1 American health care and Medicare: high cost and variable quality

“It’s the prices, stupid.”

This was the conclusion of a seminal paper published a decade ago explaining why the USA outspends peer countries on health care without providing more services [1]. Ten years ago, Americans spent an unprecedented 13 % of the US gross domestic product (GDP) towards health care costs. Today, that figure has ballooned to 17.9 % [2]. The American health care system is unsustainably expensive. Costs remain particularly high for elderly patients and those near the end-of-life, as half of health care expenditures originate from the sickest 5 % of the population [3]. Furthermore, health care spending correlates poorly with health care quality and has not been shown to decrease treatment variation or improve access to care [4, 5].

Although Americans pay a heavy premium for health services, this has not ensured the highest quality of care. Compared to its counterparts abroad, the US has the largest percentage (42 %) of chronically ill patients who skip care due to costs and is tied for the largest share (20 %) of patients who believe that they experienced no benefit from recommended treatment [6]. Life expectancy in countries such as Japan, UK, France, Germany, and Switzerland has improved at a faster rate than that in the USA from 1970 to 2003 [7]. By 2004, the US life expectancy was 97 % of those found in the peer countries. Furthermore, administrative costs account for 30 % of US health care spending, which is twice the proportion of Canada’s cost and even higher than other peer countries [8].

Rising health care expenditures also threaten the stability of vital public safety net programs such as Medicare (Table 1). Since 1965, Medicare has provided medical coverage to American seniors (age ≥ 65) and, since 1972, has extended coverage earlier to patients with permanent disability or end-stage renal disease [9]. Last year, Medicare insured 48.7 million Americans, and Medicare expenditures now account for 20 % of all US health care spending [9, 10]. With the retirement of 79 million baby boomers imminent, the number of Medicare beneficiaries will also rise sharply [11]. As a result of these factors, Medicare will be insolvent by 2024 in the absence of spending cuts or increased inflows to the program [9].

Table 1 Overview of Medicare parts A through D
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A related roadblock is the inconsistent delivery of care and high variation in health care utilization, which surgeon Atul Gawande describes as the “the cost conundrum” of American medicine [12]. In his examination of a publicly available Medicare dataset (www.dartmouthatlas.org), Gawande found one of the highest per capita Medicare spending rates in the country to be in the small, coastal city of McAllen, Texas. Much of the large health care expenditures in McAllen were related to frequent utilization of cardiovascular procedures, including double to triple the expected rates of coronary artery bypass, percutaneous coronary intervention, and pacemaker and defibrillator implantation [12]. In contrast, the nearby city of El Paso featured half the per capita treatment costs despite having higher morbidity and poverty. Gawande’s simple comparison demonstrates that the costs and quality of care can differ vastly, even among adjacent localities. Similar conclusions have been reached in the Get With The Guidelines (GWTG) program, where differences in outcomes for heart failure (HF) and coronary artery disease (CAD) were attributed to factors such as physician concentration, socioeconomic status, and type of health care insurance [13, 14]. Likewise, among Medicare populations, both propensity of testing and treatment for cardiovascular conditions tend to vary across geographic regions without a consistent connection to outcomes [15, 16].

2 Impact on cardiac electrophysiology

Electrophysiologists are acutely aware of rising health care costs, as they frequently encounter patients with high morbidity and mortality due to conditions such as atrial fibrillation (AF) and heart failure. In 2006, the direct cost of AF treatment in the USA was estimated at US $6.65 billion [17], driven by frequent hospitalizations, complications, and high-cost procedures such as catheter ablation. Similarly, direct costs for HF are estimated at US $39.2 billion [18]. Although this includes non-arrhythmia care, a major contributor to the figure is the substantial penetration of implantable device-based therapies.

