Blog Page 995

POLICY: Pay or Play in California signed into law


In what may be one of his last acts in office depending on how tomorrow’s recall vote goes, yesterday Gray Davis signed SB2. I’ve written more extensively about what SB2 is and more importantly what it isn’t in this post. Essentially it’s a play or pay mandate for businesses with more than 20 workers who don’t provide health insurance.  If the business has more than 200 employees it will also have to provide insurance to the families of the workers. Most importantly it won’t take effect for more than two years or more than 3 years for smaller businesses (20-200 employees), and it doesn’t impact businesses under 20 employees at all and business between 20-50 employees will get a tax credit to cover (some of) the costs of the insurance they have to buy.

So we can expect:
a) a hell of a fight in the next two years by California’s business lobby (in particular the fast-food industry)  to overturn the law in the courts and by referendum
b) a lot of consultants emerging explaining how to restructure your business into several businesses with less than 50 or 20 employees each (depending on how that tax credit works out)
c) (when the law takes effect) some combination of job losses/higher prices for consumers as we see in Hawaii —  all dwarfed by the real driver of the employment market in California which is the national economic state of high-tech, entertainment and the defense industry.
d) gradual acceptance of that fact that that’s a cost of doing business here which the vast majority of employers were paying anyway (OK some editorial in that comment from me!)
e) more legislation to reduce medical care costs (as there is no cost control in SB2).

Of course the major issue behind all this is that 75% of the uninsured in America are full-time workers (and their families)  in low wage industries. Most of them work in businesses too small to be affected by this law, so it will only get some 1 million of California’s 7 million into insurance.

Friday Funny


So I’m a very messy guy who’s insensitive to what’s happening around me and likes using the TV remote control — a massive P rather than a J on the Myers-Briggs scale. I have had several girlfriends who are extreme Ps, i.e. total neat freaks, who somehow have found this a problem.  Medical Rants today explains that it’s not that I’m a slob, it’s my brain’s fault!

PBMs: The very, very begining of the end for PBMs?


You may remember my post somewhat facetiously titled The End of Managed Care. The concept was that managed care plans had stopped trying to manage physician behavior and had given up in the face of aggressive class action lawsuits from doctors who wanted to get paid more quickly and objected to being "down-coded".

Well the lawyer behind that suit is turning his sights on the PBMs on behalf of some smaller pharmacies. The new suit filed today alleges that the PBMs are forcing patients to use their mail-order services instead of the local pharmacies (which seems likely but probably not illegal to me) and are forcing unfair contracts upon small pharmacies (which if your definition of "unfair" means "using your buying power to extract lower prices" also seems likely but not illegal). Still, worth watching this space and seeing if yet more legal antics for the PBMs actually has any effect on their business. As someone who completely underestimated the impact of the backlash against managed care, I’m loathe to say that this seemingly hopeless suit will have no impact on PBMs.

TECHNOLOGY: Health tech spending grows


Gartner says healthcare IT spending is going to $41 billion next year and will be $46 billion in 2005. This sounds like a very big number to me. Back when I was looking at this intently in the late 1990s, estimates of healthcare IT spending varied from $4 bn to over $2O billion. Of course it all depends what you mean by health care and what you mean by IT spending.  The $4bn number probably only really means software and some hardware for the provider sector–and is equivalent to the revenues for the top 100 health care software companies. The bigger number probably includes communication technology as well as hardware and all software for all health care companies including the pharma market.

In any event the reasons given for the increase are HIPAA concerns, increased pressure for CPOE and the move to wireless.  That’s clearly all true, and given the reduction in IT spending in other industries, it’s good news for the health care IT industry.  It’s hard to parse out the data for those HC software companies as the two biggest, SMS and HBOC are part of Siemens and McKesson respectively.  McKesson’s information unit (the old HBOC) only had a 4% year on year increase last quarter. However, another big player, Meditech,  does post its numbers in its Annual report, which show a big revenue increase from $216 million the dark days of 2000 to $256 million last year–more than a 10% annual growth rate.

