January/February 2014

Clinicians or Bureaucrats
to Authorize Health Care?

By Marilyn M. Singleton, MD, JD
Today’s Geriatric Medicine
Vol. 7 No. 1 P. 34

Should Medicare control health care costs at the expense of the sick? In 2012, Medicare spent $536 billion on benefits, consuming 16% of the federal budget. From 2007 to 2010, Medicare spending for chronically ill patients in their last two years of life increased 15%, from $60,694 to $69,947, despite patients spending fewer days in the hospital and receiving more hospice care.

To address ballooning costs, the Affordable Care Act established the 15-member president-appointed Independent Payment Advisory Board (IPAB). If Medicare spending per capita grows above the statutory target, the IPAB delivers a cost-reduction plan to Congress. The proposal is binding unless the House passes an alternative plan or at least two-thirds of the Senate rejects the IPAB proposal.

The IPAB cannot ration health care, increase beneficiary premiums or cost sharing (eg, deductibles, coinsurance, copayments), restrict benefits, or modify eligibility criteria. Restrictions notwithstanding, “death panel” apprehensions have merit. For 15 years, the Medicare Payment Advisory Commission (MedPAC) has advised Congress regarding payments to Medicare providers. The IPAB’s proposals will have the force of law.

MedPAC examines payments for medically necessary services (ie, those that “meet accepted standards of medical practice”). The IPAB ensures access to “necessary and evidence-based” services. The difference is not trivial. Physicians can justify to Medicare why specific treatments are necessary for specific patients. Evidence-based services are designed for the masses.

Death panel fears are fueled by Great Britain’s experience with the National Institute for Health and Care Excellence (NICE), which provides advice on “effective, good value health care.” Effective care is gauged by the quality-adjusted life year. If a treatment costs more than a fixed monetary cap per quality-adjusted life year, then that treatment is denied.

Is this good science or rationing? Since 2007, NICE has rejected 69% of the new medicines it reviewed. Memorably, NICE rejected the cancer drug bevacizumab (Avastin) because it was “not the best use of taxpayers’ money.” NICE restricts the use of Alzheimer’s disease drugs for early-stage patients despite evidence that early treatment can slow progression. It recommended allowing only a fraction of age-related macular degeneration patients to receive an expensive but highly effective treatment—for only one eye. After widespread public outrage, this recommendation was withdrawn.

The Affordable Care Act’s version of NICE is the Patient-Centered Outcomes Research Institute (PCORI), whose mission is to engage in comparative effectiveness research. The PCORI cannot use a quality-adjusted life year formula or affix a lower value to age, disability, or terminal illness, but these attributes can be used to determine effectiveness of treatment.

Comparative effectiveness is not a panacea. Even assuming unbiased PCORI research, conclusions are limited by several patient characteristics, including ethnicity, genetics, coexisting illnesses, and medication adherence. Physicians who treat patients as individuals must navigate around payment rules based on statistics. Is this good care or wasting resources?

A 2012 class action lawsuit illuminates an anti–chronically ill mindset. Medicare paid for physical therapy or skilled care only if a patient improved, and treatment could resume only when the patient got worse. The 2013 settlement compelled Medicare to cover treatments to maintain a beneficiary’s condition and prevent backsliding.

Because hospitals initially are exempt from IPAB cuts, the focus will be on payments to physicians (particularly specialists), surgery centers, Medicare Advantage, and drug plans. Over the last 10 years, Medicare physician fee-for-service rates increased 9%, while physician overhead increased 27%. Lowering payments will force physicians to limit acceptance of new Medicare patients, resulting in less access to care.

By 2020, the Affordable Care Act will have slashed $716 billion from Medicare payments to hospitals, hospice, dialysis centers, and nursing homes. Additionally, hospitals will receive reduced payments for hospital-acquired conditions and hospital readmissions within 30 days of discharge. Economic considerations will make pariahs of the sickest patients.

Do we want impersonal mechanized health care delivery? Clinicians, not bureaucrats, are patients’ best advocates. Physicians and families in an accountable, accessible, transparent environment should direct necessary treatments for the aged, disabled, and chronically ill.

— Marilyn M. Singleton, MD, JD, is an anesthesiologist and a board member of the Association of American Physicians and Surgeons. After receiving her law degree at the University of California, Berkeley, she interned at the National Health Law Project, practiced insurance and health law, and currently teaches classes in the recognition of elder abuse.