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To help combat unnecessary care (e.g. medical procedures that would not improve patient lives), insurance companies instituted the practice of prior authorization, where physicians are required to obtain authorization for certain procedures before performing them. As this practice proved effective in reducing costs, the practice became more and more widespread (across insurers and across more and more procedures). Physicians have resented this practice, as it introduces another bureaucratic step and allows insurers to affect -- and potentially disrupt -- medical treatment. Kaiser Health News reported on efforts by the Centers for Medicare & Medicaid Services (CMS) to curb this practice, including tightening requirements for insurers' responsiveness and requiring insurers to disclose more information about denials. Some states have passed or are considering relevant legislation. For example, Michigan requires insurers to report prior authorization data.

To help combat unnecessary care (e.g. medical procedures that would not improve patient lives), insurance companies instituted the practice of prior authorization, where physicians are required to obtain authorization for certain procedures before performing them. As this practice proved effective in reducing costs, the practice became more and more widespread (across insurers and across more and more procedures). Physicians have resented this practice, as it introduces another bureaucratic step and allows insurers to affect -- and potentially disrupt -- medical treatment. Kaiser Health News reported on efforts by the Centers for Medicare & Medicaid Services (CMS) to curb this practice, including tightening requirements for insurers' responsiveness and requiring insurers to disclose more information about denials. Some states have passed or are considering relevant legislation. For example, Michigan requires insurers to report prior authorization data.

Prior authorizations pose a natural tension: on one hand, it is meant to curb the underlying cause of unnecessary medical care (which might be due to fraud), and on the other hand, it imposes an administrative cost on providers for which they are not necessarily compensated. One measure that might help the situation include publicizing prior authorization data by insurer so that patients can make more informed decisions about their insurance plan. Another measure might be to have a state-level ombudsman to adjudicate prior authorization disputes. Yet another idea might be to make the insurer (or even the medical team at the insurer) responsible for negative outcomes when procedures are declined. It is also possible that there could be a more effective technique against unnecessary care than prior authorization. For example, if insurers could effectively monitor medical care and accurately identify providers that are less effective than expected, insurers could adjust their network of providers to either drop ineffective providers or to at least steer patients away from them.

Kaiser Health News reported that Eli Lilly announced that it would reduce the list price of some insulin products. In this era of corporate profits and rapidly rising drug costs, why did Eli Lilly decide to reduce prices? For reference, the price one of the company's insulin products rose from $21 per vial to $255, from 1996 to 2016. The article reports on two theories for the price reduction.

Kaiser Health News reported that Eli Lilly announced that it would reduce the list price of some insulin products. In this era of corporate profits and rapidly rising drug costs, why did Eli Lilly decide to reduce prices? For reference, the price one of the company's insulin products rose from $21 per vial to $255, from 1996 to 2016. The article reports on two theories for the price reduction.

One theory is that recent legislation eliminated what is known as the Medicaid drug rebate cap. Apparently, drug manufacturers who want their drugs to be covered by Medicaid must agree that prices above a certain amount must be rebated back to the government. That limit has two components, one of which has a limit itself. When pricing is enough that that secondary limit is triggered, manufacturers do not need to increase the rebate that they owe the government. The American Rescue Plan Act removed that secondary limit. As a result, drug manufacturers have less financial incentive to maintain a high price. This theory seems less plausible since Medicaid insurance coverage accounts for a relatively small portion of the insurance market. Even if the profits from Medicaid are reduced, it seems that manufacturers can maintain their margins when selling to other insurers.

The other theory that the article offers is that other suppliers are entering the market. For example, a nonprofit drugmaker based in Utah has plans to sell insulin inexpensively, as does CostPlus Drug Company. Additionally, California plans on getting into the business. This increased supply seems like the more likely explanation for Eli Lilly's pricing decrease, although the two reasons are not mutually exclusive.

Kaiser Health News reported on Montana State Hospital, a state-run psychiatric hospital that was decertified by the Centers for Medicare & Medicaid Services (CMS). Unfortunately, "Federal officials found in the investigations that the hospital had failed to meet Medicare's 'basic health and safety requirements.'"

Kaiser Health News reported on Montana State Hospital, a state-run psychiatric hospital that was decertified by the Centers for Medicare & Medicaid Services (CMS). Unfortunately, "Federal officials found in the investigations that the hospital had failed to meet Medicare's 'basic health and safety requirements.'"

Decertification did not mean that the hospital was shut down. Rather, Medicare would no longer pay for services rendered at that facility. The state health department, which oversees the hospital, indicated that there was "a change in leadership," but has apparently not released "information related to patient deaths, severe injuries, or substantiated abuse and neglect cases, which had led to decertification in the first place."

Generally, one would think that a hospital that fails federal standards should not survive. However, it seems likely that residents in that area have few options, making this a problem of short supply. People want competent hospitals, but what if there are none that are nearby?

The US is experiencing a shortage of primary care providers, and that shortage is expected to become more acute as a higher percentage of its population ages into retirement. That trend is likely a result of specialists being better compensated than primary care providers, and might have been accelerated during the pandemic (given the number of providers who left the profession). In a marketplace dynamic, when meeting demand is too expensive and that demand cannot be curbed, then it is logical to think about increasing supply, which Kaiser Health News reports the state of Montana doing. Specifically, the state is considering whether to allow physician assistants to practice more independently.

The US is experiencing a shortage of primary care providers, and that shortage is expected to become more acute as a higher percentage of its population ages into retirement. That trend is likely a result of specialists being better compensated than primary care providers, and might have been accelerated during the pandemic (given the number of providers who left the profession). In a marketplace dynamic, when meeting demand is too expensive and that demand cannot be curbed, then it is logical to think about increasing supply, which Kaiser Health News reports the state of Montana doing. Specifically, the state is considering whether to allow physician assistants to practice more independently.

Not surprisingly, the CEO of Montana Medical Association opposes the move. It is unclear what medical associations propose to solve the shortage. Presumably, physicians would welcome higher reimbursements, but if the number of doctors who can be trained each year is limited, paying more does not seem like an effective strategy. Given the long-term trends, it seems likely that more and more states will expand the autonomy of mid-level practitioners to cover the primary care shortage.

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).