Managing Healthcare Costs

Ingenious study of 65 year old Medicare beneficiaries shows increase in mortality caused by an increase in pharmacy cost sharing

2021-02-09T22:28:00.002-05:00

Today’s Managing Health Care Costs Number is 32.7%

Amitabh Chandra and colleagues have just published blockbuster and ingenious research that shows the potential harm from pretty small changes in the costs of prescription drugs.

They use the “donut hole” in Medicare prescription plans, where patients are responsible for 100% of medical costs after they exceed $2500 cost in a year to create a synthetic experimental group of 65 year olds who move into Medicare early in the year (who are more likely to hit the donut hole), and compare these to another group of 65 year olds who age into Medicare late in the year (when they are less likely to have enough costs to hit the donut hole). The first group has higher effective cost sharing in December than the second group. (They use dual eligible Medicare/Medicaid beneficiaries to project what drug spending would have been in the first group had they had full coverage without cost sharing.

From the paper:

...small increases in cost cause patients to cut back on drugs with large benefits, ultimately causing their death.

The results:

Increase of about ⅓ in out of pocket costs (11% increase in coinsurance, $10.40 per drug) causes 22.6% decrease in total drug consumption ($61.20) and a 32.7% increase in mortality.
Price increases cause 18% more patients to fill no drugs at all, regardless of how many drugs they had been on previously
Many of the drugs that were not filled were lifesaving drugs (cholesterol, blood pressure, diabetes, asthma and COPD medications)
Patients at the highest tercile of risk based on their machine learning projections were almost three times MORE likely to drop cardiac drugs than those in the bottom ⅔ of risk
These differences held true for those who lived in both high and low income zip codes (although Medicare age-ins could live in wealthy zip codes while having relatively little income or cash)
Over ⅔ of those on 4 or more drugs at baseline filled NO drugs in December with this price increase
The “savings” Medicare beneficiaries realize by not filling drugs equates to $6,628 per life year lost - which is way below the $100-150K value we usually place on a life year.

The donut hole, a design initially meant to discourage overutilization in Medicare Part D, was “closed” in 2020 - so there is no longer this “cliff” where seniors have to pay 100% of the cost of medications after they hit a certain threshold.

If anything, the real impact on Medicare beneficiaries of this donut hole is probably substantially larger. This is looking at only the youngest non-disabled Medicare beneficiaries, and looking at mortality only in December of their 65th year. Behavior is likely similar in those over 65, who are more likely to die of the harm from not filling lifesaving drugs.

The authors’ conclusion:

...patient cost-sharing introduces large and deadly distortions into the cost-benefit calculus. Payers should evaluate the merits of these policies in light of their impact on health, not just on health care costs.

Other countries pay just 39% of what the US pays for drugs

2021-02-06T16:26:00.000-05:00

Today’s Managing Health Care Cost Number is 39%

RAND published data on US drug prices late last month. No surprise, US drugs are the most expensive in the world. They express other country’s prices as a percent of US costs (and most are in the 250-350%; I prefer to show this with the US as the standard - so other country’s prices are uniformly less than 60% of the US prices. All of the countries in the Organization for Economic Cooperation and Development together have drug prices 39% of those in the US.

Why is this?

For starters, we are richer than other countries. Based on “purchasing power parity,” we should pay at least a bit more for drugs than other countries do - though there are a few countries now that have higher GDP per capita than the US (Norway, Switzerland, Luxembourg for instance), and so our drug prices should theoretically be a bit lower.

Most importantly, we are the only developed country that offers iron-clad patent protection to pharmaceutical companies and doesn’t either have national price-setting, a single payer system, or national negotiations. Most other developed countries also consider price when determining whether to approve new medications. The Food and Drug Administration is prohibited from doing this. Medicare, the largest purchaser of drugs, was prohibited from negotiating or setting outpatient drug prices by the law which established Medicare Part D.

There is real energy to address high drug prices - but many of the approaches that are offered are unlikely to offer sustainable decreases in overall pharmaceutical costs.

Importation.
The Trump Administration favored this- and the Health and Human Services Department for the first time said that this could be safe. Multiple states, including Colorado and Florida, are in the process of negotiating contracts for a middleman to do this importation from Canada. It’s pretty costly (Florida got no bidders when if first offered a contract!), and it seems clear that the Pharmas would not supply enough drugs for this to be sustainable if used widely. The Canadian government would likely step in to avert shortages for their citizens
Price regulation pegged to international prices.
The Pharmas say they are deeply worried about this - but game theory suggests that if we do that the result will be higher Pharma profits -because they will raise prices elsewhere to avoid having to lower prices in the US, which represents a disproportionate share of total margin. If they were not allowed to raise prices elsewhere, they would likely stop selling some high margin drugs in the reference price countries - which would lead to enormous pressure on governments to relent and grant price increases. It’s also not clear to me - if we want to regulate prices, why should we rely on other countries to do this for us?
Rebates.

Legislators really like letting others do the negotiating, and OBRA 1990 granted Medicaid the “most favored nation” best prices on pharmaceuticals. Subsequent legislation has increased the rebates required for Medicaid drug acquisition. Most favored nation approaches favor the seller - and create strategic inflexibility that makes it easier for the pharmas to maintain their price discipline. Here’s a graphic from the Congressional Budget Office showing how the Medicaid MFN regulations decreased discounting for other payers from 36% pre-OBRA to 15% afterward.

Big steps, like allowing Medicare to set or negotiate rates, could clearly lower total costs - although they would be opposed by both Pharma and by the myriad of health plans that offer Medicare Part D plans. We would essentially have to nationalize that industry, and that’s never pretty.

Other steps, like “value based purchasing,” are favored by the pharmaceutical companies since it distracts policymakers from addressing the fact that many drug prices are too high. Commonwealth Fund reviewed outcome based pricing in 2017 and found that

...the power of these contracts to curb spending is questionable, largely because their applicability is restricted to a small subset of drugs and meaningful metrics to evaluate their impact are limited. There is no evidence that these contracts have resulted in less spending or better quality.

The Biden Administration is moving ahead with its COVID recovery package through reconciliation - which requires budget neutrality after ten years. Lowering the prices that the government pays for medicines would be helpful for subsequent legislation which would likely require a “paygo” to offset the costs of expanded social programs, so we’ll probably hear more about drug pricing in the coming months.

COVID racial disparities are stark

2021-01-20T09:30:00.001-05:00

Today's Managing Health Care Costs Number is 92

This week Martin Luther King would have been 92. In his lifetime, King emphasized the importance of health care access and equality. While we’ve come a long way from segregated hospitals, racial disparities continue to loom large.

Here are four graphics which show how this is relevant to COVID, and to COVID vaccination.

1. COVID death rates among Black and Hispanics remain substantially higher than the overall population:

Source: COVID Tracking Project

2. Kaiser Family Foundation reports that acceptance of vaccines has increased in all groups, although still lags among Blacks.

Source: Kaiser Family Foundation LINK

3. Vaccine inequity: Data from all states reporting race show that the portion of Blacks who are vaccinated significantly lags the portion who are eligible health care workers.

Source: Kaiser Family Foundation LINK

4. Vaccine distribution is inversely proportional to poverty and to Black portion of population: Washington, DC as an illustrative example

Sources: Alex Taliadoros, Brian Robinson, Nichlas Finnio. LINK

Disparities don’t disappear quickly -but we will only resolve this unfairness and the unnecessary loss of life and health if we recognize the problem. It’s heartening that Joe Biden, being inaugurated today, has appointed Marcia Nunez-Smith, a noted clinician and researcher, as the “first-ever presidential adviser with a sole focus on combating racism and racial disparities in health care.” It’s dispiriting that these disparities remain so severe.

Haven Health closes its doors

2021-01-10T13:16:00.000-05:00

Today’s Managing Health Care Costs Number is 3

We got the news this week that Haven Health, the joint venture of Amazon, Berkshire Hathaway, and JP Morgan Chase, is being disbanded this month. It’s not a surprise at this point, CEO Atul Gawande left his day-to-day role this spring, and executives have been leaving the organization for months. Haven helped design some health plans for JPMC, and did a considerable amount of data analytics, but it certainly hasn’t disrupted the marketplace.

I was enthusiastic about Haven’s chances of making a real difference in 2018 - here’s a link to my blog post with (unsolicited) advice for Haven from June, 2018. I wasn’t alone - the stock prices of health plans and PBMs sunk when Haven was announced, and rose with Haven’s failure.

Haven was famously secretive, and I don’t have an inside source, but here are a few thoughts:

It’s hard to get three different employers to agree on uniform strategy and tactics. Each employer has different business issues and different cycles, and each has an existing strategy which is hard to upend, and existing benefits staff who are at best ambivalent about being disrupted.
Haven did not notch early wins. Change is difficult; there are generally winners and losers, and Prospect Theory (part of behavioral economics) shows us that people hate losing much more than they like winning. So the winners are quietly happy, and the losers are noisily unhappy. That’s how we reach “Nash Equilibriums” where no one is happy with the current situation, but no one is willing to junk it for a new system that they worry would disadvantage them. Early wins create the currency to be able to disrupt the status quo. Lack of early wins means the disruptor is shut down.

