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TECH: HIMSS – A view from the floor

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HIMSS appears to be getting bigger and bigger. There are 23,500
people here and over 800 exhibitors, but segregation is the watchword.
The big guys are downstairs in the main exhibit hall, while the smaller
companies are in an upstairs gulag. Cerner has perhaps the most
interesting approach,
taking a huge space in the middle of the hall, but featuring its
clients rather than itself. Several other big companies are hosting
smaller ones, with Microsoft devoting seemingly all its space to lots
of vendors who use Windows, and maybe one day Vista. Meanwhile, the
other Vista, as in the VA’s
system, is the core of Medsphere’s new offering for the mid-range
hospital market. CMO Scott Shreeve told me that "Epic is a Jaguar, but
not everyone can afford a Jaguar."

I’ll report more this week on wireless tracking, ePrescribing,
RHIOs, and interoperability–the IHE has a large part of the gulag
showing its interoperability forum. Brailer’s keynote yesterday
continued the inter-operability message.

TECH: GotVoice–pretty cool message solution

Not exactly health care tech, but I find this pretty cool. GotVoice takes messages out of your cell phone or home/office voice mail (It actually leaves them in the saved queue) and emails them to your email inbox as Mp3 files. You can either set it up on a schedule (twice a day) to go get them, or you can download their little application that sits in that little tray at the bottom right of windows, and you can send it to get your messages. So then you can basically turn your cell phone off, and of course you can now forward the message attached to an email.

The messages are still in your “saved” queue if you want to get them by phone, and you can even set it up so it will delete old saved messages (that are now in your email box) on schedule, and if you want to keep a message forever, then you can store it as an MP3 forever.

Neat, free technology, that doesn’t take much effort to set up. Very convenient if you have a more reliable computer than phone connection. The only pain for me is that when I play the message in iTunes, after it stops iTunes plays the next thing on my list which happens to be Joe Walsh’s Rocky Mountain Way….all together now: Dun dun dun nun dun der

HEALTH PLANS/TECH/POLICY: Health plans and brokers — pathetic, pathetic, pathetic

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I’’m on my way to HIMSS today but in the meantime, more on my ongoing personal struggle to get health insurance…..

Remember that I was kicked out (or the association that I bought my insurance through was kicked out) from the PacAdvantage buying group? So my choices are to go back to the individual market or, luckily as I’m now “domestic partnered”, to pay some $450 a month for the rich benefit plan on my partners insurance.

So I finally got around to fixing myself short-term insurance while I’m being underwritten by Blue Shield and Health Net for standard  individual insurance. For the short term insurance from Blue Shield the application I initially started last year puzzled me because the common generic medication I take for gout wasn’t on the approved drug list (It costs $40 a year!!) but a whole bunch of much worse medications were! I’d saved my application from last year because it itself didn’t enable you to change the desired date of coverage but you could restart it and it would start on the next effective date. But if you went “back” to change the date, you lost all you’d put in. A stupid UI screw-up which I wrote about when it happened last year. When I re-continued my “saved application” it denied me. But I had in between talked with the Blue Shield people who told me that the drug list had been discontinued as part of the short-term program. So I started a new application (start counting how many I end up filling in) on eHealthinsurance, and got approved — or at least got accepted and later (with no new email informing me) got a form in the mail saying I was approved. Oh, and for the short term coverage, you can’t set up automated payment or credit card even thought you pay for the first month in advance online with a credit card. Instead, you have to send a check. Pathetic.

Then I started the next application for normal individual HDHP insurance with HealthNet, also on eHealthinsurance. It asked me a bunch of the same questions, none of which carried over from page to page. It even asks you to fill in the same doctor’s information on 3 different pages (it asks about conditions, then drugs, then visits — all were the same one shot visit to one doctor for me!!) It never gives you the chance to carry over the information or tick a box saying “same”. And of course nothing came over from the short-term application I’d just filled in, even though it’s all in eHealthinsurance’s database. The UI on the form and the user experience is pathetic.

