Summary: Two news items this week lay bare US drug cost problems. The underlying cause is prices several-fold higher than elsewhere. Exacerbating that is convoluted gaming – moving money around to boost and retain profits. Who wins? Pharma and Pharmacy Benefit Managers (partnered with insurers). And loses? The rest of us.

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Senators Call Out PBMs, Drugmakers for High Prescription Drug Costs, MedPage Today, May 11, 2023, by Shannon Firth

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Drugmakers and pharmacy benefit managers (PBMs) traded the blame over high drug prices during a hearing of the Senate Health, Education, Labor and Pensions Committee on Wednesday.

Each side argued the other was trying to fleece patients and the government, but Sen. Bernie Sanders (I-Vt.), chairman of the committee, argued there was plenty of blame to go around.

“Let’s be clear, while Americans pay outrageously high prices for prescription drugs, the pharmaceutical companies and the PBMs make enormous profits every year,” he said.

In 2021, the 10 major drug companies made $100 billion in profits, and in 2022, the three largest PBMs made over $27 billion, Sanders noted. Moreover, the three pharmaceutical companies that produce insulin — Eli Lilly, Novo Nordisk, and Sanofi — have hiked the price of the drug dozens of times over the last two decades for “the same exact product,” he added.

Meanwhile, 1.3 million Americans have been forced to ration their insulin because of its high cost, and some, including 23-year-old Alec Raeshawn Smith, have died. …

Several lawmakers argued that PBMs benefit from higher list prices because higher prices mean higher rebates, and PBMs keep a portion of rebates. …

In their testimony, the PBM witnesses all stated that they pass about 98% of their rebate onto their customers, which include employers, health plans, and unions. …

Notably, however, because of vertical integration, the three largest PBMs, CVS Health, Express Scripts, and OptumRx … are all owned by or partnered with health plans. UnitedHealth Group owns OptumRx, Cigna owns Express Scripts, and CVS Health and Aetna merged in 2018.

Sen. Markwayne Mullin (R-Okla.) likened this setup to “the fox guarding the henhouse.” He pointed out that when PBMs say 98% of rebates go to customers, health plans are included among their customers.

“So you’re rebating yourselves. That is just — wow — [a] great business model,” he said.

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Wonking Out: Attack of the Pharma Phantoms, New York Times, May 12, 2023, by Paul Krugman

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The U.S. health care system, unlike health systems in other countries, isn’t set up to bargain with drug companies for lower prices. In fact, until the Biden administration passed the Inflation Reduction Act, even Medicare was specifically prohibited from negotiating over drug prices. As a result, the U.S. market has long been pharma’s cash cow: On average, prescription drugs cost 2.56 times — 2.56 times — as much here as they do in other countries.

Strange to say, however, pharmaceutical companies report earning hardly any profits on their U.S. sales. … a striking chart comparing 2022 revenue and profit for six major pharma companies:

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… 2022 was an exceptionally profitable year for these companies, but the pattern — large revenue in the U.S. market, with very low reported profits — has been consistent over time.

How do the pharma giants do that? Mainly by assigning patents and other forms of intellectual property to overseas subsidiaries located in low-tax jurisdictions. Their U.S. operations then pay large fees to these overseas subsidiaries for the use of this intellectual property, magically causing profits to disappear here and reappear someplace else, where they go largely untaxed.

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Comment:

By Jim Kahn, M.D., M.P.H.

These two pieces, a news report on a Senate hearing and an op-ed by a prominent economist, succinctly characterize the massive cost problems we face with prescription drugs.

First, prices are more than 2.5 times as high in the US as in comparison wealthy countries.

Second, drug companies avoid paying US taxes on those profits by setting up intellectual property havens in other countries with low tax rates. They pay themselves (their foreign entities) inflated amounts for patent use, thereby shifting profits to where they can keep them.

Third, PBMs – an invented intermediary structure — manipulate prices and rebate schemes to grab another huge slice of income and profits. The “rebates” are largely to the insurance companies with which they share corporate structure.