It’s also possible that a focus on quality of care was prioritized over a focus on health care finance, and much of what is broken in employer-sponsored health care is the finance side.

We’ll all be interested to read the “inside story,” although it’s a pity that Atul Gawande, one of the best health policy writers around, isn’t likely allowed to write that story.

Happy 2021! My first blog posting in....way too long

2021-01-03T17:36:00.003-05:00

Today’s Managing Health Care Costs Number is 83

Maybe this is how blogs die.

It’s been 83 days since I wrote a blog post here, and I haven’t focused on writing posts on managing health care costs since Spring. This is the longest I have not posted since I began the blog in 2008 -and that includes vacations, hospitalization, and even a bike trip from Vietnam to Laos (during which time, in all fairness, the Affordable Care Act reconciliation passed Congress.)

The COVID-19 pandemic has taken over my professional world, as it has many others - and addressing concerns about a pandemic that as of now has killed over 1.8 million globally and over 350,000 in the US has crowded out, well, just about everything else.

It’s been a productive time for me (I’ll list publications below) - and the years that I’ve spent writing the blog have certainly helped me frame data - and frame my opinion. I’ll be teaching my 17th year of Managing Health Care Costs at the Harvard TH Chan School of Public Health starting later this month - so it’s a good time to step back and think about what’s been going on with health care costs over the last year - and what we can expect going forward.

The cost of health care has gone down during the pandemic, because we’ve stopped delivering a lot of the care that we are accustomed to.

Elective surgery was halted this spring in much of the country for the first wave of the pandemic, and elective procedures simply haven’t come back in much of the country. I still practice (a little) urgent care, and the demand has simply cratered. People stay home with self-limited illnesses - which get better without medical intervention. There’s worry, though, too. People are not getting their preventive care. This will lead to more preventable cancer deaths, and could lead to secondary epidemics of preventable childhood illness.

Virtual care has finally hit its stride

Over 90% of employers offered telemedicine for the last 4 years, but the uptake was usually tiny. The pandemic has changed all of that. Psychologists and social workers and psychiatrists who insisted on in-person visits during business hours have seen the light, and some of my clients saw an increase in mental health visits during the spring - even when most other visits were way down. Virtual care could help control medical costs in the future, as it’s hard to order ancillary tests for patients who are at a distance, and virtual visits will likely eventually be paid at a lower rate than in-person visits. Of course, if virtual visits are simply incremental to in-person visits post-pandemic, they will not help us lower costs.
Congress passed the Surprise Billing legislation

Surprise bills have been a thorn in the side of health care payers and patients for decades, and recent private equity purchase of various specialty physician groups and air and ground ambulances have increased the problem of enormous out-of-plan bills. Researchers recently found that these surprise bills increase medical care costs for everyone - since they give some providers leverage to demand higher allowable prices for participating in networks. In fact, effective elimination of surprise bills could decrease health care premiums by 1-5%. (This might seem small -but remember, we are talking about health care spending of over $1 trillion in employer sponsored health insurance alone).

The bill that passed Congress is imperfect. It requires arbitration, which can be burdensome and probably advantages sophisticated providers. The arbitrators cannot consider Medicare or other public payer rates, although at least they also cannot consider the billed charges. It seems likely that it will be better to have this bill than not -and over time we will see how the arbitrators are ruling.
The pharmaceutical companies have delivered COVID-19 vaccines in record time

Rising pharmaceutical prices continue to be a challenge for all health plan sponsors - whether private or governmental. The Pharmas have been very effective at accelerating vaccine development and manufacture, and we’ll have to see how much good will they have accrued to ward off meaningful attempts to lower US pharmaceutical costs. A closely divided Congress will help prevent meaningful constraints on pharmaceutical prices, but the financial crisis we’ll face coming out of the COVID-induced recession will make it more difficult to avoid real action here.

The pharmas have been quite reasonable in their pricing of vaccines and even the (marginally effective) anti-COVID therapies. They have not chosen to charge a “value based price for vaccines, for instance. If the economic cost of the pandemic is $16 trillion, then the “value” of a vaccine to address this could be $50,000 per US resident! But the actual acquisition costs per vaccine are just dozens of dollars, not hundreds or thousands. We should be aggressively questioning the declaration that we should pay for value for pharmaceuticals. We rarely pay for the “real” value of things we purchase. If we paid for the value of vegetables based on the productivity of my home garden, I would starve! We should be grateful to the pharmaceutical companies for their excellent pandemic work, but we need to be sure we aren’t paying twice or more what the rest of the world is paying.
Transparency is (maybe) here!

The Trump Administration enacted broad regulations requiring transparency from hospitals (which must list how much each insurer is paying them for 300 procedures as of 1/1/21, and more in subsequent years) and from insurers (which must provide members with information about allowable prices and out of pocket costs beginning 1/1/22). The Biden Administration is not likely to roll these back. Who’s against transparency after all?

I’m happy to see this sort of transparency, and especially happy that this requires hospitals and insurers to provide machine readable data - so third parties can commercialize products that incorporate this data. I’m not as worried as some that this will lead lower-priced providers to raise their prices. The transparency initiative doesn’t give those lower priced providers a whole lot of additional leverage, and I don’t believe they were leaving “money on the table” all along.

Transparency alone, though, won’t address our rising health care unit costs. Most medical expenses are concentrated on people with very high total costs, where prices shouldn’t drive their behavior because they are (1) too sick to be thinking about the prices and (2) way over their out of pocket maximums. Further, medical care continues to be a very complex purchase, and there are few bundles. I purchase a car, and don’t have to purchase an engine and a battery separately, so it’s not so hard to go to Consumer Reports and research this. It’s a lot tougher to purchase a gallbladder removal - hard to know what components will end up being billed.

I’m not likely to return to two or three posts each week - but I’ll periodically do updates, and will link to new posts on twitter (please follow me).

My best wishes for a healthy, happy and safe New Year.

Here’s the 2020 bibliography:

Levin-Scherz, J and Allen, D "8 Questions Employers Should Ask About Coronavirus" Harvard Business Review digital publication March 2, 2020 https://hbr.org/2020/03/8-questions-employers-should-ask-about-coronavirus

Levin-Scherz, J "Federal action can limit impact of COVID-19 costs on American businesses and workers" The Hill, April 13, 2020 https://thehill.com/opinion/healthcare/492551-federal-action-can-limit-impact-of-covid-19-costs-on-american-businesses

McCann, R and Levin-Scherz, J “Employers can address the racial disparities exposed by COVID-19” Willis Towers Watson, April, 2020

https://www.willistowerswatson.com/en-US/Insights/2020/04/employers-can-address-the-racial-disparities-exposed-by-covid-19

Bremen, J, Jesuthasan, R, Levin-Scherz, J "Five Ways COVID-19 Will Forever Change Work" World at Work, May 15, 2020 https://worldatwork.org/workspan/articles/five-ways-covid-19-will-forever-change-work

Levin-Scherz, J and Allen, D "8 Questions Employers Should Ask About Reopening" Harvard Business Review digital publication May 28, 2020 https://hbr.org/2020/05/8-questions-employers-should-ask-about-reopening

Levin-Scherz, J, Noblick, J and Jones, JH, "How behavioral economics can help employers respond to COVID-19" Human Resources Executive, May, 2020 https://hrexecutive.com/how-behavioral-economics-can-help-employers-respond-to-covid-19/

Levin-Scherz, J, Jesuthasan, R, Bremen, J “Should CEOs be in the Office Now?” Chief Executive Magazine, June 18, 2020 https://chiefexecutive.net/should-ceos-be-in-the-office-now/

Levin-Scherz, J and Parson, T "The Paradox of Medical Costs During the Pandemic" Econofact.org, June 30, 2020 https://econofact.org/the-paradox-of-medical-costs-during-the-pandemic

Levin-Scherz, J "The federal government must pay for distribution of the COVID vaccine" The Hill, July 20, 2020 https://thehill.com/opinion/healthcare/508118-the-federal-government-must-pay-for-distribution-of-the-covid-vaccine

Levin-Scherz, J, Blumenfield, S, Stone, J "7 Ways COVID-19 Will Transform Health Care" CFO.com October 14, 2020 https://www.cfo.com/health-benefits/2020/10/7-ways-covid-19-will-transform-health-care/

Levin-Scherz, J and Stone, J "Charting a New Course: Implications of the Pandemic for Health Plan Sponsors" Benefits Magazine, November 2020 LINK WTW LINK

Levin-Scherz, J and Lupin, B "Seven Questions Human Resources is Asking about COVID-19 Vaccinations" HR Executive, December 1, 2020 https://hrexecutive.com/seven-questions-hr-is-asking-about-covid-19-vaccinations/

Blumenfield, S and Levin-Scherz, J "Digital Tools Are Revolutionizing Mental Health Care in the U.S" Harvard Business Review December 3, 2020 https://hbr.org/2020/12/digital-tools-are-revolutionizing-mental-health-care-in-the-u-s

Levin-Scherz, J "As U.S. Vaccinations Begin, Hope Mixes With Worry"[Letter to the Editor] New York Times, December 16, 2020 https://www.nytimes.com/2020/12/15/opinion/letters/covid-vaccination.html

Levin-Scherz, J "Strategies to Encourage Employees to Get COVID Vaccines" HR Executive, December 21, 2020 https://hrexecutive.com/3-strategies-for-right-now-to-encourage-employees-to-get-covid-vaccines/

"Herd immunity" before an immunization would kill many and not help the economy

2020-10-19T15:58:00.000-04:00

Today’s Managing Health Care Costs Number is 4772

There's been a lot in the news about "herd immunity" lately - and clients might ask you. So - a brief explanation, and some thoughts about the public policy debate.