Now of course I get an email from eHealthinsurance saying that HealthNet needs more info, and will be mailing me a form to fax back! So much for the “e” in their name.

As this was going on I’d called Blue Shield to ask about their guaranteed issue plan (Over $400 a month for dreadful coverage). Later on Blue Shield had a different agent call me to direct me to her website where I could download a PDF application, fill it in bt hand and fax it back. Don’t forget, AHIP tells us that this is one of America’s most technologically advanced health plans! Ten years ago they allegedly did a deal with Healtheon to help their customers apply and manage their benefits online—oh, how far we’ve come! Oh, and the PDF crashed my system because I didn’t have the latest version of Acrobat, so I had to download that too. Pathetic

And of course the joke is I am already a Blue Shield customer via the group plan (or was till the end of January) and am on the short-term product right now!  And I was a customer on their short-term product back in 2004 when I last had surgery. So I’ve been constantly covered by them since 2003. They could look in the claims database for everything that I’ve had in the past 3 years. But none of that information appears to be available. Pathetic

In the end I thought that I’d go back to eHealthinsurance rather than fill in a paper form. So I find the same plan and the same price as Blue Shield offered me direct, and applied for that. They of course wanted all the exact same information that HealthNet wanted. Of course all that information is in the eHealthinsurance system. The eHealthinsurance customer rep told me that it was fine to apply for multiple plans at once. I asked her if, when I gave the same information to a different health plan, would they underwrite me the same way and come back with the same price? She said, no they vary greatly.

BUT I could not transfer the information from the HealthNet form to the Blue Shield form even though it’s all in the same damn database! So I had to re-key it in. She told me that I wasn’t the first person to ask for that function by a long chalk. And once again I couldn’t even carry physician information over from page to page of the application, even though you can go via eHealthinsurance to HealthNet’s electronic provider directory to find out information on the exact physician. But you cannot import it into the application form. Pathetic.

Now the interesting part will be figuring out a) what else the plans think they need to know and b) what rates they will charge once they figure out that I had knee surgery in the past — even though it’s only a minor indicator of whether I’ll need it in the future.

Meanwhile, eHealthinsurance says that when you look at its plans it gives you a comparison between them, but it doesn’t even put the most important single feature of a HDHP on the front page— that is the maximum out of pocket (i.e. your maximum exposure if you have a catastrophic event). And it doesn’t even define the maximum out of pocket the same way when you click through to it — for some plans the number includes the deductible, sometimes it doesn’t.

I had an email conversation with the preeminent medical director working in the corporate benefits world about this exact topic. He told me that he came to realize what a mess this all was when he was unable to figure out what was the best option for his mother among the multiple competing plans with different premiums and benefits in Medicare Part D. If I’m in the top 1% of Americans on this topic he’s in the top one or two period. And he can’t figure it out.

This is a world of deliberately confusing plans and benefits, presented in a deliberately confusing way, taking advantage of none of the technology that makes our lives easier in other areas of business. Pathetic. pathetic, pathetic.

And it’s a world that many many more people will be heading for.

 

 

PBMs: More on the enigma of how PBMs make money

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California Healthline had an article about PBMs role in Medicare Part D. (Hat tip Joe Paduda). Not entirely un-coincidentally, the report that I wrote with Jane Sarasohn Kahn on The Prescribing Infrastructure: Are we ready for eRx, which CHCF published last week also had a little section on PBMs.  However, for space reasons much of the research that I did for that piece didn’t make the cut. So as promised last week, here’s a longer version of what I wrote about what’s going on behind the veil of the PBM.

Pharmacy benefit management companies have become the hidden giants behind the current prescribing infrastructure. After several mergers, three dominant companies have emerged; Medco, Caremark and Express Scripts. How these companies make money has been a major source of controversy, leading to the slow emergence of the “transparent PBM movement.”  PBMs sell their services based on their ability to lower drug costs for their clients. Typically a PBM is not a risk bearing entity, but officially gets paid for providing three services to their clients, who are usually health plans or self-insured employers, and managing the pharmacy use of the “member” (the employee or insured).

