Why Many Medicare Beneficiaries Cling to an Allegedly Worse Deal

By Uwe Reinhardt, PhD
JAMA Forum, June 1, 2016

Under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, Congress granted private Medicare Advantage health plans more money per Medicare beneficiary than it granted traditional, government-run Medicare. In other words, the per beneficiary cost paid by the US taxpayers was higher for those enrolled in the private plans than for those enrolled under the traditional, government-run Medicare program.

In addition to these extra payments from government, the private Medicare Advantage plans are able to cut costs through tactics forbidden to traditional Medicare, such as conducting cost-effectiveness analysis for coverage decisions and offering limited networks of health care providers. As a result, the Medicare Advantage plans have been able to offer Medicare beneficiaries more benefits at lower premiums than what is available to them under traditional Medicare–evidently a better deal.

So it’s not surprising, as a recent JAMA Forum post noted, that the Medicare Advantage program has grown in popularity. Currently, about 30% of approximately 55 million beneficiaries are enrolled in a Medicare Advantage plan compared with only 6% a decade ago.

But even so, about 70% of the approximate 55 million Medicare beneficiaries still prefer the “worse” deal, traditional, government-run Medicare. What can explain this revealed preference?

Freedom of Choice

One answer, as the JAMA Forum post hinted, is that traditional Medicare still offers  beneficiaries complete freedom of choice among physicians, hospitals, and other professionals or facilities providing health care. In contrast, under Medicare Advantage, beneficiaries are confined to the limited network of such health professionals and facilities chosen by their insurer. Concerns have been raised about the adequacy of networks in the plans, and a September 2015 report from the US Government Accounting Office recommended that the Centers for Medicare & Medicaid Services increase its oversight of Medicare Advantage networks.

Does the general US public actually share the idea that freedom of choice among insurers is more important than freedom of choice among physicians, hospitals, and others who offer health care or is that merely the preference of a policy-making elite that forces the public to accept more limited choice for the sake of cost containment? It is an important question in light of the endless debate over restructuring Medicare.

The Issue of Trust

Another factor that may explain the revealed preference among Medicare beneficiaries for traditional Medicare might be the issue of trust.

It is said that in the eyes of US public, government is incompetent and cannot be trusted. But is that really so?

The strong revealed preference for traditional, government-run Medicare suggests quite the opposite. So does the tenacity with which US veterans defend the existence of the Veterans Health Administration health care system, the purest form of socialized medicine in the world; the public’s staunch opposition to privatizing Social Security, their government-run pension system; or even the most conservative state governor’s swift solicitation of assistance from the Federal Emergency Management Agency whenever natural disaster strikes. Would these same governors have the same trust in, say, an emergency management system operated by a consortium of private casualty insurers?

Enrolling in traditional Medicare can be likened to being married to a spouse who, if not generally thrilling, is an always faithful and reliable companion. The social contract under traditional Medicare is not easily changed and can be changed only after much open debate.

By contrast, by their very nature, private enterprises cannot be more than ephemeral companions. They may be acquired by another company with different ideas of management and social obligations, and their contracts with customers are easily changed, at the behest of boards and managers who make those decisions in secret. The limited networks of physicians, hospitals, and other health care professionals and facilities under Medicare Advantage can easily change over time, as can be the benefit packages they offer.

It is good that older adults in the United States have a choice between traditional, government-run Medicare and the private Medicare Advantage plans. Ideally, US veterans would be offered the same choice. But policy makers should think twice before writing off traditional, government-run Medicare, which evidently has served the elderly well enough to remain their most popular choice.

https://newsatjama.jama.com/2016/06/01/jama-forum-why-many-medicare-beneficiaries-cling-to-an-allegedly-worse-deal/

***

Comment:

By Don McCanne, M.D.

Congress has elected to overpay private Medicare Advantage plans in a scheme to entice Medicare beneficiaries out of the public plan and eventually privatize the full program through premium support (vouchers). With the extra funds the private plans are able to bribe patients with lower premiums and supplementary benefits. So why have two-thirds of Medicare beneficiaries refused to fall for this scheme since it would appear to be a better deal for them (though worse for the taxpayers)? Uwe Reinhardt gives us an astute answer, having to do with trust in our government.

Reinhardt ends with the conclusion that it is good to have the choice between the government program and the private plans, especially since it allows beneficiaries to specifically select the trusted government option. In Canada that choice is not allowed for the same reasons that it should not be allowed here. The private version costs taxpayers more, especially because of extra administrative costs due to the more complex private bureaucracies. The private sector also shamelessly manipulates the system to the detriment of those in the public program, a prime example being the ability to enable private patients to jump the queue, leaving the public patients behind. The private sector also is adept at subjecting the public sector to adverse selection, passing more health care costs onto the taxpayers. And so on.

As an interim measure, what we need to do is demand that Congress provide the same level of funding for the traditional program as they do for the private plans so that premiums and benefits can be comparable (actually better since private plan spending is less efficient). They also need to inflict greater penalties on the private plans for their transgressions in unfairly manipulating the system to their benefit. That is, Congress should provide us with an improved Medicare so that it can become the benchmark for a single payer national health program.

Why Many Medicare Beneficiaries Cling to an Allegedly Worse Deal

By Uwe Reinhardt, PhD
JAMA Forum, June 1, 2016

Under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, Congress granted private Medicare Advantage health plans more money per Medicare beneficiary than it granted traditional, government-run Medicare. In other words, the per beneficiary cost paid by the US taxpayers was higher for those enrolled in the private plans than for those enrolled under the traditional, government-run Medicare program.

