Sorry, so the title is another bad attempt to be imitate an old Spanish movie but the problem is real enough. If the formula is, increase the number of jobs available without insurance, add more people moving into a county without regular access to physicians, reduce the number of community clinics, and limit the amount of services at county hospitals, then the result will be more and more people showing up in the ER at other local hospitals. And of course if this is in LA County, all those problems are going to be magnified. The study claims that at "40 private hospitals reporting jumps in
emergency room visits by the uninsured, the cost of caring for them
rose from $63 million in 2000 to $77.5 million in 2004." So amazingly enough, the health care system for the people at the bottom appears to be connected to the one for the rest of us? Who’d have thought it, in this day and age when there are no social problems, no issues with inequality, and we’re all happy in Arnie’s golden state?
POLICY: Krugman on the international health care context
Paul Krugman has a great column out about the international health care context, called The Medical Money Pit. There’s nothing new or original that THCB readers or Health Affairs readers won’t already know. We spend more and basically get less, but we lead the league in surgeons driving Porsches. But it’s very good that someone is raising this issue outside of pure policy wonk circles. Even Krugman seems stunned that our government spends so much more per head than other governments which cover all their people, and all we get for it is Medicare for seniors and crappy coverage for the very poor. And by the way those numbers don’t count the role of the Feds and states as employers paying for health care coverage for 10 million government workers–if you add that in, the government share of spending is higher (although that math doesn’t really matter as we don’t cover any more people because of which column you put the spending in).
What Krugman doesn’t say is that, in general, government spending in those other countries guarantees a basic level of care for everyone, and that the rich (even in the UK, but not in Canada) can trade up with their own money for a nicer class of waiting room or to jump the line. And they do, and there’s not only nothing wrong with that. It doesn’t destroy the basic fabric of the social system. And if we had universal health care here, it would be true here too, and there would be nothing for those in the upper social tiers here to be afraid about. But you won’t find that rumor getting out when this gets discussed politically.
PBM: Caremark apparently about to face fraud charges?
Writing in The Street Melissa David says that a 6 year-long investigation of Caremark receiving overpayments for Texas Medicaid is about to result in indictments. Caremark stock reacted poorly to the rumors.
Of course indictments and charges are nothing new in the PBM industry, and will only become more common when Medicare Part D is introduced next year. Why? Well the whole industry runs on secrets, and no-one really understands what’s going on, despite the attempt to develop "transparent PBMs".
PHARMA: Patients are stil “complieant”
Patients don’t take their pills properly. Some estimates are that 30% of written scripts are never filled. Now there’s a new Harris study out showing that 33% of patients are actively non-compliant. Of course if all these patients took all the pills that they were supposed to, then pharma costs would be much higher — Datamonitor is quoted as saying that’s $30 billion a year higher (or 15-ish percent). And of course if they all took all their pills properly overall health costs would be much lower, right? Right? (Where is the echo from PhRMA when you need it?). Still the cost impact of non-compliance is something to ponder.
PS "Complieant" was my add to the "just-off" definitions list run on THCB a few weeks back.
POLICY: Super Size This! By John Pluenneke
As if the US fast food industry didn’t have enough worries with new labeling rules under discussion at the FDA and the campaign for healthy school foods being led in California by the Governator, there is more bad news on the way. Morgan Spurlock’s Super Size Me has been edited down and re-released so that it can be shown to middle school and high school audiences. The film, which shows Spurlock’s physical deterioration over the course of a month as he consumes a steady diet of Big Macs, fries and sodas, has won praise from nutritionists for its depiction of the health problems junk food can lead to. Perhaps objectionable segments, like the moment where Spurlock’s vegan chef girlfriend discusses the impact of his fast food diet on his penis with almost eery clinical detachment have been edited
out. What sort of impact could the film have? According to a
report in Newsday, students in New York went on strike last week after watching the film, demanding healthier food. Could this mean a wave of radical civil disobedience might follow at school cafeterias and vending machines across the country?
INDUSTRY/POLICY: Diabetes primer
Sorry — was crazy busy yesterday, so light posting today. Meanwhile if you want to see something interesting, on the Pfizer-sponsored site Health Politics, Dr Mike Magee has a primer on Diabetes in the US.
HEALTH PLANS/POLICY: It will stagger you to find out that health care competition may not result in better quality!
