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POLICY: A long and excellent series on health insurance, and a good review of the Kerry plan, with UPDATE

There is an excellent series on the current crisis in health insurance in the San Diego Union-Tribune written by Leslie Berestein. The really avid TCHB wonk reader may know all this, but it’s not often the three rings of the circus are put together in the popular press. The first article Insurance ills put squeeze on consumers explains the background to the current cost explosion. The second, employers benefits in critical shape, looks at the problem small and medium business are having providing insurance, while all employers are cutting back on health care and increasing employee contributions. Finally the third article, the individual insurance market sucks (Ok it’s not called that but it should be) has some harrowing stories about the collapse of the individual market for the 20% of those in it who really need it.

Go read the articles, and kudos to Leslie and her editors for running this series. I have two quick observations. One, this type of article started appearing in the early 1990s. We didn’t fix the problem then and now it’s back much worse. Second, there is no solution without compulsory insurance and compulsory risk pooling. Anything else is an illusion.

Finally, Jeff Lemiuex at Centrists.org has an interesting, long and thorough review of what in the Kerry plan (and also in the Frist plan) both conservatives and liberals can live with. I don’t share his optimism about the likelihood of a non-universal insurance system being able to contain long-term costs, but it’s a very thoughtful analysis of a possible legislative response to the developing crisis reported in the Union-Tribune.

UPDATE: The NY Times has a very similar article on the problems of small businesses buying health insurance.

TECHNOLOGY: Patient Physician email redux

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Here’s a quickie round-up of some activity in the patient-physician connectivity space (boy, that word makes me miss 1999!)

The BMJ has a pretty typical academic article summarizing the good and the bad of patient physician email. The two part article basically says that it’s pretty good for asynchronous connections that don’t require the hands-on caring touch. While the article is only worth reading for the harder core among us, the iHealthbeat summary is worth a quick perusal. Meanwhile Manhattan research, also reported in iHealthbeat confirms that only 8% of American docs currently email their patients.

So yes, the level of online interaction continues to be small. But there are some wins taking place. Relayhealth’s service counts my doctor as a sort of user. I can, via Calif Blue Shield, find his “online office” and fill in my health record form, but he doesn’t seem to have any of the features switched on nor has he emailed me back. But overall the concept does appear to be making forward progess, if only painfully slowly. The Rocky Mountain News reports it’s not going so badly in a clinic in Denver that now has over 700 patients using the service. Of course they are not really using it for online consults–the killer apps of online connectivity are appointment setting and prescription refill requests. iHealthbeat has a little more on the subject, and as you can see from the steady number of deals RelayHealth is signing up, interest in the conecpt is slowly taking shape.

Meanwhile, in what’s essentially the same space (sorry!), that of EMR access by patients, Geisenger in Pennsylvania has a success to report. Like Group Health Cooperative in Seattle, which has a similar system that also appends email connectivity to a patient’s view of its EHR, Geiseneger patients can go oline to get their health information from their physicians and also email them about administrative and clinical tasks. An article in JAMIA shows that Geisenger patients found EHRs easy to use. The authors noted that:

Patients preferred email communication for some interactions (e.g., requesting prescription renewals, obtaining general medical information) while they preferred in-person communication for others (e.g., getting treatment instructions). Telephone or written communication was never their preferred communication channel. In contrast, physicians were more likely to prefer telephone communication and less likely to prefer email communication.

Something tells me that this is a slow movement of attrition that will hit a tipping point. Perhaps a modest injection of funds as part of the 10 Year Plan might help push it along? Can the VA and DOD get on board first? We’ll see.

HEALTH PLANS: Group Health strike–ahh the irony

Here’s the AP report on the fact that the workers at Group Health Cooperative of Puget Sound, the nation’s most famous staff model HMO, (and no I have heard of Kaiser but I’m being a smartass here) are on strike because they are being asked to pay a greater share of their health care costs. Given that labor is about 70% of system costs there’s something circular going on here, but I won’t investigate it for fear that smoke will start coming out of my ears.

HOSPITALS/PROVIDERS: GPOs under investigation

There’s a long article in the NY Times this weekend suggesting that the next target for investigation by HHS and DOJ are the GPOs (Group Purchasing Organizations). The largest of these Novation (the GPO of the VHA a group of some 1400 hpsitals and the much smaller University Hospital Consortium) has received a supoena investigating its relationship with suppliers. The NY Times mole, a former Novation exec, likened the case to the “best price” issues that Medicaid and Medicare have had with the pharma companies:

The former Novation executive said he believed that the federal investigators might see similarities in those arrangements to payments that drug companies have made to doctors who prescribed their brands – payments that have led to multibillion-dollar settlements by some pharmaceutical companies.

