Should Medicare negotiate drug prices? Probably not


A popular idea, but not a good one

It’s nice that the vast majority of Democrats (93%) and Republicans (74%) have found something to agree upon. Too bad it’s the overrated idea of having Medicare negotiate drug prices.

Prescription drug costs are rising again after years of flat or modest growth. New, expensive products are hitting the market while drug makers have also found ways to boost the prices of older products, even generics. There’s been a lot of ink (and electrons) spilled by people complaining about “the $1000 pill” and other outrages, like bad boy drug exec and price gouger Martin Shkreli. On the other hand, many Hepatitis C patients have been cured and the need for liver transplants and cancer treatment averted. That should be worth something.

Why do people think Medicare would be such a good negotiator? Private sector Part D drug plans already do a good job of price negotiation. Executives’ bonuses and stock options depend on getting good deals from the drug makers. Meanwhile, if Medicare tried to negotiate it would have to be willing to say “no” to certain drugs and to impose restrictions such as prior authorization and high co-pays. No doubt many in the vast majorities cited above would be quick to complain about those tactics, making it hard for Medicare to be the bad guy.

It’s a whole different ballgame if we’re talking about Medicare simply dictating the price it will pay or requiring rebates as Medicaid does. But that’s not negotiation.

In fact Medicare should do something about drug spending. Something more innovative than squeezing unit price. Medicare should develop and test full-fledged value-based medication reimbursement programs that reward manufacturers financially if their drugs work well and lower overall medical costs (not just drug costs). Only Medicare is big enough to get the attention of all the drug makers.

Medicare has done a good job testing out new payment models with providers (think Accountable Care Organizations and bundled payments), which set precedents that private payers can follow and improve upon. It should take the same approach with drugs –setting up innovative programs that can be tested and then implemented widely.

I want drug companies to have the potential to make a lot of money when they cure patients, improve quality of life, or lower medical costs. That’s good for patients, families, investors, private payers and the public purse. Outcomes based payment approaches led by Medicare could get us there. Medicare price negotiation or price regulation just won’t do the trick.

Image courtesy of Master isolated images at

By healthcare business consultant David E. Williams, president of Health Business Group.

Donald Trump or Dwayne Camacho for president?

Donald Trump is a clown, and his popularity among voters reflects poorly on the electorate and bodes ill for our society. The 2006 movie Idiocracy provides an entertaining view of where the dumbing down of society and politics is leading us. You should watch the whole thing. Meanwhile, here’s one of my favorite scenes: President Dwayne Elizondo Mountain Dew Herbert Camacho’s address to Congress. The Donald’s got nothing on him!

Idiocracy – President Camacho Speech from ChEeZe BaLL on Vimeo.



In Medicare Advantage, providers are becoming payers


Payer, provider or PayVider?

Accountable Care Organizations enable providers of care to take on some of the functions of health plans and to receive some of the financial rewards as well as the risk. But at least on the Medicare side it can be fairly indirect, with patients “attributed” to providers rather than assigned and little formal ability to keep a patient within a single provider system.

So it’s not huge surprise that some integrated provider organizations are going further, and sponsoring Medicare Advantage (MA) plans themselves. That way they are literally both the payer and provider. Setting up an MA managed care plan and running an ACO are not mutually exclusive, since the MA plan applies just to those who sign up for managed care.

Avalere Health has released an interesting report on this phenomenon. Some key takeaways:

  • More than half of the MA plans that started between 2012 and 2015 were provider sponsored
  • Provider sponsored plans are much more likely than other plans to achieve the top star ratings of 4 or 5
  • In a few geographies, provider sponsored MA plans have enrolled the vast majority of MA members and account for more than 10 percent of all Medicare recipients (most of whom are in traditional fee for service Medicare)
  •  Provider sponsored plans are not limiting themselves to the Medicare market. Some are going after commercial patients as well

What does this all mean? A few things:

  • We need to reconsider the boundary between payers and providers; they are starting to overlap more
  • Commercial health plans face even more pressure than before to demonstrate that they can add value –since providers are competing with them and showing better quality results. (The Avalere report was sponsored by Aetna –I’m not exactly sure what they were expecting to hear.)
  • Even if a Republican President and Congress overturn Obamacare, the concept of providers taking risk for Medicare patients isn’t going away
  • Medicare beneficiaries who are fans of a particular provider system should consider checking whether that system offers an MA plan

By healthcare business consultant David E. Williams, president of Health Business Group.

Mass Health Quality Partners releases patient experience results

Screenshot 2016-02-02 08.15.50

Massachusetts Health Quality Partners is a national leader in reporting on patient experience in primary care. Its latest data release at provides valuable information for patients looking for a physician and for practices seeking to understand how they perform in absolute terms and in comparison with others.