Apart from escalating per-patient costs, cardiac electrophysiology is expected to see a rise in total costs driven by increased demand for services. For example, the incidence of AF has increased by 13 % in the last two decades, and up to 16 million Americans will develop AF by 2050 [19]. Patients are also developing AF at a younger age, which may lead to a sharp rise in pre-Medicare spending on AF. Delivery of cardiovascular care will be critical as reductions in cardiovascular disease have already accounted for 70 % of the gains in life expectancy over the last four decades [20]. However, this will occur at significant cost.

3 Notable provisions of Federal Health Care Policy and Reform

In an effort to remediate problems such as high costs, disparate access and quality, and the impending insolvency of Medicare, Congress has enacted a variety of policy-directed legislation. In 2006, Congress passed the Tax Relief and Health Care Act. This legislation established monitoring of Medicare payments through the Medicare Recovery Audit Contractor (RAC) program to detect over- and underpayments. During the initial 3-year pilot, the RAC program identified US $1 billion in improper payments in six states [21]. When expanded nationwide, RAC audits were projected by the House Ways and Means Committee to recover US $10 billion. Moving forward, every electrophysiologist should be prepared for two forms of RAC audits: complex and automated. While the former allows auditors to request 300 patient records every 45 days, the latter can occur at any time without notice through online records [21]. These RAC audits are separate from the investigation audits conducted by the Department of Justice (DOJ), which will be described in detail below.

In 2009, the Health Information Technology for Economic and Clinical Health (HITECH) Act was included as part of the American Recovery and Reinvestment Act. The HITECH Act allocated US $19.2 billion to create health IT infrastructure and encourage “meaningful use” of electronic health records (EHRs) [22]. Two years after its passage, over 90,000 health care providers and hospitals had participated in the federal EHR program [23, 24], which is purported to reduce costs and improve efficiency of health care delivery. However, EHRs may fail to reduce the ordering of unnecessary diagnostic tests, as posited by proponents [25]. Furthermore, none of the step 1 requirements for meaningful use reflect the complexities of managing arrhythmia patients, such as the need for structured data collection processes or open exchange of the complex and voluminous data obtained from in-person and remote device interrogation.

In March 2010, the landmark Affordable Care Act (ACA) was signed into law. Colloquially known as “Obamacare,” this legislation includes measures to expand coverage to as many as 30 million Americans. The ACA also pilots new reimbursement models for Medicare that will especially impact acute care hospitals to reduce the part A shortfall. ACA programs include value-based purchasing initiatives, bundled payment demonstrations, accountable care organization (ACO) pilot programs, and hospital readmissions pilot programs, which are detailed in Table 2. Although these initiatives apply to Medicare, commercial insurers have pledged to adopt certain measures for privately insured populations [26].

Table 2 Notable payment reforms and pilots in the ACA
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4 Threats to Medicare physician reimbursement

Despite notable payment reform undertaken in the ACA, the issue of physician reimbursement remains unresolved. The sustainable growth rate (SGR) was instituted in 1997 to determine Medicare physician payment by factoring in the national inflation and GDP. The formula raised physician reimbursements for Medicare services above the rate of inflation from 1997 through 2001 but has subsequently projected steady payment rate cuts. In that time, Congress has repeatedly delayed these rate cuts 11 times without providing a long-term solution to modify or repeal SGR [27]. Table 3 shows three possible strategies for SGR reform and their expected fiscal impacts.

Table 3 Proposals for the sustainable growth rate reform
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Another source of concern has been the prospect of a new Medicare Independent Payment Advisory Board (IPAB) as stipulated in the ACA. This 15-member board would provide binding payment cut recommendations for Medicare directly to Congress. If Congress were unable to agree upon budget offsets to replace the proposal, the Department of Health and Human Services would be directed to implement the IPAB plan [28]. The launch of IPAB would cede much of Congress’s traditional oversight on Medicare to an unelected board, but its repeal could cost an estimated $3 billion between 2018 and 2022, according to the Congressional Budget Office [29]. The House of Representatives has passed multiple bills to repeal IPAB, but the proposals have failed to muster a majority in the Senate.