“Pharmaceuticals are referred to in the press because the average reader can associate with them more,” the former executive said. “Consumers don’t buy operating-room tables or X-ray machines, or that kind of stuff, but you’ve got the same sort of thing going on. And it’s huge, huge money.”

GPOs have historically had some influence moving market share between different suppliers, but any member of the buying group has always been free to go around the group if they can get a better deal outside it. So because the GPO cannot force its members into buying supplies through it, they are always looking to deliver reasons to stay within the buying fold. The article suggests that the complexity of the GPO’s arrangements both in terms of rebates for volume purchases it gets from manufacturers, and dollars and services it delivers back to its memeber hospitals has ended up with either over complex or false real pricing. Hence Medicare and Medicaid may not have got the best prices, as they are legally supposed to.

It might also be worth keeping an eye on whether the same issues have been raised in some of the bigger chains practices, notably HCA or Broadlane (the buying group owned by Kaiser and Tenet). There’s no hint of that in the report, but if HHS is looking at one GPO you can assume that most of them have been following the same pattern.

Where this investigation goes will be interesting. The complexities of rebates and pricing in these cooperatives are mind-boggling. Some of the intricacies of the relationships between the big hospitals, the GPOs, the big wholesalers (like McKesson and Cardinal) are very complex. Add into that mix that some suppliers, notably GE as reported in the NY Times a while back, are rolling in consulting across a whole hospital’s operations as part of a wider business realtionship, and it becomes very difficualy indeed to figure out what the “best price” really is.

POLICY: Watching the politics of MMA

The devil is in the details and all politics are local. Cliches, but in the implementation of health care policy and payment in the US, true cliches. Two articles over the weekend bear this out. The AP reports that insurers and pharma companies are fighting over the details of whether therapeutic categories are broadly defined in the details of the the MMA’s new Part D drug benefit (as the insurers want) or more narrowly (as the pharmas want). What’s at stake here is the ability of the insurer or PBM to switch a patient from an expensive branded product to a generic or a cheaper older brand. If they are in the same category, it’ll probably be OK, but if it’s in a different category, it probably won’t be. So should Cox-2 inhibitors be in the same category as ibuprofen? In fact a trial underway is looking at that precise question, and if there’s no real difference perhaps Vioxx and Celebrex will only be available under some kind of step therapy within Medicare Part D. Well you see where this is going.

For those of you really interested, here’s the first draft of the US pharmacopoeia guidelines, which includes a series of steps for meetings and comments. Those of us who prefer to gloss over the details and look at the big picture just need to realize that over the next decade lots of lobbying dollars will be spent to change tiny line items in the resulting final document.

And talking of tiny details in new regulations it appears that the Bush administration is running into trouble by trying to create regional Medicare managed care plans when the nation’s health plans (especially the Blues of course) are actually 51 different plans, all operating under different local statutes, and are not too keen to develop the alliances or infrastructure required to compete regionally when they’re mostly happy with their monopolies infrastructure at home. Now if you want competition, you have to make the market big enough so that you can have a few plans with some scale compete in a region. But of course it makes no sense for any plan to go into, say, a North Dakota and take on the local Blues plan with its 80% market share. How this gets squared away I don’t know, but I suspect that you’ll see an exemption for the share of the population living outside the top 100 metro areas, which after all are the real units that matter in the business of America (think TV markets!).

Frankly the state-based health insurance system is an anachronism. But then the state-based system of electing Senators (and Presidents!) is an anachronism too. (Note that a senator from California represents 15 million people where one from Alaska represents 200,000, but as far as the law’s concerned their votes are equal). It might actually be easier and faster for HHS to abolish the states and come up with 10 regions! On second thoughts, maybe not. But what a great idea.

HOSPITALS/PROVIDERS: Hospitalists save money

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Over the last 10 years, the hospitalist movement has been growing from a small base in the US. In fact most countries have had hospitalists for decades and use their community-based GPs to refer patients to their hospital-based specialists. In the US where community-based physicians have held sway politically over hospital-based ones, the movement to get those community-based doctors to hand over their patients to the hospital has been proceeding slowly.

