialysis. Congress had directed CMS to implement a program called “bundled payment” designed to encourage providers to be more efficient and economical in providing care.  Congress also wanted to make sure that providers don’t skimp on quality so it directed CMS to set up a quality measurements program.

Bundled payments cover procedures such as dialysis treatment for patients with kidney disease.  In addition to their regular dialysis treatments, many patients need a blood-boosting drug to treat their anemia and keep them strong.  If the concentration of hemoglobin in the blood falls below a measurement of 10 or above 12, patients are at risk of serious complications.  Patients whose hemoglobin count falls below 10 typically receive erythropoietin stimulating agents (ESAs) to boost their red blood cell count.

But under the bundled payment system, providers get the same payment for providing dialysis services, whether they provide ESAs or not.

Now CMS is proposing a rule that gives dialysis centers an extra incentive to under-treat patients by saying that the lower-level trigger point of 10 to administer ESAs should be eliminated.

The Medicare Payment Advisory Commission which advises Congress warned that “low hemoglobin levels could lead to the under-treatment of anemia, which could – in turn – cause adverse health outcomes for dialysis patients, such as the need for blood transfusions and hospitalization.”

The American Association of Kidney Patients said in a letter:  “Having no minimum standards for anemia management will drive down hemoglobin levels to the point patients will become weak and fatigued, require blood transfusions, have increased hospitalizations, and may request early retirement or disability.”

The bundled payment system provides an incentive for dialysis providers to provide less care – including limiting the use of ESAs.  Patients with low hemoglobin levels are likely to be sicker and are more likely to need additional treatment – but those costs are shifted to other payment silos.  This is bad for patients and bad for taxpayers who must pick up the bill for unnecessary blood transfusions and hospitalizations.

“This should be an individual process, with doctors weighing pros and cons and weighing each individual patient,” said Richard Amerling, M.D., director of Outpatient Dialysis at Beth Israel Medical Center. “The idea that anyone is going to be able to deliver good-quality care from the top-down system is just a nonstarter.”

When it finalizes its proposed rule, CMS should listen to Medicare experts and especially to the concerns of patient and physician groups who say that reinstating the lower-level hemoglobin trigger point of 10 will guard against under-treatment of anemia for dialysis patients.

Competitive bidding. As another example, Congress enacted a program designed to save money in purchasing durable medical equipment through Medicare – everything from wheelchairs, oxygen supplies, and beds to sophisticated home care equipment that helps to heal wounds.

Instead of Washington setting prices, Congress wanted CMS to get competitive bids on the equipment.  Sounds like a good idea.  But the regulations that CMS set up to implement this program are actually stifling competition, and they violate all the rules of a market-driven bidding system.  And the fiasco threatens to disrupt patients’ access to these medical devices.

CMS set up the current pilot program with its mis-named “competitive bidding” program earlier this year in nine cities.  The program is estimated to save Medicare $17 billion over 10 years in reduced costs for nearly three million seniors using the products.

In the flawed program, companies can low-ball the bids but then not be required to follow through and provide the products they bid on.  This has the effect of lowering the median bidding price, sometimes below cost, which can knock out legitimate competitors.  In some areas, 80% to 90% of the suppliers of certain types of equipment were shut out of the big Medicare market.

Thirty patient advocacy groups, 244 economists, and 145 members of Congress have sent letters saying the program is flawed, warning that it reduces quality and, once competitors have been driven out of the market, the remaining suppliers will be able to jack up prices, defeating the goal of cutting Medicare spending.

But instead of rethinking the controversial program, CMS announced in August that it plans to expand it to another 91 metropolitan areas.

According to University of Maryland economist Peter Cramton, companies are able to submit non-binding, low-ball bids, resulting in prices that are far below any reasonable profit level. This leads to a lack of accountability on the part of the prospective bidder.

The flawed process also means that legitimate suppliers will have limited resources to provide the services and support patients need to keep equipment working.  The result will be lower quality care and higher costs in the long run.

One example is a device for Negative Pressure Wound Therapy, which was added by CMS to the competitive bidding list as a new category.  This is a device that fits over a severe or chronic wound – an amputation or deep pressure ulcers, for example – and provides gentle suction that cleans the wound and promotes healing.  The device can be used at home, eliminating the need for hospitalization, but only if it is properly applied and managed.

One company, KCI based in San Antonio, Texas, handles more than half a million support calls a year for their Negative Pressure Wound therapy system.  Yet KCI must compete with companies that provide little or no service but who, under CMS’ rules, could easily be winning bidders.  Patients whose treatment goes awry are likely to wind up with poorer health outcomes and higher health costs from complications and hospitalizations, just like the dialysis patients above.

The price distortions in the CMS program are likely to ricochet throughout the health sector, making it difficult if not impossible to find the true competitive price for medical devices in the future, according to Tom Bradley, chief of Medicare cost estimates at the Congressional Budget Office.

These examples are only the tip of the iceberg of Washington’s micromanagement of health care decisions.  Many expect the coming Independent Payment Advisory Board, created under the new health overhaul law, to exert an iron-fist rule over payment policies.  It will be under strict instructions to cut payments to Medicare providers, regardless of the consequences, with limited ability for Congress to overrule its edicts.

The solution is not to give Washington more power but to put doctors and patients back in charge of medical decisions.  Medical care increasingly can be personalized, even to medicines that fit a person’s individual genetic code.  But these advances will be stopped cold if Washington continues its bureaucratization with one-size-fits-all medical decisions and misguided price-fixing.

Grace-Marie Turner is president of the Galen Institute, a non-profit research organization focusing on health reform.  She is a co-author of Why ObamaCare Is Wrong for America (Broadside/HarperCollins, 2011).