Single payer would replace this convoluted profit-maximizing drug marketing maze with a straightforward, proven and transparent system of drug price negotiation and payment. This shift would save enough money, along with administrative simplification, to make single payer the economic unicorn: a “free lunch” — a cost–saving expansion to universal high-quality insurance.

http://healthjusticemonitor.org…

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Summary: The large-scale corporate appropriation of primary care reflects and enables the profiteering that now dominates US health care. The doctor-patient relationship suffers. Single payer financing may falter if corporations own the vast majority of providers. What are our reform options?

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Corporate Giants Buy Up Primary Care Practices at Rapid Pace, The New York Times, May 8, 2023, by Reed Abelson

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Why are multibillion-dollar corporations, particularly giant health insurers, gobbling up primary care practices?

The appeal is simple: Despite their lowly status, primary care doctors oversee vast numbers of patients, who bring business and profits to a hospital system, a health insurer or a pharmacy outfit eyeing expansion.

And there’s an added lure: The growing privatization of Medicare means that more than half its 60 million beneficiaries have signed up for policies with private insurers under the Medicare Advantage program. The federal government is now paying those insurers $400 billion a year.

The absorption of doctor practices is part of a vast, accelerating consolidation of medical care, leaving patients in the hands of a shrinking number of giant companies or hospital groups. Nearly seven of 10 of all doctors are either employed by a hospital or a corporation. Experts warn these major acquisitions threaten the personal nature of the doctor-patient relationship, especially if the parent company has the authority to dictate limits on services from the first office visit to extended hospital stays. [The article provides examples of how corporate control of primary care leads to abusive practices to increase revenue.]

“We’re dealing with incredible levels of burnout within the profession,” said Dr. Max Cohen, who practices near Portland, Ore.

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Comment:

By Don McCanne, M.D. and Jim Kahn, M.D., M.P.H.

There is not much new here in this report of the corporate takeover of our health care system except maybe for the rapidity and boundlessness with which it is taking place.

Recently single payer financing gained in popularity as people recognized how it could transform our defective insurance system to bring truly affordable, accessible, equitable care with free choices for all. But with corporations now controlling medical delivery including linchpin primary care providers, care has become less affordable and thus less accessible for many, certainly less equitable, and our choices are limited to the dictates of the corporate entity.

The complexity that this has produced was explained by Steffie Woolhandler and David Himmelstein, the founders of Physicians for a National Health Program, in a recent Jacobin interview and HJM post. Just a few years back, all we needed was a public financing program that displaced private ownership of health insurers (single payer).

But now with Wall Street’s takeover of the health care delivery system, reform of ownership of provider resources is needed. Community rather than corporate control of care seems to be what we need, but imagine the hurdle in transferring ownership of our entire health care system from the titans of Wall Street to the inhabitants of Main Street. Difficult times lie ahead, but what can we do? One thing for sure, we cannot leave control of our health care in the hands of the billionaires.

Are there any ideas out there that would actually work, short of socialized medicine (which, of course, would)? We’re contemplating this, and welcome ideas healthjusticemonitor@gmail.com.

http://healthjusticemonitor.org…

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Summary: The May 2023 issue of Health Affairs, the leading health policy journal, has 20 articles. In our assessment, 9 of them would be unnecessary and another 7 simplified if the US had truly universal and standard health insurance. These health policy resources could be redirected to critical non-insurance issues in access, equity and disparities, and outcomes.

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Health Affairs Table of Contents May 2023

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(Parenthetical assessments by HJM)

Availability Versus Accessibility: Identifying COVID-19 Testing Deserts Across Massachusetts (Largely a coverage issue; simplified.)

The Role of Financial Incentives in Biosimilar Uptake in Medicare: Evidence from the 340B Program (Drug pricing issue; simplified.)

Benchmarking Changes and Selective Participation in The Medicare Shared Savings Program (ACO issue; likely moot.)

Trend Toward Older Maternal Age Contributed to Growing Racial Inequity in Very-Low-Birthweight Infants in the US (Partially an insurance issue; simplified)

Federal Funding for Discovery and Development of Costly HIV Drugs Was Far More Than Previously Estimated (Informs drug pricing; still needed.)

Medicaid Payment For Postpartum Long-Acting Reversible Contraception Prompts More Equitable Use (Coverage issue; moot.)

Insurer Market Power and Hospital Prices in the US (Insurer patterns; moot.)

Hospital-Physician Integration Is Associated with Greater Use of Cardiac Catheterization and Angioplasty (Provider ownership & practice issues; likely still relevant.)