In addition to these extra payments from government, the private Medicare Advantage plans are able to cut costs through tactics forbidden to traditional Medicare, such as conducting cost-effectiveness analysis for coverage decisions and offering limited networks of health care providers. As a result, the Medicare Advantage plans have been able to offer Medicare beneficiaries more benefits at lower premiums than what is available to them under traditional Medicare–evidently a better deal.

So it’s not surprising, as a recent JAMA Forum post noted, that the Medicare Advantage program has grown in popularity. Currently, about 30% of approximately 55 million beneficiaries are enrolled in a Medicare Advantage plan compared with only 6% a decade ago.

But even so, about 70% of the approximate 55 million Medicare beneficiaries still prefer the “worse” deal, traditional, government-run Medicare. What can explain this revealed preference?

Freedom of Choice

One answer, as the JAMA Forum post hinted, is that traditional Medicare still offers  beneficiaries complete freedom of choice among physicians, hospitals, and other professionals or facilities providing health care. In contrast, under Medicare Advantage, beneficiaries are confined to the limited network of such health professionals and facilities chosen by their insurer. Concerns have been raised about the adequacy of networks in the plans, and a September 2015 report from the US Government Accounting Office recommended that the Centers for Medicare & Medicaid Services increase its oversight of Medicare Advantage networks.

Does the general US public actually share the idea that freedom of choice among insurers is more important than freedom of choice among physicians, hospitals, and others who offer health care or is that merely the preference of a policy-making elite that forces the public to accept more limited choice for the sake of cost containment? It is an important question in light of the endless debate over restructuring Medicare.

The Issue of Trust

Another factor that may explain the revealed preference among Medicare beneficiaries for traditional Medicare might be the issue of trust.

It is said that in the eyes of US public, government is incompetent and cannot be trusted. But is that really so?

The strong revealed preference for traditional, government-run Medicare suggests quite the opposite. So does the tenacity with which US veterans defend the existence of the Veterans Health Administration health care system, the purest form of socialized medicine in the world; the public’s staunch opposition to privatizing Social Security, their government-run pension system; or even the most conservative state governor’s swift solicitation of assistance from the Federal Emergency Management Agency whenever natural disaster strikes. Would these same governors have the same trust in, say, an emergency management system operated by a consortium of private casualty insurers?

Enrolling in traditional Medicare can be likened to being married to a spouse who, if not generally thrilling, is an always faithful and reliable companion. The social contract under traditional Medicare is not easily changed and can be changed only after much open debate.

By contrast, by their very nature, private enterprises cannot be more than ephemeral companions. They may be acquired by another company with different ideas of management and social obligations, and their contracts with customers are easily changed, at the behest of boards and managers who make those decisions in secret. The limited networks of physicians, hospitals, and other health care professionals and facilities under Medicare Advantage can easily change over time, as can be the benefit packages they offer.

It is good that older adults in the United States have a choice between traditional, government-run Medicare and the private Medicare Advantage plans. Ideally, US veterans would be offered the same choice. But policy makers should think twice before writing off traditional, government-run Medicare, which evidently has served the elderly well enough to remain their most popular choice.

https://newsatjama.jama.com/2016/06/01/jama-forum-why-many-medicare-beneficiaries-cling-to-an-allegedly-worse-deal/

Congress has elected to overpay private Medicare Advantage plans in a scheme to entice Medicare beneficiaries out of the public plan and eventually privatize the full program through premium support (vouchers). With the extra funds the private plans are able to bribe patients with lower premiums and supplementary benefits. So why have two-thirds of Medicare beneficiaries refused to fall for this scheme since it would appear to be a better deal for them (though worse for the taxpayers)? Uwe Reinhardt gives us an astute answer, having to do with trust in our government.

Reinhardt ends with the conclusion that it is good to have the choice between the government program and the private plans, especially since it allows beneficiaries to specifically select the trusted government option. In Canada that choice is not allowed for the same reasons that it should not be allowed here. The private version costs taxpayers more, especially because of extra administrative costs due to the more complex private bureaucracies. The private sector also shamelessly manipulates the system to the detriment of those in the public program, a prime example being the ability to enable private patients to jump the queue, leaving the public patients behind. The private sector also is adept at subjecting the public sector to adverse selection, passing more health care costs onto the taxpayers. And so on.

As an interim measure, what we need to do is demand that Congress provide the same level of funding for the traditional program as they do for the private plans so that premiums and benefits can be comparable (actually better since private plan spending is less efficient). They also need to inflict greater penalties on the private plans for their transgressions in unfairly manipulating the system to their benefit. That is, Congress should provide us with an improved Medicare so that it can become the benchmark for a single payer national health program.

Patient-Centered Outcomes Research Institute (PCORI)

The Patient-Centered Outcomes Research Institute (PCORI), an independent nonprofit, nongovernmental organization located in Washington, DC, was authorized by Congress in 2010.

Our mandate is to improve the quality and relevance of evidence available to help patients, caregivers, clinicians, employers, insurers, and policy makers make informed health decisions. Specifically, we fund comparative clinical effectiveness research, or CER, as well as support work that will improve the methods used to conduct such studies.

