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This Week in Health Care Reform: October 5th, 2018

Drugmakers continue to raise prices with impunity; ER usage declines as urgent care becomes more popular; lawmakers target rising air ambulance costs; and, hospital mergers are shown to yield minimal supply chain savings.

Week in Review

Drug Price Increases: The rising price of insulin has put many, already-vulnerable diabetic patients at risk.  According to the Health Care Cost Institute, between 2012 and 2016, insulin prices nearly doubled.  In fact, doctors say that the price of the drug has spiked even more dramatically, costing three times as much today as it did a decade ago.  Unfortunately, a pervasive lack of transparency makes it increasingly difficult to understand the drug’s price spike.  A separate investigation undertaken by the Associated Press (AP) found that, despite finding themselves the target of increased political scrutiny and rhetoric, pharmaceutical manufacturers continue to increase the prices of brand-name prescription drugs.  By analyzing more than 26,000 list price changes from January 1 through July 31 this year, the AP established that there were 96 price hikes for every one reduction.

ER Utilization: Visits to emergency departments are on the decline as patients with minor medical conditions are opting to head to urgent care centers instead, at least according to a new study published in JAMA Internal Medicine last month.  In examining more than 20 million claims between 2008 and 2015 for “low-acuity” conditions, researchers found that visits to emergency departments decreased by 36 percent, while visits to non-emergent care facilities, including calls in to telemedicine services, increased by 140 percent.  Further, spending per patient per year for these conditions went up 14 percent over this period, largely owing to the 79 percent increase in cost per emergency department visit.

Air Ambulance Transparency: As written about last week, consumers may soon find themselves better protected from outrageous air emergency service bills, which in some regions, average around $60,000.  Air ambulance companies have long benefitted from a 40-year old federal law banning states from regulating rates, routes, or services of commercial airlines, which courts have ruled to include air ambulance charges.  However, Congress has taken up the issue, most recently by means of a proposed bill introduced this year to clarify that that previous 1978 statute could not prevent states from regulating air ambulance medical costs

Minimal Savings:
The continued transition to population health and away from traditional fee-for-service medicine has not been without consequences to hospitals’ bottom lines.  The industry’s slowness to adapt to this changing reimbursement model has only served to further worsen this impact.  One way hospitals have tried to respond is by touting the benefits of mergers and acquisitions, as health systems look for ways to bundle purchases and standardize services.  However, a new paper shows that these aggregations fail to yield the savings executives point to as justification for these deals.  If anything, when these organizations come together, these inefficiencies are only exacerbated.  Specifically, the prevalence of decentralized data and poor contract management throw up barriers to hospitals realizing these purported savings.  Further, standardization is hamstrung by larger health systems’ inability to get participating doctors to agree on physician preference items, such as suppliers.      

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