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Of ‘miracles’ and money: Why hemophilia drugs are so expensive
YUBA CITY, Calif. – When Landon Morris was diagnosed with hemophilia shortly after birth, his mother, Jessica Morris, was devastated. “It was like having your dreams – all the dreams you imagined for your child – just kind of disappear,” she recalled.
Hemophilia, a rare bleeding disorder caused by a gene mutation that prevents blood from clotting properly, is typically passed from mother to son. Ms. Morris’ grandfather had it, and she remembered hearing how painful it was. “It was almost like he was bubble-wrapped,” she said. “He was coddled, because his mom didn’t want him to get hurt.”
But Landon’s life turned out much different than she expected.
“He’s wild. He’s probably sometimes the roughest of them all,” she said, as she watched the 6-year-old race around a park. “He leads a totally normal life. He plays T-ball. He’ll start soccer in the fall. He runs and jumps and wrestles with his brothers.” That’s due almost entirely to his medication – the kind that wasn’t available in his grandfather’s day. For the Morris family, this type of drug – broadly known as clotting factor – is a miracle, helping Landon’s blood clot normally. And its cost is almost entirely covered by his father’s federal employee health plan.
But for the health care system, such drugs are enormously expensive, among the priciest in the nation. Medications to treat hemophilia cost an average of more than $270,000 annually per patient, according to a 2015 Express Scripts report. If complications arise, that annual price tag can soar above $1 million. The U.S. hemophilia drug market, which serves about 20,000 patients, is worth $4.6 billion a year, according to the investment research firm AllianceBernstein.
Examining the stubbornly high cost of these medications opens a window into why some prescription drugs in the United States – especially those for rare diseases – have stratospheric prices. The short answer: Competition doesn’t do its traditional job of tamping down costs.
Vying for patients
The market for hemophilia medicines in the United States is flooded with 28 different drugs, with another 21 drugs in development. Because blood factor drugs are biological products – in this case, a protein – there are no cheaper copies, called biosimilars, available. Not only do prices rise steadily as each new product comes on the market, demand is growing – and pushing costs upward – as more and more clotting factor is used to prevent bleeding episodes, not just to treat them.
Yet competition has not brought prices down in the way someone “operating at the level of undergrad Econ 101 would expect,” said Jerry Avorn, MD, a professor of medicine at Harvard Medical School, Boston, who studies prescription drug costs.
The problem is that companies have no incentive to lower prices. Patients generally don’t push back because insurers pay the bulk of the cost. And insurers tend not to object because the market for the drugs – expensive as they are – is small and the patients are especially vulnerable.
For drug companies, Dr. Avorn said, “it’s a magical formula: Lifesaving drug, child at risk of bleeding to death – it kind of casts anybody who looks at costs into the role of some evil Scrooge-like person.”
“The insurers don’t want to end up on the front page of the newspaper saying Little Timmy bled to death because his drug wasn’t covered,” he said.
Also, because prices are high across the hemophilia market, no drug company wants to be the one to blink first. “They don’t want to get a price war started and end up at a super low price point,” said Edmund Pezalla, a consultant to pharmaceutical companies and former executive at Aetna.
So, these drugmakers compete not on price but clinical benefits – such as how long the drugs’ effects last – and through intensive marketing. The pool of potential customers is so valuable that companies often vie directly for individual patients.
Manufacturers, as well as specialty pharmacies that sell the drugs, hire patients and parents as recruiters and advisers, hold dinners and holiday parties, offer scholarships to patients, and even run summer camps for children with the disease. The Morris family regularly receives such invitations.
Jonathan Ducore, MD, a pediatric hematologist-oncologist at the University of California, Davis, Hemophilia Treatment Center in Sacramento, said some of his patients are persuaded by drug company presentations to switch medications. ”But the real differences between the drugs are limited,” he said.
Dr. Ducore said he tells patients if he thinks they are being misled by drugmakers about what a product will do. “But even though the tactics may seem a little smarmy, if it’s the patient’s choice, you have to go with it,” said Dr. Ducore, who has been Landon’s doctor since the boy was born.
The first clotting factor products, which came onto the market in the mid-1960s, were derived from human blood plasma, with thousands of donations combined to create one batch. This proved disastrous in the 1980s, when donors unwittingly spread HIV into the blood supply. An estimated 4,000 people with hemophilia – about 40 percent of the patient population in the United States – died from AIDS as a result.
In the 1990s, manufacturers introduced a product that did not carry the disease risk of plasma-based drugs – made by cloning human clotting proteins in animal cells. Companies charged a premium for this ever-more-popular “recombinant factor.”
Recombinant factor is difficult and delicate to make, said Steve Garger, a development scientist at Bayer, which produces two popular factor products at its Berkeley, Calif., plant – including Landon Morris’ drug, Kogenate.
Inside a concrete building on the campus, kidney cells from baby hamsters are grown in stainless-steel vessels called bioreactors, and the clotting factor they produce is then purified in steel tanks kept in cold rooms. Working at full capacity, this factory produces less than a pound of clotting factor each year – but when diluted with other ingredients, it’s enough to treat thousands of patients in 80 countries.
The investment in manufacturing and marketing is only part of the reason for the high cost of the drugs, said Kevin O’Leary, vice president of pricing and contracting at Bayer. Bayer does not simply add up the costs, slap on a profit margin and come up with the price, Mr. O’Leary explained.
Instead, he said, the company begins by talking to insurers, doctors, and patients to get a sense of what value its products bring to the market, especially compared with drugs already available. Bayer then sets a price based on both its investment and the product’s perceived worth. In the end, he said, “we’re charging a price that’s competitive with the other factor products on the market.”
Bayer’s annual sales from its hemophilia drugs were 1.166 billion euros in 2016. That’s the equivalent of about $1.45 billion in the United States.
Pushing back on costs
In Europe, hemophilia drugs cost less than half what they cost in the United States. That’s because payers – usually governments – request bids and pick products based on cost and quality.
Without pushback from insurers in the United States, “the price of any drug in the U.S. is whatever the market will bear as seen by the manufacturer,” said Dr. Avorn of Harvard.
Recently, a few insurance companies have quietly started to push back on costs. Bayer’s Mr. O’Leary said several insurers have approached the company and demanded rebates in exchange for offering the drug to their customers. Mr. O’Leary would not discuss the details because he said the contracts are confidential.
State Medicaid programs, which provide health insurance to low-income Americans and cover about half of hemophilia patients, already receive significant rebates from hemophilia drug manufacturers.
Michelle Rice, a senior vice president at the National Hemophilia Foundation, said she has been working with several insurers to help them manage costs safely. “We understand the need to control costs, but they can’t impede access to the product a patient needs,” she said.
It is not yet clear whether such efforts will work, let alone spread.
Sitting at a picnic bench at a park, Jessica Morris pages through Landon’s insurance documents. Over the past year, his care cost over $120,000. She wonders sometimes what would happen if they lost their coverage.
“How much would you be willing to pay to have your child lead a normal life?” she said. “I don’t think that there’s anything we wouldn’t pay or sacrifice for him.”
It’s a problem she prays they’ll never have to face.
Kaiser Health News is a nonprofit news service covering health issues. It is an editorially independent program of the Kaiser Family Foundation that is not affiliated with Kaiser Permanente. KHN’s coverage of prescription drug development, costs, and pricing is supported by the Laura and John Arnold Foundation.
YUBA CITY, Calif. – When Landon Morris was diagnosed with hemophilia shortly after birth, his mother, Jessica Morris, was devastated. “It was like having your dreams – all the dreams you imagined for your child – just kind of disappear,” she recalled.
Hemophilia, a rare bleeding disorder caused by a gene mutation that prevents blood from clotting properly, is typically passed from mother to son. Ms. Morris’ grandfather had it, and she remembered hearing how painful it was. “It was almost like he was bubble-wrapped,” she said. “He was coddled, because his mom didn’t want him to get hurt.”
But Landon’s life turned out much different than she expected.
“He’s wild. He’s probably sometimes the roughest of them all,” she said, as she watched the 6-year-old race around a park. “He leads a totally normal life. He plays T-ball. He’ll start soccer in the fall. He runs and jumps and wrestles with his brothers.” That’s due almost entirely to his medication – the kind that wasn’t available in his grandfather’s day. For the Morris family, this type of drug – broadly known as clotting factor – is a miracle, helping Landon’s blood clot normally. And its cost is almost entirely covered by his father’s federal employee health plan.
But for the health care system, such drugs are enormously expensive, among the priciest in the nation. Medications to treat hemophilia cost an average of more than $270,000 annually per patient, according to a 2015 Express Scripts report. If complications arise, that annual price tag can soar above $1 million. The U.S. hemophilia drug market, which serves about 20,000 patients, is worth $4.6 billion a year, according to the investment research firm AllianceBernstein.