The goal of our work is to determine which of the many healthcare options available to patients and those who care for them work best in particular circumstances. We do this by taking a particular approach to CER called Patient-Centered Outcomes Research, or PCOR, research that addresses the questions and concerns most relevant to patients, and we involve patients, caregivers, clinicians, and other healthcare stakeholders, along with researchers, throughout the process.

From the 2015 Financial Report

The Patient-Centered Outcomes Research Institute was authorized in 2010 by the Patient Protection and Affordable Care Act (42 U.S.C. 1301 et seq.) (Act) to “assist patients, clinicians, purchasers, and policy- makers in making informed health decisions by advancing the quality and relevance of evidence concerning the manner in which diseases, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed through research and evidence synthesis.” It does this by supporting comparative clinical effectiveness research (CER) projects designed to answer questions most important to patients. PCORI is also charged with disseminating the results of that research, focusing on “health outcomes, clinical effectiveness, and appropriateness of the medical treatments, services, and items” studied.

PCORI is a 501(c)(1) tax-exempt, nonprofit corporation, governed by a 21-member multi-stakeholder Board of Governors, including 19 members appointed by the Comptroller General of the United States. By law, the Comptroller General must appoint three members representing patients and healthcare consumers; seven members representing physicians and providers; three members representing private payers; three members representing pharmaceutical, device and diagnostic manufacturers or developers; one member representing quality improvement or independent health services researchers; and two members representing the federal government or the states (including at least one member representing a federal health program or agency). The Act also provides that the Directors of the Agency for Healthcare Research and Quality (AHRQ) and the National Institutes of Health (NIH), or their designees, be members of the Board.

How We’re Funded

PCORI is funded through the Patient-Centered Outcomes Research Trust Fund (PCOR Trust Fund), which was established by Congress through the Patient Protection and Affordable Care Act of 2010. The PCOR Trust Fund receives income from three funding streams:  appropriations from the general fund of the Treasury, transfers from the Centers for Medicare and Medicaid trust funds, and a fee assessed on private insurance and self-insured health plans (the PCOR fee).

PCORI receives 80 percent of the monies collected by the PCOR Trust Fund to support its research funding and operations. The Department of Health and Human Services (HHS) receives the other 20 percent of trust fund monies to support dissemination and research capacity-building efforts (the majority of HHS’s share goes to the Agency for Healthcare Research and Quality).

For government fiscal years (FYs) 2010 through 2012, the PCOR Trust Fund received a total of $210 million total in appropriations from general fund revenues. For FYs 2013 through 2019, the PCOR Trust Fund will receive $150 million from the general fund annually.

http://www.pcori.org

***

Re-evaluating the Patient-Centered Outcomes Research Institute

By Zeke Emanuel, Topher Spiro, Thomas Huelskoetter
Center for American Progress, May 31, 2016

The ACA established PCORI with a clear mandate to carry out the “funding of comparative clinical effectiveness research” over 10 years. PCORI was to focus distinctly on CER and not duplicate the types of research funded by the Agency for Healthcare Research and Quality, the National Institutes of Health, or other entities. However, a Center for American Progress analysis in 2014 found that only one-third of PCORI’s funding was going toward CER.

PCORI studies should have the potential to change clinical treatment decisions or insurers’ coverage determinations. Yet to date, this potential impact on the nation’s health care system has not been fully realized. With PCORI only authorized through 2019, the institute is running out of time to make a significant impact on CER.

Cumulatively since its inception, PCORI has invested 51 percent of its almost $1.4 billion in grant funding in CER, totaling $716 million.

To evaluate whether PCORI’s funding was directed toward high-impact research areas, CAP examined how many of its awards addressed research questions that the Institute of Medicine identified as the top 25 highest-priority CER topics. In fairness, this is not the only relevant ranking of CER needs, and priorities may have evolved since the IOM list was published in 2009. However, the IOM list serves as an authoritative, independent rubric by which to judge whether PCORI is focusing on the most critical evidence gaps in medicine.

In its previous analysis, CAP found that only 12 percent of PCORI’s grants and 14 percent of its grant funding went toward research topics in the IOM’s top quartile. In the new CAP analysis, this first figure declined to 4 percent of grants. However, the percentage of funding allocated to the IOM topics increased to 18.5 percent. IOM top-quartile priority topics cumulatively represent 16 percent of PCORI’s funding to date, representing relatively little change from CAP’s previous analysis.

In response to this analysis, PCORI asserts that 72 percent of the IOM’s top 25 topics have been addressed by a PCORI-funded study, along with 62 percent of the IOM’s top 100 topics. Yet this alternate framing of the issue still leaves almost 30 percent of the top quartile and almost 40 percent of the top 100 unaddressed after several years. Furthermore, this metric explains nothing about whether these studies involved significant or merely minimal funding. Many of these research topics concern broad areas of medicine where many studies are needed; as a result, CAP feels it is important not only that high-impact research topics be addressed but that a significant percentage of PCORI’s funding be connected to such topics.

Thus far, PCORI has not made the impact on the health care system that the drafters of the Affordable Care Act envisioned. The need for CER remains urgent, and PCORI still has the potential to help reduce health care costs and improve the quality of care.

https://www.americanprogress.org/issues/healthcare/report/2016/05/31/138242/re-evaluating-the-patient-centered-outcomes-research-institute/

***

Report: Federally funded institute avoids comparing drugs, other treatments

By Jane O’Donnell
USA Today, May 31, 2016

An institute that pays researchers to compare medical treatments has spent only half of its more than $1.4 billion in available federal money on what is called comparative effectiveness research and has largely ignored prescription drugs, despite their role in driving up health care costs, according to a study released Tuesday by a Washington-based policy group.

