Posts filed under ‘Comparative Effectiveness Data’

Pharmaceutical Advertising

As consumers, we are by no means strangers to pharmaceutical advertisements. They are constantly in front of us, whether it is via TV commercials, magazine ads, or billboards along the highway. An article published on the New York Times ( website takes a look at how these direct to consumer advertisements have impacted Americans’ use of prescription drugs. It also discusses how doctors and patients now use checklists that can be found often times online to diagnose ailments and indicate the proper treatment.

The goal of pharmaceutical companies in regards to advertisements to consumers is clear; they want to raise awareness of their branded drug and want consumers to choose their prescription medication to take over others. It has been difficult to prove, however, that advertisements lead to any increase in direct sales as mentioned in the article. Are patients really any more likely to take a particular drug simply because they know of the brand, or do they simply listen to what their healthcare providers tell them to do? And is the information provided in these ads helping the consumer become more well-informed and knowledgeable with respect to what drugs they should be taking?

Many people, me included, seem to find drug advertisements to be a bit of a nuisance. Although I may be wrong, when the time comes for me to begin taking various prescription medications, I think I will let my doctor make the diagnosis and prescribe me whatever drug he or she thinks will work best—regardless of whether I’ve seen a commercial for it or not. Obviously this is not the case with every consumer; there are some that question their doctors on certain brand name drugs. My question is: is it really worth the time and money of pharmaceutical companies to heavily advertise their drugs to consumers? If there is no way to prove that they help sales and many consumers are annoyed by the ads, is the main reason to continue this heavy advertising to consumers simply to keep up with others in the industry?

I assume pharmaceutical companies could save a significant amount of money if they cut back on their advertising, and with little research to support that advertisements help sales, doing so may not have a negative impact. I know I would not be upset with the absence of prescription drug ads in my day to day life and I am sure I am not alone.

Author: Jamie Notaro

Edited by: Ken Chiang


February 28, 2012 at 3:07 PM Leave a comment

Medicare-Democratic Side

As discussed in last week’s blog entry, Medicare is a central issue right now for our country. I went into more detail in that previous post about many Republicans’ desires to increase the privatization of payment for Medicare services, but what do the Democrats want? After Representative Paul Ryan’s (R-Wis.) proposal was released, President Obama shared with the nation what his agenda for Medicare included.  Many members of the Democratic Party believe Ryan’s subsidy plan would be a colossal error. Obama, also not wanting to move to a Medicare voucher system, said in a speech given in April of 20111 that his plan for Medicare would protect the fundamental commitment our country has to the elderly, disabled, and poor, which he and other Democrats feel Ryan’s plan fails to do. The President has outlined several ways in which he will create savings within the Medicare program.

Obama plans to make certain changes that directly affect Medicare beneficiaries. For example, increasing deductibles by $25 in 2017, 2019, and 2021, increasing premiums for higher-income beneficiaries, and increasing the percentage of beneficiaries paying higher premiums from 5%-25%. He also calls for new beneficiaries to pay co-payments of $100 for home healthcare visits starting in 20172. Finally, new beneficiaries who buy private insurance to help fill gaps in Medicare would see an increase in Medicare premiums by 30%. These are all actions to increase the revenue received by Medicare through its beneficiaries. Another target source of revenue in Obama’s proposal is pharmaceutical companies. There would be a requirement for drug companies to lower their rates and pay out additional rebates to low-income beneficiaries. Those producing brand name drugs would pay a rebate of 23% and generic drug makers would pay a 13% rebate3.

These actions to increase revenues could affect the decisions made by both Medicare beneficiaries and many pharmaceutical companies. Those about to enroll in Medicare may choose to take advantage of the program much differently than before changes were made. Also, the drug companies might change what proportions of what drugs they produce depending on how the rebates affect them.

Cutting expenses is another way President Obama plans to reform Medicare. Slowly lowering Medicare payments to nursing homes, home health agencies, and rehabilitation hospitals, cutting payments from nursing homes where large numbers of patients were hospitalized because they did not receive proper care at the home, and reducing payments to hospitals and other providers for bad debts that result when beneficiaries fail to pay deductibles and co-payments are all ways to save money for Medicare4. Implementing these changes will not only save Medicare money, but it will help to change the incentive system and encourage providers to execute higher quality care.

I believe Obama’s plan has positive underlying ideas. Changing the incentive system to provide higher quality products and services for those enrolled in Medicare is a difficult task to accomplish. Making healthcare more accessible and affordable is also a key to the President’s suggested changes. Whether the Democratic Party and President Obama are given the chance to implement their changes, or Paul Ryan and the Republicans are given the opportunity, all who are somehow active in the healthcare system should be ready to make some adjustments of their own.