The three main ways PBMs make money are via:

  • Transaction processing,including managing the eligibility files, benefit information and payment transactions connected with an Rx.
  • Network and formulary management, such as negotiating with both pharmaceutical companies and pharmacies over pricing, and ensuring that the most cost-effective drugs and most appropriate therapies are available to the member. This includes techniques such as generic substitution, pre-approval, step therapy and compliance programs–all of which tend to add administrative complexity to the current prescribing infrastructure.
  • Mail-order pharmacies, which typically supply lower-cost 90 day supplies of chronic medications to the member

Controversy in PBMland — Channel-switching, the Spread & Rebates 

There has been considerable controversy as to how effective PBMs actually are at lowering drug costs, and how they actually make their money. Some of these issues have been raised by their competitors: retail pharmacies are losing business to mail order PBMs, and are also being forced de facto to spend a lot of unpaid time on the phone with physicians’ offices sorting out formulary issues. Many protests are also being raised by their customers -– both employers and end-user consumers/enrollees.

One frequently heard complaint is that PBMs are restricting consumer choice by forcing members to receive their drugs only from their own mail order pharmacies. In fact, the creation of SureScripts by the largest pharmacy chains was in direct reaction to the initial creation of RxHub by the PBMs, which the pharmacies thought was an attempt to turbo-charge this channel switching by controlling access to online pharmacy channels. These fears were somewhat overblown, and the two networks are working in cooperation together. The truth is that this channel restriction is done with the approval of the benefit plan sponsor (usually the employer), and may actually be a rational method of controlling costs and increasing efficiency. Mail order drug operations are highly automated and require substantially fewer pharmacists per Rx than traditional retail pharmacy.

But the major accusations are that PBMs are withholding information from their clients about the “spread” and their “rebates.”

The spread is the difference between the price the PBM tells its client that it is paying for the drug (or in effect the price its client is charged) and what it actually is paying the pharmacy. Critics accuse PBMs of paying much lower actual prices to pharmacies than they reveal to their clients, and also of giving clients only a small fraction of the extra profit they make when they dispense a drug via mail order. For more on this see Robert Garis, et al Shining The Light On Non-Transparent PBM Cash Flows in America’s Pharmacist, November 2004

The rebate is a payment from a pharmaceutical company to a PBM for driving more volume to its branded product by putting it higher on formulary. There are two separate controversies about the rebates.

    • First, while the revenue from the rebates are officially passed back to the end client, the accounting behind that process is extremely opaque and has been very difficult for customers to audit. PBMs have been commonly accused of either short-changing their clients, or colluding with health plans to keep rebates back from their customers. For instance, Medco paid Oxford Health Plans $87m allegedly for data, but this was widely presumed to be connected to hiding the rebates from its customers, including the government. (As reported in Barbara Martinez U.S. Maintains Medco Offered Insurer a Kickback Wall Street Journal December 3, 2004) –in effect keeping drug prices higher than they need to be. Michael J. Rudolph, Pharm.D., of the University of Southern California School of Pharmacy, noted that one of the three largest PBMs (Medco) admitted in its annual report that of about $3 billion in rebates garnered in 2004, it passed only $1.7 billion to health plan providers. "This is the story that is not being told, and I venture to say most of the plan sponsors do not understand this," he said’. (source is Frank Celia Chains ponder responses to mandatory mail order Drug Topics Apr 18, 2005)

    • The second controversy is that the rebate agreements have been “bribes” that have resulted in the PBMs creating formulary incentives, or campaigns that in fact favor branded products over cheaper generic equivalents. For example, the Detroit Free Press reported that the University Michigan concluded that PBMs working with the university often steered customers towards more expensive brand name drugs and accepted payments from drug companies to promote their products. As a result, the University has moved to a single PBM and is tightly monitoring drug spending. The school has saved $8.6 million as a result. I found this info in Katie Merx U-M’s changes cut drug expense: Pharmacy benefit managers who drove up costs are replaced Detroit Free Press May 18, 2005 (Article is no longer online, although I have a copy if anyone is really interested)