PCORI has been criticized since it first appeared in the legislation that became the ACA. Although CER had bipartisan support, the institute got caught in the politics surrounding what Republican former vice presidential candidate Sarah Palin called “death panels” that could decide who received medical treatment.

Now despite widespread concerns about rising drug costs, CER is being attacked by patient groups supported by the pharmaceutical industry that claim the research could limit access to some life-saving drugs.

Congress limited the ability of PCORI to consider costs when comparing health care, drugs or prioritizing research studies.

Patient groups, which are nearly always backed by pharmaceutical companies, are major players in what PCORI decides to research. That can limit the focus on finding lower-cost options, which could hurt the profitability of the companies that pay for the patient groups.

http://www.usatoday.com/story/news/politics/2016/05/31/report-federally-funded-institute-avoids-comparing-drugs-other-treatments/84676320/

***

Comment:

By Don McCanne, M.D.

The Patient-Centered Outcomes Research Institute (PCORI) is an independent, nonprofit, nongovernmental organization authorized by the Affordable Care Act and funded predominantly by the federal government. They in turn fund comparative clinical effectiveness research (CER), especially through Patient-Centered Outcomes Research (PCOR). The purpose is to determine the relative effectiveness of various clinical approaches, including the comparison of drug therapies. But Congress specifically prohibited a comparison of costs.

Some readers of yesterday’s report on the ICER (Institute for Clinical and Economic Review) were concerned about the potential conflict of interest that could result from the involvement of various stakeholders. The same concern could be expressed about PCORI. Although we have no reason to doubt the integrity of the individuals involved in these organizations, it would be preferred that their organizations have an infrastructure that did not include the influence of vested interests.

An additional concern regarding PCORI is the interference by Congress in preventing crucial determinations about cost effectiveness. Transparency in pricing is essential if we are to ensure value in our health care purchasing.

Another unique feature of PCORI is that it is only a ten year program, scheduled to end in 2019. It is astonishing that members of the policy community, working with Congress, could ever think that we could complete all important comparative effectiveness research by 2019, and that future drugs and technology would not require such reviews.

Just as with ICER, PCORI is under attack by conservatives and by stakeholders, motivated by ideology and by greed. Once again, it appears that, with their influence, the patient is not always being kept foremost in our policy decisions.

We want health care that is the most effective and with the fairest prices. We don’t want health care that gives the most powerful stakeholders a greater advantage in the health care marketplace while also ensuring them a maximum return on their investments. ICER and PCORI seem to be above that, but 100 percent public funding without stakeholder involvement in governance could give us further assurance that their work product is strictly in the patients’ best interests.

Patient-Centered Outcomes Research Institute (PCORI)

The Patient-Centered Outcomes Research Institute (PCORI), an independent nonprofit, nongovernmental organization located in Washington, DC, was authorized by Congress in 2010.

Our mandate is to improve the quality and relevance of evidence available to help patients, caregivers, clinicians, employers, insurers, and policy makers make informed health decisions. Specifically, we fund comparative clinical effectiveness research, or CER, as well as support work that will improve the methods used to conduct such studies.

The goal of our work is to determine which of the many healthcare options available to patients and those who care for them work best in particular circumstances. We do this by taking a particular approach to CER called Patient-Centered Outcomes Research, or PCOR, research that addresses the questions and concerns most relevant to patients, and we involve patients, caregivers, clinicians, and other healthcare stakeholders, along with researchers, throughout the process.

From the 2015 Financial Report

The Patient-Centered Outcomes Research Institute was authorized in 2010 by the Patient Protection and Affordable Care Act (42 U.S.C. 1301 et seq.) (Act) to “assist patients, clinicians, purchasers, and policy- makers in making informed health decisions by advancing the quality and relevance of evidence concerning the manner in which diseases, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed through research and evidence synthesis.” It does this by supporting comparative clinical effectiveness research (CER) projects designed to answer questions most important to patients. PCORI is also charged with disseminating the results of that research, focusing on “health outcomes, clinical effectiveness, and appropriateness of the medical treatments, services, and items” studied.

PCORI is a 501(c)(1) tax-exempt, nonprofit corporation, governed by a 21-member multi-stakeholder Board of Governors, including 19 members appointed by the Comptroller General of the United States. By law, the Comptroller General must appoint three members representing patients and healthcare consumers; seven members representing physicians and providers; three members representing private payers; three members representing pharmaceutical, device and diagnostic manufacturers or developers; one member representing quality improvement or independent health services researchers; and two members representing the federal government or the states (including at least one member representing a federal health program or agency). The Act also provides that the Directors of the Agency for Healthcare Research and Quality (AHRQ) and the National Institutes of Health (NIH), or their designees, be members of the Board.

How We’re Funded

PCORI is funded through the Patient-Centered Outcomes Research Trust Fund (PCOR Trust Fund), which was established by Congress through the Patient Protection and Affordable Care Act of 2010. The PCOR Trust Fund receives income from three funding streams:  appropriations from the general fund of the Treasury, transfers from the Centers for Medicare and Medicaid trust funds, and a fee assessed on private insurance and self-insured health plans (the PCOR fee).

