Robert W. Morrow, M.D.

New York Times, February 3, 2018:

Interest rates that are set every day in the global bond markets are already leaping higher, in anticipation of central bank rate increases later this year. On Friday, the yield on the 10-year Treasury note — a widely used gauge for overall interest rates — rose to more than 2.8 percent, the highest level since early 2014.

Rising rates have myriad consequences, including making it more expensive for companies and individuals to borrow money, like for buying a home or a car.

Or your hospitalization. Or your heart treatment prescription.

Investor’s Paradise Lost

I had some money hanging around. What to do? I decided to invest in the bonds of a health system through my retirement fund.

OK, you got me on that one. Some financial wizard who runs my retirement fund invested in MegaCare Wellness. Bought some collateralized debt. It is sure to pay 10%. Should cover my new condo. After all, health care is a growth industry.  Bonds are sure winners.

Whoops.  MegaCare (my generic name for the dwindling number of colossal heath care systems preying on the unhealthy) is “overleveraged,” a term of art that simply means they have so much debt that they cannot hope to pay it all off, at least not without sacrificing other payment obligations, such as to doctors, nurses, etc., i.e. the people who should be delivering the care.  My bonds are now worthless.

The Money Goes Round and Round…

There are also some bucks in the pharmacy merry-go-round as well. Consider the rebate payments that help smooth the drug prescription delivery pipeline flow.  A Pharmacy Benefit Manager (PBM) might include an expensive, name-brand drug as its formulary choice, rather than a cheaper, generic version.  In appreciation for that move, the drug company will arrange a payment back to the PBM.  In the old, Rockefeller Standard Oil days, it was called a “rebate.”  Oh my, it’s still called a rebate!

As the patient, much of the additional cost of the branded prescription comes out of your wallet in the form of a larger copay.  Did you even know that a cheaper drug was available?

Probably not!  And there is a reason why.   The pharmacist, or the distant mail order firm, is working under a contract that gags them.  They are contractually obligated to not let you there is a cheaper alternative.

Could that be true? Cross my heart, no stents yet.

You Can’t Prescribe That!

Let’s talk about another money pot. That is the “prior authorization” scam. Let’s say that I want, as your doc, to prescribe a formulary medicine that requires “a prior auth.” Someone in the practice, often me as the doctor, has to make a call to convince someone at your PBM to approve your use of what is a standard drug, say amlodipine for blood pressure. The usual generic stuff.

PBM’s are harder to reach than the cable company. Cue the hold music.  On my side, either staff time or doc time is required. Frequently enough, we give up, or hold and hold.

The person I reach, however, knows far less about the medical issues than I.  Their expertise, however, is less medical than obstructionist.  They know how to throw up barriers to approval.

Then the denial, then the appeal. The end of the line is a reviewer of denials. OK-the drug is approved… or not.  None of this is medically necessary.  It is all about money, however.

Who profits? If you guessed the PBM, perhaps I’ll be willing to prescribe the proper drug and get beaten up by the process. And yes, this applies to other standard services, such as physical therapy or imaging.

The Greatest (Cost) Healthcare System in the World

Do costs go down? No—rebates get paid. And simple lifesaving meds, such as inhaled corticosteroids for asthma become wildly more expensive, particularly in your co-pays. And the chunk of healthcare dollars to pharma goes up, not just for fancy (and sometimes useless) cancer fighting drugs, but for everyday asthma and blood pressure meds.

Standard asthma and blood pressure medications that used to cost $6 are now $80 or more. Sometimes much more. Every January several PBMs announce I need to change asthma drug A (hypothetically Proair) for drug B (say Ventolin). The next year, the process is reversed. No smiles, no apologies for extra work or different co-pays. The local pharmacist tells the patient that the drug is not covered.  Then the doctor writing the prescription has to try again.

“Which alternative can I use?”

“Can’t say,” says the pharmacist, with a wink.

I have actually been instructed to provide a triply expensive asthma medicine instead of one in use for decades. The new med has a black box warning (meaning the FDA has found this drug causes people to die… sometimes).

Is the US unique in this?  Yes.

Do hospitalizations go up?  Yes.

Did the US death rate go up again for 2017, like 2016?  That’s not a trick question.

The Veterans’ Administration bargains for drugs. Medicare does not. Medicaid sort of bargains. Hospitals get some help, maybe, if they are safety net hospitals.  Does any of this make sense?