Examining the stubbornly high cost of these medications opens a window into why some prescription drugs in the United States – especially those for rare diseases – have stratospheric prices. The short answer: Competition doesn’t do its traditional job of tamping down costs.
Vying for patients
The market for hemophilia medicines in the United States is flooded with 28 different drugs, with another 21 drugs in development. Because blood factor drugs are biological products – in this case, a protein – there are no cheaper copies, called biosimilars, available. Not only do prices rise steadily as each new product comes on the market, demand is growing – and pushing costs upward – as more and more clotting factor is used to prevent bleeding episodes, not just to treat them.
Yet competition has not brought prices down in the way someone “operating at the level of undergrad Econ 101 would expect,” said Jerry Avorn, MD, a professor of medicine at Harvard Medical School, Boston, who studies prescription drug costs.
The problem is that companies have no incentive to lower prices. Patients generally don’t push back because insurers pay the bulk of the cost. And insurers tend not to object because the market for the drugs – expensive as they are – is small and the patients are especially vulnerable.
For drug companies, Dr. Avorn said, “it’s a magical formula: Lifesaving drug, child at risk of bleeding to death – it kind of casts anybody who looks at costs into the role of some evil Scrooge-like person.”
“The insurers don’t want to end up on the front page of the newspaper saying Little Timmy bled to death because his drug wasn’t covered,” he said.
Also, because prices are high across the hemophilia market, no drug company wants to be the one to blink first. “They don’t want to get a price war started and end up at a super low price point,” said Edmund Pezalla, a consultant to pharmaceutical companies and former executive at Aetna.
So, these drugmakers compete not on price but clinical benefits – such as how long the drugs’ effects last – and through intensive marketing. The pool of potential customers is so valuable that companies often vie directly for individual patients.
Manufacturers, as well as specialty pharmacies that sell the drugs, hire patients and parents as recruiters and advisers, hold dinners and holiday parties, offer scholarships to patients, and even run summer camps for children with the disease. The Morris family regularly receives such invitations.
Jonathan Ducore, MD, a pediatric hematologist-oncologist at the University of California, Davis, Hemophilia Treatment Center in Sacramento, said some of his patients are persuaded by drug company presentations to switch medications. ”But the real differences between the drugs are limited,” he said.
Dr. Ducore said he tells patients if he thinks they are being misled by drugmakers about what a product will do. “But even though the tactics may seem a little smarmy, if it’s the patient’s choice, you have to go with it,” said Dr. Ducore, who has been Landon’s doctor since the boy was born.
The first clotting factor products, which came onto the market in the mid-1960s, were derived from human blood plasma, with thousands of donations combined to create one batch. This proved disastrous in the 1980s, when donors unwittingly spread HIV into the blood supply. An estimated 4,000 people with hemophilia – about 40 percent of the patient population in the United States – died from AIDS as a result.
In the 1990s, manufacturers introduced a product that did not carry the disease risk of plasma-based drugs – made by cloning human clotting proteins in animal cells. Companies charged a premium for this ever-more-popular “recombinant factor.”
Recombinant factor is difficult and delicate to make, said Steve Garger, a development scientist at Bayer, which produces two popular factor products at its Berkeley, Calif., plant – including Landon Morris’ drug, Kogenate.
Inside a concrete building on the campus, kidney cells from baby hamsters are grown in stainless-steel vessels called bioreactors, and the clotting factor they produce is then purified in steel tanks kept in cold rooms. Working at full capacity, this factory produces less than a pound of clotting factor each year – but when diluted with other ingredients, it’s enough to treat thousands of patients in 80 countries.
The investment in manufacturing and marketing is only part of the reason for the high cost of the drugs, said Kevin O’Leary, vice president of pricing and contracting at Bayer. Bayer does not simply add up the costs, slap on a profit margin and come up with the price, Mr. O’Leary explained.
Instead, he said, the company begins by talking to insurers, doctors, and patients to get a sense of what value its products bring to the market, especially compared with drugs already available. Bayer then sets a price based on both its investment and the product’s perceived worth. In the end, he said, “we’re charging a price that’s competitive with the other factor products on the market.”
Bayer’s annual sales from its hemophilia drugs were 1.166 billion euros in 2016. That’s the equivalent of about $1.45 billion in the United States.
Pushing back on costs
In Europe, hemophilia drugs cost less than half what they cost in the United States. That’s because payers – usually governments – request bids and pick products based on cost and quality.
Without pushback from insurers in the United States, “the price of any drug in the U.S. is whatever the market will bear as seen by the manufacturer,” said Dr. Avorn of Harvard.
Recently, a few insurance companies have quietly started to push back on costs. Bayer’s Mr. O’Leary said several insurers have approached the company and demanded rebates in exchange for offering the drug to their customers. Mr. O’Leary would not discuss the details because he said the contracts are confidential.
State Medicaid programs, which provide health insurance to low-income Americans and cover about half of hemophilia patients, already receive significant rebates from hemophilia drug manufacturers.
Michelle Rice, a senior vice president at the National Hemophilia Foundation, said she has been working with several insurers to help them manage costs safely. “We understand the need to control costs, but they can’t impede access to the product a patient needs,” she said.
It is not yet clear whether such efforts will work, let alone spread.
Sitting at a picnic bench at a park, Jessica Morris pages through Landon’s insurance documents. Over the past year, his care cost over $120,000. She wonders sometimes what would happen if they lost their coverage.
“How much would you be willing to pay to have your child lead a normal life?” she said. “I don’t think that there’s anything we wouldn’t pay or sacrifice for him.”
It’s a problem she prays they’ll never have to face.
Kaiser Health News is a nonprofit news service covering health issues. It is an editorially independent program of the Kaiser Family Foundation that is not affiliated with Kaiser Permanente. KHN’s coverage of prescription drug development, costs, and pricing is supported by the Laura and John Arnold Foundation.
YUBA CITY, Calif. – When Landon Morris was diagnosed with hemophilia shortly after birth, his mother, Jessica Morris, was devastated. “It was like having your dreams – all the dreams you imagined for your child – just kind of disappear,” she recalled.
Hemophilia, a rare bleeding disorder caused by a gene mutation that prevents blood from clotting properly, is typically passed from mother to son. Ms. Morris’ grandfather had it, and she remembered hearing how painful it was. “It was almost like he was bubble-wrapped,” she said. “He was coddled, because his mom didn’t want him to get hurt.”
But Landon’s life turned out much different than she expected.
“He’s wild. He’s probably sometimes the roughest of them all,” she said, as she watched the 6-year-old race around a park. “He leads a totally normal life. He plays T-ball. He’ll start soccer in the fall. He runs and jumps and wrestles with his brothers.” That’s due almost entirely to his medication – the kind that wasn’t available in his grandfather’s day. For the Morris family, this type of drug – broadly known as clotting factor – is a miracle, helping Landon’s blood clot normally. And its cost is almost entirely covered by his father’s federal employee health plan.
But for the health care system, such drugs are enormously expensive, among the priciest in the nation. Medications to treat hemophilia cost an average of more than $270,000 annually per patient, according to a 2015 Express Scripts report. If complications arise, that annual price tag can soar above $1 million. The U.S. hemophilia drug market, which serves about 20,000 patients, is worth $4.6 billion a year, according to the investment research firm AllianceBernstein.
Examining the stubbornly high cost of these medications opens a window into why some prescription drugs in the United States – especially those for rare diseases – have stratospheric prices. The short answer: Competition doesn’t do its traditional job of tamping down costs.
Vying for patients
The market for hemophilia medicines in the United States is flooded with 28 different drugs, with another 21 drugs in development. Because blood factor drugs are biological products – in this case, a protein – there are no cheaper copies, called biosimilars, available. Not only do prices rise steadily as each new product comes on the market, demand is growing – and pushing costs upward – as more and more clotting factor is used to prevent bleeding episodes, not just to treat them.
Yet competition has not brought prices down in the way someone “operating at the level of undergrad Econ 101 would expect,” said Jerry Avorn, MD, a professor of medicine at Harvard Medical School, Boston, who studies prescription drug costs.
The problem is that companies have no incentive to lower prices. Patients generally don’t push back because insurers pay the bulk of the cost. And insurers tend not to object because the market for the drugs – expensive as they are – is small and the patients are especially vulnerable.
For drug companies, Dr. Avorn said, “it’s a magical formula: Lifesaving drug, child at risk of bleeding to death – it kind of casts anybody who looks at costs into the role of some evil Scrooge-like person.”
“The insurers don’t want to end up on the front page of the newspaper saying Little Timmy bled to death because his drug wasn’t covered,” he said.
Also, because prices are high across the hemophilia market, no drug company wants to be the one to blink first. “They don’t want to get a price war started and end up at a super low price point,” said Edmund Pezalla, a consultant to pharmaceutical companies and former executive at Aetna.
