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The Keckley Report

Medical Education Step 1 Change is a Small Step in the Right Direction

By February 17, 2020March 1st, 2023No Comments

Last Wednesday, the U.S. Medical Licensing Examination (USMLE) announced a major policy change: the compulsory exam known as Step 1 would cease to be reported with a three-digit score but instead become pass/fail as early as 2022. That’s big news for America’s 92,758 medical students in America’s 192 Schools of Medicine and Osteopathy.


The change to pass-fail by USMLE was made in part to “address concerns about Step 1 scores impacting student well-being and medical education.” It’s the first of the 3 tests required of aspiring medical doctors seeking licensure in the U.S.:

  • Step 1, a one-day exam typically taken midway through medical school, tests a candidate’s knowledge of science. It covers anatomy, behavioral sciences, biochemistry, microbiology, pathology, pharmacology, physiology, nutrition, genetics, aging and others.

  • Step 2, which has both clinical knowledge (CK) and clinical skills (CS) components and is taken before matching into a residency program

  • Step 3, a two-day exam usually taken after the first year of residency assesses whether medical school students or graduates can apply medical knowledge and understanding of biomedical and clinical science essential for the unsupervised practice of medicine, with emphasis on patient management in ambulatory settings.


Changing the Step 1 test to pass-fail is a small step toward modernizing physician training in the U.S. While it might help students concentrate on their pre-clinical studies with less stress, it’s unlikely to dramatically change how tomorrow’s clinicians prepare for practice in the real world.

Short-term, it will make Step 2 Exam scores used by residency directors to review applicants for their coveted slots even more important. But the larger issues in medical training are not being adequately addressed.

Medical school is stressful: a fourth of medical students suffer from depression or other mental health disorders. Most aspire to practice medicine in settings void of political infighting, financial pressures and second guessing from administrators and patients. To the vast majority, medicine is a calling. They’re young, diverse, competitive and smart. They are the first generation of digital natives acclimated to artificial intelligence, electronic health records and data-driven decision-making.  And 9 of 10 leave med school with six-figure debt while facing a 3-to-5-year residency ahead.

Is it time to re-think how we train our future physician workforce? Yes. They play a major role in the issues of affordability, cost-containment, patient adherence and appropriate use of medications, surgeries and tests. Their accountability for and competencies in addressing these has not been hard-wired into their training.

The good news is that medicine still attracts young people who feel called to the profession of healing. The bad news is the realities of the profession are changing faster than their training. Regrettably, innovations in medical training have been incremental. Step 1 pass-fail is a case in point.



“No More Numerical Scores for USMLE Step 1 Exam: New pass/fail policy aims to reduce over-emphasis on test performance” MedPage February 14, 2020;

“USMLE Step 1 pass/fail winners and losers” KevinMD February 13, 2020


Trump 2021 Budget Cuts HHS

Last Monday, the administration unveiled his fiscal 2021 budget plan to Congress. “The 2021 Budget requests $94.5 billion for HHS, a 10% decrease from the 2020 enacted level.  The Budget proposes $1.6 trillion in net mandatory health savings, reducing longer-term deficits by eliminating wasteful spending while preserving beneficiaries’ access to care, enhancing competition, and prioritizing Federal resources for the most vulnerable.” Other highlights:

  • Veterans Affairs Department + 13%

  • Work requirements for food stamps and Medicaid,

  • Additional cuts to Medicaid disproportionate-share hospital payments from 2025 through 2030

Several of these policies were in HHS’ fiscal 2020 budget request.

“A Budget for America’s Future” The White House February 10, 2020

Surprise Medical Bill Legislation Nearing Passage, Private Equity Surveillance a Potential Add-On

Surprise medical bill legislation is working its way through House committees. The remaining issue involves the methodology for setting benchmark payment and arbitration for disputes. Meanwhile, the House Ways and Means Committee advanced a bill Wednesday to force private equity firms that own physician practices to provide the federal government with information on payments and real estate investments. The bill would require private equity owners that have a controlling stake in a medical provider to file information with the Internal Revenue Service on Medicare payments and the mortgage and rent payments the firms get from providers. Sponsors want it added to surprise billing legislation.