PCORI receives 80 percent of the monies collected by the PCOR Trust Fund to support its research funding and operations. The Department of Health and Human Services (HHS) receives the other 20 percent of trust fund monies to support dissemination and research capacity-building efforts (the majority of HHS’s share goes to the Agency for Healthcare Research and Quality).

For government fiscal years (FYs) 2010 through 2012, the PCOR Trust Fund received a total of $210 million total in appropriations from general fund revenues. For FYs 2013 through 2019, the PCOR Trust Fund will receive $150 million from the general fund annually.

http://www.pcori.org

***

Re-evaluating the Patient-Centered Outcomes Research Institute

By Zeke Emanuel, Topher Spiro, Thomas Huelskoetter
Center for American Progress, May 31, 2016

The ACA established PCORI with a clear mandate to carry out the “funding of comparative clinical effectiveness research” over 10 years. PCORI was to focus distinctly on CER and not duplicate the types of research funded by the Agency for Healthcare Research and Quality, the National Institutes of Health, or other entities. However, a Center for American Progress analysis in 2014 found that only one-third of PCORI’s funding was going toward CER.

PCORI studies should have the potential to change clinical treatment decisions or insurers’ coverage determinations. Yet to date, this potential impact on the nation’s health care system has not been fully realized. With PCORI only authorized through 2019, the institute is running out of time to make a significant impact on CER.

Cumulatively since its inception, PCORI has invested 51 percent of its almost $1.4 billion in grant funding in CER, totaling $716 million.

To evaluate whether PCORI’s funding was directed toward high-impact research areas, CAP examined how many of its awards addressed research questions that the Institute of Medicine identified as the top 25 highest-priority CER topics. In fairness, this is not the only relevant ranking of CER needs, and priorities may have evolved since the IOM list was published in 2009. However, the IOM list serves as an authoritative, independent rubric by which to judge whether PCORI is focusing on the most critical evidence gaps in medicine.

In its previous analysis, CAP found that only 12 percent of PCORI’s grants and 14 percent of its grant funding went toward research topics in the IOM’s top quartile. In the new CAP analysis, this first figure declined to 4 percent of grants. However, the percentage of funding allocated to the IOM topics increased to 18.5 percent. IOM top-quartile priority topics cumulatively represent 16 percent of PCORI’s funding to date, representing relatively little change from CAP’s previous analysis.

In response to this analysis, PCORI asserts that 72 percent of the IOM’s top 25 topics have been addressed by a PCORI-funded study, along with 62 percent of the IOM’s top 100 topics. Yet this alternate framing of the issue still leaves almost 30 percent of the top quartile and almost 40 percent of the top 100 unaddressed after several years. Furthermore, this metric explains nothing about whether these studies involved significant or merely minimal funding. Many of these research topics concern broad areas of medicine where many studies are needed; as a result, CAP feels it is important not only that high-impact research topics be addressed but that a significant percentage of PCORI’s funding be connected to such topics.

Thus far, PCORI has not made the impact on the health care system that the drafters of the Affordable Care Act envisioned. The need for CER remains urgent, and PCORI still has the potential to help reduce health care costs and improve the quality of care.

https://www.americanprogress.org/issues/healthcare/report/2016/05/31/138242/re-evaluating-the-patient-centered-outcomes-research-institute/

***

Report: Federally funded institute avoids comparing drugs, other treatments

By Jane O’Donnell
USA Today, May 31, 2016

An institute that pays researchers to compare medical treatments has spent only half of its more than $1.4 billion in available federal money on what is called comparative effectiveness research and has largely ignored prescription drugs, despite their role in driving up health care costs, according to a study released Tuesday by a Washington-based policy group.

PCORI has been criticized since it first appeared in the legislation that became the ACA. Although CER had bipartisan support, the institute got caught in the politics surrounding what Republican former vice presidential candidate Sarah Palin called “death panels” that could decide who received medical treatment.

Now despite widespread concerns about rising drug costs, CER is being attacked by patient groups supported by the pharmaceutical industry that claim the research could limit access to some life-saving drugs.

Congress limited the ability of PCORI to consider costs when comparing health care, drugs or prioritizing research studies.

Patient groups, which are nearly always backed by pharmaceutical companies, are major players in what PCORI decides to research. That can limit the focus on finding lower-cost options, which could hurt the profitability of the companies that pay for the patient groups.

http://www.usatoday.com/story/news/politics/2016/05/31/report-federally-funded-institute-avoids-comparing-drugs-other-treatments/84676320/

The Patient-Centered Outcomes Research Institute (PCORI) is an independent, nonprofit, nongovernmental organization authorized by the Affordable Care Act and funded predominantly by the federal government. They in turn fund comparative clinical effectiveness research (CER), especially through Patient-Centered Outcomes Research (PCOR). The purpose is to determine the relative effectiveness of various clinical approaches, including the comparison of drug therapies. But Congress specifically prohibited a comparison of costs.

Some readers of yesterday’s report on the ICER (Institute for Clinical and Economic Review) were concerned about the potential conflict of interest that could result from the involvement of various stakeholders. The same concern could be expressed about PCORI. Although we have no reason to doubt the integrity of the individuals involved in these organizations, it would be preferred that their organizations have an infrastructure that did not include the influence of vested interests.