The Costs of Disparities in Preventable Heart Failure Hospitalizations in The US South, 2015–17 (Partially insurance issue; simplified.)

Enrollment and Characteristics of Dual-Eligible Medicare and Medicaid Beneficiaries in Integrated Care Programs (Insurance issue; moot.)

The Neighborhood Atlas Area Deprivation Index for Measuring Socioeconomic Status: An Overemphasis on Home Value (Equity; still relevant)

Changes In Health Coverage During The COVID-19 Pandemic (Insurance issue; moot.)

Buprenorphine Treatment for Opioid Use Disorder: Comparison of Insurance Restrictions, 2017–21 (Insurance issue; moot.)

‘We’ll Decide for You’: A Patient Is Rushed at Hospital Discharge (Partially insurance issue; simplified.)

Inequities In the Use of High-Quality Home Health (Largely insurance issue; simplified.)

Risk Adjustment and Health Equity (Insurance issue; probably moot.)

The Neighborhood Atlas Area Deprivation Index and Recommendations for Area-Based Deprivation Measures (Equity issue; still relevant.)

The Health Plan Price Transparency Data Files Are a Mess- States Can Help Make Them Better (Insurance complexity issue; moot.)

Identifying Scalable Strategies to Maintain Coverage as Medicaid Continuous Enrollment Ends (Insurance issue; moot.)

Why International Recruitment Won’t Solve the US Nursing Staffing Crisis (Largely financial issue; simplified.)

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Comment:

By Jim Kahn, M.D., M.P.H.

Much health policy research examines the harms of and potential fixes for un- and underinsurance – problems created by our chaotically fragmented health insurance.

Our review of the table of contents of the premier US health policy journal suggests that the government and academic health policy community focuses on issues that would disappear with universal high quality health insurance, including drug price regulation – under single payer.

The considerable collective skills of health policy researchers should, could, and would be re-directed to the issues that are not fully resolved with single payer, such as disparities in access, care, and outcomes related to economic status and race.

Health policy researchers would also be called upon to study and refine the performance of single payer. For example, how should drug prices be set? How do provider reimbursement levels affect care patterns and outcomes? What is the impact of covering long-term care? How do clinical outcomes in the real world vary by choice of medical strategies? In another post, I’ll more fully describe a single payer health policy research agenda.

The contributions of health policy research must be unleashed by removing from the research portfolio the highly frustrating and largely futile research focused on trying to fix our irremediably broken insurance system. Policy band-aids, no matter how cleverly designed, won’t fix major pathology.

Liberate and empower health policy research!

http://healthjusticemonitor.org…

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Summary: PNHP founders Woolhandler and Himmelstein propose that progressive health reform needs updating to respond to the widespread takeover of providers by for-profit corporations. The original vision of insurance reform should be expanded to include ownership of provider organizations.

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We Don’t Just Need Medicare for All — We Need a National Health System, An Interview with Steffie Woolhandler and David U. Himmelstein, Jacobin, May 2, 2023

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The founders of Physicians for a National Health Program put single-payer health care on the map. Now, discussing the next phase of the movement, they say even single-payer won’t be enough to fix the problems caused by continued privatization. …

Steffie Woolhandler

There’s two countervailing things going on. One is that giant for-profit corporations have a much stronger hold on the health care system than they did when we started PNHP. So when we started, we were mostly up against the insurance industry and pharmaceutical industry. But now there’s all sorts of involvement by banks and for-profit ownership of health providers, so that makes things harder.

The other thing is that the health care system continues to be so dysfunctional. People with or without insurance face massive medical bills, the complete inability to afford lifesaving treatments like insulin and sometimes cancer treatments. The growing dissatisfaction among doctors is now often called burnout or sometimes moral injury. Whatever you call it, physicians recognize that the system’s not functioning very well. So the system’s own problems and dysfunctions continually create an interest in and constituency for fundamental health reform.

Giant for-profit corporations have a much stronger hold on the health care system than they did when we started PNHP.

David U. Himmelstein

We need to have a deep understanding of what the problems in the current system are, and the shifts in the organization of the current system need to guide both our program and our political work. So I think we need to update what the vision of single-payer health care is from when we first conceived of it.