So, these drugmakers compete not on price but clinical benefits – such as how long the drugs’ effects last – and through intensive marketing. The pool of potential customers is so valuable that companies often vie directly for individual patients.
Manufacturers, as well as specialty pharmacies that sell the drugs, hire patients and parents as recruiters and advisers, hold dinners and holiday parties, offer scholarships to patients, and even run summer camps for children with the disease. The Morris family regularly receives such invitations.
Jonathan Ducore, MD, a pediatric hematologist-oncologist at the University of California, Davis, Hemophilia Treatment Center in Sacramento, said some of his patients are persuaded by drug company presentations to switch medications. ”But the real differences between the drugs are limited,” he said.
Dr. Ducore said he tells patients if he thinks they are being misled by drugmakers about what a product will do. “But even though the tactics may seem a little smarmy, if it’s the patient’s choice, you have to go with it,” said Dr. Ducore, who has been Landon’s doctor since the boy was born.
The first clotting factor products, which came onto the market in the mid-1960s, were derived from human blood plasma, with thousands of donations combined to create one batch. This proved disastrous in the 1980s, when donors unwittingly spread HIV into the blood supply. An estimated 4,000 people with hemophilia – about 40 percent of the patient population in the United States – died from AIDS as a result.
In the 1990s, manufacturers introduced a product that did not carry the disease risk of plasma-based drugs – made by cloning human clotting proteins in animal cells. Companies charged a premium for this ever-more-popular “recombinant factor.”
Recombinant factor is difficult and delicate to make, said Steve Garger, a development scientist at Bayer, which produces two popular factor products at its Berkeley, Calif., plant – including Landon Morris’ drug, Kogenate.
Inside a concrete building on the campus, kidney cells from baby hamsters are grown in stainless-steel vessels called bioreactors, and the clotting factor they produce is then purified in steel tanks kept in cold rooms. Working at full capacity, this factory produces less than a pound of clotting factor each year – but when diluted with other ingredients, it’s enough to treat thousands of patients in 80 countries.
The investment in manufacturing and marketing is only part of the reason for the high cost of the drugs, said Kevin O’Leary, vice president of pricing and contracting at Bayer. Bayer does not simply add up the costs, slap on a profit margin and come up with the price, Mr. O’Leary explained.
Instead, he said, the company begins by talking to insurers, doctors, and patients to get a sense of what value its products bring to the market, especially compared with drugs already available. Bayer then sets a price based on both its investment and the product’s perceived worth. In the end, he said, “we’re charging a price that’s competitive with the other factor products on the market.”
Bayer’s annual sales from its hemophilia drugs were 1.166 billion euros in 2016. That’s the equivalent of about $1.45 billion in the United States.
Pushing back on costs
In Europe, hemophilia drugs cost less than half what they cost in the United States. That’s because payers – usually governments – request bids and pick products based on cost and quality.
Without pushback from insurers in the United States, “the price of any drug in the U.S. is whatever the market will bear as seen by the manufacturer,” said Dr. Avorn of Harvard.
Recently, a few insurance companies have quietly started to push back on costs. Bayer’s Mr. O’Leary said several insurers have approached the company and demanded rebates in exchange for offering the drug to their customers. Mr. O’Leary would not discuss the details because he said the contracts are confidential.
State Medicaid programs, which provide health insurance to low-income Americans and cover about half of hemophilia patients, already receive significant rebates from hemophilia drug manufacturers.
Michelle Rice, a senior vice president at the National Hemophilia Foundation, said she has been working with several insurers to help them manage costs safely. “We understand the need to control costs, but they can’t impede access to the product a patient needs,” she said.
It is not yet clear whether such efforts will work, let alone spread.
Sitting at a picnic bench at a park, Jessica Morris pages through Landon’s insurance documents. Over the past year, his care cost over $120,000. She wonders sometimes what would happen if they lost their coverage.
“How much would you be willing to pay to have your child lead a normal life?” she said. “I don’t think that there’s anything we wouldn’t pay or sacrifice for him.”
It’s a problem she prays they’ll never have to face.
Kaiser Health News is a nonprofit news service covering health issues. It is an editorially independent program of the Kaiser Family Foundation that is not affiliated with Kaiser Permanente. KHN’s coverage of prescription drug development, costs, and pricing is supported by the Laura and John Arnold Foundation.
Sickle cell patients suffer discrimination, poor care – and shorter lives
For more than a year, NeDina Brocks-Capla avoided one room in her large, brightly colored San Francisco house – the bathroom on the second floor.
“It was really hard to bathe in here, and I found myself not wanting to touch the walls,” she explained. The bathroom is where Ms. Brocks-Capla’s son Kareem Jones died in 2013 at age 36, from sickle cell disease.
It’s not just the loss of her son that upsets Ms. Brocks-Capla; she believes that if Mr. Jones had gotten the proper medical care, he might still be alive today.
Sickle cell disease is an inherited disorder that causes some red blood cells to bend into a crescent shape. The misshapen, inflexible cells clog the blood vessels, preventing blood from circulating oxygen properly, which can cause chronic pain, multiorgan failure, and stroke. About 100,000 people in the United States have sickle cell disease, and most of them are African American.
Patients and experts alike say it’s no surprise then that while life expectancy for almost every major malady is improving, patients with sickle cell disease can expect to die younger than they did 20 years ago. In 1994, life expectancy for sickle cell patients was 42 for men and 48 for women. By 2005, life expectancy had dipped to 38 for men and 42 for women.
Sickle cell disease is “a microcosm of how issues of race, ethnicity and identity come into conflict with issues of health care,” said Keith Wailoo, PhD, a professor at Princeton University who writes about the history of the disease.
It is also an example of the broader discrimination experienced by African Americans in the medical system. Nearly a third report that they have experienced discrimination when going to the doctor, according to a poll by NPR, Robert Wood Johnson Foundation, and Harvard T.H. Chan School of Public Health.
“One of the national crises in health care is the care for adult sickle cell,” said leading researcher and physician Elliott Vichinsky, MD, who started the sickle cell center at UCSF Benioff Children’s Hospital Oakland in 1978. “This group of people can live much longer with the management we have, and they’re dying because we don’t have access to care.”
Indeed, with the proper care, Dr. Vichinsky’s center and the handful of other specialty clinics like it across the country have been able to increase life expectancy for sickle cell patients well into their 60s.
Dr. Vichinsky’s patient Derek Perkins, 45, knows he has already beaten the odds. He sits in an exam room decorated with cartoon characters at Children’s Hospital Oakland, but this is the adult sickle cell clinic. He’s been Dr. Vichinsky’s patient since childhood.
“Without the sickle cell clinic here in Oakland, I don’t know what I would do. I don’t know anywhere else I could go,” Mr. Perkins said.
When Mr. Perkins was 27, he once ended up at a different hospital where doctors misdiagnosed his crisis. He went into a coma and was near death before his mother insisted he be transferred.
“Dr. Vichinsky was able to get me here to Children’s Hospital, and he found out what was wrong and within 18 hours – all I needed was an emergency blood transfusion and I was awake,” Mr. Perkins recalled.
Kareem Jones lived just across the bay from Mr. Perkins, but he had a profoundly different experience.
Mr. Jones’ mother, Ms. Brocks-Capla, said her son received excellent medical care as a child, but once he turned 18 and aged out of his pediatric program, it felt like falling off a cliff. Mr. Jones was sent to a clinic at San Francisco General Hospital, but it was open only for a half-day, one day each week. If he was sick any other day, he had two options: leave a voicemail for a clinic nurse or go to the emergency room. “That’s not comprehensive care – that’s not consistent care for a disease of this type,” said Ms. Brocks-Capla.
Ms. Brocks-Capla is a retired supervisor at a worker’s compensation firm. She knew how to navigate the health care system, but she couldn’t get her son the care he needed. Like most sickle cell patients, Mr. Jones had frequent pain crises. Usually he ended up in the emergency department where, Ms. Brocks-Capla said, the doctors didn’t seem to know much about sickle cell disease.
When she tried to explain her son’s pain to the doctors and nurses, she recalled, “they say have a seat. ‘He can’t have a seat! Can’t you see him?’ ”
Studies have found that sickle cell patients have to wait up to 50% longer for help in the emergency department than do other pain patients. The opioid crisis has made things even worse, Dr. Vichinsky added, as patients in terrible pain are likely to be seen as drug seekers with addiction problems rather than patients in need.
Despite his illness, Mr. Jones fought to have a normal life. He lived with his girlfriend, had a daughter, and worked as much as he could between pain crises. He was an avid San Francisco Giants fan.
For years, he took hydroxyurea, but it had side effects, and after a while Mr. Jones had to stop taking it. “And that was it, because you know there isn’t any other medication out there,” said Ms. Brocks-Capla.