This has all been bound up in one of the basic anomalies of American health care. The physician gets paid some modified form of fee-for-service, so the more they do the more they get. However, since the early 1980s, the hospital gets a lump sum per admission (DRG-based), so its best interest is to kick the patient out as soon as possible. This inherent contradiction has been part of the reason that hospitals and doctors have had a slow-burn conflict over the years.

The hospitalist may be the solution. The hospitalist works for the hospital. While they usually bill insurers and Medicare less than their total salary costs, hospitals like employing the hospitalists because overall they save them much more by discharging patients earlier with no increase in readmissions. The results proving this are starting to come in. A new study in The American Journal of Managed Care compared an academic medical center in Iowa which had hospitalists managing patients alongside community and academic physicians. The patients treated by the hospitalists had similar (in fact slightly better) outcomes, but much shorter LOS and much lower costs.

Some community physicians also like the hospitalists, as they find they can make more money staying in their offices than they can bill by going to the hospital, and they don’t have to bother with the travel. But overall in health care old habits die hard, so expect this trend to continue to gain traction only slowly.

QUALITY: Pain, its treatment and hope amongst the insanity

I won’t rant on about it, but the DOJ headed by theocratic fascist John Ashcroft has declared war on pain doctors. For much more take a look at the Pain Relief Network’s site. And the arrest, imprisonment and career destruction being meted out not just to “outlaw” doctors but those in the forefront of science on pain relief has a visceral effect on how pain is treated for patients across the board. For a gut-churning example of how much pain rational intelligent clinically-educated patients are forced to endure by the system, see this article on the treatment of “My Left Lung” by nurse and patient Richard Ferri.

But slowly the tide may be turning. In an article titled Must We Die In Pain? the radical commies at Forbes note that little progress has been made yet.

In 1995, a group of researchers funded by the Robert Wood Johnson Foundation published a shocking result in the Journal of the American Medical Association. At some of the nation’s top medical centers more than half of cancer patients passed away in serious, uncontrolled pain. But guidelines from the World Health Organization indicate that 85% to 90% of cancer patients could have their pain controlled by oral medications. It seemed like a solvable problem. The Wood Johnson Foundation and the Soros Foundation were among the groups that worked on trying to improve the care of the dying. (The Soros Foundation’s Project on Death in America spent $45 million on improving end-of-life care.) What do we have to show for it? Patients still die in pain. A recent study by Joan Teno at Brown University found that of patients in nursing homes with excruciating pain, 42% were still suffering after a second assessment.

But,(as certain politicians might say), hope is on the way. First, there is greater awareness among clinicians of this issue than there was some years ago, and the realization that pain patients are almost always not the same as recreational opiod addicts. In fact a relatively dispassionate reading of the data suggests that almost all deaths from Oxycontin abuse come in conjunction with other forms of substance abuse and have nothing to do with pain management patients. Second, there is better awareness among physicians of alternatives, especially for the dying:

Doctors don’t always know about alternatives to narcotics. Raymond Gaeta, director of the Stanford Pain Management Service points out that a whole host of treatments exist. One option is anti-epilepsy drugs such as Neurontin from Pfizer (Note: which as described elsewhere in TCHB is dramatically growing in use) and Topamax from Johnson & Johnson, which can ease the pain of nerves damaged by chemotherapy. When these medicines don’t work, there are local anesthetics, and drugs delivered directly into the spine by pumps such as those made by Medtronic. These pumps are expensive–costing some $10,000 per patient–but Gaeta thinks they’re worth it, even for patients who only have a month to live. Doctors also can simply surgically destroy nerves, preventing the patient from feeling any pain.

Third, much of the fuss about pain and the DEA and DOJ’s draconian assaults on pain doctors have to do with Oxycontin, and the ability of addicts to somehow break down its slow release mechanism to use it for a heroin-like high. At least one company, Pain Therapeutics, has two drugs in clinical trials designed to deliver Oxycontin-like pain relief without either the high or the addictive side effects. One is designed to reduce the addictive qualities of the opiate, and the other is designed to prevent abusers from breaking down the slow release mechanism. (Disclosure: I own stock in Pain Therapeutics. Do your own DD but obviously I think it’s a winner) Whether or not these drugs work, there is clearly a market for making a safe and effective, non-addictive pain killer, that will hopefully send Ashcroft’s goons into retirement–although hopefully he’ll beat them to it in January.