We thought we could control the health care system by replacing insurance companies with a single public financing system. And I think that was true as long as health care was essentially carried out by small-scale practices, mostly individual hospitals, that were not parts of large chains, not controlled by giant corporations. But at this point, we have the vertical and horizontal integration of ownership of the health care system. So for instance UnitedHealthcare employs seventy thousand doctors. Just taking away the insurance business isn’t going to be an adequate reform of the health care system.

We need to reconsider our reforms to think about how we seize ownership of health care assets from the corporations that have come to dominate them, and how patients and people doing health care work can really take ownership of this system. I don’t think it’s possible any more by just taking control of insurance. I don’t see a lot of advocacy for radical reform of the health care system, and that I think is the next phase that either PNHP or some new form will need to take up.

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Comment:

By David Himmelstein, M.D. and Steffie Woolhandler, M.D., M.P.H.

Looking forward rather than backward, progressives need to update the vision of health reform that we and others articulated in the 1980s. Back then, a public financing program that displaced private ownership of health insurers would have had the leverage needed to broadly transform health care. But Wall Street’s subsequent takeover of health care delivery – hospitals and nursing homes, doctors’ practices, and even hospices – necessitates reform of who owns provider resources. Communities, not corporations should control care.

We hope that by speaking out on this issue, we can encourage the health reform movement to take on the critical ownership issues.

A few comments on the mostly accurate PNHP history presented in the article. It was founded 37, not 35 years ago. We note that Ron Sable, and subsequently Quentin Young, and then Claudia Fegan took over day-to-day oversight when PNHP moved from Cambridge to Chicago. Former Executive Directors Ida Hellander and Matt Petty made important contributions to PNHP. We are currently members, but not leaders, of the organization.

http://healthjusticemonitor.org…

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Summary: Aggressive collection tactics by a large bariatric surgery practice exemplify widespread problems with our health insurance: complex payment arrangements, confusing and misleading financial contracts, widely variable prices, medical debt, expensive litigation, and rising private equity.

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Lose Weight, Gain Huge Debt: NY Provider Has Sued More Than 300 Patients Who Had Bariatric Surgery, KFF Health News, April 20, 2023, by Fred Schulte

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Seven months after Lahavah Wallace’s weight loss operation, a New York bariatric surgery practice sued her, accusing her of “intentionally” failing to pay nearly $18,000 of her bill. …

Wallace denies the allegations, which the bariatric practice has leveled against patients in hundreds of debt-collection lawsuits filed over the past four years, court records in New York state show.

In about 60 cases, the lawsuits demanded $100,000 or more from patients. Some patients were found liable for tens of thousands of dollars in interest charges or wound up shackled with debt that could take a decade or more to shake. Others are facing the likely prospect of six-figure financial penalties, court records show. …

[Wallace] said she turned over checks from her insurer to the bariatric group and was stunned when the medical practice hauled her into court citing an “out-of-network payment agreement” she had signed before her surgery.

“I really didn’t know what I was signing,” Wallace told KFF Health News. “I didn’t pay enough attention.” …

The bariatric group has cited these out-of-network payment agreements in at least 300 lawsuits filed against patients from January 2019 through 2022 demanding nearly $19 million to cover medical bills, interest charges, and attorney’s fees, a KFF Health News review of New York state court records found. …

In most cases, the medical practice had agreed to accept an insurance company’s out-of-network rate as full payment for its services — with caveats, according to court filings.

In the agreements they signed, patients promised to pay any coinsurance, meeting any deductible, and pass on to the medical practice any reimbursement checks they received from their health plans within seven days.

Patients who fail to do so “will be held responsible for the full amount charged for your surgery, plus the cost of legal fees,” the agreement states.

That “full amount” can be thousands of dollars higher than what insurers would likely pay, KFF Health News found — while legal fees and other costs can layer on thousands more. …

Wallace, the Brooklyn legal assistant, was billed $60,500 for her lap sleeve gastrectomy, though how much her insurance actually paid remains to be hashed out in court.

Michael Arrigo, a California medical billing expert at No World Borders, called the prices “outrageous” and “unreasonable and, in fact, likely unconscionable.” …

Private Equity Arrives

… In August 2019, the private equity firm Sentinel Capital Partners bought 65% of the MSO for $156.5 million, according to Garber’s affidavit. The management company is now known as New You Bariatric Group. The private equity firm did not respond to requests for comment.