5 Increased comparative effectiveness research

The Affordable Care Act also established a nonprofit Patient-Centered Outcomes Research Institute (PCORI) to promote use of comparative effectiveness research to impact real-world clinical decisions. This represents a reversal by Congress, which had banned the use of comparative effectiveness research (CER) in 2003 for drug coverage decisions in Medicare part D [30]. The 19-member PCORI consists of health care industry leaders, and although its suggestions are nonbinding, the Center for Medicare & Medicaid Services (CMS) can still weigh the institute’s research as long as it is not the sole determinant of a coverage decision. PCORI may have a greater influence through the Medicare IPAB, which can consider the institute’s work in its proposals.

Increased comparative effectiveness research has the potential to improve clinical decision making in cardiology but will also pose unique challenges for cardiac electrophysiology, in which high-risk patients, often with limited overall life expectancies, are treated with complex and high-cost therapies. The Agency for Health Research and Quality’s recent CER analysis of radiofrequency catheter ablation compared to various medical treatments for atrial fibrillation [31] serves as a model for what to expect for future government-funded CER work in electrophysiology (EP). Although economists estimate that strict adoption of CER-based management strategies could save up to US $3.0 billion per year [32], it remains unclear if CER will actually improve medical decision making, treatment access, health care efficiency, or cost containment as envisioned. Unfortunately, emphasis on comparative effectiveness research will create major challenges for cardiac electrophysiology in terms of adoption and diffusion of new technologies, since high-cost interventions will be constantly reevaluated for coverage and reimbursement.

6 Accountable care organizations

Another key provision of the ACA includes a pilot program to expand use of Accountable Care Organizations. An ACO is a group of coordinated health care providers that abides by payment and delivery models that link reimbursement for the care of Medicare beneficiaries to both cost savings and quality measures. An ACO would agree to manage all of the health care needs of a minimum of 5,000 Medicare beneficiaries for at least 3 years (see Table 2 for more details).

The rationale for Congress to include ACOs in the Affordable Care Act is to incentivize health care providers and care systems to provide improved quality of care and to assume financial accountability for the quality of care delivered. By focusing on significant sources of health care expenditures such as avoidable diagnostic tests, treatments, and hospital admissions, ACOs are expected to reduce overall costs for the treatment of Medicare beneficiaries but will also be judged on the basis of 33 pre-determined quality metrics [33]. ACOs will not completely eliminate fee-for-service medicine; rather, they are expected to enhance fee-for-service (FFS) medicine by allowing more local-level planning and coordination, rewards and penalties for performance, and experimentation with alternative payment and delivery models that can reduce costs [34]. Similar to other organizational models like independent physician associations and physician-hospital organizations, ACOs will also attempt to achieve their goals through increased collaboration between clinicians [35]. Already, more than 150 ACO contracts have been distributed by CMS for the care of 2.4 million Medicare beneficiaries, and over 400 new organizations have declared interest to apply in 2013 [36].

Successful ACOs can improve coordination between primary care physicians, specialists, and clinical staff, where other payment models in the ACA fall short [35]. This promise is alluring for managed conditions such as AF and HF where care is often fragmented among multiple physicians and clinical staff [37]. Yet, ACOs are hardly a panacea. To achieve shared savings, these organizations will be incentivized to shunt patients to low-cost therapies, preventing some from accessing costlier but life-saving treatments such as implantable cardioverter-defibrillators. Additionally, certain electrophysiology procedures, such as ventricular tachycardia ablation, are expressly reserved for life-threatening situations and would certainly contribute to high costs in outlier patients.

ACOs may also suffer from lack of physician buy-in, especially if doctors view the imposition of newly encouraged “integration” as a disruption to clinical workflow [35] or established collaborative practices between multiple physicians caring for the same patient. Finally, these organizations have yet to prove results in rural and underserved areas, where limited resources and understaffing threaten the formation of effective ACOs [38].