Viruses stop spreading when each person who gets the infection doesn't transmit it - which means they don't come in contact with anyone who is susceptible while contagious. Not everyone needs to have immunity - just enough people need immunity so that each new infection is a 'dead end' and the virus will die out. That's herd immunity. Estimates are that we would reach herd immunity if about 60-70% of the population were no longer susceptible to SARS CoV2, the virus that causes COVID-19.

The hope is to reach herd immunity with an effective vaccine. That will require patience. We need to have a safe effective vaccine, manufacture it at a massive scale, and convince hundreds of millions in the US (and billions globally) to get vaccinated. Most people think this will take much of 2021. In the meantime, the economic losses from the pandemic worsen. It's not surprising to hear some asking "Can we just let nature take its course?"

If we reach herd immunity by continuing to have widespread infections, we could have over 1.2 million deaths in the US alone. (320 million people * 60% infection rate * 0.65% case fatality rate). It could be worse, too, as mortality rates appear to be much higher when the medical system is overwhelmed.

Some look at Sweden, which alone in Europe enforced no shutdowns or distancing this winter. Sweden's initial COVID infection rate didn't look especially bad. But by summer it was clear that this approach led to 4772 more deaths than if Sweden had the mortality rate of Denmark. Sweden is small (10.2m population). An excess mortality rate this size would mean 150,000 excess deaths in a country the size of the United States.

Source: Time Magazine

But Sweden didn't suffer less economic damage than other Nordic countries because it initially rejected public health measures. Its GDP loss in Q2 was the worst in Scandinavia.

Source: OECD

The Infectious Disease Society of America has weighed in on this debate.

“Community immunity,” or “herd immunity,” a goal of vaccination campaigns, should never come at the cost of planned exposure to infection of millions of additional people as well as the severe illness and preventable deaths of hundreds of thousands of people.

The Lancet recently published an editorial signed by many academics:

Any pandemic management strategy relying upon immunity from natural infections for COVID-19 is flawed. Uncontrolled transmission in younger people risks significant morbidity and mortality across the whole population. In addition to the human cost, this would impact the workforce as a whole and overwhelm the ability of health-care systems to provide acute and routine care.

There are researchers who support achieving herd immunity through allowing infections through the "low risk" population. Unfortunately, even those who are not older and don't have underlying illness can die of COVID-19, and it's almost impossible to keep the young and healthy who get infected away from the old and the vulnerable who they have many interactions with.

I remain enormously hopeful that we'll have a safe effective vaccine in early 2021. Wearing masks and physical distancing can save hundreds of thousands of lives in the meantime. There's even evidence that those who wear masks who do get COVID-19 have a lower risk of serious illness. We don't need to have 1.2 million deaths to reach the end of the pandemic.

If I had $300 million dollars...

2020-10-01T19:16:00.001-04:00

Today's Managing Health Care Costs Number is $300 million

The Trump Administration took $300 million from the Centers for Disease Control and Prevention to fund a lavish celebrity-infused marketing campaign to "boost confidence in President Donald Trump's response to the pandemic."

Say what?

This is the brainchild of Michael Caputo, a former campaign official who went on medical leave last week. Caputo hired a business partner's firm with no experience making public health public service announcements. Getting celebrities to participate is apparently difficult. One agent said "it would be malpractice to my client" to ask them to participate in this misadventure.

This is grift that we'd expect from the Trump Administration, showing callous disregard for Congressional appropriations and for norms - but Trump has sought to politicize the pandemic from the start.

Some thoughts about what $300 million could buy if it weren't squandered on this self-aggrandizing nonsense.

o 30 million faceshields ($10 each)

o 60 million N95 masks ($5 each)

o 150 million bottles of hand sanitizers ($2 each)

o 15 million doses of vaccine ($20 each)

o 4000 contact tracers ($75,000 each)

o 2000 scientists ($150,000 each)

Improving reality would be far better than just telling a better but misleading story.

But the reality show President can only think of how to write a new script, not how to help the American people.

RAND: hospitals receive 2.5X Medicare rates from employer sponsored insurance

2020-09-22T07:21:00.000-04:00

Today's Managing Health Care Costs Number is 2.5

RAND published its third cycle of data showing the relationship between commercial insurance rates and the rates paid by Medicare in hospitals across the country. This is based on claims data donated by employers (including in some instances states), and shows just how ineffective private purchasers have been at controlling unit cost. That's exceptionally important, as US health care costs exceed the costs of all other countries because of high unit costs, not because of high utilization.

Above is the summary graphic from RAND - showing that average statewide hospital rates range from 186% of Medicare (Arkansas) to 351% of Medicare (West Virginia). This understates the differences that exist within states, though. I pulled out data for Massachusetts, where I live. You'll see that for delivery networks the range in overall allowable rates was 170% of Medicare (Baystate) to 269% of Medicare (Partners, now Mass General Brigham Health).

Christopher Whalen and his coauthors have also collected impressive evidence that low Medicare and Medicaid rates are not associated with higher commercial rates. Look at this scatterplot - showing essentially no relationship. Delivery systems which serve more Medicare and Medicaid patients don't routinely respond by higher allowable rates for their patients on employer sponsored health insurance.

The study also shows that the commercial rates, as a percentage of Medicare, have risen since the first round in 2016. (Note that the y axis here is not set at 0).

Note that most previous studies have shown no clear relationship between quality and cost. The RAND study shows that there are more poorly performing hospitals among those which receive the lowest rates. Clearly, there are many high performing delivery systems with lower costs - but purchasers should be aware that some lower priced facilities (and some higher priced facilities) might have worse quality and poorer outcomes.

Lessons?

1. Commercial rates exceed Medicare rates (often by a lot)

2. Variation in rates within states and even within metro markets is huge

3. Higher Medicare and Medicaid penetration does not necessarily cause high commercial rates

4. There is a small correlation of price to quality, but we can purchase high quality care at much lower prices

5. Commercial payers are not able to negotiate favorable pricing from high leverage provider organizations, and consolidation is likely to continue to make this worse

The FDA should not offer emergency use authorization for COVID-19 vaccine until Phase 3 trials are complete

2020-09-01T12:27:00.000-04:00

Today's Managing Health Care Costs Number is 30,000

FDA Commissioner Stephen Hahn has announced that the Food and Drug Administration is open to giving an emergency use authorization (EUA) to a COVID-19 vaccine even before clinical trials are complete.

This is the approach taken by Russia and China, which have begun inoculating soldiers (China) and civilians (Russia) without completing clinical trials.

The phases of clinical trials:

Phase 0: checking how the drug is processed in the body - usually just a handful of people.
Phase 1: Checking different doses to be sure the drug does not cause significant harm (safe)
Phase 2: Larger studies - looking at safety and also assessing whether there are positive effects of the drug
Phase 3: Population studies to ascertain whether the drug is safe and effective. These are usually randomized trials. For immunizations, these are generally studies with 30,000 participants

The FDA should not give emergency use approval until the clinical studies are completed and analyzed!

Here's why:

The vaccine MIGHT turn out to be useless, or even frankly dangerous. We won’t know this until after the phase 3 trial is complete. (Example: Dengue Fever vaccine can only be given to those who have had the disease in the past. If given to those who have no previous exposure, it makes infections worse, not better).

It makes sense to give an EUA for a drug of potential value to people who would otherwise be likely to die. But it’s ethically questionable to do this when the vaccine will be given to otherwise healthy people!

An early EUA is likely to make it much tougher to get enrollment in clinical trials – and also might increase the difficulty of recruiting volunteers for randomized studies of future vaccine(s) that might turn out to be more effective
Trust in vaccines is already low – and a perception of political meddling in the science of vaccine approval could lead to a whole new crop of antivaxxers – which could impede rather than advance our effort to reach herd immunity.