When Sen. Maria Cantwell (D-Washington) suggested that, in order to participate in Medicare Part D, PBMs should be forced to reveal information about these contracting arrangements, their opposition was very vocal, and it was supported by a GAO report. While the PBMs said that this disclosure would prevent their ability to contract on behalf of their clients, cynics drew a different conclusion.

Some studies are now starting to support some of these accusations, and it may be that the tide is slowly turning against PBMs. One survey showed that over 47% of their customers thought that PBMs did not get them the best drug costs Hewitt Associates “Health Care Expectations: Future Strategy and Direction 2005” Executive Summary of Hewitt Teleconference November 17, 2004) but several interviewees we spoke to in the course of this report suggested that PBMs’ customers had in general been slow to try to do anything about these practices. There is though an ongoing legal suit in Illinois (Melissa David "Loyalty Strained at Caremark" The Street.com 2/1/2005), and the slow emergence of the “transparent” PBM movement, such as the breakaway group of employers lead by Hewitt Associates, (Melissa David "Medco and Its Peers Brace for a Flank Attack" The Street.com 8/16/2004).

Overall the trend towards transparency will will probably push PBMs away from looking to rebates and other games with pharma clients. Instead they will try to drive more revenue by switching fulfillment to their mail order businesses, and by more aggressively moving to generic substitution. But it’s still a business that requires more aggressive customers overseeing what’s going on behind the curtain.

PHARMA/TECH: Should big Pharma be blogging? by Shahid Shah

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In the light of the recent tattle in the pharma blogosphere of the hijacking of Cialis’ brand identity and Lilly’s apparent inability to do squat about it, Shahid Shah, who besides being a healthcare IT expert is also becoming a corporate blogging evangelist, sent me this guest submission suggesting a little more specificity about blogging on pharmaceutical and regulated products. As many THCB readers know Shahid runs theHITSphere  blog aggregator as well as his own Healthcare IT Guy blog. I also think many of his thoughts are applicable to other health care corporations concerned about blogging, such as providers and insurers. And of course I like his pitch to pharma companies to hire me to help them figure this out!

Corporate blogging is certainly not new but it hasn’t really taken off because executives are always nervous about public statements they make, especially if they run a public company. Until now only small firms, who have much to gain with direct 2-way contact with their customers, have really engaged their clients through blogs. Now, however, even the big companies as different as McDonalds and Microsoft have become corporate bloggers with different degrees of success.

The pharmaceutical industry is certainly one group of companies that could use increased goodwill that comes from direct contact with their customers. If anyone should be blogging from a corporate perspective it should be big pharma because what it does directly touches the lives of its customers in a way very few other industries do. The level of importance people give to their health and the way that they bond with their healthcare providers (and by extension the drugs they take) is very important. Most pharma companies are worried about the FDA and cite that as a big concern about why they don’t blog. But, I think that’s a mistake.

Pharma shouldn’t worry too much about what the FDA has to say specifically for blogs. Blogging does not impact anything that wouldn’t already be public anyway. For example, if a pharmaceutical firm has a call center where they answer questions about their drugs’ on-label use, a blog would be no different. In fact, drug firms can improve customer service by providing tips, tools, and guidance on how best to use their drugs. I would recommend that firms start to create blogs that start to tell stories of why scientists (in their own words) are focusing on certain diseases, how far technology has come along, how exactly drugs go from an idea to discovery to production. All these would bring customers closer to them, not alienate them. And, the FDA won’t complain about anything that doesn’t cause off-label use. I spoke with an FDA counsel this week and she basically said the same thing: anything that’s covered by existing guidance would apply to blogs, too (she didn’t provide official legal guidance, it was just a comment stating the obvious).