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Comment:

By Jim Kahn, M.D., M.P.H.

This exposé of one firm exposes problems that plague all of health care. The aggressive legal tactics employed by this surgery practice drew press attention because they’re so egregious and extensive. But the fundamental issues permeate our insurance system.

1) Complex payment arrangements: Scores of public insurance programs (Traditional Medicare with and without direct contracting, Medi-gap policies, Medicare Advantage and Medicaid plans in profusion) and thousands of private insurance plans from work and ACA exchanges. Out-of-network payments regulated by ambiguous laws. All of this contributes hugely to more than $600 billion per year in excess administrative costs.

2) Confusing and misleading financial contracts with patients: The patients of this bariatric surgery practice were told that it would accept out-of-network payments offered by insurers … except if … here’s the fine print … they failed to take care of all tasks within 7 days, in which case their obligation would shift to “the full amount charged for your surgery, plus the cost of legal fees”. And, it seems, the practice charged very high prices.

3) Widely variable prices: Which brings us to prices. It turns out that prices listed by different practices for these standard surgeries vary widely in nearby areas. This is generally true of medical prices: the amount “charged” (aka “billed”, aka “chargemaster”) is entirely discretionary, and varies hugely across providers. Insurers typically negotiate much lower “allowed” charges. Discerning a truly fair local price is impossible. This surgical practice aims high, which means the sued patients are on the hook for amounts far in excess of actual costs.

4) Medical debt: Which leads to medical debt. As detailed in the article, this is the result for many sued patients. And, as covered in HJM, estimates of the current prevalence of medical debt are in the range of 40-50%, with a median debt of $2,500 or more.

5) Expensive litigation: Collections lawyers are happy to line up when liabilities of tens of thousands of dollars are in the offing from poorly-represented patients who didn’t read the fine print in their contracts, and the lawyers will keep 1/3 of the yield. That adds to administrative costs. And the litigation clogs the courts and traumatizes patients.

6) Rising private equity: As the last excerpted paragraph notes, the surgery practice payment lawsuits accelerated once private equity entered the scene. Private equity is rapidly expanding its role in provider ownership, as reported in HJM. Pursuit of income and profit as their guiding light.

Single payer would solve problems 1, 2, 3, 4, and 5. And greatly mitigate 6.

http://healthjusticemonitor.org…

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Summary: Oracle Health, acquired by Cerner, is pursuing a global cloud-based health records repository. Except that they can’t even succeed in five Veteran’s Administration hospitals. And their grand vision fails to address core healthcare financing challenges. When will we turn our attention from profit-seeking business models to health coverage basics?

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Oracle’s plan to build national health records database ‘going great,’ Feinberg says, Healthcare Dive, April 21, 2023, by Rebecca Pifer

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(David Feinberg was CEO of Cerner and then became chairman of Oracle Health when it acquired Cerner.)

Healthcare Dive: When the deal closed, Oracle said it planned to focus the unit on medical software usability and voice-enabled user interfaces, and would expand Cerner’s business to more countries. Can you give me an update on these priorities?

Feinberg: I remember those three things being listed. It’s more now. Our vision is to create a cloud-enabled health platform that brings all kinds of information together to make individuals and communities healthier around the world. That includes the electronic health record, and Oracle’s human capital management, enterprise resource planning, supply chain management, claims processing, clinical trials – so we have a platform that normalizes data and then tees it up for whoever needs it, a mom taking care of kids at home, or a government looking at public health issues.

Healthcare Dive: Larry Ellison announced Oracle has plans to build a health records database to link the thousands of separate hospital databases. How is this going?

Feinberg: It’s going great. We have a new product we just launched called Seamless Exchange. A clinician gets a new patient, and this patient has records from multiple places. With one click, we take all of that information and we make a longitudinal story of that patient.

Healthcare Dive: What are the next steps?

Feinberg: I want all information that’s applicable to my health. That includes social determinants, that includes claims processing, so many other pieces of information.

Healthcare Dive: How will Oracle pull that additional data?

Feinberg: Oracle Financial Services processes 80% or 90% of the world’s credit card transactions… So we have the clinical data. Oracle Financial Services also does claims data. We think we can be the trusted intermediary between clinical care and the payment of clinical care that dramatically decreases the cost.