Indeed, hydroxyurea, which the Food and Drug Administration first approved in 1967 as a cancer drug, was the only drug on the market to treat sickle cell during Mr. Jones’ lifetime. In July, the FDA approved a second drug, Endari (L-glutamine oral powder), specifically to treat patients with sickle cell disease.
Funding by the federal government and private foundations for the disease pales in comparison to other disorders. Cystic fibrosis offers a good comparison. It is another inherited disorder that requires complex care and most often occurs in Caucasians. Cystic fibrosis gets 7-11 times more funding per patient than does sickle cell disease, according to a 2013 study in the journal Blood. From 2010 to 2013 alone, the FDA approved five new drugs for the treatment of cystic fibrosis.
“There’s no question in my mind that class and color are major factors in impairing their survival. Without question,” Dr. Vichinsky said of sickle cell patients. “The death rate is increasing. The quality of care is going down.”
Without a new medication, Mr. Jones got progressively worse. At 36, his kidneys began to fail, and he had to go on dialysis. He ended up in the hospital, with the worst pain of his life. The doctors stabilized him and gave him pain meds but did not diagnose the underlying cause of the crisis. He was released to his mother’s care, still in incredible pain.
At home, Ms. Brocks-Capla ran him a warm bath to try to soothe his pain and went downstairs to get him a change of clothes. As she came back up the stairs, she heard loud banging against the bathroom walls.
“So I run into the bathroom and he’s having a seizure. And I didn’t know what to do. I was like, ‘Oh come on, come on. Don’t do this. Don’t do this to me.’ ”
She called 911. The paramedics came but couldn’t revive him. “He died here with me,” she said.
It turned out Mr. Jones had a series of small strokes. His organs were in failure, something Ms. Brocks-Capla said the hospital missed. She believes his death could have been prevented with consistent care – the kind he got as a child. Dr. Vichinsky thinks she is probably right.
“I would say 40% or more of the deaths I’ve had recently have been preventable – I mean totally preventable,” he said, but he got to the cases too late. “It makes me so angry. I’ve spent my life trying to help these people, and the harder part is you can change this – this isn’t a knowledge issue. It’s an access issue.”
Dr. Vichinsky’s center and others like it have made major advances in screening patients for the early signs of organ failure and intervening to prevent premature death. Patients at these clinics live 2 decades longer than the average sickle cell patient.
Good care for sickle cell requires time and training for physicians, but it often doesn’t pay well, because many patients are on Medicaid or other government insurance programs. The result is that most adult sickle cell patients still struggle even to access treatments that have been around for decades, Dr. Vichinsky said.
The phenomenon is nothing new — the disease that used to be known as sickle cell anemia has had a long and sordid past. It was first identified in 1910 and helped launch the field of molecular biology. But most of the research was used to study science rather than improving care for sickle cell patients, Dr. Vichinsky said.
In the 1960s and 1970s, sickle cell became a lightning rod for the civil rights movement. At the time, the average patient died before age 20. The Black Panther Party took up the cause and began testing people at its “survival conferences” across the country.
“I’m sure we tested over four-and-a-half-thousand people for sickle cell anemia last night – and I think that the voter registration is running neck and neck with it,” Black Panther Party Chairman Bobby Seale told news crews at an event in Oakland in 1972.
The movement grew, and Washington listened. “It is a sad and shameful fact that the causes of this disease have been largely neglected throughout our history,” President Richard Nixon told Congress in 1971. “We cannot rewrite this record of neglect, but we can reverse it. To this end, this administration is increasing its budget for research and treatment of sickle cell disease.”
For a while, funding did increase, newborn screening took hold, and by the 1990s, life expectancy had doubled, with patients living into their 40s. But over time, funding waned, clinics closed, and life expectancy started dropping again.
Dr. Vichinsky pushes against that trend for patients like Derek Perkins. The father of four looks healthy and robust, but like most sickle cell patients, he has episodes of extreme pain and has problems with his kidneys, heart, hips, and breathing. Keeping him thriving requires regular checkups and constant monitoring for potential problems.
“The program Dr. Vichinsky is running here, I feel I owe my life to [it],” said Mr. Perkins. “If it wasn’t for him and the things that he did for me, my family wouldn’t have me.”
Kaiser Health News is a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation. KHN’s coverage of children’s health care issues is supported in part by a grant from The Heising-Simons Foundation.
For more than a year, NeDina Brocks-Capla avoided one room in her large, brightly colored San Francisco house – the bathroom on the second floor.
“It was really hard to bathe in here, and I found myself not wanting to touch the walls,” she explained. The bathroom is where Ms. Brocks-Capla’s son Kareem Jones died in 2013 at age 36, from sickle cell disease.
It’s not just the loss of her son that upsets Ms. Brocks-Capla; she believes that if Mr. Jones had gotten the proper medical care, he might still be alive today.
Sickle cell disease is an inherited disorder that causes some red blood cells to bend into a crescent shape. The misshapen, inflexible cells clog the blood vessels, preventing blood from circulating oxygen properly, which can cause chronic pain, multiorgan failure, and stroke. About 100,000 people in the United States have sickle cell disease, and most of them are African American.
Patients and experts alike say it’s no surprise then that while life expectancy for almost every major malady is improving, patients with sickle cell disease can expect to die younger than they did 20 years ago. In 1994, life expectancy for sickle cell patients was 42 for men and 48 for women. By 2005, life expectancy had dipped to 38 for men and 42 for women.
Sickle cell disease is “a microcosm of how issues of race, ethnicity and identity come into conflict with issues of health care,” said Keith Wailoo, PhD, a professor at Princeton University who writes about the history of the disease.
It is also an example of the broader discrimination experienced by African Americans in the medical system. Nearly a third report that they have experienced discrimination when going to the doctor, according to a poll by NPR, Robert Wood Johnson Foundation, and Harvard T.H. Chan School of Public Health.
“One of the national crises in health care is the care for adult sickle cell,” said leading researcher and physician Elliott Vichinsky, MD, who started the sickle cell center at UCSF Benioff Children’s Hospital Oakland in 1978. “This group of people can live much longer with the management we have, and they’re dying because we don’t have access to care.”
Indeed, with the proper care, Dr. Vichinsky’s center and the handful of other specialty clinics like it across the country have been able to increase life expectancy for sickle cell patients well into their 60s.
Dr. Vichinsky’s patient Derek Perkins, 45, knows he has already beaten the odds. He sits in an exam room decorated with cartoon characters at Children’s Hospital Oakland, but this is the adult sickle cell clinic. He’s been Dr. Vichinsky’s patient since childhood.
“Without the sickle cell clinic here in Oakland, I don’t know what I would do. I don’t know anywhere else I could go,” Mr. Perkins said.
When Mr. Perkins was 27, he once ended up at a different hospital where doctors misdiagnosed his crisis. He went into a coma and was near death before his mother insisted he be transferred.
“Dr. Vichinsky was able to get me here to Children’s Hospital, and he found out what was wrong and within 18 hours – all I needed was an emergency blood transfusion and I was awake,” Mr. Perkins recalled.
Kareem Jones lived just across the bay from Mr. Perkins, but he had a profoundly different experience.
Mr. Jones’ mother, Ms. Brocks-Capla, said her son received excellent medical care as a child, but once he turned 18 and aged out of his pediatric program, it felt like falling off a cliff. Mr. Jones was sent to a clinic at San Francisco General Hospital, but it was open only for a half-day, one day each week. If he was sick any other day, he had two options: leave a voicemail for a clinic nurse or go to the emergency room. “That’s not comprehensive care – that’s not consistent care for a disease of this type,” said Ms. Brocks-Capla.
Ms. Brocks-Capla is a retired supervisor at a worker’s compensation firm. She knew how to navigate the health care system, but she couldn’t get her son the care he needed. Like most sickle cell patients, Mr. Jones had frequent pain crises. Usually he ended up in the emergency department where, Ms. Brocks-Capla said, the doctors didn’t seem to know much about sickle cell disease.
When she tried to explain her son’s pain to the doctors and nurses, she recalled, “they say have a seat. ‘He can’t have a seat! Can’t you see him?’ ”
Studies have found that sickle cell patients have to wait up to 50% longer for help in the emergency department than do other pain patients. The opioid crisis has made things even worse, Dr. Vichinsky added, as patients in terrible pain are likely to be seen as drug seekers with addiction problems rather than patients in need.
Despite his illness, Mr. Jones fought to have a normal life. He lived with his girlfriend, had a daughter, and worked as much as he could between pain crises. He was an avid San Francisco Giants fan.
For years, he took hydroxyurea, but it had side effects, and after a while Mr. Jones had to stop taking it. “And that was it, because you know there isn’t any other medication out there,” said Ms. Brocks-Capla.
