Quiet Medicaid rationing and the need for comparative effectiveness research

A quiet case of streetcorner Medicaid rationing highlights the need for comparative effectiveness research.

(This piece is cross-posted at The Century Foundation’s Taking Note section.)

Mona Mangat has a nice post over at Doctors for America (a group I advise). Her column conveys some of the street realities of providing safety-net care and the value-subtraction entailed by our fragmented health insurance system:

I currently participate in 5 private Medicaid plans. Four of them require paper claims for reimbursement as well as onerous authorization procedures. I currently care for a 4 year old child with recurrent seasonal wheezing that has concomitant growth delays. I have attempted to treat her with a leukotriene modifier drug. Her private Medicaid provider denied my request, insisting that I use a generic nebulized steroid preparation. I engaged in a peer-to-peer review to try and get approval (that lasted 15 minutes over the phone), after exhausting 3 levels of paper prior authorizations. The friendly doctor I spoke with apologized that the drug could not be approved and when pressed for a reason, his answer was clear- COST. My patient will have to be placed on a medication that could further stunt her growth when a safer option is available, because her privately administered Medicaid insurance plan needs to make more profit.

Such stories indicate why everyone involved–insurers, patients, policymakers–desperately needs a legitimate evidence-informed process based on clinical judgment and comparative effectiveness research.

An expensive, potentially valuable drug is available that may greatly benefit a patient. The insurer doesn’t want to pay for it. It thus creates a process to either deny reimbursement or to make it more difficult, cumbersome, and unpleasant for doctors to prescribe this sort of thing. The doctor believes her patient needs the drug, and is willing to invest the time to pursue it. We need some legitimate, evidence-informed process to indicate whether and when such medications are reasonable to use.

Yes, this process will ultimately require some attention to cost-effectiveness. Some hard bargaining needs to go along with that, too. There is one missing element in the story: How much is the drug company charging Medicaid for this product? Is that reasonable? Costs and even insurer profits are valid considerations. These issues needs to be addressed through some transparent process that commands public legitimacy that protects people from the hidden and harmful forms of rationing Mona’s patient is now experiencing.

Insurers cannot address these issues on their own–in Medicaid or anyplace else in the American healthcare system. They have no standing to do that, even though in some ways that is precisely what they need to do in managing patient care. Their track record, particularly within the individual and small-group market, has not earned the public’s trust in making delicate judgments that balance issues of costs and patient well-being. The industry desperately needs some external referee that commands this kind standing.

That’s one reason why insurers should support a strong Independent Payment Advisory Board included in last year’s health reform. Ironically, that’s also a reason the industry should support serious public regulation of its own behavior. If the insurance industry fails to win greater public support and legitimacy, it will face a much more punitive reaction than anything included in last year’s health reform.

Finally, we need to raise Medicaid funding and reimbursement rates so that providers and Medicaid managed care plans have the resources to treat every patient and family with the humanity that everyone deserves. If it would be reasonable to demand that my child have the more costly medication to avoid stunting her growth, it’s reasonable to demand that Mona’s patient have it, too. We need to pay for that.

Author: Harold Pollack

Harold Pollack is Helen Ross Professor of Social Service Administration at the University of Chicago. He has served on three expert committees of the National Academies of Science. His recent research appears in such journals as Addiction, Journal of the American Medical Association, and American Journal of Public Health. He writes regularly on HIV prevention, crime and drug policy, health reform, and disability policy for American Prospect, tnr.com, and other news outlets. His essay, "Lessons from an Emergency Room Nightmare" was selected for the collection The Best American Medical Writing, 2009. He recently participated, with zero critical acclaim, in the University of Chicago's annual Latke-Hamentaschen debate.

10 thoughts on “Quiet Medicaid rationing and the need for comparative effectiveness research”

  1. So you are saying the Comparative Effectiveness Reviews are not death panels, but can actually be used to promote a more expensive treatment if it’s actually effective? Knock me over with a feather, I’m surprised.

    I’ll suggest now we call them Life Panels.

  2. I sure hope you’re right about the “punitive reaction.” But I’m not sure what makes you think our ill-informed populace is ever going to get a clue about healthcare. It seems what you’re saying is that the public could shame private insurers into doing the “right thing” if we had more data. But private insurers’ *only* job is to make profit. Nothing else. They don’t care about actual health, at least not in any active way.

    You’re right that some kind of cost-control or rationing is necessary, in any system, but I don’t agree that these people understand anything besides the language of money. If the better drug costs more, they’re still not going to want to use it. And if you’re saying the better drug might cost less over the long-term, I’m not even sure they’d care about that!

    I don’t blame them personally. I’m just saying it’s a rotten system and we need to get rid of it. If there is a market fix for this problem, how come no one’s thought of it yet? (Market fix not including faux insurance sold across state lines, of course. Unless it’s to clairvoyants.)

  3. Criminalize for-profit health insurance. Make it a felony. As NCG says, it is a rotten system.

    Non-profit and mutual insurance, if carefully regulated, could conceivably work as efficient administrators, particularly if supported by tax-financed “wholesale” single-payer and a government monopsony regulator of provider prices.

  4. Bruce:

    “Criminalize for-profit health insurance.” Wow. That would be fun, but I thought I was radical to think it should simply be nationalized with Medicare-for-all.

    Thank you for trying to shift the Overton Window a ‘shade’ to the left 😉

  5. Are you sure about the doctor’s assertion regarding efficacy of leukotriene modifier vs. inhaled steroids? Are you really sure that you understand the evidence regarding growth retardation with the use of inhaled steroids?
    I think you are badly underinformed on both these questions and are too much reliant on your doctor friend’s personal opinion vs. evidence. This comes from someone who hates the current system and believes that incurance companies are generally primarily motivated by profit considerations, but also believe that individual doctor’s ofter arrogantly substitute their gut feel for actual evidence and are swayed by the new and branded vs. the old and generic.

  6. anon: Seems to me the point is that we don’t know. The doctor thinks yes (but then a doctor would), the insuror thinks no, but the insuror has no credibility, and apparently the available data aren’t conclusive. That’s why you need people who do have credibility to do the studying and make recommendations.

  7. Actually, we do know. I was trying to be polite; the doctor is wrong and the insurance company is right. Let me know if you need cites but they are easily googled or pub-med if you don’t trust google.

  8. And the comment about it being a cost issue is somewhat true, but mainly it was probably a dodge so that the person did not have to come right out and call the person ignorant (at least ignorant is better than stupid). Been there, done that in a different situation (explaining why stockpiling tamiflu was inappropriate in the bird flu scare).

  9. In other words, if you want to pursue low-hanging fruit at a very low cost, you save a lot of money and lives by constricting doctor’s flexibility instead of running more studies.

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