An additional concern regarding PCORI is the interference by Congress in preventing crucial determinations about cost effectiveness. Transparency in pricing is essential if we are to ensure value in our health care purchasing.

Another unique feature of PCORI is that it is only a ten year program, scheduled to end in 2019. It is astonishing that members of the policy community, working with Congress, could ever think that we could complete all important comparative effectiveness research by 2019, and that future drugs and technology would not require such reviews.

Just as with ICER, PCORI is under attack by conservatives and by stakeholders, motivated by ideology and by greed. Once again, it appears that, with their influence, the patient is not always being kept foremost in our policy decisions.

We want health care that is the most effective and with the fairest prices. We don’t want health care that gives the most powerful stakeholders a greater advantage in the health care marketplace while also ensuring them a maximum return on their investments. ICER and PCORI seem to be above that, but 100 percent public funding without stakeholder involvement in governance could give us further assurance that their work product is strictly in the patients’ best interests.

Institute for Clinical and Economic Review (ICER)

About

ICER is a trusted non-profit organization that evaluates evidence on the value of medical tests, treatments and delivery system innovations and moves that evidence into action to improve the health care system.  To accomplish this goal ICER performs analyses on effectiveness and costs; develops reports using innovative methods that make it easier to translate evidence into decisions; and, most distinctively, fills a critical gap by creating sustainable initiatives with all health care stakeholders that can align efforts to use evidence to drive improvements in both practice and policy.  Through all its work, ICER seeks to play a pivotal role in creating a future in which collaborative efforts to move evidence into action provide a foundation for a more effective, efficient, and just health care system.

http://icer-review.org

An example: Treatment Options for Relapsed or Refractory Multiple Myeloma:

http://icer-review.org/wp-content/uploads/2016/05/MWCEPAC_MM_Agenda_052016.pdf

Evidence report: Multiple Myeloma:

http://icer-review.org/wp-content/uploads/2016/05/MWCEPAC_MM_Evidence_Report_050516-1.pdf

***

Health insurers find back door to limit choice

By Jeff Stier
USA Today, May 26, 2016

Lost in the noise of political posturing over health care, there’s one widely accepted principle: the importance of the doctor-patient relationship in medical decision-making.

Yet we’ve all heard stories where insurance companies won’t fully cover a drug that both the doctor and patient believe is the right medical choice. Why not? It’s pretty simple: the insurance companies don’t want to pay.

As cutting edge drugs come to market, insurance companies are scrambling to find ways to justify not paying for them.

Insurers will tell you (if you can get them on the phone) the drug isn’t covered because it’s not on their formulary, their own list of preferred medicines. Kids have a term for this: “Sorrynotsorry.” Don’t let the circular reasoning fool you.

Almost as bad, doctors often have to get pre-authorization before prescribing something that is on the formulary. (Because we all need more paperwork.)

The flawed justification was normalized by President Obama in 2009, when he oversimplified pharmacoeconomics, saying, “If there’s a blue pill and a red pill, and the blue pill is half the price of the red pill and works just as well, why not pay half price for the thing that’s going to make you well?”

Insurance companies are using this concept to cut costs by excluding the red pills. To do so,  they’ve cooked up a clever way to justify exclusions from formularies by founding and funding a group called the Institute for Clinical and Economic Review, or ICER.

ICER does a version of something called “comparative effectiveness” to determine whether, across the population, the drugs are worth the cost compared to other treatments. It releases the findings around the same time drugs come to market, just in time for insurance companies, who, not coincidentally, serve on ICER’s governing board, to justify excluding FDA approved drugs from the formulary based, in part, on ICER’s “independent” math.

ICER’s approach appears to be modeled on the United Kingdom’s National Institute for Health and Clinical Excellence (NICE) model, which tries to judge the cost-effectiveness of therapies, in order to help determine which health services the government should provide. ICER and NICE share more than just three letters; ICER’s president, Steven Pearson, was awarded an Atlantic Fellowship by the British Government and acted as Senior Fellow at NICE.

If insurers get to play the role the British government does, determining which pills are cost-effective, we’ll have taken a huge step not only toward rationing, but toward stifling innovation.

http://www.usatoday.com/story/opinion/2016/05/26/health-insurance-coverage-prescriptions-drugs-icer-comparative-effectiveness-column/83868108/

***

The Center for Medicine in the Public Interest Says ICER’s Proposed Value Assessment for New Cancer Medications Would Cost Thousands of Lives and Stifle Innovation

Business Wire, May 25, 2016

The Center for Medicine in the Public Interest (CMPI) – a not-for-profit organization that advocates for consumer access to medical innovation – today challenged so-called value frameworks being proposed by the Boston-based Institute for Clinical and Economic Research (ICER). A white paper authored by Robert Goldberg, Ph.D, vice president and co-founder of CMPI, concludes that under ICER’s plan, 44,000 fewer patients with the cancer multiple myeloma will be alive within the next five years than if access to new medicines continues to grow at historical levels. At the same time, the CMPI report projects a serious drain on the U.S. economy from this loss of life, costing more than $12 billion in health expenditures and lost productivity.

The CMPI report, Not at Any Price: How ICER Robs Myeloma Patients of their Hope, challenges ICER’s assessment of the value of recently approved therapies for multiple myeloma, a rare cancer of cells in the bone marrow. ICER has also announced plans to conduct similar assessments of new treatments for lung cancer, multiple sclerosis and other serious diseases in the coming months.