’Doctors Push Back As Congress Takes Aim At Surprise Medical Bills’ NPR February 12, 2020
King “Private equity firms in Congress’ crosshairs with legislation calling for transparency” Feb 12, 2020

Iora Completes Series F Funding

Iora Health, a Boston-based startup aiming to improve primary care with tech-enabled offerings, recently received $126 million in a series F funding round from investors around the world. To date, Iora Health has received $350 million in funding. The company operates 48 practices that serve thousands of Medicare beneficiaries across the U.S. In 2019, Iora patients averaged more than four visits during the year and had around eight virtual interactions with their care teams. Iora cites a 40% decrease in hospitalizations due to improved patient engagement.

“Iora Health Closes $126 Million Series F Funding Round” February 10, 2020


Health Cost Containment Institute: Employer-Sponsored Coverage Costs Increased 4.4% in 2018

Per-capita health spending for 160 million Americans in employer-sponsored health plans grew by 4.4% in 2018, the third consecutive year of increases above 4%. Highlights:

  • Annual per-person spending among the commercially insured, after accounting for inflation and drug rebates that help reduce premiums, grew by 3.8% between 2014 and 2018.Three-quarters of that rise was attributed to hospitals, doctors, drug companies and others raising prices.

  • The average out-of-pocket price for emergency room visits jumped 37%, from $368 in 2014 to $503 in 2018.

  • The average price of drugs administered in doctors’ clinics (i.e. infusions) increased 73% from 2014 to 2018.

  • Higher prices accounted for nearly three quarters of spending growth between 2014 and 2018, while increased utilization accounted for 21%.

“Health Care Cost and Utilization Report (HCCUR)” Health Care Cost Institute;

Study: Coverage Expansion Did Not Improve Affordability

Expanded insurance coverage has not resulted in improved healthcare affordability. Using data from the Behavioral Risk Factor Surveillance System, a national survey conducted between 1998 and 2017, the researchers found:

  • the percentage of adults who were unable to afford to see the doctor when needed increased by nearly one-third, from 11% to 16%.

  • In 2017, individuals who were uninsured were about three times more likely to say they couldn’t afford health care than those with coverage.

  • between 1998 and 2017, more and more people with serious illnesses like diabetes and heart disease said they couldn’t afford doctor visits. By 2017, nearly one-fifth of all adults with at least one serious chronic disease said they couldn’t afford doctor visits.

JAMA Internal Medicine; “Health Insurance Affordability Concerns and Health Care Avoidance Among US Adults Approaching Retirement”;

Study: Rural Populations Experience Unique Problems

This survey conducted by researchers at the Harvard T.H. Chan School of Public Health of 1300 rural adults in 2018 and 1405 in 2019 found:

  • Rural adults primarily identified as non-Hispanic white (78%), while 8% identified as Hispanic or Latino, and 8% as non-Hispanic black. 81% of rural adults did not have a college degree and 55% were 50 years or older vs. 44% aged 18 to 49 years.

  • Rural adults think the most urgent major issues in their communities are opioid/drug addiction/abuse (25%) and eroding economic conditions (21%).

  • Opioid or other drug addiction or abuse was reported as a serious problem in their local community by 57% while 49% said they personally know someone who has had opioid addiction.

  • Problems paying medical bills were reported by 32% of rural adults, and recent issues with accessing health care were reported by 26% of rural adults.

  • 55% rated their local economy as only fair or poor, and 49% of rural adults said they would have difficulty paying off an unexpected $1000 expense.

  • 58% of rural adults saw a need for outside help to solve major community problems, and among those who reported needing outside help, 61% identified a major role for government.