Indeed, hydroxyurea, which the Food and Drug Administration first approved in 1967 as a cancer drug, was the only drug on the market to treat sickle cell during Mr. Jones’ lifetime. In July, the FDA approved a second drug, Endari (L-glutamine oral powder), specifically to treat patients with sickle cell disease.
Funding by the federal government and private foundations for the disease pales in comparison to other disorders. Cystic fibrosis offers a good comparison. It is another inherited disorder that requires complex care and most often occurs in Caucasians. Cystic fibrosis gets 7-11 times more funding per patient than does sickle cell disease, according to a 2013 study in the journal Blood. From 2010 to 2013 alone, the FDA approved five new drugs for the treatment of cystic fibrosis.
“There’s no question in my mind that class and color are major factors in impairing their survival. Without question,” Dr. Vichinsky said of sickle cell patients. “The death rate is increasing. The quality of care is going down.”
Without a new medication, Mr. Jones got progressively worse. At 36, his kidneys began to fail, and he had to go on dialysis. He ended up in the hospital, with the worst pain of his life. The doctors stabilized him and gave him pain meds but did not diagnose the underlying cause of the crisis. He was released to his mother’s care, still in incredible pain.
At home, Ms. Brocks-Capla ran him a warm bath to try to soothe his pain and went downstairs to get him a change of clothes. As she came back up the stairs, she heard loud banging against the bathroom walls.
“So I run into the bathroom and he’s having a seizure. And I didn’t know what to do. I was like, ‘Oh come on, come on. Don’t do this. Don’t do this to me.’ ”
She called 911. The paramedics came but couldn’t revive him. “He died here with me,” she said.
It turned out Mr. Jones had a series of small strokes. His organs were in failure, something Ms. Brocks-Capla said the hospital missed. She believes his death could have been prevented with consistent care – the kind he got as a child. Dr. Vichinsky thinks she is probably right.
“I would say 40% or more of the deaths I’ve had recently have been preventable – I mean totally preventable,” he said, but he got to the cases too late. “It makes me so angry. I’ve spent my life trying to help these people, and the harder part is you can change this – this isn’t a knowledge issue. It’s an access issue.”
Dr. Vichinsky’s center and others like it have made major advances in screening patients for the early signs of organ failure and intervening to prevent premature death. Patients at these clinics live 2 decades longer than the average sickle cell patient.
Good care for sickle cell requires time and training for physicians, but it often doesn’t pay well, because many patients are on Medicaid or other government insurance programs. The result is that most adult sickle cell patients still struggle even to access treatments that have been around for decades, Dr. Vichinsky said.
The phenomenon is nothing new — the disease that used to be known as sickle cell anemia has had a long and sordid past. It was first identified in 1910 and helped launch the field of molecular biology. But most of the research was used to study science rather than improving care for sickle cell patients, Dr. Vichinsky said.
In the 1960s and 1970s, sickle cell became a lightning rod for the civil rights movement. At the time, the average patient died before age 20. The Black Panther Party took up the cause and began testing people at its “survival conferences” across the country.
“I’m sure we tested over four-and-a-half-thousand people for sickle cell anemia last night – and I think that the voter registration is running neck and neck with it,” Black Panther Party Chairman Bobby Seale told news crews at an event in Oakland in 1972.
The movement grew, and Washington listened. “It is a sad and shameful fact that the causes of this disease have been largely neglected throughout our history,” President Richard Nixon told Congress in 1971. “We cannot rewrite this record of neglect, but we can reverse it. To this end, this administration is increasing its budget for research and treatment of sickle cell disease.”
For a while, funding did increase, newborn screening took hold, and by the 1990s, life expectancy had doubled, with patients living into their 40s. But over time, funding waned, clinics closed, and life expectancy started dropping again.
Dr. Vichinsky pushes against that trend for patients like Derek Perkins. The father of four looks healthy and robust, but like most sickle cell patients, he has episodes of extreme pain and has problems with his kidneys, heart, hips, and breathing. Keeping him thriving requires regular checkups and constant monitoring for potential problems.
“The program Dr. Vichinsky is running here, I feel I owe my life to [it],” said Mr. Perkins. “If it wasn’t for him and the things that he did for me, my family wouldn’t have me.”
Kaiser Health News is a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation. KHN’s coverage of children’s health care issues is supported in part by a grant from The Heising-Simons Foundation.
For more than a year, NeDina Brocks-Capla avoided one room in her large, brightly colored San Francisco house – the bathroom on the second floor.
“It was really hard to bathe in here, and I found myself not wanting to touch the walls,” she explained. The bathroom is where Ms. Brocks-Capla’s son Kareem Jones died in 2013 at age 36, from sickle cell disease.
It’s not just the loss of her son that upsets Ms. Brocks-Capla; she believes that if Mr. Jones had gotten the proper medical care, he might still be alive today.
Sickle cell disease is an inherited disorder that causes some red blood cells to bend into a crescent shape. The misshapen, inflexible cells clog the blood vessels, preventing blood from circulating oxygen properly, which can cause chronic pain, multiorgan failure, and stroke. About 100,000 people in the United States have sickle cell disease, and most of them are African American.
Patients and experts alike say it’s no surprise then that while life expectancy for almost every major malady is improving, patients with sickle cell disease can expect to die younger than they did 20 years ago. In 1994, life expectancy for sickle cell patients was 42 for men and 48 for women. By 2005, life expectancy had dipped to 38 for men and 42 for women.
Sickle cell disease is “a microcosm of how issues of race, ethnicity and identity come into conflict with issues of health care,” said Keith Wailoo, PhD, a professor at Princeton University who writes about the history of the disease.
It is also an example of the broader discrimination experienced by African Americans in the medical system. Nearly a third report that they have experienced discrimination when going to the doctor, according to a poll by NPR, Robert Wood Johnson Foundation, and Harvard T.H. Chan School of Public Health.
“One of the national crises in health care is the care for adult sickle cell,” said leading researcher and physician Elliott Vichinsky, MD, who started the sickle cell center at UCSF Benioff Children’s Hospital Oakland in 1978. “This group of people can live much longer with the management we have, and they’re dying because we don’t have access to care.”
Indeed, with the proper care, Dr. Vichinsky’s center and the handful of other specialty clinics like it across the country have been able to increase life expectancy for sickle cell patients well into their 60s.
Dr. Vichinsky’s patient Derek Perkins, 45, knows he has already beaten the odds. He sits in an exam room decorated with cartoon characters at Children’s Hospital Oakland, but this is the adult sickle cell clinic. He’s been Dr. Vichinsky’s patient since childhood.
“Without the sickle cell clinic here in Oakland, I don’t know what I would do. I don’t know anywhere else I could go,” Mr. Perkins said.
When Mr. Perkins was 27, he once ended up at a different hospital where doctors misdiagnosed his crisis. He went into a coma and was near death before his mother insisted he be transferred.
“Dr. Vichinsky was able to get me here to Children’s Hospital, and he found out what was wrong and within 18 hours – all I needed was an emergency blood transfusion and I was awake,” Mr. Perkins recalled.
Kareem Jones lived just across the bay from Mr. Perkins, but he had a profoundly different experience.
Mr. Jones’ mother, Ms. Brocks-Capla, said her son received excellent medical care as a child, but once he turned 18 and aged out of his pediatric program, it felt like falling off a cliff. Mr. Jones was sent to a clinic at San Francisco General Hospital, but it was open only for a half-day, one day each week. If he was sick any other day, he had two options: leave a voicemail for a clinic nurse or go to the emergency room. “That’s not comprehensive care – that’s not consistent care for a disease of this type,” said Ms. Brocks-Capla.
Ms. Brocks-Capla is a retired supervisor at a worker’s compensation firm. She knew how to navigate the health care system, but she couldn’t get her son the care he needed. Like most sickle cell patients, Mr. Jones had frequent pain crises. Usually he ended up in the emergency department where, Ms. Brocks-Capla said, the doctors didn’t seem to know much about sickle cell disease.
When she tried to explain her son’s pain to the doctors and nurses, she recalled, “they say have a seat. ‘He can’t have a seat! Can’t you see him?’ ”
Studies have found that sickle cell patients have to wait up to 50% longer for help in the emergency department than do other pain patients. The opioid crisis has made things even worse, Dr. Vichinsky added, as patients in terrible pain are likely to be seen as drug seekers with addiction problems rather than patients in need.
Despite his illness, Mr. Jones fought to have a normal life. He lived with his girlfriend, had a daughter, and worked as much as he could between pain crises. He was an avid San Francisco Giants fan.
For years, he took hydroxyurea, but it had side effects, and after a while Mr. Jones had to stop taking it. “And that was it, because you know there isn’t any other medication out there,” said Ms. Brocks-Capla.
