IFHP publishes 2013 Price Report

International Federation of Health Plans, Accessed April 18, 2014

The International Federation of Health Plans (IFHP) today released its 2013 Comparative Price Report, detailing its annual survey of medical prices per unit. Designed to showcase the variation in healthcare prices around the world, the report examines the price of medical procedures, tests, scans and treatments in nine countries. This year the survey also shows pricing for five specialty prescription drugs.  As in prior years, the survey data shows that the United States continues to have the highest fees of those countries surveyed for drugs and various medical procedures.

IFHP’s Chief Executive Tom Sackville explained why he believed to the data to be important.

“First, it gives the lie to the idea that some countries spend more on health as a result of higher utilization. It is all about unit price,” he said. “Second, we have looked here at a number of procedures and products which are identical across the markets surveyed. The price variations bear no relation to health outcomes: they merely demonstrate the relative ability of providers to profiteer at the expense of patients, and in some cases reflect a damaging degree of market failure.”

Prices examined in the study included those from Argentina, Australia, Canada, England, Netherlands, New Zealand, Spain, Switzerland and the United States. The data for the report was gathered from participating IFHP member organizations in each country.   Prices in the U.S. were based on prices negotiated between private health plans and health care providers.

http://www.ifhp.com/1404121

2013 Comparative Price Report:http://static.squarespace.com/static/518a3cfee4b0a77d03a62c98/t/534fc9eb…

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These 15 charts show our health care prices are totally insane

By Sarah Kliff
Vox, April 17, 2014

(The International Federation of Health Plans) published Thursday its annual look at international variation in health care prices. For all but one item they studied, from Nexium to MRI scans to bypass surgery, the United States is always the most expensive.

Americans spend more for health care largely because of the prices.

Most other countries have some central body that negotiates prices with hospitals and drug manufacturers. Tom Sackville (chief executive of the International Federation of Health Plans) who used to work for Britain’s health care system, recalls that it would have a unit of 14 people whose whole job was getting drug manufacturers to give the country a better deal on prescription medications.

That unit of 14 is essentially buying in bulk for a country of 63 million people – and can successfully ask for steep discounts in return.

The United States doesn’t have that type of agency. Every insurance plan negotiates individually with hospitals, doctors and pharmaceutical company to set their own prices. Insurers in the United States don’t, as these charts show, get a bulk discount. Instead, our fragmented system means that Americans pay more for every type of health care that IFHP measured.

“You could say that American health care providers and pharmaceuticals are essentially taking advantage of the American public because they have such a fragmented system,” said Sackville. “The system is so divided, it’s easy to conquer.”

http://www.vox.com/cards/health-prices/america-is-getting-gouged-on-heal…

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Cost of Treatment May Influence Doctors

By Andrew Pollack
The New York Times, April 17, 2014

Saying they can no longer ignore the rising prices of health care, some of the most influential medical groups in the nation are recommending that doctors weigh the costs, not just the effectiveness of treatments, as they make decisions about patient care.

The shift, little noticed outside the medical establishment but already controversial inside it, suggests that doctors are starting to redefine their roles, from being concerned exclusively about individual patients to exerting influence on how health care dollars are spent.

In practical terms, new guidelines being developed by the medical groups could result in doctors choosing one drug over another for cost reasons or even deciding that a particular treatment — at the end of life, for example — is too expensive. In the extreme, some critics have said that making treatment decisions based on cost is a form of rationing.

Traditionally, guidelines have heavily influenced the practice of medicine, and the latest ones are expected to make doctors more conscious of the economic consequences of their decisions — even though there is no obligation to follow them. Medical society guidelines are also used by insurance companies to help determine reimbursement policies.

Generally, Medicare is not supposed to consider cost effectiveness in coverage decisions, and other government attempts to do so are susceptible to criticism as rationing. Insurers do perform cost analyses, but they also risk ire from patients and doctors.

Dr. Steven D. Pearson, a visiting scientist in the ethics department at the National Institutes of Health, said the move by some societies to incorporate economic analysis “heralds an important shift in the way doctors in America are talking about cost and value.”