QUALITY QUICKIE: Practice Variation by Race


Researchers in John Wennberg’s shop at Dartmouth have come out with another stunning analysis of practice variation published in the new England Journal of Medicine (NEJM). This time it’s not region that makes a difference, but race of the patient. Essentially the article says that you are much less likely to receive a common type of knee surgery if you are black or hispanic than if you are white.

We’ve know for a long time that outcomes and health status are impacted by race and socio-economic status (SES).  For instance black males in Harlem have much lower life expectancy than average.  Similarly, despite the 50 years of Universal Health Insurance and care from the National Health Service in the UK, SES or "class" level there has a marked impact on health status and outcomes. In fact variation in employment status within the same SES, also has a large impact (and not surprisingly it’s better to be at the top than the bottom), as shown in the classic British Whitehall Study. And of course we also know that access to care for those without insurance is worse in the US than for those with insurance.

However, I believe that this is the first example in the US showing that access to a specific type of care for those in the same insurance category is very different.  I don’t know why black seniors in the US have knee surgery at half the rate of white seniors.  I suspect both patient demand, and physician culture have something to do with it.  I also don’t know which rate of knee surgery is better.–especially as last year the NEJM published a study that said that in the case of osteoarthritis, knee arthoscopy was no better than placebo. But it is clear that race and presumably other social factors influence the treatment that is given to patients with similar conditions for no good reason.

(Alerted to this by California Healthline)

TECHNOLOGY: New tools for e-detailing


The crush of detail reps all trying to break into the physician office has been causing headaches for some time.  Not only for the poor office staff but also for their pharma company CFOs.  Although Pfizer’s success in the past decade has been based mainly on expanding its field sales force, the truth is that detail reps rarely get more than one or two actual presentations in to doctors per day.  Most of their time is spent sitting in the waiting room, and hence the need to deliver cookies, tickets to sporting events, dinners and other bribes knowledge-enhancing opportunities to physicians. Now that PhRMA and the AMA have "agreed" to new guidelines restricting what a detail rep can give to a doc, the physician’s incentive to see the rep has declined even further.  Meanwhile eDetailing may provide some answer to getting the message out. (For much more information on the eDetailing market see here) Manhattan Research reported recently that (some fraction of) 49% of doctors were likely to use eDetailing. (Note: I don’t have the full numbers, so I’m extrapolating somewhat vaguely here).

The problem has been getting some technology that’s easy and convenient in front of the docs. Companies like iPhysiciannet and RxCentric have taken a high bandwidth approach, including sometimes actually putting IDSN lines and computers in physicians offices. But they have often required an actual appointment time, which is a pain in the rear and an actual cost for a busy doc. And, of course, it’s pretty expensive.

On interesting new approach for eDetailing is a tool called Av-Mail. This allows a pharma co to send an email to a doc.  At a time and place of their choosing, physicians can click on a link on the email, and view a relatively short combined powerpoint/voice-over presentation.  Click here to see what it’s like. Something like this might be a reasonable answer to getting in front of docs at very a low cost.  How effective it is in increasing script writing I don’t know, but I suspect it’s not as much fun as a free trip to Hawaii.

THE INDUSTRY: Price Discrimination lives–Only the poor pay full price in U.S. healthcare system


In an article on CBS Marketwatch, titled Only the poor pay full price, Michael Collins points out from a business point of view, the crazy pricing scheme in the U.S. healthcare "system". I had a similar experience last year when I had knee surgery.  I bargained heavily with my surgeon who wouldn’t take managed care contracts.  For the facility charge, the bill I saw was $20,000 but the facility only collected around $8,000.  Meanwhile a surgeon billed me over $100 for a second opinion, but the PPO only paid $43. I remember this back in 1990 in Alain Enthoven’s class.  Several hospital representatives in the class used to complain about being forced to give managed care plans "discounts".  Enthoven called hospital billing a "fiction".

Collins makes the obvious point that if you do not have insurance, you will be charged the full price.  The provider may not expect to get their money, but if you have any assets, the hospital/clinic will come after you for the money–and you’ll be paying at the full rate, which no insurer pays. 