Author: Jamie Notaro

Edited by: Ken Chiang


1Remarks by the President on Fiscal Policy:

2,4New York Times:

3Kaiser Health News:

February 21, 2012 at 6:01 PM Leave a comment

Medicare & Baby Boomers

A key issue in this year’s upcoming presidential election is the future of Medicare. Nearly everywhere you turn (e.g., 2012 Medicare debate is all about the baby boomers- Yahoo! Finance) people are embracing different ideas to address the shortfalls in Medicare funding. These changes will have a significant effect on health care providers and manufacturers because it has the potential to change how these companies are paid. Impending changes to Medicare will decide whether providers will work with an increasing number of private insurance companies or if they continue to work with government payers to reimburse for the use of their products. As the number of baby boomers enrolling in Medicare continues to rapidly increase at a rate of over 1.5 million enrollees per year1, the issue becomes more and more prominent. Although not a baby boomer myself, I am a potential future Medicare beneficiary, making the future of the program a concern for me as well.

The indicator of Medicare’s financial health that receives the most attention is the Hospital Insurance (HI) Trust Fund. Since 2008, the payments made from the HI Trust Fund have exceeded its total income2. Any basic level of accounting knowledge will tell you, when expenses surpass income, there’s a problem. These deficits support the importance of implementing changes to Medicare, and unfortunately shortfalls like this are projected to continue and accumulate over the next several years.

Representatives of both major political parties agree on certain alterations to Medicare. Some examples of agreed upon alterations include limiting the future growth of federal spending on Medicare by maintaining the current percentage and limiting future growth of its percent of the federal budget, increasing the amount of money coming from upper and middle class retirees through higher out-of-pocket expenses for beneficiaries, and raising the age of eligibility from 65-673 over time

As I touched upon before, the HI Trust Fund is an important indicator of Medicare’s financial stability. This fund is predicted to run out by approximately 20294.  Although this would not be an instant end to Medicare, that money is clearly an important factor to its functionality considering Medicare’s continued consumption on a year to year basis. Congress will compare the budget impact from reducing reimbursement advantages to those of others strategies, such as increases in payroll taxes and changing Medicare from a guaranteed benefit to a subsidy toward the purchase of private health insurance.

One of the biggest divides between political parties in this debate is on privatization of payment for care. Many Republicans would prefer to see increased privatization. Wisconsin Republican Representative and chairman of the House Budget Committee, Paul Ryan, introduced a proposal in April 2011 providing more competition to traditional Medicare by private insurance companies, while still keeping government-run Medicare as an option. Individuals enrolled in Medicare would receive a monthly payment to put toward whatever option they want, while those over 55 would not need to make any changes. Ryan’s plan has been supported by many other political figures such as Republican presidential candidate Mitt Romney as well as Democratic Senator Ron Wyden.

President Obama responded to Ryan’s plan with ideas of his own that involve slightly less savings, $4 trillion over 12 years opposed to Ryan’s $6 trillion over 105. However, these savings would be only partially achieved through cuts in spending, unlike Ryan’s proposal. About half of the savings in Obama’s plan would come from increases in taxes. President Obama has acknowledged privatization as a legitimate idea, but does not support it because he believes it will be too problematic6.

Increasing the number of private insurance companies assuming risk for Medicare beneficiaries, and the way in which they participate from a third-party administrator to covering the elderly as a subsidiary of the federal government changes where healthcare providers receive their payments from. Instead of the traditional government run fee-for-service program, private plans would make the payments, increasing their power in the Medicare system. This may also have an effect on MedSpan’s medical device clients and how their products are utilized. Certain drug therapies and procedures may not be covered or reimbursed in the same way or to the same extent under a private insurance plan as they are under Medicare’s government-run program, altering which devices are used. Privatization would help Medicare maintain a more consistent percentage of the federal government budget instead of continuing to grow. It would also increase the breadth of options beneficiaries would have, based on what different companies are willing to offer. Having more options will result in more personalized care to what each beneficiary wants and needs.

I believe Ryan’s proposal to be the best alternative that has been presented. The current system for Medicare has not proved to be sustainable, so I think making seemingly drastic changes to the structure will give the program the best shot of surviving. The federal government would have a simpler involvement in Medicare should Ryan’s plan be adopted. They will provide the necessary subsidies to beneficiaries, leaving those individuals to choose what is best for them from a broader pool of plans.

This is one of the most critical issues for our clients to keep an eye on, and they should analyze how different changes will affect their business. It is almost certain that some changes will be made, so beginning to prepare now will make for an easier adjustment in the near future.