Now I want you all to sit down comfortably and drink a glass of water before you read this article. Says here (in a story cribbed from the academic journal Medical Care) that Health care competition may not result in better quality. The study found that HMOs in places where there was less competition between HMOs did better on HEDIS scores. Oddly those where there was more enrollment in HMOs also did better on HEDIS scores (though not as well on consumer satisfaction). All suggesting that a single monopoly HMO probably does best of all on quality. Um, does this sounds like anywhere we know? Well now you’ve all recovered from the shock, let’s review what little that we know on the subject.
a) Competition amongst health plans and HMOs is not about the competition to produce the best quality care. It’s about the competition to insure as many as possible of the people least likely to need it. Harsh but fair words.b) In general health plans have little ability to control what medical providers do, and providers are the ones who do the things that make up HEDIS scores. Consumer satisfaction with health plans has to do with customer service reps, not health care quality which the average consumer wouldn’t recognize even if it showed up as their prom date.c) The more health plans there are in an area the less each plan’s ability to get providers to do anything, as they’ll be responsible for a very small part of the provider’s businessd) As Porter, Enthoven and a host of other bright people have pointed out, competition such as it exists in the US system is in the wrong place (see point a).And e) no one in the real world, where people and employers vote with their money, cares about HEDIS or has even heard of it.
I hope no one working hard in a health plan feels too offended. Sorry for feeling bloody minded tonight, but my next chore is to do my taxes! I’m sure you understand!
HEALTH PLANS: Are there any winners from the high deductible games?
The LA Times had an article this weekend about how patients were leaving HMOs to go PPOs which were essentially high deductible plans. The article claims that the new trend is leaving HMOs in an Unstable Condition: as Members Bolt to Other Plans.
Ignoring the fact that it’s the same corporate parents who provide both types of insurance product, so the HMOs per se (with the possible exception of the still highly profitable Kaiser) are not exactly becoming "unstable", there are two connected but somewhat obscured issues here. The total cost of treating an HMO patient is still somewhat cheaper than treating a comparable PPO patient, but much more of that cost is now pushed onto the consumer/employee so the premiums are cheaper for the employer/payer. Where Blue Cross’ new high deductible plan called Tonik and other low price (but not low cost!) plans come in is that they are an attempt by one insurer or another to favorably slant their overall risk profile — as insuring healthy people is a much easier way to make money than taking proper care of sick ones. This is not new. Prior to its sale to Aetna in 1996 US Healthcare was expert at paying off brokers to find them better risk groups in the early 1990s. Aetna forgot to use that technique when they bought them, but certainly has rediscovered how to improve their risk profile in the last five years. All plans have been playing this game forever, this is just a new variant. Look for the coda at the end of this article for more information about brokers being paid off by plans. (In the case of Aon, the pay-offs were allegedly at the insistence of the broker but you can imagine that they weren’t being paid bribes to deliver the groups with the worst risk profiles! Eliot Spitzer for one has noticed).
Meanwhile the AMA’s wet dream of an HSA with the consumer paying (a price of the doctors choosing!) at the point of service is plain wrong. I’ve been hearing this fantasy from physicians in focus groups since 1994! But the truth is that, even with the high deductible plans, payment will still go through the insurer and all the rigmarole that they put the providers through to get paid will still exist. It’s just for the high deductible plans the money will now come out of the consumer’s bank account. In fact it’ll be harder for the provider to collect from those consumers without an HSA linked directly to their health plan’s account (which my guess is over 90% of HSA holders presently).
I know. I have one of these plans and when I had surgery last year I made all my providers wait several months until after my plan finished totally messing up my deductible calculations and finally got the amounts right before I paid out a penny! The providers still had to send in all the medical notes, I still got (mostly wrong) EOBs, I still had to spend hours and hours on the phone with confused and beleaguered customer service reps, etc, etc. The only difference was that when all was said and done the providers had to come after me for a big share of the money. Luckily I had the money set aside. How many Tonik members — supposedly young and relatively poor extreme-sports types — will be able to say the same?
Funnily enough I’m not even sure that the games pay off that well for the plans. In 2003 I was offered an underwritten PPO that was originally quoted at $63 a month for a $2000 deductible/$3,000 max out of pocket. When they found out about my previous knee surgery the premium quote went up to nearly $400 a month! Instead I bought a short term plan (from a subsidiary of the same company!) for about $70 a month. And then when, as their underwriters had guessed correctly, I needed more surgery it all eventually cost (in terms of actual money paid out to providers) about $7000. That would have been roughly the same as my original premium payments ($4,500) plus my maximum out of pocket ($3,000). In other words for the original plan a $7,500 patient would have been one on which they’d have broken-even but as I went with the non-underwritten plan that I assume is similar to Tonik, which didn’t quite cover so many conditions (e.g. no pregnancy coverage, and excluded diabetics, cancer patients, etc up front) , I paid about $3000 less in premiums. So they lost money on me! Were there no "bare-bones" short term plan available, aimed primarily at younger healthier people, I’d have probably ended up paying up for the more expensive version. (Luckily I’m in a buying group now that gets me the $400 premium plan for closer to $200!)