Indeed, hydroxyurea, which the Food and Drug Administration first approved in 1967 as a cancer drug, was the only drug on the market to treat sickle cell during Mr. Jones’ lifetime. In July, the FDA approved a second drug, Endari (L-glutamine oral powder), specifically to treat patients with sickle cell disease.
Funding by the federal government and private foundations for the disease pales in comparison to other disorders. Cystic fibrosis offers a good comparison. It is another inherited disorder that requires complex care and most often occurs in Caucasians. Cystic fibrosis gets 7-11 times more funding per patient than does sickle cell disease, according to a 2013 study in the journal Blood. From 2010 to 2013 alone, the FDA approved five new drugs for the treatment of cystic fibrosis.
“There’s no question in my mind that class and color are major factors in impairing their survival. Without question,” Dr. Vichinsky said of sickle cell patients. “The death rate is increasing. The quality of care is going down.”
Without a new medication, Mr. Jones got progressively worse. At 36, his kidneys began to fail, and he had to go on dialysis. He ended up in the hospital, with the worst pain of his life. The doctors stabilized him and gave him pain meds but did not diagnose the underlying cause of the crisis. He was released to his mother’s care, still in incredible pain.
At home, Ms. Brocks-Capla ran him a warm bath to try to soothe his pain and went downstairs to get him a change of clothes. As she came back up the stairs, she heard loud banging against the bathroom walls.
“So I run into the bathroom and he’s having a seizure. And I didn’t know what to do. I was like, ‘Oh come on, come on. Don’t do this. Don’t do this to me.’ ”
She called 911. The paramedics came but couldn’t revive him. “He died here with me,” she said.
It turned out Mr. Jones had a series of small strokes. His organs were in failure, something Ms. Brocks-Capla said the hospital missed. She believes his death could have been prevented with consistent care – the kind he got as a child. Dr. Vichinsky thinks she is probably right.
“I would say 40% or more of the deaths I’ve had recently have been preventable – I mean totally preventable,” he said, but he got to the cases too late. “It makes me so angry. I’ve spent my life trying to help these people, and the harder part is you can change this – this isn’t a knowledge issue. It’s an access issue.”
Dr. Vichinsky’s center and others like it have made major advances in screening patients for the early signs of organ failure and intervening to prevent premature death. Patients at these clinics live 2 decades longer than the average sickle cell patient.
Good care for sickle cell requires time and training for physicians, but it often doesn’t pay well, because many patients are on Medicaid or other government insurance programs. The result is that most adult sickle cell patients still struggle even to access treatments that have been around for decades, Dr. Vichinsky said.
The phenomenon is nothing new — the disease that used to be known as sickle cell anemia has had a long and sordid past. It was first identified in 1910 and helped launch the field of molecular biology. But most of the research was used to study science rather than improving care for sickle cell patients, Dr. Vichinsky said.
In the 1960s and 1970s, sickle cell became a lightning rod for the civil rights movement. At the time, the average patient died before age 20. The Black Panther Party took up the cause and began testing people at its “survival conferences” across the country.
“I’m sure we tested over four-and-a-half-thousand people for sickle cell anemia last night – and I think that the voter registration is running neck and neck with it,” Black Panther Party Chairman Bobby Seale told news crews at an event in Oakland in 1972.
The movement grew, and Washington listened. “It is a sad and shameful fact that the causes of this disease have been largely neglected throughout our history,” President Richard Nixon told Congress in 1971. “We cannot rewrite this record of neglect, but we can reverse it. To this end, this administration is increasing its budget for research and treatment of sickle cell disease.”
For a while, funding did increase, newborn screening took hold, and by the 1990s, life expectancy had doubled, with patients living into their 40s. But over time, funding waned, clinics closed, and life expectancy started dropping again.
Dr. Vichinsky pushes against that trend for patients like Derek Perkins. The father of four looks healthy and robust, but like most sickle cell patients, he has episodes of extreme pain and has problems with his kidneys, heart, hips, and breathing. Keeping him thriving requires regular checkups and constant monitoring for potential problems.
“The program Dr. Vichinsky is running here, I feel I owe my life to [it],” said Mr. Perkins. “If it wasn’t for him and the things that he did for me, my family wouldn’t have me.”
Kaiser Health News is a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation. KHN’s coverage of children’s health care issues is supported in part by a grant from The Heising-Simons Foundation.
Medicare yet to save money through ACO model
The Centers for Medicare & Medicaid Services offers the lure of bonuses to health care practitioners who band together as accountable care organizations, or ACOs, to take care of patients. The financial incentives are intended to encourage these doctors, hospitals, nursing homes, and other institutions to keep patients healthy rather than primarily treat illnesses, which is what Medicare payments traditionally have rewarded. ACOs that save a substantial amount get to keep a share of the savings as a bonus.
The Obama administration touts ACOs as one of the most promising reforms in the 2010 federal health care law. The administration set a goal that by the end of 2018, half of Medicare spending currently based on the volume of procedures a doctor or hospital performs will instead be linked to quality and frugality. But so far, the ACO program generally has been a one-way street, with most doctors and hospitals happy to accept bonuses while declining to be on the hook for a share of any excessive costs run up by their patients.
Last year, Medicare paid $60 billion to 353 ACOs to take care of nearly 6 million Medicare beneficiaries. Some ACOs made significant strides in reducing use of hospitals and other costly resources. But patients at 45 percent of groups cost Medicare more than the government had projected based on their patients’ historic costs, records show. After paying bonuses to the strong performers, the ACO program resulted in a net loss of nearly $3 million to the Medicare trust fund, government records show.
“It’s turning out to be tougher to transform care and realign delivery than people had expected,” said Eric Cragun, an analyst with the Advisory Board Company, a consulting group based in Washington.
Medicare officials said most ACOs are still in their infancy and that performances will improve with experience and ultimately save significant sums for Medicare while improving care for beneficiaries. “In the long run we’re shooting to achieve those goals,” Sean Cavanaugh, CMS deputy administrator, said in an interview.
Nonetheless, the results are short of what Medicare projected in 2011 as it launched the program. Those estimates anticipated the government would save between $10 million and $320 million during 2014.
‘Bearing risk is a big leap’
The ACO program’s bottom line has been hurt by the reluctance of most ACOs to accept financial responsibility for their patients. Only 7% of ACOs opted last year for a high-risk/high-reward deal in which they had the potential to earn larger bonuses but would have to reimburse the government should their patients instead cost Medicare more than expected.
The rest of the ACOs opted to avoid the potential of financial punishment even though it meant their potential bonuses would be smaller. The risk aversion proved so widespread that Medicare has given ACOs up to 6 years to participate without fear of penalties, instead of phasing out that option.
“Many of these ACOs are newly formed groups of doctors and hospitals, and bearing risk is a big leap,” Cavanaugh said.
Last year, 196 ACOs saved Medicare money, while 157 ACOs cost more than expected. Medicare ultimately did not realize any savings because it paid out bonuses to 97 ACOs, but only 3 of the costly ACOs had to repay Medicare for losses their patients incurred.
In Oregon, North Bend Medical Center ACO patients cost Medicare $9 million. Spending for those patients was 12% more than projected, the largest gap of any ACO. In Los Angeles, the government spent $20 million, or 11%, more than expected for ACO patients at Cedars-Sinai Medical Care Foundation. That was the largest amount in dollars. Both ACOs had chosen to be exempt from financial penalties.
North Bend dropped out of the program earlier this year.
Cedars-Sinai said its ACO patients ended up more expensive than other previous patients because the hospital added new physician practices specializing in cancer and heart disease, which are among the most costly conditions to treat. In a statement Thursday, Cedars said it unintentionally failed to include those patients in the comparisons it sent to Medicare and was now revising its calculations.
Even some of the ACOs that saved the most money have yet to accept financial risk. Costs for patients at Winchester Community ACO in Massachusetts were 16% less than Medicare estimated. The ACO earned a bonus of $5 million. Catharine Robertson, an executive with Winchester Hospital, said their cost-saving initiatives were created when the ACO was formed. One team at the ACO identified patients as high risk of getting sick and sought to intercede before they ended up requiring hospitalization.
“We’re absolutely thrilled with our success the last few years, but the reality is there’s a lot to learn about population-based management,” she said.
The largest bonus in dollars, $23 million, went to Memorial Hermann Accountable Care Organization in Houston, which was 11% below Medicare’s cost expectations. Christopher Lloyd, the CEO of Memorial Hermann’s ACO, credited its success to a decade’s worth of changes that improved cooperation among physicians and the hospital, as well as the creation of systems to share medical details of patients.
“The ACO when we formed it in 2012 was just an extension of what we were already doing,” Mr. Lloyd said. He said committed ACOs could make the same improvements in 3-4 years. “What took us 10 years to build does not take 10 years to replicate,” he said. Still, Memorial Hermann, like Winchester, is not yet accepting risk.