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VA Halts Future Launches of its Oracle Cerner Health Record System, Military.com, April 21, 2023, by Patricia Kime

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The Department of Veterans Affairs has abandoned plans to introduce its new electronic health records system at more facilities, announcing Friday that it has halted all future deployments as if moves to fix the system at the five places where it is currently used.

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Comment:

By Don McCanne, M.D.

So it looks like Oracle wants to take over the entire health care information technology system. In whose interest is this?

In these days when the medical-industrial complex dominates, it seems that Oracle’s designs are on enhancing shareholder value, probably not just for individual shareholders and for the corporate executives, but especially for the dominant shareholders representing the shift of wealth from the masses to the billionaire element in our society.

Is this in the interest of the health care professionals and the health care industry at large? It does provide a framework for an overlay of their health information technology, but for the purpose of enhancing income produced by the IT system. Any income for the actual health care delivery system would be to keep them satisfied so they would continue to use Oracle products.

But shouldn’t the health care delivery system be designed to, above all, meet the needs of patients? What does this IT system do for those individuals who could qualify for Medicaid but are left out because of political decisions in their states? What about for those who are left un- or under-insured because of employer-labor disputes? What about those who are medically underserved due to well-documented problems such as racial inequities? Why would we ignore all our health policy lessons about how to provide optimal care for everyone?

Creating more wealth-generators in health care without fixing the profound deficiencies in our health care system is obviously continuing down the wrong path, blatantly disregarding real needs. At least they understand this at the VA. They’ve halted the launch of the Oracle Cerner Health Record System because it is not working for the patients, and the patients are what health care is all about. Oracle can’t manage data for five health facilities, but they’re eager to take on health data around the world.

Shouldn’t we get serious about health system improvement? Clear goals on how to optimize access to care for everyone (not maximize profits), using proven methods (not shoddy IT).

http://healthjusticemonitor.org…

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Summary: In Part 1, we discussed how primary care is being acquired and distorted by huge corporations pursuing massive profits. Today, we present a competing vision: a broad social movement to reclaim primary care as a “common good” focused on public benefit.

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Forging a Social Movement to Dismantle Entrenched Power and Liberate Primary Care as a Common Good, Annals Of Family Medicine, March/April 2023, by Kevin Grumbach

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Abstract

The state of family medicine and primary care in the United States is precarious, afflicted by chronic underinvestment. Family physicians and their allies should not expect different policy outcomes without adopting a different theory of change and tactical approach to reform. I argue: (1) high-quality primary care is a common good, as asserted by the National Academies of Sciences, Engineering, and Medicine; (2) a market-based health system captured by extractive capitalism is inimical to primary care as a common good; (3) professionalism has both aided and constrained family physicians as agents of change for primary care as a common good; and, (4) to actualize primary care as a common good, family physicians must embrace “counterculture professionalism” to join with patients, primary care workers, and other allies in a social movement demanding fundamental restructuring of the health system and democratization of health that takes power back from interests profiting from the status quo and reorients the system to one grounded in healing relationships in primary care. This restructuring should take the form of a publicly financed system of universal coverage for direct primary care, with a minimum of 10% of total US health spending allocated to Primary Care for All.

Over past decades, several waves of health reform and advocacy efforts offered hope of revitalizing the specialty of family medicine and the primary care sector: the rise of managed care in the 1990s; the Joint Principles of the Patient- Centered Medical Home in 2007; enactment of the Patient Protection and Affordable Care Act in 2010; the launching of Family Medicine for America’s Health in 2013. Yet the reality on the ground has not fundamentally improved for family physicians and others working in primary care, or for patients struggling to obtain high-quality primary care. Between 2005-2015, the number of primary care physicians per capita in the United States declined, primary care visits per capita decreased, and waiting times for new primary care appointments lengthened. The earnings gap between primary care physicians and physicians in other specialties widened and burnout remains high. Most tellingly, only about 5% of national health expenditures in the United States are spent on primary care—one-half or less than the proportion spent in Canada and Europe. …

A Social Movement for Primary Care as a Common Good

To actualize primary care as a common good, family physicians must embrace what I call “counterculture professionalism” to join with patients, community members, primary care workers, and other allies to build a broad-based social movement demanding a fundamental restructuring of the health system and democratization of health that takes power back from interests profiting from the status quo and reorients the system to one grounded in healing relationships in primary care. A social movement must have clarity about what it wants to achieve, and how to achieve it. …