Like all human beings, I desperately want a vaccine to be proven safe, effective, manufactured to scale, and distributed and administered to as many people as possible as quickly as possible. But we have to follow all the steps. If we don’t prove it’s safe and effective before we start to vaccinate a lot of people, the results are likely to be very bad.

Antigen tests and "assurance testing" could help us return to near normal even before vaccines

2020-08-20T04:00:00.009-04:00

Today's Managing Health Care Costs Number is $1

Much of the recent news in the US on the pandemic is troubling. It's depressing to read about clusters of infections at universities, athletes with severe COVID-related heart inflammation, continued shortage of tests in hard-hit states and the inexplicable culture war over face coverings.

But there is also some bright news.

On the vaccine front there are around 200 different vaccines under development. 31 are in clinical trials, and 8 are in the all-important Phase 3 (efficacy) trials. There are two vaccines currently approved for non-research use, one a Russian vaccine that has not undergone Phase 3 trials, and another being administered to Chinese army volunteers.

I think that even if there is a vaccine that proves efficacious by early 2021, not a certainty, it will still take the better part of a year to administer this to the vast majority of Americans - and I had been thinking that we need to reach 60% or so of the population to achieve "herd immunity" where the virus should die out. That's actually incredibly difficult!

If the SARSCoV2 virus' infectiousness, known to epidemiologists as R naught (R 0), is 2.5, meaning that each person infected spreads the disease to 2 1/2 others, then we need to achieve 60% immunity to have herd immunity. Here's a graph that shows the importance of R naught in calculating threshold for herd immunity. For context, the R 0 for measles is around 16 – so 94% need to have immunity to achieve herd immunity.

To achieve 60% immunity, we'd need to immunize 82% of those who never had COVID-19 in the past. When we remove those with severe illness, those who oppose vaccinations, and those who simply can't be reached, this sounds really hard. Calculations are in the table here.

1	R naught	R 0	2.5
2	Herd Immunity Threshhold	1-1/R 0	60%
3	Portion of population already immune from previous infection:	10%	10%
4	Additional portion needing to be immune to hit herd immunity	60%-10%=50%	50%
5	Vaccine effectiveness	75%	75%
6	Portion of total population needing vaccine	Line 4/Line 5	67%
7	Portion of those who never had infection needing vaccine	Line 6/(1-Line 3)	74%

So - why am I becoming more optimistic?

Because the infectiousness (R 0) of an infectious disease is not a fixed number. The infectiousness goes up in environments where there is more opportunity for spread (like a noisy crowded college bar), and plummets when the opportunity to spread is decreased. That's why quarantines work. If those with the disease can't interact with others in the community, it doesn't matter how contagious a disease is.

We've been trying to decrease the infectiousness of the novel coronavirus through quarantines, physical distancing, masks, and handwashing. This works - as is evidenced by end of the bad infection wave when these interventions took hold in different communities. There is no vaccine available in countries like Hong Kong and Taiwan - and they've had only scattered outbreaks, very few deaths, and have been able to (mostly) restart their economies. They've accomplished all this with these public health measures.

But it's been desperately hard in the US to quarantine those who might be infectious when tests take many days (or weeks) to return. This is a special problem since many who are infectious don't feel too badly, and some have no symptoms at all.

Furthermore, we simply can't provide enough testing if tests cost $150 each and require multimillion dollar laboratories and trained technicians, or a fancy point-of-care testing machine that is on backorder!

We've been thinking of testing as "diagnostic testing", where getting an absolutely accurate answer is critical - even if it costs a lot and takes a long time. What we need is "assurance testing," where many people, even most people, are testing themselves every day or two even if they have no symptoms. We also need to accept tests that are a lot less sensitive - but are cheap and rapid - to achieve the goal of diminishing disease prevalence to close to zero.

The Antigen tests are coming, and many researchers believe they can cost as little as $1 each and be developed at home. There are many scientists now advocating for the FDA to approve such a test. A less sensitive test that can be done often will prevent far more disease than a more sensitive test done infrequently, as I noted earlier this month.

Currently available polymerase chain reaction (PCR) tests pick up 1000 viral units per ml in secretions, and the antigen tests might not turn positive until people have 100,000 viral units in their respiratory secretions. That might seem like there would be a lot of misses - but it won't matter that much if people are testing frequently. Further - these tests probably pick up those who are most contagious, and tell them to quarantine right away.

Here's what's making me more optimistic. If we can use antigen testing and distancing to diminish infectiousness (R 0) to just 1.5, we only need to vaccinate 35% of those who have not previously had an infection. If we can get the infectiousness rate down to 1.2, then we would just need to vaccinate 10% of those without previous infection to reach the herd immunity threshold. This makes it easier to be a real optimist.

We're not there yet - these tests need to be approved by the FDA and they need to be mass produced and distributed. But the combination of cheap self-service testing and vaccination could give us substantial relief sooner than I was previously thinking.

Widespread frequent testing, even with a vaccine, wouldn't necessarily mean that life would return to pre-pandemic normal. We'll likely still want to restrict large gatherings, and I would wait to go to a stadium or a bar until there were many weeks of no cases of community transmission.

We should all get comfortable with our masks, and I'm done shaking hands. But this feels to me like a dose of really good news.

Many health care companies doing just fine economically in the pandemic

2020-08-05T05:30:00.009-04:00

Today's Managing Health Care Costs Number is $1.35 billion

Sources below. Note that the CARES Act payments to both of these publicly traded hospital companies helped prop up their earnings

Axios' Bob Herman writes:

The economy has been tanking. Coronavirus infections and deaths have been rising. And the health care industry is as rich as ever.

A friend and colleague sent this to me - and asked whether this was consistent with our piece published by Econofact: "The Paradox of Medical Costs During the Pandemic." How could the health care industry be doing well in the midst of all of this economic devastation? And how does this fit with millions of workers laid off or furloughed from hospitals and ambulatory practices?

Here's how:

Providers

The two largest publicly traded hospital systems, HCA and Tenet released their 2nd quarter earnings this week. As you can see, the amount of CARES Act stimulus payments for each was huge. Tenet would have had a large loss without the CARES Act payment, and HCA would have had income (profit) of under a billion - a 40% decline from Q2 2019.

The hardest hit provider organizations, community practices and community hospitals, are largely nonprofit, and they don't report publicly. These parts of the medical ecosystem have taken a terrible hit, and many physicians will retire, many rural hospitals will close forever, and many ambulatory facilities will go under.

Insurers

Of course they had banner quarters! The large national insurers have mostly self-insured businesses, but they made substantial unexpected profits on any fully-insured business, and they had a lot fewer claims to process leading to lower administrative costs.

Pharmaceuticals

The dropoff in pharmacy spending is much less pronounced than for medical procedures, since people can get their drugs delivered by mail. In fact, in the first months of the pandemic there was likely some stockpiling. The big upside for pharma, in addition to massive payments for vaccines and drugs for COVID-19, is that our focus has shifted from blaming them for high health care costs to revering them for their research and innovation that can get us out of this pandemic mess. The outlook for continued high prices of specialty drugs and brand name drugs is improved.

Medical costs will be down in 2020 - which is not inconsistent with improved profitability and share prices for many health care stakeholders.

Recent articles

2020-07-28T05:57:00.000-04:00

I know I've been posting less during these pandemic months -and my posts have been more COVID-19 focused, and less focused on health care costs.

I've been busy though!

Here are a list of recent publications:

MCann, R and Levin-Scherz, J “Employers can address the racial disparities exposed by COVID-19” Willis Towers Watson, April, 2020

https://www.willistowerswatson.com/en-US/Insights/2020/04/employers-can-address-the-racial-disparities-exposed-by-covid-19

Levin-Scherz, J, Jesuthasan, R, Bremen, J “Should CEOs be in the Office Now?” Chief Executive Magazine, June 18, 2020 https://chiefexecutive.net/should-ceos-be-in-the-office-now/

Levin-Scherz, J and Parson, T "The Paradox of Medical Costs During the Pandemic" Econofact.org, June 30, 2020 https://econofact.org/the-paradox-of-medical-costs-during-the-pandemic

COVID-19 Quackery: Treatments that don't work or worse

2020-07-27T05:54:00.000-04:00

Today's Managing Health Care Costs Number is 43

There's now good evidence that some therapies improve the outcome of patients with severe COVID-19. Oxygen therapy, steroids, and Remdesivir help the sickest of patients, but there is no medical therapy that has been proven to prevent infection or to improve outcome for cases that are milder. There's excellent evidence that masks, physical/social distancing, and hand washing prevent spread of the novel coronavirus.