If a drug vendor starts a blog or discussion forum about its products and doesn’t mis-communicate about efficacy of its products or fitness for a particular purpose it shouldn’t get into trouble. Companies won’t have problems with regulators if they stick to the truth about their products and improve the way customers interact with them. That doesn’t mean they shouldn’t be careful about what they say — but that goes for anything a company says. It’s not something special to blogging but blogging does make it easy for people to say whatever they want (like folks do in an email).

So, if you’re not blogging today don’t blame the feds. If you’re not creating corporate blogs, it’s due to a lack of vision and innovation and perhaps a lack of respect of your customers, not the FDA. Guys like me and Matthew can help you devise an appropriate strategy to allow direct communication, improved customer service, and who knows in a few years people may stop thinking of big pharma in a poor light like they do now.

Oh, and by the way, don’t think that just because you’re not blogging about your own products that nobody else is. Nature abhors a vacuum and so does the blogging community. Third parties are already talking about your drugs and company in their own blogs and forums. Given the growing influence of blogs on consumers, pharmaceutical companies can not afford to dismiss comments made about their products by bloggers and must create their own presence within the blogosphere. Why not take the initiative and help navigate people to the “official” word about your drugs?

QUALITY: Sam Nussbaum saying the time is now for P4P

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Sam Nussbaum is Wellpoint’s chief medical director (before that he was on the provider side). Improvement is too slow and variability is too great. Again it’s all been too slow. Cost and quality bear little relationship to each other. In fact it’s a negative correlation (Dartmouth)

We continually have a lack of excellence in quality but that there is employer and even consumer interest in improving it. He wants to promote the establishment of a national quality coordination board to turbo-charge P4P. He believes that P4P will incent investments in IT. But that we need to add clinical decision support into IT to reduce practice pattern variation (we need more than just EMRs)

So how to start?  Start with a foundation of trust (can this really come from Wellpoint? he doesn’t address that)  He thinks that they need to move from process measures to outcomes measures. He used the example of rich measures of quality process and outcomes in cardiology care, whereby they are rewarding for process and outcome. This is the Quality Insights Hospital Incentive Program (QHIP). In this program complications in PCI were 47% decreased in QHIP hosps vs 20% nationally. So how do they contract with hospitals to do that? They want to earmark a share of (increase in) payment to clinical quality measures. Similar success with OBGYNS in Ohio. They have lots and lots of programs in many states…and they want to move it to more places.

So how to translate that more generally. Within networks (and even within medical groups) there is practice variation, no correlation between cost and quality. Sam is true for hospitals And in the communities, the advertising billboards don’t reflect the real quality issue. But we need to raise the bar for everyone—can’t just send everyone to the top 30%.

And he wants to get consumers involved (so Wellpoint bought Lumenos and is using Subimo) to guide them to the best type of care. Plus roll that into many other programs, such as DM, specialty pharmacy, etc.

All good stuff but he never mentioned the dark side of HDHPs….and the avoidance of people at risk by insurance  firms. Ian Morrison is coming up later, and I’m sure he’ll talk about this.

But how do we pay for those programs via  PPO, or via ASO services? How does risk adjustment become very apparent? He believes that the key driver is CMS brining P4P to market. — but as anyone who reads the comments in THCB knows, that’ll still be a big fight. AND he admits that the unintended consequences of sharing information is that providers want more money, either to support improvement, or because they are already the best and want to be rewarded for it.

So we must close the quality chasm….P4P is one of the strategies. But there needs to be collaboration.

QUALITY: Milstein’s shark

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Arnie Milstein from Mercer is probably the smartest “purchaser” in health care on quality. He’s also the only person explicitly linking the inefficiency in health care to the plight of the middle class un- and under insured….as in this story.