7 Disadvantages of reform under the ACA

While the Affordable Care Act offers bold suggestions for reform, potential pitfalls exist. For example, quality of care in EP may suffer under the hospital readmissions program. Data from the Veterans Affairs’ national health care system have demonstrated a divergent trend between rehospitalization and mortality in HF patients, a paradox that indicates readmissions to be beneficial for certain managed conditions [39]. However, proposed quality measures could still mitigate a decline in quality of care. For example, for implantable cardioverter-defibrillator (ICD) implantation, reporting for 30- and 90-day major complication rates has been proposed, along with additional requirements for in-person evaluations following device implantation [40]. Yet, the use of quality and performance reporting could impel physicians or ACOs to avoid treating high-risk patients. Recent evidence suggests that among Medicare beneficiaries with acute MI, use of percutaneous coronary intervention was lower in states with public reporting of outcomes compared to states without such requirements [41].

Like the hospital readmissions program, value-based purchasing (VBP) initiatives may not improve quality of care. Value-based purchasing pilots will attempt to incentivize quality by redistributing a portion of Medicare reimbursements to reward high-performing physicians, health care providers, and institutions (see Table 2). To date, the largest hospital pay-for-performance demonstration most closely resembling VBP initiatives has been CMS’ 6-year pilot, Premier Health Quality Incentive Demonstration. A recent Medicare claims analysis discovered that the program did not improve outcomes for myocardial infarction, heart failure, or patients receiving coronary artery bypass grafting [42]. Despite VBP initiatives, a majority of hospitals will experience minimal change to reimbursements [43], which may render the program ineffective.

Overall, reimbursement models endorsed by the ACA assume that hospitals and health care providers can improve quality of care when rewarded for improvement or penalized for underperformance. This approach to health care reimbursement could have hidden consequences when expanded nationwide, including higher costs passed onto the privately insured patients if Medicare reimbursements fall short of treatment costs. This paradigm has been observed with Medicare in the past [44].

8 Increased oversight and DOJ investigations

Recently, the Department of Justice began investigating the appropriateness of ICD implantation, fueled by evidence that many patients receive ICDs outside of evidence-based indications [45]. Steinberg and Mittal [46] relate the experience of a university-affiliated hospital in New York which modified its clinical review process for ICD implantation after a DOJ audit. As the DOJ continues its investigations, hospitals and practitioners may similarly be advised to refine documentation of comorbidities including criteria for ICD implantation. Additional steps should be taken to ensure adequate coding in electronic health records when reporting to the National Cardiovascular Data Registry, run by ACC and HRS [45].

The ongoing audits may prevent the improper placement of ICDs but may also result in a loss of benefit when these devices can be used appropriately but outside of DOJ or RAC evidence guidelines [46]. Further research may be warranted to capture the costs and burdens of patients who may not receive a procedure or intervention but may have otherwise benefitted.

9 Threats to innovation

Finally, the emergence of new threats to innovation could prevent novel drugs and devices from reaching the market. Cardiac device manufacturers have expressed particular opposition to the 2.3 % excise tax levied on all revenues for device manufacturers, beginning in 2013 [47]. Critics argue that the tax will send jobs abroad, pass considerable costs on to consumers, and force smaller device manufacturers to cease operations.

Another roadblock to innovation appears at the level of medical device coverage and reimbursement in Medicare. To qualify for reimbursement, a medical device must fall within a Medicare benefit category, must be “reasonable and necessary” for the patient, and must not meet any statutory exclusions [48]. However, the significant lag in data used to update reimbursement rates creates a disincentive for utilization of new technologies because of the high costs of treatment and lack of commensurate coverage.

10 Health care reform: a summary

Overall, the US cannot sustain its torrid pace of health care spending. Reform of the system will begin to address roadblocks to accessible and high quality care for all; however, such reform will also add new regulatory burdens and unique challenges for the field of cardiac electrophysiology and all providers of heart rhythm care.