Based on a thorough review of ICER’s assessment and its calculations, the CMPI report questions ICER’s evaluation on a number of grounds. One major concern is that ICER applies a measure called the QALY, quality adjusted life year, to determine how much insurers and health systems should pay for additional years of life relatively free of disease. Therapeutics that exceed the QALY threshold are considered too expensive to be used unless prices are lowered.

“In practice, QALYs lead to rationing,” Dr. Goldberg stated. “Due to the reliance on QALYs, ICER ignores the value patients place on novel medicines that extend their lives when they are faced with certain death.”

http://www.businesswire.com/news/home/20160525005466/en/Center-Medicine-Public-Interest-ICER’s-Proposed-Assessment

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Comment:

By Don McCanne, M.D.

ICER (Institute for Clinical and Economic Review) is a non-profit organization that analyzes effectiveness and costs of medical tests, treatments (including drugs) and delivery system innovations thereby “creating sustainable initiatives with all health care stakeholders that can align efforts to use evidence to drive improvements in both practice and policy.” These collaborative efforts “provide a foundation for a more effective, efficient, and just health care system.”

The majority of ICER’s funding is from private, non-profit foundations. Stakeholders do provide input and feedback in developing the reports, but they are not responsible for the final contents of the reports nor should they be assumed to support any part of the reports which are “solely the work of the ICER team and its affiliated researchers.” As an example of the integrity of the organization, two of the panel members are our esteemed friends, Aaron Carroll, MD and Harold Pollack, PhD (though Pollack still has concerns about single payer feasibility).

The function that ICER is attempting to fulfill is desperately needed in the United States. We spend far more on health care than other nations yet have a system that is noted, on average, for its mediocrity. We need objective evaluation of old and new technology and the comparative effectiveness of various options for medical management. We also need to better understand whether the prices we are paying are commensurate with the health care value we are receiving. We have to end the U.S. model of paying too much for inferior technology – a model that is made possible by pretending that the markets will automatically improve value though that is nearly impossible when vested interests are preventing transparency. It’s time to turn on the lights.

NICE, the National Institute for Health and Care Excellence in England and Wales, is a leader in providing guidance on efficiency and cost effectiveness. Although an excellent source of such information, it has been under continual attack in the United States by anti-government conservatives and by stakeholders who profit from the dysfunction in our system. We frequently see claims that the British National Health Service is killing people by withholding life saving drugs or procedures. In fact, NICE recommendations are resulting in better care at lower prices.

We are now seeing this attack replicated on ICER. The USA Today article excerpted above is from the National Center for Public Policy Research, a conservative think tank founded by Amy Ridenour. The Business Wire article is from The Center for Medicine in the Public Interest, an organization co-founded by Robert Goldberg from the Manhattan Institute and Peter Pitts from the Pacific Research Institute, conservative and libertarian organizations. Their expressed opinions are driven by right-wing ideology and by greedy stakeholder interests, not by the public good.

Other similar articles are appearing now, and we will see many more telling us that ICER is rationing our health care. What they will not tell us is that ICER will help us select the most beneficial care while preventing outrageous price gouging. If that is rationing, then bring it on.

Institute for Clinical and Economic Review (ICER)

About

ICER is a trusted non-profit organization that evaluates evidence on the value of medical tests, treatments and delivery system innovations and moves that evidence into action to improve the health care system.  To accomplish this goal ICER performs analyses on effectiveness and costs; develops reports using innovative methods that make it easier to translate evidence into decisions; and, most distinctively, fills a critical gap by creating sustainable initiatives with all health care stakeholders that can align efforts to use evidence to drive improvements in both practice and policy.  Through all its work, ICER seeks to play a pivotal role in creating a future in which collaborative efforts to move evidence into action provide a foundation for a more effective, efficient, and just health care system.

http://icer-review.org

An example: Treatment Options for Relapsed or Refractory Multiple Myeloma:

http://icer-review.org/wp-content/uploads/2016/05/MWCEPAC_MM_Agenda_052016.pdf

Evidence report: Multiple Myeloma:

http://icer-review.org/wp-content/uploads/2016/05/MWCEPAC_MM_Evidence_Report_050516-1.pdf

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Health insurers find back door to limit choice

By Jeff Stier
USA Today, May 26, 2016

Lost in the noise of political posturing over health care, there’s one widely accepted principle: the importance of the doctor-patient relationship in medical decision-making.

Yet we’ve all heard stories where insurance companies won’t fully cover a drug that both the doctor and patient believe is the right medical choice. Why not? It’s pretty simple: the insurance companies don’t want to pay.

As cutting edge drugs come to market, insurance companies are scrambling to find ways to justify not paying for them.

Insurers will tell you (if you can get them on the phone) the drug isn’t covered because it’s not on their formulary, their own list of preferred medicines. Kids have a term for this: “Sorrynotsorry.” Don’t let the circular reasoning fool you.

Almost as bad, doctors often have to get pre-authorization before prescribing something that is on the formulary. (Because we all need more paperwork.)

The flawed justification was normalized by President Obama in 2009, when he oversimplified pharmacoeconomics, saying, “If there’s a blue pill and a red pill, and the blue pill is half the price of the red pill and works just as well, why not pay half price for the thing that’s going to make you well?”