But there are many unproven approaches out there, too. Yesterday, a colleague told me that while he was at his physician's office he discovered some people were waiting to have ozone therapy. This week's Journal of the American Medical Association had a report of companies promoting stem cell therapy (also known as regenerative therapy) to prevent or treat COVID, although there is no evidence that this is effective. There is a professor at East Virginia Medical School who is promoting a preventive "cocktail" with 5 (or 6) drugs that must be taken at least twice a day. The evidence of efficacy of these drugs is poor or nonexistent.

The Food and Drug Administration has sent 43 warning letters to companies promoting unproven or even harmful treatments for COVID. These include

Vitamins (C, D, thiamine)
Minerals (iodine, silver)
Herbal supplements
Essential oils
CBD products
Homeopathic remedies
Chinese medicines
Stem cell products
Ozone therapy

Two of the ingredients of the East Virginia "cocktail" are in FDA warning letters.

There is clear danger of ozone therapy (patients have blood removed, it is mixed with ozone, then it is reinfused). There are also significant risks of stem cell therapy (patients have blood removed, it is centrifuged and a portion of the blood is reinfused). Stem cell clinics have been sanctioned by the FDA multiple times in the past, although they continue to promote their services for multiple diseases, including COVID-19. Either of these two therapies can lead to infection, and if there are administrative errors people could have a blood transfusion reaction.

There's even some potential public health danger to recommending taking supplements to protect against COVID like the East Virginia "cocktail", though they are not especially hazardous.

There are two problems, both are related to behavioral science (AKA behavioral economics). One is the issue of depletion. If there are too many choices about what to do, people often do nothing. Grocery stores that offer jam samples find that if they offer too many flavors, the sampling is not associated with increased sales. So it's best not to promote unnecessary interventions, which could crowd out what actually works.

The other is the issue of moral licensing. If people do something "good," they feel the permission to do something bad. This might be why people who exercise with a wearable have been shown to lose less weight - they feel that as long as they've exercised, it's fine to have a cupcake! If people are investing a lot of energy in taking supplements of no proven valuable, they might be less committed to social/physical distancing, masks, and hand washing.

Cost of COVID testing varies widely

2020-07-16T17:11:00.002-04:00

Today's Managing Health Care Costs Number is $850

Source: JAMA

COVID testing remains a conundrum. We likely need to do 4 million tests a day to suppress the pandemic -and are currently only doing 750,000 a day. We need results to be available quickly, and right now the turnaround is often 7 days or longer. We mostly need to do tests for those who are currently infected (and represent a danger to others), but there is a surplus of antibody tests - so many vendors are advertising these. Antibody tests can't tell who is infectious now. many have a high false positive rate so might overstate who's already been infected. The only use case for antibody testing of individuals is to determine who can donate plasma - and no one should assume a positive Ab test means they are immune.

Here's another problem. Although the CARES Act requires that health insurers cover testing (of either molecular or antibody tests), the prices vary widely, and many people who believe they are fully covered are likely to get a bill.

The Kaiser Family Foundation and the Peterson Institute just published results of a study of hospital list prices for COVID testing. They queried web sites and found published prices for 78 of the top volume two hospitals per state (102 total). The costs ranged from $20 to $850

Here's the distribution:

Source

What does this mean?

This understates the cost of testing- many hospitals also collect specimen collection fees and potential office visit fees.
Insurance companies generally don't pay the "list price," but rather pay an agreed upon price substantially lower. However, those who aren't insured or who have the non-ACA compliant plans promoted by the Trump Administration will be on the hook for these amounts. Patients getting care out of network might also see large bills.
The researchers only looked at the two largest hospitals in each state - so they probably missed the most expensive. Reporters separately have found at least one ambulatory center in Texas billing almost $7000, and one patient had a PCP who sent to an out of plan lab which billed over $28,000 (and collected over $25K) for COVID (and related) tests on a throat swab.

The biggest problem today is that we aren't doing enough testing. There are shortages of swabs, reagents, test kits, and personnel.

But the high and variable cost is a problem too. Many will need to be tested frequently -and the top quartile of charges here is just unacceptable. The pandemic continues to shine a light on the dysfunction of our health care finance system.

Employers who drop contraceptive coverage due to the Supreme Court decision will have higher costs

2020-07-09T05:00:00.000-04:00

Today's Managing Health Care Costs Number is 3.74

Source

Today the Supreme Court has upheld a Trump Administration executive order which allows employers to choose to not cover birth control for employees if that company has either a religious or a moral objection to birth control.

This is a terrible decision - allowing employers to impose their religious beliefs on their employees. It's anti-woman and anti-choice, and it is highly likely to increase abortions. But this is about managing health care costs.

Some employers might ask "How much does birth control cost, and what could I save if I stopped providing this coverage?"

This is the wrong question - since employers which stop covering contraception will face additional maternity costs. In fact, contraception and childhood vaccination are the two services that clearly lower total medical costs. Researchers found that each public dollar spent on birth control saved $3.74. So we should not project a decrease in spending if contraceptive coverage is eliminated.

We have seen a dramatic decrease in teen pregnancy in the US, as well as a decrease in the rate of abortions. It's likely that the availability of long acting reversible contraception (LARC - such as intrauterine devices and progesterone implants) has helped this trend. Coverage of LARC for teens has been especially effective, but the unit cost is high enough that many will not have access to such contraception absent employer sponsored coverage.

I'm hopeful that many employers will continue to pay for contraception. This benefit is highly valued by their employees, and they should reject the Trump administration's ongoing efforts to take essential health care benefits away from Americans at this critical time.

Source

Gilead prices Remdesivir at $3120 - a lower price than I expected

2020-06-29T20:25:00.001-04:00

Today's Managing Health Care Costs Number is $3120

Gilead announced its price for Remdesivir, the antiviral that is modestly effective at decreasing the number of days of hospitalization in those with severe COVID-19. It will charge $3120 for a five-day course of the medication in the US, and $2340 for a 5 day course for government payers in the US and other developed countries. It will license the drug to generic manufacturers to allow far cheaper prices in developing countries.

Remdesivir is better than no treatment for those severely ill with COVID-19, but it does not confer a statistically significant survival advantage. It does help people get out of the hospital earlier though - and Gilead says the value of these decreased hospital days is $12,000. ICER, the Institute for Clinical and Economic Review, has looked at Remdesivir a number of ways:

Marginal cost: Ingredient cost and manufacturing cost is between $10 and $600
Cost recovery: Considering the $1b clinical development claimed by Gilead, the justifiable cost could be $1000 per course
Traditional cost effectiveness: Value of Remdesivir was $4500-$5000 assuming that it offers some survival advantage, although that declines to just $2500-$2800 now that dexamethasone, a cheap generic drug, has also been shown to decrease hospital length of stay, along with decreasing mortality. ICER states that the cost-effectiveness benchmark price declines to $310 per course if Remdesivir has no survival advantage.

This afternoon, a commentary in StatNews points out that the pharmaceutical industry could be furious at Gilead for not charging a higher price. Activists are already asking why Gilead should be allowed to charge whatever the market would pay for its HIV and Hepatitis C drugs.

Gilead broke serious boundaries when it initially charged $1000 a pill ($84,000 for a course of treatment) for its Hepatitis C therapy (Sovaldi). So I fully expected the initial price for Remdesivir to be higher. I would predict that the price for inhaled Remdesivir, if it comes to market, will be far higher.

Pharmaceutical companies rarely leave "money on the table," and it will be hard for hospitals not to use Remdesivir for their sickest patients. On the other hand, the study showing effectiveness of dexamethasone at <$10 a dose made it harder for Gilead to charge a premium price for Remdesivir, which appears to be a bit less beneficial. And the backlash for Sovaldi pricing was severe, although the profits from that effort allowed Gilead to invest in additional HIV medications which it priced high as well.

Drug companies want to be able to charge a "value based" price for their successful drugs. But the reality is that the value delivered by some drugs, though probably not this one, is simply more than we as a society can afford to pay. Gilead might have helped the entire industry dodge a bullet by not choosing the most eye-popping price for Remdesivir.

Podcasts I'm listening to during the pandemic

2020-06-22T04:00:00.000-04:00

Today's Managing Health Care Costs Number is 100

A beaver does a swim-by in Carlisle, MA

This weekend marked the hundredth day of the global COVID-19 pandemic, and it's been hard for many of us to concentrate on just about anything else. The pandemic has upended our school, our work, and our lives - and many have lost parents, spouses and loved ones.

Governmental responses to the pandemic have been awful, and that's been bipartisan. The Trump Administration declaration of victory (as a new surge overtakes two dozen states) is reprehensible. New York Governor Andrew Cuomo might have appeared resolute and determined in his daily news conferences, but the New Yorker showed how he and New York City Mayor Bill DiBlasio wasted precious weeks and gave New Yorkers substantial bad advice. Jay Inslee of Washington did far better; he let the public health officials make the decisions and hold the press conferences.

