Blog

Kaiser Health News reported on a growing trend in which emergency rooms are increasingly staffed with midlevel practitioners (nurse practitioners and physician assistants) instead of physicians. Apparently, emergency medicine physicians are paid about two-and-a-half times what midlevel practitioners are paid. Private equity investors (generally not from the healthcare industry) have been buying up staffing agencies and changing the mix of providers to save money.

Kaiser Health News reported on a growing trend in which emergency rooms are increasingly staffed with midlevel practitioners (nurse practitioners and physician assistants) instead of physicians. Apparently, emergency medicine physicians are paid about two-and-a-half times what midlevel practitioners are paid. Private equity investors (generally not from the healthcare industry) have been buying up staffing agencies and changing the mix of providers to save money.

The article points out that "definitive evidence remains elusive that replacing ER doctors with nonphysicians has a negative impact on patients", although specific studies might find otherwise. One study found that "treatment by a nurse practitioner resulted on average in a 7% increase in cost of care and an 11% increase in length of stay, extending patients' time in the ER by minutes for minor visits and hours for longer ones." However, given that the hospital that owns the emergency room is not bearing the increased cost (and perhaps even benefits financially from the added revenue), it is not surprising that staffing agencies are keen to save on labor costs by replacing physicians. It is also not surprising that a leader of an organization representing physician assistants believes that this trend is positive.

A major question remains as to whether patient care is deteriorating because of this trend. If the industry had widely established and public metrics to evaluate quality of patient care, administrators could make much more informed decisions. For example, an administrator might feel a two percent drop in quality is worth a 70% drop in cost. Without knowing how quality of care is being affected, it is difficult to understand the tradeoffs. For now, it seems that policy should be adjusted so that patients who return to the emergency room within the same day for the same issue should not be charged for separate visits when the earlier visits failed to detect an issue that ultimately became recognized (as was the case in the anecdote that opened the article).

NPR reported on Medicare's proposed plans to slow the growth of drug prices. Apparently, Medicare plans to require pharmaceutical manufacturers to repay amounts where prices have increased faster than inflation. Medicare believes it has this authority from the Inflation Reduction Act, along with the power to negotiate pricing for up to ten medications per year for several years.

NPR reported on Medicare's proposed plans to slow the growth of drug prices. Apparently, Medicare plans to require pharmaceutical manufacturers to repay amounts where prices have increased faster than inflation. Medicare believes it has this authority from the Inflation Reduction Act, along with the power to negotiate pricing for up to ten medications per year for several years.

The article posits that the "inflation refund" regulation will be the subject of one or more lawsuits, similar to how the Affordable Care Act was. Given that Medicare expects to save over $170 billion over the next decade, it is not at all surprising that pharmaceutical manufacturers would explore all legal measures to overturn or at least delay this regulation. Limiting the growth of prices of private good by public regulation does seem unusual in the United States.

Taxpayers want to know that their dollars are well spent, and people talking about the budget for the federal government frequently talk about Medicare expenses. In that context, Kaiser Health News commented on a surprising decision that the Centers for Medicare & Medicaid Services (CMS) made to not require insurance companies to refund overpayments. CMS had paid $54 million annually to audit Medicare Advantage plans, and found overpayments to insurance companies in nearly 80% of the audits for 2011 to 2013. Despite CMS' own previous estimate overpayments of $650 million during those years (which some analysts thought were low), CMS now appears to not be concerned about those overpayments, from 2011 to 2017.

Taxpayers want to know that their dollars are well spent, and people talking about the budget for the federal government frequently talk about Medicare expenses. In that context, Kaiser Health News commented on a surprising decision that the Centers for Medicare & Medicaid Services (CMS) made to not require insurance companies to refund overpayments. CMS had paid $54 million annually to audit Medicare Advantage plans, and found overpayments to insurance companies in nearly 80% of the audits for 2011 to 2013. Despite CMS' own previous estimate overpayments of $650 million during those years (which some analysts thought were low), CMS now appears to not be concerned about those overpayments, from 2011 to 2017.

It appears that the audits only sampled a small patient population, and that CMS is requiring refunds of overpayments found in that sample. However, contrary to what seems like reasonable and customary practice, CMS is apparently waiving refunds for extrapolated overpayments (i.e. the amounts that would be expected if the patient samples were representative of the insurance plans' entire populations). While $650 million is a small percentage of Medicare's overall annual budget, the absolute number seems large enough to fund other meaningful initiatives that could help improve health care in the future.

As another example of California's current governor short-circuiting an open and transparent bidding process, Kaiser Health News reported on California's decision to award five health insurers contracts to provide Medi-Cal coverage. During the pandemic, the governor was criticized for awarding contracts to certain companies without an open process. Similarly, California was criticized last year for announcing a deal with Kaiser Permanente, bypassing a bidding process.

As another example of California's current governor short-circuiting an open and transparent bidding process, Kaiser Health News reported on California's decision to award five health insurers contracts to provide Medi-Cal coverage. During the pandemic, the governor was criticized for awarding contracts to certain companies without an open process. Similarly, California was criticized last year for announcing a deal with Kaiser Permanente, bypassing a bidding process.

This particular agreement raises questions of whether California is too dependent on a few large insurers to provide Medi-Cal coverage. That California canceled the bidding process after over two years and announced agreements with previous vendors raises the question of whether smaller providers might have been unfairly denied an opportunity to compete. Regardless, the cancellation is not a good look for state procurement.

Some states have laws that prohibit medical practices from being owned by corporations that are not themselves owned by licensed doctors. Kaiser Health News reported on a controversy where some private equity groups (not owned by licensed doctors) effectively own medical practices or staffing groups through the use of physicians who technically own such groups, but who have no direct control. Other physicians (or groups of physicians) have sued to stop that practice.

Some states have laws that prohibit medical practices from being owned by corporations that are not themselves owned by licensed doctors. Kaiser Health News reported on a controversy where some private equity groups (not owned by licensed doctors) effectively own medical practices or staffing groups through the use of physicians who technically own such groups, but who have no direct control. Other physicians (or groups of physicians) have sued to stop that practice.

A shallow analysis of the situation might suggest that preventing non-medical corporate owners of physician practices would be a good thing. After all, non-medical corporate owners of physician practices might unduly pressure medical staff to hurry patient visits or to overbill. Physicians who are replaceable employees might feel enormous pressure to comply and perhaps compromise quality of care. The theory is that physicians are professionals and if they owned the corporations that owned the practices, they would not let the financial picture distort medical care.

Thinking about this situation further, however, reveals a naivety with the shallow analysis: physicians are corruptible people too. Some physicians have overbilled and some physicians have been found to have committed malpractice. Perhaps even that there are enough physicians to participate in these ownership schemes without direct control suggests that full compliance with the spirit of the legislation could still lead to other loopholes being exploited. Interestingly, the Texas Medical Board declined to intervene against doctors who were accused of participating in these schemes.

There might not be an easy answer for what the policy here should be. Restricting ownership to licensed doctors seems like it would be an inadequate measure. Ideally, there would be some way for employee doctors to voice complaints about interference with medical care, and it would be easy for doctors to change employers. The consolidation of the medical industry can make both of those conditions more difficult to realize.