How Payment Impacts Care in Diabetes - and How Things Are Changing

In an ADA session called "Follow the Money," panelists led by Joslin Diabetes Center's Robert A. Gabbay, MD, PhD, FACP, discussed the diabetes cost burden, insulin costs, and payment models.

The United States spends far more per patient, both with and without diabetes, than the rest of the world. And the current effort to fundamentally change what is rewarded in healthcare—to “burn the boats” as one speaker put it—will ultimately be good for providers in the intuitive, less procedure-driven field of diabetes care.

A hall mostly filled with clinicians came to hear a diverse panel at “Follow the Money—How Costs and Payments Impact Diabetes Care,” presented Friday, the opening day of the 76th Scientific Sessions of the American Diabetes Association (ADA) in New Orleans, Louisiana. The symposium was chaired by Robert A. Gabbay, MD, PhD, FACP, chief medical officer at Joslin Diabetes Center and editor-in-chief for Evidence-Based Diabetes Management, a publication of The American Journal of Managed Care.

Neda Laiteerapong, MD, MS, an assistant professor at the University of Chicago School of Medicine, who presented on behalf of Elbert S. Huang, MD, MPH, FACP, offered an overview of the staggering burden of diabetes and healthcare costs generally in the United States—including the well-known data from ADA that diabetes and prediabetes cost $322 billion a year.1 While diabetes is rising globally, Laiteerapong said, what sets the United States apart is how much more this country spends person—and how our successes in eliminating complications, like amputations, are contributing to the cost.

She reviewed data that show how incidence of diabetes per 1000 population soared through the 1990s and has leveled off or even declined in the last few years. What’s rising is prevalence—which means people are living longer with the disease. “This is actually a success story. We have improved survival for people with diabetes,” she said. The downside is that caring for people with diabetes for the long term is very expensive.

Insulin Prices Draw Fire

Laiteerapong discussed a recent cost concern—rising insulin prices. Since 2006, she said, costs have steadily increased. The symposium’s second speaker, health economist David H. Howard, PhD, of Emory University, discussed drug pricing, and distinguished between the list price at launch—the one published in news reports—versus the one paid later on existing drugs still on patent, and finally prices paid for off-patent or generic drugs.

Despite high list prices, he said, insurers and pharmacy benefit managers have been aggressive about demanding discounts, and while there is a lot of secrecy about the process, available data suggest diabetes therapies enjoy greater discounts than most drugs.

But rising insulin prices worry providers who care for persons with diabetes; those with type 1 and advanced type 2 disease need the hormone to stay alive. Howard looked at diabetes therapy from a long-term perspective, citing a study that appeared in The American Journal of Managed Care (Cunningham).2 The study found that the share of nonelderly adults with diabetes spending more than 10% of family income on insurance premiums and services fell in the 8-year period between 2001 and 2009, and Howard noted the importance of examining long-term trends.

During the question-and-answer session, physicians challenged the use of older data they said did not reflect the out-of-pocket experience patients see today, given current insulin prices and new benefit structures under the Affordable Care Act.

While some new drugs offer significant value, Howard said, there are others that charge high prices but offer marginal benefits. Too often, the prescribing of costly drugs is driven by “nonclinical factors,” and when patients have insurance, there’s little incentive for physicians to avoid higher cost therapies, he said.

As much as physicians might dislike prior authorization, Howard said, it does help keep drug prices lower than they might be otherwise. He anticipates changes to the Medicare Part D program because both presumptive nominees for president in 2016 favor changes to allow negotiating power. The best solution, he said, is using comparative effectiveness trials to show which of several drugs in the same class do the best job.

Redesigning the System

Both John Donlan, MA, of the Steward Health Care Network in New England and Gabbay highlighted the importance of good diabetes care in achieving reimbursement goals, as healthcare continues down a value-based path.

Donlan told the clinicians present that while they have dedicated their lives to making people well, the larger system had perverse incentives. Referring to the data from Laiteerapong, “Incidence and prevalence are up because we’ve designed a system to financially incentivize incidence and prevalence.”

He then showed a timeline of how his health system of 9 hospitals, 2700 physicians and 300,000 managed care lives began changing course in 2008, with the first line being, “burn the boats,” or stop doing everything they had been doing. As a community-based health system competing with world-famous names in the Boston area, Steward had to offer value to compete, and it has by becoming an accountable care organization, Donlan said. It’s taken part in the Pioneer and now the Next Generation ACO programs, and dipped its feet in the world of the Medicaid ACO, which requires negotiations with state government in addition to commercial health plans.

He walked the audience through sets of financial scenarios to show how much money could be lost by “failing to manage” diabetes among Medicaid or commercially insured populations. Donlan was challenged later about the fact that patients bear responsibility, too, and what can be done about that? Patient engagement, he said, must be part of every stakeholder’s responsibility.

Enter MACRA and MIPS

Gabbay assumed the role originally set for former FDA Commissioner Mark B. McClellan, MD, PhD, who recently took the helm of the new Duke-Margolis Health Policy Center. He explained to the audience—many of whom were from overseas—that there’s a distinction between the “partisan” elements of US healthcare reform, like Medicaid expansion, and the “bipartisan” elements, like the need to get away from fee-for-service.

“The politics of healthcare reform have been pretty interesting in United States to say the least,” he said.

Historically, there’s been lots of spending on drugs and end-stage complications and much less on prevention. Innovations like better insulins and continuous glucose monitoring might lead to more spending, but they also help people live longer, and that’s not a bad thing, Gabbay said. The question is how to reward clinicians who take the time on prevention, to educate patients on nonmedical strategies—or ‘high value” activity.

Gabbay reviewed how the shift to payment for quality has been difficult because figuring how to measure this activity isn’t so simple—and the early attempts by CMS to do so were complicated. They recently been simplified in legislation adopted in 2015 that got rid of the old Sustainable Growth Rate.

The Medicare Access and CHIP Reauthorization Act (MACRA) collapsed several existing programs into a 4-part rating system that will start paying physicians in 2019 but will be based on activity in 2017.

CMS proposed the rule for the Merit-Based Incentive Payment System or MIPS, in late April and is taking comment through June 26, 2016. It folds together the Physician Quality Reporting System, the Value-Based Payment Modifier, and the Medicare EHR Incentive Program into a single entity. Gabbay described it as “pay for performance on steroids.”

As he explained, payment for value will be based on a score across 4 domains: quality, resource utilization, technology use, and practice improvement. A key feature of MIPS is the doctors’ ability to tailor the measures they use, based on the nature of their practice.

How CMS will measure quality is not completely defined, Gabbay said, and he encouraged the clinicians present to weigh in. He explained that 1 of the 6 measures must be a “cross-cutting” measure, which for endocrinologists could how many patients have A1C < 9%.

Among the options for the other 5 could be making sure patients get a lipid test, how many patients have their low-density lipoprotein < 100, how many received an annual eye exam, and an annual BMI screening and follow-up.

Having good data will be critical, and practices should start talking now about how they will get ready for this process, Gabbay said. While change can be challenging, those who treat diabetes will be more important than ever to the broader healthcare cause. “Quality will be more and more important,” he said. “For those of us who don’t do procedures, this is a big win.”


1. Economic burden of prediabetes up 74 percent over 5 years [press release]. Alexandria, VA: American Diabetes Association; November 20, 2014.

2. Cunningham P, Carrier E. Trends in the financial burden of medical care for nonelderly adults with diabetes, 2001 to 2009. Am J Manag Care. 2014;20(2):135-142.

Related Videos
View All
Related Content
© 2023 MJH Life Sciences
All rights reserved.