Difficulties in implementing the program
To wring overall savings for Medicare, the government faces a bind, analysts said. If Medicare makes the potential of repayments mandatory, many existing ACOs may drop out of the program and new ones are less likely to join. If the majority of ACOs continue to risk no financial repercussions, they have less incentive to save the government money. And without showing savings, it will be hard for Medicare to expand the program.
Clif Gaus, president of the National Association of ACOs, said Medicare should be making it easier for ACOs to earn bonuses as they assemble their operations. “Any start-up company, I don’t care who they are, never makes profits in the early years,” Mr. Gaus said. “Starting a health care delivery system is just as hard, if not harder, than starting a Facebook or an Amazon.”
Because Medicare sets its expectations based on national spending averages, “it’s really hard to save money in some parts of the country,” said David Muhlestein, an executive at the consulting firm Leavitt Partners based in Salt Lake City. “We’ve talked to ACOs that have joined the program, started to make changes, and decided that it’s really too much work right now.”
Sharp HealthCare, a well-regarded five-hospital system in San Diego, dropped out of the program last year after concluding it might not be able to avoid penalties. In a financial statement, Sharp said that because Medicare’s assessments are “based on national financial trend factors that are not adjusted for specific conditions that an ACO is facing in a particular region (e.g., San Diego), the model was financially detrimental to Sharp ACO.”
Jeff Goldsmith, a health industry analyst and professor at the University of Virginia who is a longtime ACO critic, said the ACO model is flawed. Consumers do not actively opt to participate in the ACOs and do not share in any savings, so they lack financial incentives to help keep costs down, he said. ACOs also have limited leverage to control the costs incurred by highly paid specialists such as surgeons and cardiologists. Patients in ACOS can still go to any doctor who accepts Medicare’s regular method of paying, in which they receive a set fee based on the nature of the service without regard to its outcome.
“Faux managed care is actually harder to do than real managed care,” Goldsmith said. The ACO program, he said, “has a bad enough reputation in the provider community that is not going to grow sufficiently to replace regular Medicare.”
The Obama administration is more optimistic. The administration said patients are benefiting with better care, as most quality measures Medicare is using to track ACO performance improved between 2013 and 2014.
CMS’s actuaries believe the ACOs are performing better than they appear when compared with the historical benchmarks that the health law established, which CMS has been using. The actuaries employed an alternative method in a report issued last spring, comparing Medicare spending trends in places with ACOs and those without, and concluded that, overall, ACOs were saving money.
Still, ACOs’ appetite for taking risk remains small. The number of ACOs opting for the largest potential bonuses and penalties has shrunk from 32 at the start of the program to 19. Rob Lazerow, an Advisory Board consultant, said, “In a world where ACOs are still optional, CMS still has to make it attractive for providers to want to participate.”
Kaiser Health News is a nonprofit national health policy news service that is part of the Henry J. Kaiser Family Foundation.
The Centers for Medicare & Medicaid Services offers the lure of bonuses to health care practitioners who band together as accountable care organizations, or ACOs, to take care of patients. The financial incentives are intended to encourage these doctors, hospitals, nursing homes, and other institutions to keep patients healthy rather than primarily treat illnesses, which is what Medicare payments traditionally have rewarded. ACOs that save a substantial amount get to keep a share of the savings as a bonus.
The Obama administration touts ACOs as one of the most promising reforms in the 2010 federal health care law. The administration set a goal that by the end of 2018, half of Medicare spending currently based on the volume of procedures a doctor or hospital performs will instead be linked to quality and frugality. But so far, the ACO program generally has been a one-way street, with most doctors and hospitals happy to accept bonuses while declining to be on the hook for a share of any excessive costs run up by their patients.
Last year, Medicare paid $60 billion to 353 ACOs to take care of nearly 6 million Medicare beneficiaries. Some ACOs made significant strides in reducing use of hospitals and other costly resources. But patients at 45 percent of groups cost Medicare more than the government had projected based on their patients’ historic costs, records show. After paying bonuses to the strong performers, the ACO program resulted in a net loss of nearly $3 million to the Medicare trust fund, government records show.
“It’s turning out to be tougher to transform care and realign delivery than people had expected,” said Eric Cragun, an analyst with the Advisory Board Company, a consulting group based in Washington.
Medicare officials said most ACOs are still in their infancy and that performances will improve with experience and ultimately save significant sums for Medicare while improving care for beneficiaries. “In the long run we’re shooting to achieve those goals,” Sean Cavanaugh, CMS deputy administrator, said in an interview.
Nonetheless, the results are short of what Medicare projected in 2011 as it launched the program. Those estimates anticipated the government would save between $10 million and $320 million during 2014.
‘Bearing risk is a big leap’
The ACO program’s bottom line has been hurt by the reluctance of most ACOs to accept financial responsibility for their patients. Only 7% of ACOs opted last year for a high-risk/high-reward deal in which they had the potential to earn larger bonuses but would have to reimburse the government should their patients instead cost Medicare more than expected.
The rest of the ACOs opted to avoid the potential of financial punishment even though it meant their potential bonuses would be smaller. The risk aversion proved so widespread that Medicare has given ACOs up to 6 years to participate without fear of penalties, instead of phasing out that option.
“Many of these ACOs are newly formed groups of doctors and hospitals, and bearing risk is a big leap,” Cavanaugh said.
Last year, 196 ACOs saved Medicare money, while 157 ACOs cost more than expected. Medicare ultimately did not realize any savings because it paid out bonuses to 97 ACOs, but only 3 of the costly ACOs had to repay Medicare for losses their patients incurred.
In Oregon, North Bend Medical Center ACO patients cost Medicare $9 million. Spending for those patients was 12% more than projected, the largest gap of any ACO. In Los Angeles, the government spent $20 million, or 11%, more than expected for ACO patients at Cedars-Sinai Medical Care Foundation. That was the largest amount in dollars. Both ACOs had chosen to be exempt from financial penalties.
North Bend dropped out of the program earlier this year.
Cedars-Sinai said its ACO patients ended up more expensive than other previous patients because the hospital added new physician practices specializing in cancer and heart disease, which are among the most costly conditions to treat. In a statement Thursday, Cedars said it unintentionally failed to include those patients in the comparisons it sent to Medicare and was now revising its calculations.
Even some of the ACOs that saved the most money have yet to accept financial risk. Costs for patients at Winchester Community ACO in Massachusetts were 16% less than Medicare estimated. The ACO earned a bonus of $5 million. Catharine Robertson, an executive with Winchester Hospital, said their cost-saving initiatives were created when the ACO was formed. One team at the ACO identified patients as high risk of getting sick and sought to intercede before they ended up requiring hospitalization.
“We’re absolutely thrilled with our success the last few years, but the reality is there’s a lot to learn about population-based management,” she said.
The largest bonus in dollars, $23 million, went to Memorial Hermann Accountable Care Organization in Houston, which was 11% below Medicare’s cost expectations. Christopher Lloyd, the CEO of Memorial Hermann’s ACO, credited its success to a decade’s worth of changes that improved cooperation among physicians and the hospital, as well as the creation of systems to share medical details of patients.
“The ACO when we formed it in 2012 was just an extension of what we were already doing,” Mr. Lloyd said. He said committed ACOs could make the same improvements in 3-4 years. “What took us 10 years to build does not take 10 years to replicate,” he said. Still, Memorial Hermann, like Winchester, is not yet accepting risk.
Difficulties in implementing the program
To wring overall savings for Medicare, the government faces a bind, analysts said. If Medicare makes the potential of repayments mandatory, many existing ACOs may drop out of the program and new ones are less likely to join. If the majority of ACOs continue to risk no financial repercussions, they have less incentive to save the government money. And without showing savings, it will be hard for Medicare to expand the program.
Clif Gaus, president of the National Association of ACOs, said Medicare should be making it easier for ACOs to earn bonuses as they assemble their operations. “Any start-up company, I don’t care who they are, never makes profits in the early years,” Mr. Gaus said. “Starting a health care delivery system is just as hard, if not harder, than starting a Facebook or an Amazon.”
Because Medicare sets its expectations based on national spending averages, “it’s really hard to save money in some parts of the country,” said David Muhlestein, an executive at the consulting firm Leavitt Partners based in Salt Lake City. “We’ve talked to ACOs that have joined the program, started to make changes, and decided that it’s really too much work right now.”
Sharp HealthCare, a well-regarded five-hospital system in San Diego, dropped out of the program last year after concluding it might not be able to avoid penalties. In a financial statement, Sharp said that because Medicare’s assessments are “based on national financial trend factors that are not adjusted for specific conditions that an ACO is facing in a particular region (e.g., San Diego), the model was financially detrimental to Sharp ACO.”