Insurance companies are using this concept to cut costs by excluding the red pills. To do so,  they’ve cooked up a clever way to justify exclusions from formularies by founding and funding a group called the Institute for Clinical and Economic Review, or ICER.

ICER does a version of something called “comparative effectiveness” to determine whether, across the population, the drugs are worth the cost compared to other treatments. It releases the findings around the same time drugs come to market, just in time for insurance companies, who, not coincidentally, serve on ICER’s governing board, to justify excluding FDA approved drugs from the formulary based, in part, on ICER’s “independent” math.

ICER’s approach appears to be modeled on the United Kingdom’s National Institute for Health and Clinical Excellence (NICE) model, which tries to judge the cost-effectiveness of therapies, in order to help determine which health services the government should provide. ICER and NICE share more than just three letters; ICER’s president, Steven Pearson, was awarded an Atlantic Fellowship by the British Government and acted as Senior Fellow at NICE.

If insurers get to play the role the British government does, determining which pills are cost-effective, we’ll have taken a huge step not only toward rationing, but toward stifling innovation.

http://www.usatoday.com/story/opinion/2016/05/26/health-insurance-coverage-prescriptions-drugs-icer-comparative-effectiveness-column/83868108/

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The Center for Medicine in the Public Interest Says ICER’s Proposed Value Assessment for New Cancer Medications Would Cost Thousands of Lives and Stifle Innovation

Business Wire, May 25, 2016

The Center for Medicine in the Public Interest (CMPI) – a not-for-profit organization that advocates for consumer access to medical innovation – today challenged so-called value frameworks being proposed by the Boston-based Institute for Clinical and Economic Research (ICER). A white paper authored by Robert Goldberg, Ph.D, vice president and co-founder of CMPI, concludes that under ICER’s plan, 44,000 fewer patients with the cancer multiple myeloma will be alive within the next five years than if access to new medicines continues to grow at historical levels. At the same time, the CMPI report projects a serious drain on the U.S. economy from this loss of life, costing more than $12 billion in health expenditures and lost productivity.

The CMPI report, Not at Any Price: How ICER Robs Myeloma Patients of their Hope, challenges ICER’s assessment of the value of recently approved therapies for multiple myeloma, a rare cancer of cells in the bone marrow. ICER has also announced plans to conduct similar assessments of new treatments for lung cancer, multiple sclerosis and other serious diseases in the coming months.

Based on a thorough review of ICER’s assessment and its calculations, the CMPI report questions ICER’s evaluation on a number of grounds. One major concern is that ICER applies a measure called the QALY, quality adjusted life year, to determine how much insurers and health systems should pay for additional years of life relatively free of disease. Therapeutics that exceed the QALY threshold are considered too expensive to be used unless prices are lowered.

“In practice, QALYs lead to rationing,” Dr. Goldberg stated. “Due to the reliance on QALYs, ICER ignores the value patients place on novel medicines that extend their lives when they are faced with certain death.”

http://www.businesswire.com/news/home/20160525005466/en/Center-Medicine-Public-Interest-ICER’s-Proposed-Assessment

ICER (Institute for Clinical and Economic Review) is a non-profit organization that analyzes effectiveness and costs of medical tests, treatments (including drugs) and delivery system innovations thereby “creating sustainable initiatives with all health care stakeholders that can align efforts to use evidence to drive improvements in both practice and policy.” These collaborative efforts “provide a foundation for a more effective, efficient, and just health care system.”

The majority of ICER’s funding is from private, non-profit foundations. Stakeholders do provide input and feedback in developing the reports, but they are not responsible for the final contents of the reports nor should they be assumed to support any part of the reports which are “solely the work of the ICER team and its affiliated researchers.” As an example of the integrity of the organization, two of the panel members are our esteemed friends, Aaron Carroll, MD and Harold Pollack, PhD (though Pollack still has concerns about single payer feasibility).

The function that ICER is attempting to fulfill is desperately needed in the United States. We spend far more on health care than other nations yet have a system that is noted, on average, for its mediocrity. We need objective evaluation of old and new technology and the comparative effectiveness of various options for medical management. We also need to better understand whether the prices we are paying are commensurate with the health care value we are receiving. We have to end the U.S. model of paying too much for inferior technology – a model that is made possible by pretending that the markets will automatically improve value though that is nearly impossible when vested interests are preventing transparency. It’s time to turn on the lights.

NICE, the National Institute for Health and Care Excellence in England and Wales, is a leader in providing guidance on efficiency and cost effectiveness. Although an excellent source of such information, it has been under continual attack in the United States by anti-government conservatives and by stakeholders who profit from the dysfunction in our system. We frequently see claims that the British National Health Service is killing people by withholding life saving drugs or procedures. In fact, NICE recommendations are resulting in better care at lower prices.

We are now seeing this attack replicated on ICER. The USA Today article excerpted above is from the National Center for Public Policy Research, a conservative think tank founded by Amy Ridenour. The Business Wire article is from The Center for Medicine in the Public Interest, an organization co-founded by Robert Goldberg from the Manhattan Institute and Peter Pitts from the Pacific Research Institute, conservative and libertarian organizations. Their expressed opinions are driven by right-wing ideology and by greedy stakeholder interests, not by the public good.

Other similar articles are appearing now, and we will see many more telling us that ICER is rationing our health care. What they will not tell us is that ICER will help us select the most beneficial care while preventing outrageous price gouging. If that is rationing, then bring it on.