He said that having societies do such evaluations was better than having a doctor make such trade-offs while treating an individual patient, which is sometimes called bedside rationing.

Still, it is unclear if medical societies are the best ones to make cost assessments. Doctors can have financial conflicts of interest and lack economic expertise.

The cardiology societies, for instance, plan for now to rely on published literature, not commission their own cost-effectiveness studies, said Dr. Paul A. Heidenreich, a professor at Stanford and co-chairman of the committee that wrote the new policy.

They plan to rate the value of treatments based on the cost per quality-adjusted life-year, or QALY — a method used in Britain and by many health economists.

The societies say that treatments costing less than about $50,000 a QALY would be rated as high value, while those costing more than $150,000 a QALY would be low value.

“We couldn’t go on just ignoring costs,” Dr. Heidenreich said.

http://www.nytimes.com/2014/04/18/business/treatment-cost-could-influenc…

The International Federation of Health Plans represents private health insurers in 25 nations. Its members include several U.S. health insurers plus AHIP – the powerful insurance lobby in the United States. Although many would argue that it is this industry that is tasked with the responsibility of negotiating fair prices for health care services and products, in this release they contend that the very high prices in the United States “merely demonstrate the relative ability of providers to profiteer at the expense of patients, and in some cases reflect a damaging degree of market failure.”

What a remarkable statement. We are paying the insurers massive sums for their very expensive administrative services while they inflict tremendous administrative burdens on the health care delivery system, plus they take away from patients their choices in health care, especially choices of their health care professionals. They concede that they cannot control the “ability of providers to profiteer,” nor can they correct this market failure. They have become a profoundly expensive but useless appendage to the health care system – an appendage that should be severed.

Nevertheless, prices are still too high in the United States, so what can be done? Consolidation of hospitals and physicians has been anti-competitive, but prices were already high before the recent wave of consolidations began. Some providers offer services that make them “must have” participants in the insurer networks. They have a greater ability to stand firm on high prices, thus it is unlikely that antitrust enforcement could have more than a negligible impact on reducing prices.

Physicians seem to be more sensitive to cost barriers for their patients than do the hospitals and pharmaceutical firms, though both of the latter do have programs for selected indigent patients. The New York Times article describes how physician organizations are beginning to address the issue of high prices, though much of the effort seems to target the pharmaceutical firms rather than the physicians themselves. What is really remarkable though is that some physicians are now willing to look at assigning a monetary value to a quality-adjusted life-year (QALY).

Do physicians really want to assume the role of telling their patients that they will deny care that may be of some benefit but exceeds an arbitrary cost threshold assigned to a QALY? Physicians traditionally have not been the payers for their own patients’ health care. That is usually an insurer, the government, or the patient paying in cash. Shouldn’t the payer be making the spending decisions instead of the physician?

The insurers have a terrible track record – often paying too much, but also creating access barriers to care. The government has done a better job with Medicare, but with Medicaid they have often underfunded care which also creates financial barriers to care. With today’s very high health care costs, most patients are unable to pay cash if they face major medical expenses, so a third party payer is required.

Some models today would place the physician at least partially in the role of insurer. What is surprising is the relative silence on the ethical violation that such a role entails. The physician should never be placed in a position in which he profits by withholding beneficial health care. The MBAs in health care do not seem to understand the fundamental ethical compromise of such an arrangement.

The IFHP report on international health care prices does show that other nations are much more effective in controlling prices. They all have in common the fact that the government plays a major role in administering or tightly regulating prices. In general, governments seem to get it right. If we had a single payer system, we would get it right as well. In doing so we would also eliminate the profound waste caused by the private insurers, and we would ensure that financial barriers to care are removed for everyone.

What about defining the value of a QALY as ranging from $50,000 to $150,000? That should not be the role of the physician who should always be in a position to advocate for what is right for the patient. That should be the role of the public administrator who negotiates health care prices. A better term than negotiation would be price administration, implying that the government should have an “unfair” or unbalanced clout when it comes to getting prices right. Right prices means legitimate costs plus fair margins. No other country will be paying $84,000 for a twelve week course of Sovaldi to treat hepatitis C. We wouldn’t either if we had a single payer system.