In fact it may be worse.  If you do have insurance and you pay 20% of the fee, your insurer may make you pay them 20% of the full fee, while they get the negotiated discount that my classmates complained about.  Several Blues plans had plenty of legal problems when they were caught doing this practice in the mid-1990s, including Trigon (Virginia) which in essence was forced to pay large fines several times over in order for the state Attorney-General to allow it to turn for-profit. (I can’t find a reference to this but it was a big deal before they could get their S1 registration out in 1996).

Transparent pricing would appear to help everyone.  But for historical reasons (the need for cross-subsidizaton within providers from rich to poorly insured patients) it hasn’t emerged. Now for business reasons, no one wants to reveal their "deal". This is as true for hospital and physician care, as it is for drug rebates, and it gives the lie to health care being a "free" market.

Healthsouth Quickie


Following onto the recent post about the problems of for-profit health services, which highlighted Richard Scrushy, HealthSouth’s CEO, in the last couple of days another former HealthSouth honcho has plead guilty to falsifying records.  For those of you scoring at home that makes 15 execs admitting guilt so far. Healthsouth ended up claiming more than $2.5 billion in false profits a la Enron.  Also today the Corporate Counsel and Corporate Secretary just quit. Cleaning up the mess can’t have been too much fun.

More details on the Medco suit


Here’s what Medco said in its IPO offering document last April:

    In February 2000, two qui tam, or whistleblower, complaints under the Federal False Claims Act and similar state laws were filed under seal in the United States District Court for the Eastern District of Pennsylvania. These
    complaints allege improper pharmacy practices, violations of state pharmacy laws and inappropriate therapeutic interchanges. We have not been served with the complaints and have not been required to defend against the allegations.

Well now that the US Attorney is joining the suit, it appears that the "practices" included
"Inappropriately filled prescriptions includ(ing) instances where a Medco pharmacist said he consulted a doctor but didn’t, or when a prescription was canceled suspiciously".  The stock market doesn’t seem to care, based on the fact that the existence of the suit was disclosed in the S1. However, the US Attorney is being very aggressive claiming that the government can charge $5000 for each script that was affected, and that there are thousands and thousands.  It’s worth keeping an eye on this one as PBMs may find their future in whatever comes out of the Medicare Drug Coverage bill is affected by this publicity–whether or not Medco is found guilty and fined a huge sum.

Did Astra Zeneca treat innocent MDs as Babes in the Wood? by Matt Quinn


Matt Quinn wrote this post about doctors charging Medicare for samples given to them by drug companies. Astra Zeneca has already settled with the Feds at  a cost of $330m for promoting that behavior. As I’ve mentioned many time, I think Medicare’s structure makes it easy to defraud, so I don’t place all the blame on the docs.  I actually think Matt’s a little over-critical of physicians (and by extension drug companies) here.  But Matt used to work in the business of marketing oncology drugs to physicians and knows many of the tricks. So bear that in mind when you read his post below:

    A federal judge is blaming a pharmaceutical company (Astra Zeneca) for a physician, Dr. Saad Antoun, billing for (injectible) samples of their drug which he was given for free: "The judge said Antoun appeared to be ‘the kind of doctor everybody wants to go to and that this was a mistake of bad judgment fostered upon you by the drug company.‘" The full story from the Report on Medicare Compliance is here.
    My question: if this doctor is so helpless as to 1) not ask Astra directly about "misleading labeling" regarding billing for samples 2) not ask his peers/staff about the legality of billing for samples and 3) not do the (minimal) research needed to know that it violates federal law and 4) follow the directions of a drug rep in running his practice and treating his patients, how much faith should anyone have that this guy is competent in his profession?  Would it be the drug company’s fault if he used Zolodex improperly and it harmed or killed a patient?  Perhaps the label was "misleading" or the drug rep told him about an off-label use that he had heard about.
    My take is that Dr. Antoun knew exactly what he was doing — or should have.  Egregious pharmaceutical marketing only works because physicians allow it to work.  If physicians rejected trips, graft in the form of "unrestricted educational grants" and honoraria, free meals, gas, and concert tickets and other "non-scientific" aspects of drug marketing, then the companies would stop spending money on this stuff.  But many physicians don’t.  External agencies only need to regulate a profession when members of that profession can’t conduct themselves ethically.  I guess Judge Farnan can’t understand this and refuses to keep up the government’s (taxpayers’!) side of the deal.