Of course if all the health plans get this right then, while the risk pool will continue to fragment overall, more consumers will end up holding the bag. But it’ll eventually be a zero sum game for the insurers as they all have to figure out how play the risk-avoiding game as well as their competition, which will end up with all their risk profiles the same. Then they’ll have to think of the next bright idea to get a competitive edge! I smell consulting dollars….
CODA: Meanwhile if you want to know a little more about the games played by health plans to get the better risks, or perhaps to make sure that they don’t get stuck with the worst ones, take a look at this article that I swiped from Managed Care Week. (They don’t put out an online version but they sometimes reprint articles in AIS Health Business News.
Complaints filed by five state agencies against one of the nation’s largest insurance brokers offers a behind-the-scenes look at how insurers allegedly compensate brokers for steering insurance business.
Connecticut Attorney General Richard Blumenthal (D), Illinois Attorney General Lisa Madigan (D) and New York Attorney General Eliot Spitzer (D), along with state insurance commissioners in New York and Illinois, on March 4 said they reached a $190 million settlement with Aon Corp. for "soliciting and accepting kickbacks to steer business to favored insurers." The complaints outlined alleged payments made by health insurers including Aetna, Inc. and WellPoint, Inc. subsidiary Anthem Blue Cross and Blue Shield of Connecticut to Aon Corp. in order to win business from Aon’s clients.
The case never went to trial, and Aon said it admitted no wrongdoing or liability in the settlement.As part of the agreement, Aon CEO Patrick Ryan apologized and acknowledged that some Aon staff members engaged in improper conduct. But he also said he did not agree with several allegations in the complaints.
The settlement was unveiled five months after Spitzer filed lawsuits against a major broker and four insurers in the property and casualty industry. That suit kicked off a nationwide probe into how brokers are compensated for steering business to one insurer over another.
According to Blumenthal’s complaint, employers paid Aon a fee to select "the best insurance coverage for the best price." But Aon made it clear to Aetna, Anthem and other insurers that their products would not be selected unless the insurers made additional "back-door" payments that "were folded into the overall premiums paid," the filing said.
These payments — which Blumenthal derided as "kickbacks," — "have the potential to compromise Aon’s objectivity and improperly influence its brokerage and consulting decisions by directing business to insurers that pay overrides and withholding business from those that do not," the complaint asserted.
The complaint also charged that Aon did not report the commissions, overrides and other payments to clients, and pressured insurers to omit such payments from their reports to employers on Internal Revenue Service Form 5500 and other documents.Blumenthal’s complaint offered the example of Manchester, Conn., which paid Aon an annual fee of $14,350 to help it select health insurance for employees. The town’s request for proposals "specifically insisted that the winning broker only accept a commission from the town." Meanwhile, according to the complaint, Anthem was paying Aon over $1 million per year in various commissions, overrides and other payments. The complaint charged that "the steering evidently worked for, interestingly, Manchester, and every other Connecticut municipality that retained Aon Consulting for its health coverage, ended up with insurance from Anthem Blue Cross Blue Shield."
Aetna initially resisted paying override commissions to Aon, the complaint alleged. It quoted several internal Aetna e-mails and company managers. One e-mail said, "[Aon] made it clear that the lack of an override puts us at a severe disadvantage. That is evidenced by the fact that we haven’t written a case with them in several years." Another described a meeting in which one broker told the Aetna staff member, "You guys just don’t get [it], price and ease of administration is not the issue…it’s my compensation."
According to the complaint, Aon brokers said the solution was simple: Aetna should "load the rates for additional comp[ensation] and you’ll start to get the business. If the comp is right, they will sell the rates," according to an Aetna manager quoted in the Blumenthal complaint. "He told us to load our rates 5-10% (give him 1/2) and we’d get all his business."Such arrangements were successful, the complaint alleged. "As one Aetna executive put it, overrides have the potential to ‘take away the objectivity consultants are so protective of.’"
Blumenthal’s complaint indicated that Aetna eventually "began to adapt," developing payment structures that allowed the insurer to pay Aon commissions that were not reported to employers.
Brokers Allegedly Wanted Payments Hidden
The Connecticut complaint asserted that brokers continued to insist on concealed arrangements even as regulators stepped up scrutiny into commission payments. The filing quoted an e-mail sent by a broker to Aetna. "As the discussion around disclosure of override contracts heats up we want to position these as arrangements as profit sharing of the overall book and not tied to a specific account."
Spitzer’s complaint outlined similar experiences in New York. Herkimer County, N.Y., which purchases benefits for 1,000 employees, paid Aon more than $78,153 over a five-year period to help it buy "stop-loss" coverage for protection from catastrophic health claims.