By social movement, I mean a coming together of people and organizations united by a sense of common purpose counter to the dominant power. The consequential issues of our times—climate change, systemic racism, inequality of wealth, gun violence, reproductive rights, among others—are all contests for the common good. Progress requires an activated citizenry working in solidarity to challenge profits, power, and privilege that harm collective well-being. High quality primary care for all is not simply a parochial interest for family medicine. In the US context, it is a radical proposition that calls for family physicians to find common cause with others who share this goal.

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Comment:

By Jim Kahn, M.D., M.P.H.

Kevin Grumbach (a colleague at UCSF) is a long-time leader in the single payer movement and in family medicine. He is thoroughly frustrated by the failure of typical policy tools – laws and high-profile reports – to mitigate the declining role of primary care in US health care. Our population suffers as a result.

Addressing family medicine doctors, Kevin proposes a broad-based social movement to reclaim primary care. His call to action is stirring. Kevin is realistic about the challenges facing social change, given powerful entrenched opponents. Yet he sees a movement as the only chance to revive primary care, given the futility of traditional policy levers.

Should the single payer movement endorse “primary care for all”, leaving specialist and hospital care for the time being in the hands of existing insurers and providers? Kevin proposes that a “successful PC4All program might prompt the nation to consider not only primary care, but all health care, to be a common good, and to join other countries with advanced capitalist economies in implementing a comprehensive, tax-financed universal health care program.”

Is “primary care for all” a stepping-stone for “health care for all”?

Maybe the more circumscribed revolution has a greater chance of success, demonstrating the value of a public approach to health care financing, and building the large and strong coalition needed for comprehensive health system transformation.

Lots to contemplate here.

http://healthjusticemonitor.org…

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Summary: Check out this terrific online conference.

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The theme is “Everybody In: Racial Equity & Medicare for All.”

Lots of great speakers—knowledgeable activists.

Register here: https://medicareforall23.sched.com

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Summary: In the first of two posts, we discuss a blog on how primary care is being acquired and distorted by huge corporations seeking massive profits by exploiting CMS value-based care, specifically capitation. The excerpt, a bit more than usual, is worth a read. Next time we’ll examine a proposal for making primary care a publicly-financed common good.

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Explaining Corporate America’s Aggressive Investment In Primary Care, Health Affairs Forefront, April 5, 2023, by Paul A. Branstad & Claude R. Maechling

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Not that long ago, primary care practices sold for hundreds of dollars per patient, depending on how “fat” their files were and what proportion were economically undesirable Medicare patients. …

Now, suddenly, the likes of Amazon, CVS Health, Walgreens, Walmart, UnitedHeath, and Humana are vying to acquire and build primary care practices targeted at serving the US’s seniors. …  and the competition has driven prices north of $50,000 per patient. When the US finally grasps what is going on, how this competition was triggered in the first place, and what the long-term consequences will be, none of us will like it. …

Too late will we realize we have lost our last best chance to reinvent a health care system centered around the large-scale provision of high-quality primary care—even though this is what value-based contracts started out trying to do. The problem lies not with the Centers for Medicare and Medicaid Services’ (CMS’s) intentions, but with how the game they have structured plays out. …

The root cause of the $50 billion investment frenzy is the financial opportunity created by CMS’s commitment to convert all Medicare beneficiaries to accountable care relationships with value-based payment models. … [this] is just table stakes to vie for the $1 trillion prize that McKinsey and Company estimates will be claimed by the winners among the consumer oligopolists competing for the prize. …

CMS seems to lack the foresight to anticipate how market forces will adapt and respond to its policies, so it is not able to foresee unintended consequences of its reimbursement and insurance practices. … CMS’s tortuous primary care reimbursement practices have been more than 30 years in the making and have led directly to the erosion of the central role that primary care physicians could and should play. …

Our conclusion is: CMS’s commitment to value-based contracting is simply the next stage of its long-standing, philosophical aversion to fee-for-service reimbursement. This aversion is reflected in the increasing justification and reporting requirements imposed on primary care physicians, requirements that represent an affront to their integrity and challenge their medical judgment. The resulting suppression of practice revenue and increased administrative burden have pushed many previously independent primary care physicians past their breaking point and into the arms of hospital-based health systems.