Author: Jamie Notaro

Edited by: Robert Kaminsky & Ken Chiang


February 17, 2012 at 5:13 PM Leave a comment

Pioneer ACO Model

On Monday, December 19, 2011 the Department of Health and Human Services announced 32 organizations that will take part in the Pioneer ACO model. As you can read in this article linked here ( there was a competitive selection process to see which organizations would participate in the project to be monitored by the CMS Innovation Center.

This model was started in January 2011 and is meant to show how particular ACO payment arrangements can best improve care and generate savings for Medicare. It also tests alternative program designs for future rules that are developed for the Medicare Shared Savings Program. Organizations that partake in this model should have experience operating as ACOs.

The first two years of the Pioneer ACO model are shared savings payment arrangements with higher levels of savings and risk than in the Shared Savings Program and other ACO initiatives. Year three, organizations showing a certain minimum of savings since starting the program will be able to transition away from a fee-for-service model to a population-based arrangement. Pioneer ACOs must negotiate outcomes-based arrangements with payers by the end of year two and are typically responsible for at least 15,000 beneficiaries.

The evolution of healthcare delivery could have an effect on MedSpan’s clients, no matter what segment of the healthcare system within which they function. Improving care while managing costs is a common goal among most businesses involved in healthcare, so staying informed on a potential process that will help accomplish this is of great interest to many.

The 32 organizations adopting Pioneer ACO structures will test various payment arrangements in aims of providing higher quality care at a lower cost. The project hopes to produce $1.1 billion in savings over five years and improve care for approximately 860,000 Medicare beneficiaries by ensuring that each healthcare dollar is spent more wisely. The goal is that patients, especially those that are chronically ill, receive the right care at the right time and unnecessary duplication of services is avoided.

The ideal result of the Pioneer model is to offer more coordinated, patient-centered care. Patients with multiple doctors will have an easier time communicating with each one. Pioneer ACOs aim to decrease the level of fragmented or disconnected care by providing better information to doctors about patients’ medical history and making it easy for them to communicate with their patients’ other doctors. Eventually this mindset will expand to all healthcare organizations, but changing the methods of delivery that have been practiced for so long will certainly not be easy.

Developing adjustments like this to the healthcare industry may bring forward new challenges for everyone. The near future will be an important time for these participants and their potential achievements with the model will affect other healthcare providers and consumers. If they succeed in providing higher quality care at lower costs, others will want to do the same. The results will be closely watched as changes are implemented. Although future success is uncertain, this program could lead to a significant shift in the industry which could hold increased benefits for all.

Primary care providers and other healthcare providers are the decision makers when it comes to participating in an ACO. Data manufacturers will benefit from this model because of the importance that patients and doctors place on the information available from ACOs.  But the organizational information must be well organized and easily accessible to all parties within a particular Pioneer ACO.  If the Pioneer ACOs model is successful, these organizations are likely to be well-accepted throughout the entire country.

Please share your thoughts.


Author: Jamie Notaro

Editors: Robert Kaminsky & Ken Chiang

February 3, 2012 at 11:44 AM Leave a comment

HHA Workers get OT and Minimum Wage

I recently came across an interesting article regarding proposed regulations for home health workers. Sometimes, it is the little things that are not dramatic that can affect our clients’ plans.

As described in more detail in the article below, On Thursday December 11, the Obama administration proposed regulations to give the nation’s nearly two million home care workers minimum wage and overtime protections. Those workers have long been exempted from coverage.  Home healthcare aides are not protected under the Fair Labor Standards Act.  Therefore, their employers are not subject to minimum wage or overtime regulations.

NY Times Article

As home healthcare aides are a rapidly growing work force, raising their wages and providing for overtime could represent a significant increase in financial responsibility for their employers.  One result might be that home health agencies may be forced to cut hours for their workers.  Also, the agencies may not have the financial resources to hire additional aides. In a slowly recovering economy, this would be an unfortunate result for both home healthcare agencies and their workers.

Another result might be that fewer patients may receive home health services or patients may not receive all of the care they need.  Patients might be required to pay more for the home health services they do receive.  Another result might be that home health workers might not be able to make as much as they do now as overtime hours are cut.

            Requiring an increase in wages could slow the growth of the industry, despite the projected significant increase in the need for home healthcare over the next 15-20 years. Slowing the growth of the home healthcare industry could lead to a decelerating rate of growth in the demand for many home healthcare products. If the availability of home healthcare services is curtailed, might that lead to an increase in direct and indirect healthcare costs?  For example, limiting access to home healthcare could encourage the use of more costly providers or an increase in negative outcomes as patients go without the care they need.

Now, what are your thoughts? 

December 20, 2011 at 2:56 PM Leave a comment

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