One public health official, Bonnie Henry of British Columbia, spearheaded a successful response to tamp down the virus, and some are now selling mugs and tee shirts with her signature line, “Now is the time to be kind, be calm, and be safe”

I've been doing a lot of biking, often to a peaceful marshland with a beaver dam and lodge in Carlisle MA. One of the beavers did a quick swim for my wife and I Thursday morning - it made me happy all day.

I've also been listening to a lot of good podcasts - and will finally be rating them all over the next week. Among my favorites

Tradeoffs - from Dan Gorenstein and the University of Pennsylvania, converted from a bimonthly to a biweekly podcast, and has featured great pods on how a behavioral economist gets people in the neighborhood to wear masks, and how the pandemic make it harder for alcoholics and opioid addicts to maintain their treatment.

Prognosis - from Bloomberg News, is a daily that covers today's COVID news and then does an 8-10 minute in depth report. Last Wednesday's was about a measured conversation about antibody testing.

Freakonomics is an old standby. Steven Dubner interviewed three college presidents about their Fall, 2020 plans in late May

I'm addicted to The Daily from the New York Times. Michael Barbaro's conversations with reporter Donald McNeil have often been prescient; here's the latest one.

Kaiser Health News' What the Health is an excellent half hour from especially insightful health reporters. I find myself often looking up their "extra credit" readings. Here's an article highlighted last week from Bloomberg News on why quick action to address a second wave of COVID-19 will save lives .

Podcast19 from fivethirtyeight.com, the sports and politics data site. Their explanation of why the death count is almost certainly too low from mid-May is especially informative

Hope you and yours are safe and staying sane.

COVID-19 and racism - being Black and being poor can be a death sentence

2020-06-08T20:48:00.002-04:00

Today's Managing Health Care Costs Number is 6

It's been a good week to think about racism - as we collectively mourn the deaths of George Floyd, Breonna Taylor and Ahmaud Arberry at the hands of police, and as protesters in all 50 states and many other countries protest against police violence and institutional racism.

COVID-19 doesn't discriminate based on race, but clearly our system is putting people of color (and people who are poor) at much higher risk of hospitalization or death from the coronavirus.

American Public Media has collected data from the 40 states (and the District of Columbia) that provide racial identity of those who have died of COVID. Blacks continue to die at over twice the rate of whites. Here are the current stats:

1 in 1,850 Black Americans has died (or 54.6 deaths per 100,000)
1 in 4,000 Latino Americans has died (or 24.9 deaths per 100,000)
1 in 4,200 Asian Americans has died (or 24.3 deaths per 100,000)
1 in 4,400 White Americans has died (or 22.7 deaths per 100,000)

Sutter Health System, a large delivery system in Northern California, published its experience with COVID-19 in Health Affairs. They found that African-Americans were hospitalized at 2.7 times the rates of whites even when they adjusted for age, sex, comorbidities, and income. They used electronic medical record to ascertain race, and zip code tabulation area to impute income. African Americans were much less likely to be tested in an ambulatory setting, and thus perhaps were hospitalized when they were sicker. Regardless of race, those who lived in zip codes representing the bottom quartile of income were four times more likely to be hospitalized than those who lived in zip codes with average or above average income. Income, as well as race, can be a death sentence.

Ochsner Health System, in Louisiana, published its experience with COVID-19 in the New England Journal of Medicine. Black non-Hispanics represent 31% of the Ochsner population, but 70% of those hospitalized. Once hospitalized, the relative mortality of Blacks and Whites was not substantially different.

The New York Times just published a data visualization which lays out starkly the increased risk of six chronic diseases (chronic obstructive lung disease, heart disease, hypertension, diabetes, obesity and kidney disease) based on census tracts. Census tracts that are a majority Black are overwhelmingly more likely to have each of these six chronic diseases, and are overwhelmingly more likely to be impoverished.

For the US, racism is our underlying preexisting condition, and slavery our original sin. As we remake our world post-COVID, we have to do better.

Source: New York Times (Vertical axis is prevalence of each chronic disease; horizontal axis is household income. Census tracts are more with higher share of Black population. You can customize this for your community. Boston is below Click on the image to enlarge)

COVID-19: Why are the numbers varying so much?

2020-05-26T17:38:00.000-04:00

Today's COVID-19 Number in Massachusetts is either 93,000 or 900,000

Signifying nothing special - a photo from a bike ride from Concord to Harvard, MA, this Saturday

We all seek certainty - and objective measures reassure us more than subjective measures. That's why it's so disconcerting that numbers around COVID-19 keep on changing! There are good reasons for numbers to vary wildly, and there are bad reasons. A few thoughts about four critical numbers

How many cases of COVID-19 are there in the community?

My state of Massachusetts reports that there have been 93,000 cases as of this weekend. But on Friday the Imperial College of London calculated that there have been almost 900,000 cases - about 13% of the population! The state number is almost certainly low - as most of us know people who had COVID-19 and were never tested. The Imperial College number likely isn't fully accounting for behavior change that lowers risk, so it's probably too high. The real answer is probably somewhere between these two.

How many people have died of COVID-19?

Official death tolls are probably low. In some communities deaths are only "counted" if the decedent was tested, and in the early months there were few tests available. Some states are counting nursing home deaths that are "consistent with" COVID-19; this could lead to some overcounting, as some of these residents were old with severe multisystem illness, and would have died anyway. Some have suggested that we should count the total number of excess deaths compared to the last few years, which would mean that people who died of a heart attack because they were too scared to call an ambulance would be counted. Note that excess deaths is how we know that the likely death toll from Hurricane Maria in 2017 in Puerto Rico was over 3000, when the official death toll was 64. Here is information about excess deaths during the pandemic in multiple countries including the US.

Source: Financial Times

Is the rate of COVID-19 infections going up or down in the community?

This is very sensitive to how many tests are being done. If we do more tests, we find more cases. If tests are in short supply, more cases escape detection. One special issue from last week is that the CDC and some state health departments started mixing Antibody test results (for past infections) and PCR tests (for acute infections). That artificially depressed the apparent portion of tests that were positive - which could lead to bad public policy decisions. The CDC has agreed to report these separately in the future.

What is the "R Naught" (R0), the rate of contagiousness?

We should feel more comfortable that the worst of the pandemic is behind us if we know that each new case is infecting less than 1 additional people. Reports over the weekend (again, from the Imperial College) suggest that the R0 is actually above 1 in almost half the states. Notice there is a pretty substantial confidence interval - so that only Texas and Arizona currently have an R0 >1 -or it might be as many as 20 states that where number of those infected is likely to continue to expand.

Source Imperial College

COVID-19 Vaccine: I think it will happen, but it won't happen as fast as we'd like

2020-05-08T16:54:00.000-04:00

There's a lot of excitement about a vaccine that would protect against SARS-CoV2, the novel coronavirus that causes COVID-19. There are even trials going on in China, the UK, and the US. Although we've never produced a vaccine in less than four years, many think that the multitude of labs working on different vaccine formulations (over 100), the rapid genomic sequencing, and the relative genetic stability of this virus makes it a good candidate for a vaccine.

But predictions that we'll have a vaccine by fall are unrealistically optimistic - and we need to have effective contingency planning that is not dependent on an early vaccine.

Here are reasons why it takes a long time to get to "herd immunity" through vaccination:

The vaccine must be shown to be safe before we use it. This is not a small issue; the swine flu vaccine (1976) was associated with Guillain Barre Syndrome, progressive paralysis. Dengue fever vaccine is associated with protection only in those who have had infection before - and can make cases more severe if given to those who have never had the disease.
The vaccine must be shown to be effective. We've been hoping for a vaccine against HIV since the 1980s - but we're still waiting. People might need more than one shot of a vaccine for protection, and protection might wane after a short time requiring many booster shots
The vaccine must be mass-produced. The US uses 140 million eggs each year to produce influenza vaccine. We don't know how tricky the mass manufacture of a coronavirus vaccine will be, but we are not going to manufacture 8 or 16 billion doses in a matter of weeks. Even manufacturing the vaccine for just the US market will be daunting, and our world will not be safe as long as there are unvaccinated people elsewhere
People have to get the vaccine. It's estimated that only 47% of adults got influenza shots during the 2018-19 season. (The 2019-20 data is not yet available.) Only 64% of those surveyed reported that they would definitely get a coronavirus vaccination, and 14% said they would refuse. Some had hoped that this pandemic would make more people enthusiastic about life-saving vaccines. That might still happen, but right now there is a crisis of decreased pediatric vaccinations. The week of April 5, a pediatric electronic medical record company reported that "measles, mumps and rubella shots dropped by 50 percent; diphtheria and whooping cough shots by 42 percent; and HPV vaccines by 73 percent."