You may be familiar with the adage, “What gets measured gets done,” so it really is important what we decide to measure and to publicize. Some patient experience topics, like communication, have been measured and reported for some time. The average score is now 93.5 out of 100 –which is great, but it also means that it’s hard to improve from there and that communication may not be a great way to choose between practices.

By contrast, some of the newer categories demonstrate opportunities for –and evidence of– improvement. This is just the second year asking about behavioral health screening –an important topic since so many behavioral issues first present in primary care. Scores on that measure have risen from 53.1 to 56.5 from 2014 to 2015, while some practices have shown improvements of up to 20 points.

Self-management, a new topic this year, comes in with a score of 54.0 for adult practices and 43.6 for pediatrics. Look for that one to rise in the coming years as well. Statewide results are summarized on the MHQP website.

Most of the scores are reported as Harvey balls, with four levels of differentiation. It’s easy to compare practices against one another on specific measures, but on the other hand it’s difficult to figure out how any given practice rates overall. That’s partly because unlike commercial rating sites, MHQP is a collaborative that needs to keep the providers on board.

A shorthand way to make comparisons is with the “willingness to recommend” score that’s reported as a percentage. I asked MHQP spokesman Joe Ternullo about this measure and how to use it:

How can patients use this measure to chose a physician?

People often ask others for a recommendation when choosing a new doctor. To learn more about this, MHQP asked patients:   “Would you recommend this provider to your family and friends?”  MHQP suggests that patients look at all available information before choosing a new doctor. This is because no single rating by itself can give a clear picture about a healthcare provider’s quality of care.

Can a consumer use that measure to make a decision when the information is presented at a practice level?

Yes. A consumer should use the ratings at to see how his/her primary care practice fares, or to look for practices in their region that have scored particularly well.  In either case, focus on two things. First, look at the percentage of patients who said they would recommend the doctor. Don’t focus too much on minor differences, such as between practices with scores from, say, 86 to 89. Second, look at its scores for individual aspects of performance, such as communicating with patients, coordinating care, and getting timely appointments.  These measures are a guide to help patients assess certain aspects of patient care. No single measure reveals everything about the quality of care at a provider’s office.  Different practices may excel in different areas. But a low score can point out certain aspects of care that a doctor’s office needs to improve.

And as a follow-on, how do practices use that information with their own providers?

Medical care is complex, and patient experience is only one measure of quality. For example, it is important to know how well as doctor helps patients manage conditions like arthritis, diabetes, high blood pressure or high cholesterol. But patient experiences can affect those clinical measures. Many practices have used the MHQP statewide patient experience survey results to improve how they interact with their patients.

The MHQP patient experience survey is a valuable community resource that we are fortunate to have in Massachusetts. The survey is supported by leading health plans and provider organizations.

By healthcare business consultant David E. Williams, president of Health Business Group.

Health Wonk Review is up at Managed Care Matters

Managed Care Matters has just just awoken from its post-party stupor after a wild celebration of the 10th anniversary of the Health Wonk Review. Maybe they should party more often because the writing is surprisingly crisp in the Tenth Anniversary Edition!

There are some great health policy posts from old-timers and newcomers alike. I’m proud to say I’ve been around since the very start.

Well done!

Like I said: United’s ACA exchange departure is no big deal


Robert Wood Johnson Foundation funded an Urban Institute study to determine how Obamacare marketplaces are being impacted by the withdrawal of United Healthcare and the failure of some of the CO-OP plans. I’m grateful for the data but as it turns out their findings line up with what I wrote more than two months ago (United pulls out of ACA exchanges: Should we care?)

Here’s what I said:

Recently we’ve heard what could be interpreted as bad news about the viability of exchanges:UnitedHealth is considering withdrawing from the program. In the highly politicized world of health reform, that information has Obamacare foes sounding the death knell.

I see things differently.

The big name insurers that have a large share of the corporate market are not necessarily the winners on the exchanges. Rather, the leaders in the new price-sensitive era are lesser known plans, many of which cut their teeth in the Medicaid managed care market where tight cost control is key. They have what it takes to play in this brave new world.

Compare that to the Urban Institute findings:

Co-ops and United Healthcare (United) exiting the marketplaces may not be the shake-up many predicted because Blue Cross insurers, managed care plans, and others dominate low-cost marketplace offerings.

  • Blue Cross insurers and managed care organizations previously offering insurance to Medicaid beneficiaries but new to the private market are the most price-competitive.
  • Blue Cross and Medicaid managed care organizations are among the lowest-cost insurers in 34 and 44 of the 81 regions, respectively.

Next time maybe I should apply for that grant rather than offering my instant analysis!

Image courtesy of Master isolated images at

By healthcare business consultant David E. Williams, president of Health Business Group.