Checking Up on Health

Health Policy Briefs: April 17, 2012

Compiled by Benita Dodd

Show me the money: Georgia ranks 11th out of the top 20 states that have received funds distributed across the nation under President Barack Obama’s Patient Protection and Affordable Care Act, according to a new tool released by the Kaiser Family Foundation. The tool, which tracks all funds received by states, local governments, employers and others to implement parts of the law, reveals that Georgia received $306.6 million, or 2.5 percent of the funds – the most in the Southeast. As of April 2, the PPACA has awarded more than $12.06 billion in health care grants and funds. California ranks No.1, with $1.142 billion (9.5 percent). Source: Becker’s Hospital Review

Transparency saves … money: Some hospitals pay thousands of dollars more than others for implantable medical devices — such as cardiac defibrillators and hip and knee joint replacements — and those excess costs may be passed onto Medicare, according to a report from the Government Accountability Office (pdf).

The GAO study, “Lack of Price Transparency May Hamper Hospitals’ Ability to Be Prudent Purchasers of Implantable Medical Devices” looked at data from 31 hospitals from 2004 through 2009. The report indicated there was significant variation in reported prices paid for several devices, most of which are used in cardiac or orthopedic procedures. For example, the difference between the highest and lowest price hospitals reported paying for a specific automated implantable cardioverter defibrillator (AICD) was $8,723, according to the study. The average price of an AICD ranges from $16,445 to $19,007. Source: Becker’s Hospital Review

Consolidation killing innovation: While consolidation was going on before President Obama took office, his new health care law has fast-tracked that trend, according to a Institute for Policy Innovation (IPI) “Policy Byte” published today. “Hospitals are buying up physicians’ practices in droves, and the big health insurers are getting into the game. The Wall Street Journal reports that there were 86 hospital mergers in 2011 valued at about $8 billion. The consolidation has become so intense that the Obama administration is worried that it will squelch competition.”

IPI Resident Scholar Dr. Merrill Matthews warns: “By injecting politics and regulation into the financial and health care sectors, the president is killing the innovation and competition that occur in markets that are easy to enter. Big companies that cater to the government rather than the consumer will soon be the new normal.”

Higher costs, higher survival? One of the most discussed rationales for health care reform is that the United States spends more on health care than most other developed nations, but its health outcomes are dubbed subpar, the National Center for Policy Analysis notes. The crucial question seems to be whether the additional spending actually yields better health outcomes, and if so, whether these superior outcomes justify the
financial outlay. NCPA reports on a study released this month by Health Affairs, where researchers sought to compare cancer treatment outcomes and costs in Europe and the United States. Assigning financial benefits of superior treatment to a standard dollar amount per year of additional life after treatment, the study found that America’s
spending is in fact worth it

A billion here, a billion there: The federal government – that’s you, the taxpayer –
agreed to settle a dispute with roughly 2,200 hospitals over a decade of low reimbursements from the Medicare inpatient prospective payment system, and the total cost of the settlement is expected to cost $3 billion. Litigation over the hospital underpayments has been pending for several years with the Department of Health and Human Services and Centers of Medicare and Medicaid Services. The underpayments resulted from erroneous calculations since 1998. Hospital representatives welcomed
the agreement, but they say it does little to resolve larger complaints that Medicare pays too little for patient care. And that, of course, is likely to worsen under the new federal health law!

‘Club Med’ food for thought: Medical tourism is on the rise as Americans attempt to circumvent skyrocketing health care costs, the New Yorker reports. The Bumrungrad hospital in Thailand treats 400,000 foreign patients annually. Malaysia had almost 600,000 medical tourists last year and South Korea had more than 100,000, nearly a third of them American. While challenges such as travel logistics, insurance company and consumer concerns still limit medical tourism, many of these factors will likely be overcome in time as price differentials grow and Americans increasingly look for alternatives to pricy domestic care. The report adds: “It has been generally assumed
that medicine is inherently a local business. But that would change if we allowed Medicare and Medicaid funds to be spent in foreign hospitals, or if insurers cut consumers in on the savings from treatment abroad. And if domestic hospitals actually had to compete with places like Bumrungrad or CIMA, the way American car companies have to compete with Toyota and Honda, they might be forced to become more efficient.”

Quote of Note: “The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another.” – Milton Friedman

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