Findling et al “Views of Rural US Adults About Health and Economic Concerns” JAMA Netw Open. 2020

Study: MA Enrollees Use High Quality Hospitals Less Frequently than Medicare fee-for-service

The Brown University research team examined 7,130,610 Medicare beneficiaries in 2016: they found that MA enrollees less often entered either low- or high-quality hospitals and were more often admitted to average-quality hospitals. For nonemergent hospitalizations, MA enrollees were 1.9% points less likely to enter a low-readmissions hospital, 5.1% more likely to enter an average-readmissions hospital, and 3.2% less likely to enter a high-readmissions hospital compared with traditional Medicare enrollees. Patients with MA were also 2.6% less likely to enter a 1- to 2-star hospital, 5.5% more likely to enter a 3-star hospital, and 2.8% less likely to enter a 4- to 5-star hospital compared with traditional Medicare enrollees.

Meyers et al “Comparison of the Quality of Hospitals That Admit Medicare Advantage Patients vs Traditional Medicare Patients” JAMA Netw Open. 2020

DOJ: Healthcare Fraud Recoveries Up

Civil fraud recoveries by DOJ rose to more than $3 billion in the fiscal year ending September 30, 2019 (FY 2019) as compared to $2.8 billion in FY 2018.  Recoveries attributable to the healthcare industry were $2.6 billion in FY 2019 (87% of total recoveries) – up slightly from $2.5 billion in FY 2018. Whistleblowers filed 633 new lawsuits under the False Claims Act (FCA) in FY 2019– slight drop-off compared to prior years, but brought the total number of FCA lawsuits filed since 2010 to more than 6,600.  For their efforts, whistleblowers recovered more than $265 million in their share awards in FY 2019, bringing the total awards to more than $2.1 billion in the last five years
“Healthcare Fraud and Abuse Review 2019” Bass Berry and Sims

CDC: Medical Debt Going Down, Still Impacts One in 7 Households

From 2011 to 2018, families who said they had difficulty with medical expenses in the past year dropped from 19.7% to 14.2%. It is worse in black households: (20.6%) and least prevalent in Asian households (7.1%). Insurance coverage is a key factor: 11.8% of adults 18 to 64 in families having problems with medical bills had private insurance vs. 27.4%for those lacking coverage. Among Medicare enrollees, Medicare Advantage seniors were better off than the elderly with traditional Medicare only (8.3% versus 12.4%).

Cha et al “Problems Paying Medical Bills, 2018” NCHS February 2020

Study: Quality of Neonatal Care in Hospitals Varies Widely

In this cross-sectional study of 1,754, 852 births from 576 US hospitals, hospital rates of severe unexpected complications in term newborns ranged from 0.6 to 89.9 per 1000 births. Hospitals with high newborn complication rates were more likely to care for younger, white, less educated, and publicly insured women with more medical comorbidities compared with hospitals with low complication rates. The risk for unexpected neonatal complication increased by more than 50% for those neonates born at hospitals without a neonatal intensive care unit compared with those with a neonatal intensive care unit.

Clapp et al “Patient and Hospital Factors Associated With Unexpected Newborn Complications Among Term Neonates in US Hospitals”

IBM Truven Report: Drug Spending More than Inpatient Spending in Commercial Population

“Analysis of the three most recent years of data from IBM Truven MarketScan®, the Medicare Limited Data Set (LDS), and Medicare Part D and Part B finds that prescription drug spending (retail and physician-administered drugs) appears to have surpassed inpatient spending in the commercial population (see Appendix for methodology). Population growth and aging, the number of prescriptions per person, general inflation, drug prices, and the introduction of high-cost novel drugs are all contributing to this trend. The drug spending analyzed here does not account for manufacturer rebates or discounts. Recent estimates suggest that gross-to-net reductions paid by drug manufacturers, most of which come in the form of rebates, equaled US$166 billion in 2018. “

“Drug and inpatient spending lines are crossing How might emerging therapies accelerate these trends?” Deloitte Insights February 6, 2020

Sherlock: Up to Half of Health Plan Administrative Costs Benefit from Scale

Managed care expert Doug Sherlock studied administrative costs in 33 Blue Cross plans concluding “ that functions comprising a range of approximately 11.7% to 40.7% of health plan administrative expenses exhibited economies of scale.”

“Economies of Scale in Health” Sherlock Company February 2020