There have been some press reports about experts who doubt there will ever be a COVID-19 immunization. Here is a report from Business Insider and one from CNN. Skeptics point out that there has never been a coronavirus vaccine in the past, and that we have no proof that there is active immunity after infection. On the positive side, SARS-CoV-2 appears to be have little "genetic drift," making it more likely that a vaccine would not have to be frequently formulated. There is some evidence that survivors of two other coronaviruses (SARS and MERS) have short term immunity. Immunity to common cold coronaviruses, though, is often under a year.

I believe there will be a vaccine, though I'm skeptical that it will be ready in less than a year, and the challenge of immunizing 330 million in the US alone is enormous.

COVID-19 Testing - We need more of it -but we shouldn't overinterpret individual results

2020-05-06T05:00:00.000-04:00

Coronavirus testing is hugely important to allow us to determine new outbreaks of COVID-19. But many people forget that test results must be interpreted based on context. There are many reasons why a test result might not indicate correctly whether someone has a disease.

Mislabeled specimens can yield to a false positive or false negative. This is shockingly common! (Here's an article about mislabeled prostate cancer biopsy samples)
Testing too early before viral load is high enough to pick up virus genetic material in the sample. COVID-19's incubation period is 2-14 days (median 5 days), so people tested day 4 after exposure might be negative, but might be contagious within a few days.
Poor specimen collection technique. Nasal swabs need to be inserted pretty deep, and it's uncomfortable. Dainty providers will see more false negatives)
Poor quality swabs. Most of the world's medical swabs were manufactured in Northern Italy - so there's been a wee bit of a shortage
Poor specimen handling. Swabs must be inserted in viral media and then refrigerated until they reach the labs. If they are not cold enough, the test might be a false negative. Even the point of care test could yield an incorrect result if not performed properly.
Test Characteristics: Tests all have less than 100% sensitivity and specificity. So even if all of the above problems are eliminated, a positive or negative test changes the pre-test probability of having disease, and doesn't unequivocally state that the person has that disease.

Sensitivity: Likelihood that someone who has the disease will have a positive test. Sensitivity of 90% means that of those who actually have the disease, 10% will be (falsely) negative.

Specificity: Likelihood someone without the disease will have a negative test. Specificity of 99% means that of those who really don't have the disease, only 1% will be (falsely) positive.

There are reports that the sensitivity of the PCR tests could be as low as 70% for nasal swabs, or 60% for throat swabs. That's not ridiculous - the rapid nasal influenza swab test has a sensitivity of around 55% in adults. Researchers also believe that stated sensitivity and specificity by the manufacturer usually overstates the accuracy of the test, and most early reports on accuracy will come from manufacturers.

The Chan Zuckerberg Initiative has reviewed Antibody testing. No test for acute illness (IgM) had a sensitivity of more than 50% in the first six days of illness. Specificity of the antibody test for convalescent COVID-19 (IgM) generally hovered around 95% - although one test had 16% false positives.

What does this mean for COVID-19?

COVID-19's incubation period is between 2 and 14 days. So if someone is infected on Monday, they are likely not to have symptoms until at least Wednesday - and the average person might not have symptoms for 5 days (Saturday). Two and a half percent won't have symptoms until late in the eleventh day after they were exposed. Many people tested during the period between infection and 2 weeks later will test negative, and a negative test doesn't necessarily mean that the person could not be contagious. It also doesn't mean that the person won't become contagious a number of days later. There are also some people with COVID-19 who have no symptoms at all - we don't know whether or when they will test positive.

The post-test likelihood of having COVID-19 is strongly correlated to the pretest probability. (This is wonky - and it's based on Bayes' Theorem - or probability theory - but it's enormously important in evaluating the result of a test. This is poorly understood even by many practicing clinicians. )

Let's assume that the test being used has an 80% sensitivity (probably optimistic) and a 99% specificity (might be true).

If someone has a "screening" nasal swab and has no symptoms, their underlying probability of having a "true" positive is probably 10% or less. In this example, one out of ten with a positive test is a false positive, and 2 out of every 100 with a negative test actually has COVID-19

Screening someone with no symptoms

Pre-test probability	10%
Sensitivity	80%
Specificity	99%
	Have Disease	Do Not Have Disease	Predictive value of a Positive	Predictive Value of a Negative
Test Positive	800	90	90%
Test Negative	200	8910		98%
Total	1000	9000

This means that if you could screen people entering an airplane, and NONE of the 200 people entering the plane had symptoms, there could still be four people who had COVID-19 who test negative and be allowed to board the plane. If we had instead assumed a test sensitivity of 70%, we'd inadvertently allow six people with COVID-19 to board.

If someone has a test because they have a fever, cough and body aches in New Orleans or in New York City last week, the pre-test probability they have COVID-19 is as high as 90%. In this example, a positive test is almost certainly correct, while almost 2/3 of those with a negative test will actually have the disease. If the sensitivity is only 70%, then almost 3/4 of those with negative tests will actually have the disease

Diagnostic test on someone with symptoms of COVID in context of community spread

Pre-test probability	90%
Sensitivity	80%
Specificity	99%
	Have Disease	Do Not Have Disease	Predictive value of a Positive	Predictive Value of a Negative
Test Positive	7200	10	100%
Test Negative	1800	990		35%
Total	9000	1000

This demonstrates the importance of excluding those with symptoms from the workplace in the context of community spread of disease, and the reason why access to tests would not be helpful. A negative test doesn't lower the post-test probability enough for us to feel confident that the person with the negative test is really not contagious.

Everyone wants an objective test to determine whether people have a disease, and it's natural to over-rely on such a test. It's important that we are able to convey to our clients the true value of a test - and help them design approaches that consider the accuracy of tests when determining who to exclude from the workplace.

"Massive Demand Collapse." Why medical costs will decline this year, and maybe next!

2020-05-05T05:00:00.000-04:00

Today's Managing Health Care Costs Number is 94%

When the COVID-19 pandemic began, I thought that medical costs would skyrocket. The increased costs would be a bit constrained by the total number of intensive care beds or ventilators-but I thought costs would definitely go up.

I was wrong, on many counts. I overestimated how many Americans would be infected in the first wave of COVID-19, and I underestimated how much non-COVID care would not happen. I WAY underestimated how much care would be foregone!

Here's a graphic from the medical record company EPIC showing that mammography, colonoscopy, and pap smears have cratered, going down by 94%, 86%,and 94% respectively

Source: StatNews

There's similar data from Komodo Health. Pap smears, lipid testing, and Hemoglobin A1C tests (for diabetes) are all down by two thirds. Here's their data on decreased monitoring tests for breast cancer - also showing a pretty dramatic decline.

Source

To give you a sense of just how much health care isn't happening. US GDP plunged 4.8% in Q1 - based purely on decreased production and consumption in March alone. This represented a net decrease of $234.1 billion. The decrease in health care services during the quarter was $110.3 billion, which is 47% of the net amount of decreased GDP!

I've heard from cardiologists that they are seeing far fewer early heart attacks and early strokes. Unfortunately, they're also seeing many more people who wait to come to the hospital until their heart or brain damage is well established, and when medical interventions can't prevent permanent damage. There are also many reports of increased death at home. Some of these deaths might have been due to COVID-19, although others could have had no COVID-19. But they might well have survived their other diseases but for this pandemic.

On the brighter side, I also heard from an obstetrician that at his hospital the Cesarean Section rate had gone down by half. That would make CS rates much closer to the recommended levels, about 15%. This might be the rare instance where care will be improved by the pandemic.

There will be a big debate about whether the care that has been missed due to the pandemic will lead to higher costs in the future. Some care deferred now is likely to be delivered later - like hip replacements. Some care deferred now could likely lead to earlier death or more complications - like people who are waiting for cancer surgery. But truly preventive care, like mammograms or colonoscopies, is not cost saving. We gain 'quality adjusted life years (QALYs)' from screening - but these QALYs come at a cost. For instance, mammograms generally cost $50,000 per quality adjusted year saved. So - we will lose years of life from missing appropriate screening tests - but medical claims will likely be lower, not higher. That's because for each person whose death is forestalled by a mammogram, many people have mammograms, biopsies, surgery and chemotherapy.

I suspect health care costs will be lower this year and perhaps next as well. The fear is that the foregone care will mean more people will die prematurely. The health care system wasn't designed to save money - it was designed to save lives.

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My daughter is a senior pediatric resident at Tufts Medical Center's Floating Hospital for Children. The pediatric ICU has been turned into an adult COVID unit; there are few kids in the hospital now, and the ICU beds are needed for sick adults. This is a photo from the statue in front of the public entrance.

Pandemics expose racism and discrimination

2020-04-07T08:27:00.000-04:00

Annual Mortality per 100,000 (age adjusted)

Source: Am J Pub Health

Viruses are not racist. They can infect everyone - regardless of race, creed, or socioeconomic status.

BUT…

Deaths from viruses are not race-blind!