What do we know? 1) The low cost regions are 30% cheaper at no worse quality. 2) Within the low spending communities the lowest spending docs with high quality are still 15% below the average cost for the region —  Boeing looked into this in Seattle. And medical errors are still a massive problem (Minnesota health policy adviser was going to have the wrong side of her brain operated on)

But we have the shark (Arnies turn at explaining the increase in spending over incomes) caused by the biomedical miracles. Arnie says that we shouldn’t shut off the shark (i.e. cut off new biomedical miracles). Cutler estimates that every year the shark adds 5 weeks to life expectancy

Answer is to a) rapidly adopt best known delivery methods — b) rapidly incubate cost efficient care delivery innovations so that improvement happens more quickly

So how to do this? a) improve performance measurement, b) increase performance sensitive payments c) faster vetting of cost saving innovations (e.g. no plan had done on ROI on their DM initiatives)

Have to speed up the process knowledge discovery-cycle, by i) expanding role of para-professionals, ii) using engineers to redesign engineer IT-enabled work flows, and then iii) source high end elective care globally. (He’s finding unbelievably cheap prices from JACHO certified hospitals in China)

This has worked elsewhere…on average since mid-90s retail has been gaining efficiency at 2.5% a years, finance at closer to 8%—but they’ve adopted scientific measures. Where this has happened in health care is worked well. Virginia mason is using engineering to reduce unit costs and volume of services, and has just written a letter saying the 50% of dollars are wasted and told its clients that.

He also believes that while not perfect salient public transparency is powerful (Julie Hibbard, Health Aff July 2005), but apparently employers and enrollees support tiering and provider selection preferred 2 to 1 over P4P. He thinks that overall P4P is “medically necessary reset” — but the middle class is not likely to be shielded in time. But it’s not enough to save them unless we really move quickly. I think he’s an optimist.

 

QUALITY/TECH: Brailer on IT in P4P

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David “Stalin” Brailer likes being on the west coast, so is happy to come out here and give talks.

He says it’s obvious. Health care IT needs P4P.  And you can’t recoup the benefits of an EMR unless it’s aligned with the direction that the health care market’s going. So the market has to change. But 1.5% of the revenue (a typical P4P bonus) is not enough, although it might be enough on the margins for a few.

Meanwhile, Brailer’s office is now certifying what is a “valid” certified health record (CCIT) and wants P4P programs to help encourage that. And he like everyone else thinks that P4P requires health care IT.

But as there is no agreement on what we’re measuring, none of this works. The industry (public and private) needs to come together to agree what the hell it is we’re measuring. Brailer thinks that  American Health Information community (AHIC) is doing that.

But we also need to commit to changing the way we pay doctors and help them along. No one knows if it’s IT that helps or management or what.

BUT he notices that health IT works better among bigger practices. His mission is not to drive everyone into big groups. This has to be made bite size for smaller practices. As the tools are much further along for the bigger groups, which tracks with the ability to do pay-for-performance. So we have a big investment to make to bring along everyone. We have to bring along the little guys too.

(I’m hearing more about this from Brailer than I was year ago)

Both health IT and P4P favor standalone rather than integrated care. Normal course of health IT can’t be followed which is why interoperability is important, and they will guarantee that certified records will be backwards compatible and be interoperable. So he wants not to reward silos, but instead to reward “interoperability” for P4P — not to create optimal activity in a sub-optimal place.

Finally he wants P4P to be long term, not to die on the vine like capitation because it’s a new name for dumping the risk on someone else!

I asked Brailer about consumerism, HDHPs, and whether that is in conflict with integrated systems. He thinks that those integrated systems will find other solutions and they will integrate with other pieces of the system. Most other industries have moved away from “integration”… He believes IDS are closer to that end point in operation versus where they are psychologically. And closed systems are not totally closed. No one is an island. So they require interoperability, but he hopes those big systems can export their knowledge. So they need interoperability too. (he didn’t really touch on whether the HDHP will destroy the HMO movement before those consumer measures are created.

His final point? This is inevitable as doctors going into practice now will not tolerate paper in their practice. He wants the process of having this happen cleanly and not have it happen as islands.

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