"In 2001, the lowest bidder for the Herkimer business would have been [Excellus] BlueCross BlueShield," Spitzer’s complaint said. "But since the coverage offered by Blue Cross would not have generated a 15% commission for Aon Consulting, it never gave Blue Cross the chance to bid." When Herkimer eventually demanded that the Blues plan be permitted to bid on business, "Aon altered it [i.e., the Blue Cross bid] by adding the 15% commission without disclosing the change to Herkimer," it alleged.As part of its settlement, Aon agreed to create a $190 million fund to compensate eligible U.S. clients with policies begun or renewed between Jan. 1, 2001, and Dec. 31, 2004. It also promised to commit to "new business practices that include heightened disclosure of remuneration and the elimination of practices that may have posed conflicts of interest."
Anthem spokesperson James Kappel said he could not comment on the suits since Anthem was not a target. But, he added, "As a company, we do not engage in the practice of bid rigging or any other improper bidding practices. Any bonuses that are paid to brokers are based on persistency [the percentage of clients that renew coverage] and the growth of their overall book of business."
"Aetna firmly believes that disclosure of compensation arrangements with brokers is in the best interest of our customers, the broker community and the insurance marketplace," the insurer said. "In 2004, we began requiring brokers to inform their customers about compensation agreements, and we have recently published our expectations regarding disclosure of compensation on our Web site."
(Reprinted from the March 21, 2005, issue of MANAGED CARE WEEK)
HEALTH PLANS/PHYSICIANS: More patient confidentiality probs at SF Bay area institutions, with UPDATE
So not long after the mess with Kaiser and the Gadfly appears to be heading to a court solution, there are two more weird breaches of patient confidentiality both demonstrating that it’s not technology but the physical security of data and the dealings of employees that are the riskiest part of keeping confidential medical information confidential.
The first story is really strange. Apparently a contractor working for Kaiser had some patient data, and tried to recycle carbon paper for their fax machine at a local copy store. But instead of being recycled, somehow it ended up in the paper supply and was sold to another customer who discovered that instead of being blank, their fax paper had patient data from Kaiser and a Reno ambulance firm. In the end the customer returned it to the copy shop and no harm appears to have been done. (The full story is the second story here) But then again it just shows that this stuff can get out in ways that are hard to imagine, and perhaps every person handling patient date needs to buy a shredder. I know that I carried around patient date from my 1992 graduate thesis work and only got around to shredding it a few years later!
The other incident is more sinister, and again it appears that the health care organization, in this case San Jose Medical Group, did nothing wrong. However, someone broke into their facility and stole three laptop computers which had patient information and social security numbers on them. They don’t know if these computers were stolen as a target for identity theft, although they have written to all the affected patients asking them to check with their credit bureaus, or whether this was done just to steal the computers. But all the same, my source is one angry patient, and I don’t know whether or not this was a HIPAA violation. Here’s the police report.
All in all a reminder to health care organizations that electronic security is not enough. Incidentally if you steal my laptop you have to know two passwords to make it start-up and then work for you, and a third to get into my password storing application Roboform. I suggest anyone reading this who uses a laptop makes sure they are using the root password function that is available by hitting F8 (or a similar key) before Windows starts, and setting a system password required on start-up.
UPDATE: The SJ Merc has more info about this in a story today. While San Jose Medical Group officials seem to believe someone from the outside stole the computers because they were new, the police report doesn’t seem to mention a forced entry. And there’s no word on whether the data was secured with a password, although it appears not to have been encrypted. It does seem that given that a laptop by definition can be mobile (and therefore easily lost), sensitive data should either be encrypted or somehow electronically secured within it.
PHARMA: Squaring the circle on Pfizer’s job cuts
Over at the Pharma Marketing Blog and on the Pharma Marketing list-serv John Mack is confused about Pfizer’s real intentions.
Is Pfizer eliminating up to 11,000 sales rep jobs or isn’t it? A WSJ article states: "In another cost-cutting plan, Pfizer plans to streamline its U.S. force of 11,000 sales representatives." Then in the next paragraph it also says "Chief Executive Hank McKinnell didn’t give details on the job cuts, but did say few jobs would be lost in the company’s sales division." (Significant cuts in a force with) 11,000 jobs seems like more than a "few" so I am at a loss to understand what Hank actually said or meant.
John asked for the list’s take on this. Remembering this article from THCB regular The Industry Veteran in which he suggested that Hank made about $50m a year (even though Forbes says it’s closer to $17m), I suggested that the solution to John’s quandary is simple: If Hank makes give or take $50m a year (as The Veteran believes), and a sales rep makes $100K, then it takes 500 sales reps to equal one CEO. So if you fire 11,000 reps you’re really only cutting 22 "real" jobs. They’re never going to cut the whole workforce so any amount is less than 22 and that’s just a "few" in Hank’s terms.
(You are all welcome to do the real math if you want, but I’m no good at dividing by 17!!)