Minorities generally fare the worst in any epidemic of respiratory disease because they

· Have more poverty, and have less access to quality medical care

· Live in areas of denser concentration - where it's easier to transmit respiratory disease

· Live in areas with more pollution, including air pollution. (Coal use was associated with higher mortality during the 1918 Influenza Pandemic)

· Can't afford to stay home because they are more likely to lack financial reserves

· Have higher rates of underlying illnesses including diabetes, heart disease, and asthma that are associated with higher mortality

· Have higher rates of tobacco use, also a risk for worse outcomes

Above is data from the US showing differential nonwhite vs. white death rates. You can see that nonwhite death rates are consistently higher. Researchers from Wellesley College just published a piece in EconoFact showing that the difference between black and white mortality doubled during the 1918 Influenza Pandemic, although other researchers have found that the white and black death rates converged somewhat.

Regardless, the health impacts and the economic impacts of the COVID-19 Pandemic are likely to fall disproportionately on Americans of color.

From Econofact. Note that this shows the difference between black and white mortality rate, and does not exactly match the AJPH data above.

Here's worrisome data from Michigan, where African Americans are disproportionately represented among those who have died so far of COVID-19.

Source: Detroit Free Press

Unfortunately, many states and cities are not reporting their COVID cases and deaths by race. Data from New Orleans and Chicago looks similar to the data from Detroit above.

Viruses don't only kill minorities at higher rates - they also bring out racism. From a history of the 1918 Influenza Pandemic in Chicago:

When the flu epidemic of 1918 came to Chicago, black people were blamed, and that blame came directly from John Dill Robertson, the city’s commissioner of public health. … Robertson’s public health edicts functioned as another layer of Jim Crow laws, limiting the movement of black Americans, and effectively quarantining them to ghettos on the city’s South Side. Public health officials became a de facto police force. Beginning in 1917, Robertson’s health department passed 75 regulations, regulating [everything from] where people could drink water to where children could play.

Hate-crimes against Asians have increased during the COVID-19 Pandemic. Here's a first-person account from Slate today about an Asian feeling unsafe due to COVID-related racism.

Pandemics aren't the cause of racism and discrimination - but they bring out the latent racism and discrimination in our society. We should address discrimination and stigma associated with the Pandemic - and do all we can to be sure that minorities and the lowest paid workers do not face disproportionate risk.

COVID-19 is laying waste to much of the health care delivery system, with potential dire future consequences

2020-04-03T15:42:00.001-04:00

Today's Managing Health Care Costs Number is 800,000

I did a short urgent care shift last night - at Atrius Health in Kenmore Square. It's a huge site - it has an endoscopy suite, CT, MRI, and just about every specialty except for cardiac surgery and neurosurgery. The entire building has gone dark. The gates to the parking garage were up, and there was a single (of five ) floors in clinical operation. The medical assistants spend most of their time canceling appointments or converting them to telephone or video visits. Almost all visits are COVID-19 related, and clinicians must don masks, face guards, gowns, and double gloves before each visit.

The Boston Globe reported last weekend that the CEO of the organization took a 50% pay cut and physician and staff pay was cut by 10-25% due to the lack of revenue. Other physician groups have furloughed physicians and nonphysicians, suspended 401K matches and have held back already-earned variable pay.

It's like this everywhere. This is from a text message I got from a former colleague who runs a large suburban practice:

"The bottom has dropped out… we're barely making it here - furloughs, cutbacks - a real mess"

A colleague wrote me about college friends in plastic surgery, orthopedics, and oncology who reported that their offices were closed, and they were no longer able to do procedures at hospitals, which are closed down except for emergencies and COVID-19 patients.

USA Today has reported that 60,000 family practices will lay off 800,000 employees by June - many practices see a decrease in revenue of over 80%. Quorum Health, which has 24 hospitals, is preparing for bankruptcy. Here's a report about. There was a loss of 43,000 jobs in healthcare through March 12 according to the US Department of Labor; late March will be worse, and April worse still. It's a bitter irony that as we need the health care system more and more- health care delivery systems are seeing nothing but red ink because all of their high margin procedures are delayed indefinitely, but they continue to have unchanged fixed costs.

What will this mean for the health care system after the pandemic?

We will see more consolidation in the health care delivery system. Hospitals with few resources will go out of business or be incorporated into larger organizations, which will have even more bargaining leverage once the pandemic is over. Unit prices are likely to go even higher, though they are already the highest in the world.
More practicing physicians are already in employed as opposed to independent practices. That number will keep on going up - new physicians are not eager to take the risk of independent practices. Young physicians will leave independent groups and go to high-leverage hospitals, too, where they perceive lower risk of future pay cuts. This will decrease the pressure to lower hospital use, as more and more are employed by hospitals
Mental health professionals, who are more likely to be independent, will be hit especially hard. This is the golden opportunity for tele-behavioral health, but some need in-person care, and I worry that we'll have an even bigger problem of access post-COVID.
Narrow networks might be more attractive as cash-strapped employers seek an option that allows them to offer low out-of-pocket costs while lowering premiums. However, narrow networks are often populated with health systems that don't have the leverage to demand the top unit prices. If these health systems fail or are acquired by the larger systems, these good "bargains" might increasingly be unavailable.
This is the golden opportunity to do more telemedicine. Patients will hopefully see how much better it is to get care virtually for some acute medical issues like urinary tract infections or even chronic diseases. I'm hopeful that they'll stay with it. Telemed means less productivity loss, and should be lower unit cost both because volume per clinician can be higher and because telemedicine providers can't easily order labs and x-rays, which often prove unnecessary if they aren't convenient. But if more patients go for virtual visits, this will further weaken the finances of the ambulatory care system.

We'll only return fully to a pre-COVID normal once there is a vaccine, which is likely at least a year away. It's easy to think of what this means for rock concerts and movie theaters and restaurants. But the risk to the provider system is extreme. We'll need to shift our mindset as we see how the provider system evolves through this crisis. Congress should consider the ambulatory health system as critical infrastructure, and consider short-term aid to maintain the capacity we will need in coming years.

Big Data to help us understand COVID-19

2020-04-03T12:08:00.000-04:00

Today's Managing Health Care Costs Number is 3

There's a lot of great "big data" work going on regarding COVID-19, and I'd like to highlight three projects that show how big data can make a real difference.

Johns Hopkins Coronavirus Data Center

Most everyone has seen the Johns Hopkins map by now - and the velocity of the spread and deadliness of this virus has helped us see where there is future trouble -and helped motivate us to take public health warnings seriously. Johns Hopkins collects data from multiple sources - and in many instances these data are flawed. We all recognize that the number of cases is understated substantially, since there are many low-level or asymptomatic cases which are not being captured. This also inflates the case fatality rate - as the denominators are way understated. There will be a huge increase in stated cases when testing becomes widely available.

Here was the map on 3/10:

Here is the map two days ago:

Kinsa Health Weather Map (Temperature Monitoring)
Bluetooth-enabled thermometers let us see the progression of this pandemic. Kinsa, which has sells these thermometers, recently reported that fevers were dropping or holding steady in communities that ordered residents to shelter in place or stay at home -with no similar change in communities that recommended 'social distancing' without restricting travel outside the home. The Kinsa data is consistent with emergency department utilization data seen in both New York and Seattle.

Unacast Social Distancing Scoreboard

We can all look at deserted streets outside our homes, and skies empty of planes, and we know that people are traveling less. Unacast has taken deidentified cell phone data to show how much of a decrease in travel distance there is county-by-county. In my county (Middlesex, MA), there is a 55-70% decrease in miles traveled, and a 65-70% decrease in non-essential visits. There are a lot of states with much less physical distancing based on this analysis - and some of them are likely to suffer from much more viral spread over the coming weeks.

It might feel a bit creepy to see how much our phones are tracking our behavior- but they might become an important public health tool going forward. Israel is now using mobile phone records to determine who has been proximate to those who are infectious - and texting the requirement for mandatory self-quarantine based on this data. China used an app which showed red/yellow/green on the mobile phone for risk -and those without green were refused entrance into public places.

Traditional public health contact tracing takes well over a dozen hours per person. Using cell phones is worrisome from a privacy perspective, but might also allow scaling of exposure tracing that would support more targeted quarantine efforts if there is recurrence of spread of COVID-19 after the current shelter in place orders are lifted.

One additional note that’s more clinical:

A Mass Institute of Technology researcher reports that staying six feet away from others might not be enough. I'm not a respiratory droplet scientist- and he is -but I believe the risk from respiratory exposure likely decreases geometrically or exponentially by distance. So six feet is better than five feet - but not as good as 12 feet. The least risk is "nowhere near," which is why "shelter in place" leads to far fewer infections than "physical distancing." This also supports the idea that we should all wear (non-medical) masks if we must be in public – and I suspect we’ll see a change in CDC guidance in the near future.