Healthcare reform, rising costs: A conversation with Paul Keckley about America's 'Bitter Pill'

Journalist Steven Brill has been making the rounds promoting his new book, "America's Bitter Pill: Money, Politics, Backroom Deals and the Fight to Fix Our Broken Healthcare System."

The book details the behind-the-scenes political infighting and industry lobbying over the Affordable Care Act (ACA). This week my colleague Ron Shinkman gave his take on Brill's latest piece and the different light it casts on healthcare finance from the prism of his social status.

Last week Brill published a piece in Time about his personal experience of being a patient at New York Presbyterian where he had open heart surgery. It's a fascinating account--one that health economist and policy expert Paul Keckley, Ph.D., writes in MedCity News is a piece worth reading because, "It reminds us that healthcare is a different industry more than any other, not simply because of its size and complexity but also because in times of need, like his, none of that matters."

"For Brill, the $190,000 price tag for his heart surgery was money well-spent: he survived," Keckley, managing director of the Navigant Center for Healthcare Research and Policy Analysis, writes. "But he concedes much could have been saved had it been delivered in a different system of care. And that's the bitter pill he swallowed."

This morning I spoke to Keckley, pictured left, about Brill's latest book and some of the author's assertions that the ACA doesn't address cost containment and that the healthcare reform law will not lower the country's healthcare costs in the long term.

Keckley is well-versed on the ACA. An independent, he participated and facilitated in meetings between the White House Office of Health Reform and major health industry trade groups as the law was being developed. Since March 2010, he's read the law in its entirety once a month--a feat in itself, considering it's about 900 pages.

Although Keckley acknowledges there are "all kinds of hanging chads in the law" and Brill makes several sound arguments, he says the journalist didn't get all the facts right. "I think the biggest concern that I have is that he's opining to the fact the Affordable Care Act is absent addressing anything that addresses cost," he told me during the exclusive interview.

"From an objective standpoint, there are elements of the law that seek to address cost reduction over time, including things like caps on spending, like the much-debated independent payment advisory board, demonstration and pilot problems, like accountable care and bundled payments, patient-centered medical homes, value-based purchasing and avoidable readmissions," he says.

The law also limits physician self-referrals, requires manufacturers of drugs and medical devices to report financial transactions of value to physicians and teaching hospitals under the Physician Payment Sunshine Act, and requests transparency in insurance policies and what they cost, using common language.

While it's reasonable to question the effectiveness of those policies and programs, Keckley says it's inaccurate to say the law doesn't address costs at all. It's harder for the public to grasp those efforts, he says; the push to increase access to insurance was "front-end loaded" in the law, while most of the efforts to reduce costs were back-end loaded.

"It's more difficult to understand delivery changes and transition from volume to value and pay for value," Keckley says. "It's more of an inside baseball discussion."

Though healthcare spending growth has slowed, Keckley does predict that, as the economy improves and more people have health insurance, the costs will spike again. The biggest challenge the healthcare system faces, he says, is engaging consumers so they become rational users of healthcare. "We haven't figured it out. As insiders in the industry, we still like to see consumers as patients and them waiting on us in exam rooms. We like them to consider us decision-makers. And that's absolutely inconsistent with where the healthcare system has to go," he says.

Patients need to be able to make better decisions when they face major healthcare problems and events. The patient needs to ask, do I need this drug? Is there an alternative to this procedure? If not, is there a place I can get it done with a good outcome but substantially lower cost? "We aren't close to that," Keckley says. "In a moment of fear, most people default to what the doctor says they need to do and doctors don't give any thought to what something costs. None."

Another flaw in Brill's assertions, Keckley says, is that the hospital chargemaster is the culprit for markups in hospital services. "He rightfully challenges the chargemaster, but the reality is there is not a hospital in the country that collects remotely close to the chargemaster. Hospital revenue is based on negotiated rates, not on retail charges, " Keckley says. "I'm sure every hospital CEO would love to get those charges."

Brill also has made a point that, if the industry took out insurance administrative costs, the country would save 10 to 20 percent of costs. Keckley says those administration costs for health plans are actually in the 6 to 8 percent range. "And that's not industry self-reporting, that's based on core administrative functions. So that 10 to 20 percent isn't a credible number," he says.

Overall, Keckley says Brill's book points out systematic flaws in a big and complicated industry and addresses them objectively. "I have no animosity or concern he is being misleading, I just want to get a set of facts on the table." --Ilene (@FierceHealth)

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