It is not mere coincidence that, over the past decade, the percentage of primary care physicians employed by a hospital-based health system or corporate entity has increased from 36 percent to 74 percent, while MA coverage of Medicare beneficiaries increased from 27 percent to nearly 50 percent.

The issue is not about who owns primary care practices but about how the proliferation of value-based contracts in Medicare is leading to a profound change in the historic physician-patient relationship. The health systems and corporations that own primary care practices often find it most efficient to organize care delivery around CMS’s process-of-care measures to maximize their reimbursement opportunity. So physicians who, heretofore, practiced patient-centered medicine that earned trust by focusing on personalized diagnostic and treatment services, are now obliged to align with these same quality protocols. They are being told how to drive from the passenger’s seat, while the patient is moved to the back.

The economic heart of value-based contracts is negotiation over capitation, in which aspiring MA plans bid to manage all care for a group of patients, according to prescribed CMS protocols, for a fixed price per patient. …

The [price] benchmark is subject to … adjustments. First, the benchmark can be increased by 5 percent, a “quality” bonus, if the MA plan earns a four on CMS’s star rating performance measurement system. The system is based on 46 measures of access, process, patient experience, and clinical quality and is indexed such that, last year, 90 percent of MA enrollees were in plans rated four stars or higher.

Second, the benchmark is adjusted in subsequent years for the risk score of the enrolled population. … [I]ntensive coding efforts translate into higher risk scores when the plan comes up for annual renewal.

[Discussion of risk selection, which lowers costs in Medicare Advantage and assures that individuals remaining in traditional Medicare – which determines payment benchmarks – will be increasingly expensive over time.]

What will be the consequences for Americans?

[C]onsolidation will raise the cost of care without any improvement in care capacity or quality….

Researchers estimate that Medicare Advantage will cost CMS $75 billion more in each of the coming years … less than 2 percent of national health expenditures … But it becomes far more significant when we think of it in terms of primary care. The US spends about $100 billion on primary care physician consultations … the money wasted on VBC overpayments could be put to very productive use remedying primary care underinvestment.

Spent correctly, this $75 billion could make a huge contribution to solving the biggest health care problem we have in this country—a lack of primary care to address the high burden of chronic disease. Reinvesting the funds could create comprehensive, relationship-based, personalized care overseen and coordinated by trusted, in-charge primary care physicians who have the time to make full use of their clinical reasoning …

Tragically, conversion to VBC plans will also undermine efforts to address the social determinants of health for disadvantaged communities. When we sacrifice higher-quality, relationship-based primary care medicine, we also sacrifice the opportunity for a physician to understand each patient’s biography, or lived experience, which arguably contributes as much to their ill-health as their biology or genetics.

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Comment:

By Jim Kahn, M.D., M.P.H.

This article ably reviews how CMS’ extreme focus on value-based care undermines rather than strengthens primary care. My only addition is to highlight that ACO REACH, in traditional Medicare, is headed down the same path, as we’ve previously discussed in HJM.

Key points:

• CMS capitation rules, most visibly in Medicare Advantage, offer corporations – especially those owning primary care practices – massive profit opportunities.
• As a result the value and price of primary care practices has shot up more than 100-fold.
• Profit tactics include risk selection (finding and keeping less expensive enrollees), exaggerated diagnostic coding, and maintaining process-of-care quality scores. Corporate maneuvers to manipulate these mechanisms outflank CMS technical and political abilities to oversee them.
• A long-standing aversion to fee-for-service payment leads to onerous requirements imposed on primary care doctors, driving them to sell to and work for corporations.
• Corporate tactics to maximize profits often conflict with and displace comprehensive, high quality primary care.
• Physicians become cogs in this machine, their pursuit of quality primary care shunted aside. Patients must follow along. The physician-patient relationship is undermined.
• $75 billion dollars per year in overpayments, largely directed to profits, could save primary care.
• The opportunity to address patient-specific social determinants of health – critical to pursuing equity – is squeezed out.

Next time – a proposal for doctors and allies to join in a social movement to make primary care a publicly-financed common good.

http://healthjusticemonitor.org…

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