Jeff Goldsmith, a health industry analyst and professor at the University of Virginia who is a longtime ACO critic, said the ACO model is flawed. Consumers do not actively opt to participate in the ACOs and do not share in any savings, so they lack financial incentives to help keep costs down, he said. ACOs also have limited leverage to control the costs incurred by highly paid specialists such as surgeons and cardiologists. Patients in ACOS can still go to any doctor who accepts Medicare’s regular method of paying, in which they receive a set fee based on the nature of the service without regard to its outcome.
“Faux managed care is actually harder to do than real managed care,” Goldsmith said. The ACO program, he said, “has a bad enough reputation in the provider community that is not going to grow sufficiently to replace regular Medicare.”
The Obama administration is more optimistic. The administration said patients are benefiting with better care, as most quality measures Medicare is using to track ACO performance improved between 2013 and 2014.
CMS’s actuaries believe the ACOs are performing better than they appear when compared with the historical benchmarks that the health law established, which CMS has been using. The actuaries employed an alternative method in a report issued last spring, comparing Medicare spending trends in places with ACOs and those without, and concluded that, overall, ACOs were saving money.
Still, ACOs’ appetite for taking risk remains small. The number of ACOs opting for the largest potential bonuses and penalties has shrunk from 32 at the start of the program to 19. Rob Lazerow, an Advisory Board consultant, said, “In a world where ACOs are still optional, CMS still has to make it attractive for providers to want to participate.”
Kaiser Health News is a nonprofit national health policy news service that is part of the Henry J. Kaiser Family Foundation.
The Centers for Medicare & Medicaid Services offers the lure of bonuses to health care practitioners who band together as accountable care organizations, or ACOs, to take care of patients. The financial incentives are intended to encourage these doctors, hospitals, nursing homes, and other institutions to keep patients healthy rather than primarily treat illnesses, which is what Medicare payments traditionally have rewarded. ACOs that save a substantial amount get to keep a share of the savings as a bonus.
The Obama administration touts ACOs as one of the most promising reforms in the 2010 federal health care law. The administration set a goal that by the end of 2018, half of Medicare spending currently based on the volume of procedures a doctor or hospital performs will instead be linked to quality and frugality. But so far, the ACO program generally has been a one-way street, with most doctors and hospitals happy to accept bonuses while declining to be on the hook for a share of any excessive costs run up by their patients.
Last year, Medicare paid $60 billion to 353 ACOs to take care of nearly 6 million Medicare beneficiaries. Some ACOs made significant strides in reducing use of hospitals and other costly resources. But patients at 45 percent of groups cost Medicare more than the government had projected based on their patients’ historic costs, records show. After paying bonuses to the strong performers, the ACO program resulted in a net loss of nearly $3 million to the Medicare trust fund, government records show.
“It’s turning out to be tougher to transform care and realign delivery than people had expected,” said Eric Cragun, an analyst with the Advisory Board Company, a consulting group based in Washington.
Medicare officials said most ACOs are still in their infancy and that performances will improve with experience and ultimately save significant sums for Medicare while improving care for beneficiaries. “In the long run we’re shooting to achieve those goals,” Sean Cavanaugh, CMS deputy administrator, said in an interview.
Nonetheless, the results are short of what Medicare projected in 2011 as it launched the program. Those estimates anticipated the government would save between $10 million and $320 million during 2014.
‘Bearing risk is a big leap’
The ACO program’s bottom line has been hurt by the reluctance of most ACOs to accept financial responsibility for their patients. Only 7% of ACOs opted last year for a high-risk/high-reward deal in which they had the potential to earn larger bonuses but would have to reimburse the government should their patients instead cost Medicare more than expected.
The rest of the ACOs opted to avoid the potential of financial punishment even though it meant their potential bonuses would be smaller. The risk aversion proved so widespread that Medicare has given ACOs up to 6 years to participate without fear of penalties, instead of phasing out that option.
“Many of these ACOs are newly formed groups of doctors and hospitals, and bearing risk is a big leap,” Cavanaugh said.
Last year, 196 ACOs saved Medicare money, while 157 ACOs cost more than expected. Medicare ultimately did not realize any savings because it paid out bonuses to 97 ACOs, but only 3 of the costly ACOs had to repay Medicare for losses their patients incurred.
In Oregon, North Bend Medical Center ACO patients cost Medicare $9 million. Spending for those patients was 12% more than projected, the largest gap of any ACO. In Los Angeles, the government spent $20 million, or 11%, more than expected for ACO patients at Cedars-Sinai Medical Care Foundation. That was the largest amount in dollars. Both ACOs had chosen to be exempt from financial penalties.
North Bend dropped out of the program earlier this year.
Cedars-Sinai said its ACO patients ended up more expensive than other previous patients because the hospital added new physician practices specializing in cancer and heart disease, which are among the most costly conditions to treat. In a statement Thursday, Cedars said it unintentionally failed to include those patients in the comparisons it sent to Medicare and was now revising its calculations.
Even some of the ACOs that saved the most money have yet to accept financial risk. Costs for patients at Winchester Community ACO in Massachusetts were 16% less than Medicare estimated. The ACO earned a bonus of $5 million. Catharine Robertson, an executive with Winchester Hospital, said their cost-saving initiatives were created when the ACO was formed. One team at the ACO identified patients as high risk of getting sick and sought to intercede before they ended up requiring hospitalization.
“We’re absolutely thrilled with our success the last few years, but the reality is there’s a lot to learn about population-based management,” she said.
The largest bonus in dollars, $23 million, went to Memorial Hermann Accountable Care Organization in Houston, which was 11% below Medicare’s cost expectations. Christopher Lloyd, the CEO of Memorial Hermann’s ACO, credited its success to a decade’s worth of changes that improved cooperation among physicians and the hospital, as well as the creation of systems to share medical details of patients.
“The ACO when we formed it in 2012 was just an extension of what we were already doing,” Mr. Lloyd said. He said committed ACOs could make the same improvements in 3-4 years. “What took us 10 years to build does not take 10 years to replicate,” he said. Still, Memorial Hermann, like Winchester, is not yet accepting risk.
Difficulties in implementing the program
To wring overall savings for Medicare, the government faces a bind, analysts said. If Medicare makes the potential of repayments mandatory, many existing ACOs may drop out of the program and new ones are less likely to join. If the majority of ACOs continue to risk no financial repercussions, they have less incentive to save the government money. And without showing savings, it will be hard for Medicare to expand the program.
Clif Gaus, president of the National Association of ACOs, said Medicare should be making it easier for ACOs to earn bonuses as they assemble their operations. “Any start-up company, I don’t care who they are, never makes profits in the early years,” Mr. Gaus said. “Starting a health care delivery system is just as hard, if not harder, than starting a Facebook or an Amazon.”
Because Medicare sets its expectations based on national spending averages, “it’s really hard to save money in some parts of the country,” said David Muhlestein, an executive at the consulting firm Leavitt Partners based in Salt Lake City. “We’ve talked to ACOs that have joined the program, started to make changes, and decided that it’s really too much work right now.”
Sharp HealthCare, a well-regarded five-hospital system in San Diego, dropped out of the program last year after concluding it might not be able to avoid penalties. In a financial statement, Sharp said that because Medicare’s assessments are “based on national financial trend factors that are not adjusted for specific conditions that an ACO is facing in a particular region (e.g., San Diego), the model was financially detrimental to Sharp ACO.”
Jeff Goldsmith, a health industry analyst and professor at the University of Virginia who is a longtime ACO critic, said the ACO model is flawed. Consumers do not actively opt to participate in the ACOs and do not share in any savings, so they lack financial incentives to help keep costs down, he said. ACOs also have limited leverage to control the costs incurred by highly paid specialists such as surgeons and cardiologists. Patients in ACOS can still go to any doctor who accepts Medicare’s regular method of paying, in which they receive a set fee based on the nature of the service without regard to its outcome.
“Faux managed care is actually harder to do than real managed care,” Goldsmith said. The ACO program, he said, “has a bad enough reputation in the provider community that is not going to grow sufficiently to replace regular Medicare.”
The Obama administration is more optimistic. The administration said patients are benefiting with better care, as most quality measures Medicare is using to track ACO performance improved between 2013 and 2014.
CMS’s actuaries believe the ACOs are performing better than they appear when compared with the historical benchmarks that the health law established, which CMS has been using. The actuaries employed an alternative method in a report issued last spring, comparing Medicare spending trends in places with ACOs and those without, and concluded that, overall, ACOs were saving money.
Still, ACOs’ appetite for taking risk remains small. The number of ACOs opting for the largest potential bonuses and penalties has shrunk from 32 at the start of the program to 19. Rob Lazerow, an Advisory Board consultant, said, “In a world where ACOs are still optional, CMS still has to make it attractive for providers to want to participate.”
Kaiser Health News is a nonprofit national health policy news service that is part of the Henry J. Kaiser Family Foundation.