Finally the DEA and several consultants from academic medicine came up with some pain medication guidelines, that hopefully will make physicians more confident in their ability to use opiates without feat of arrest and professional suicide. Let’s hope that the “enforcement” side of the agency is kept on a shorter leash now that the “drug” side has created these guidelines.

TECHNOLOGY: Stent sales go begging for J&J and Boston Scientific, with UPDATE

J&J’s Cordis unit has been having production problems with its Cypher stent. Boston Scientific has been having such bad quality problems that it recalled almost all its stents last month. Apparently the surgeons (oops! Alwin points out that I mean) interventional cardiologists and radiologists who want to use these drug-eluting stents cannot get hold of them for love nor money.

When I was a lad standing on the terraces at Chelsea (note to my American readers: that’s a soccer team), we used to say about one of our more inept forwards–after he missed yet another open goal–that he couldn’t score in a brothel with a roll of hundreds. If I was running BSC or Cordis right now I’d feel like that striker’s coach!

UPDATE: Friday’s Boston Globe has an article suggesting that Boston Scientific’s Taxus recall is even bigger than first thought. So this problem is actually getting worse before it gets better.

POLICY: Apparently health care costs real money (and yes, more on CDHPs)

The NY Times has an article on the shocking fact that increasing health care costs actually cost actual money. Apparently it costs businesses so much in additional health care costs to hire new (especially older) workers that they are hiring fewer than they would if health care costs were lower. And of course instead they’re hiring contract workers and sending jobs overseas.

Well it’s good to find out that the laws of economics are reported in the paper, so they must be true. In this case they are. Real wages in this country have barely budged upwards in the past 30 years. So what has gone up and been responsible for our increase in “wealth” over that time?

a) Working hours. Not only has the work year increased by about 10% over that time, but more importantly millions of women have entered the labor force and most families now need two incomes to keep going.

b) Productivity and technology: Which now means that you can buy a throwaway digital cameraphone that somehow you managed to get by without in 1973. It also means that a whole stack of stuff costs less (consumer goods) meaning that overall those real wages buy slightly more than they did, even though some things like education, housing and healthcare cost more.

c) Profits. Corporate profits have gone up faster than wages (especially in the last few years). The Marxists amongst us would note that this means that the share going to capital is rising faster than the share going to labor, particularly as stock ownership is still dramatically concentrated in the upper income groups.

d) Health care costs. Years ago I had a chart showing that the level of real wages was flat over 20 years while the increase in the healthcare cost part of total compensation went up over 200%. For a brief while in the mid-late 1990s the health care part of that equation settled down and real wages even went up a little. But now we are back in the old pattern. I don’t have the chart anymore, but if someone clamors hard enough I’ll figure out the numbers. Suffice it for now to say that health care costs are really eating into total compensation, and as HSC showed the other day, this is leading directly to fewer people getting health benefits at work.

So what to do about it? Kerry seems to care about the fact that health care costs are now getting through to consumers. Given that he barely mentioned this issue in years in the Senate, and now as the NYTimes says he’s raising it on every porch in middle America, methinks that his pollsters have told him that swing voters are feeling the pain. Bush doesn’t care and has no answers other than laughably and disingneuously saying that malpractice reform will solve the health care cost explosion, and promoting HSAs. Kerry’s solution is to basically make the government the insurer of last resort for catastrophic cases and force a pay-or-play solution on employers. Even if he wins (which I think now looks likely) and the Democrats retake the Senate (unlikely) the plan has little more than zero chance of becoming law this time around. It will however linger for the next time we have this serious national debate, which in my guess will be in the 2008-2012 time period.

Meanwhile, Karen Davis, radical commie and President of the Commonwealth Fund has made available the entire issue of Health Services Research that focused on CDHPs. THCB readers may remember that it had some surprising articles in it, not the least of which was health plan Humana’s research on its own internal CDHP which showed that it cost the employer (itself!) more than keeping its members in its standard plan. Davis has an excellent discussion of the research behind what the Canadians call user-fees (long version – short version) in which she points out that the RAND experiment back 25 years ago showed that increasing the actual cost of going to the doctor at point of service reduced services delivered to those patients. Of course you can read that two ways depending on whether or not you believe people use too few medical services or too many. But the key point that Davis makes is that the best way to improve quality (i.e. get the correct amount of services to patients) is to increase incentives to providers to do the right thing. She’s arguing for pay-for-performance, better use of IT, public reporting of cost and quality data, national EBM standards and a whole lot more spent on researching these issues at AHQR. And of course while she’s preaching to the choir as far as I’m concerned, it’s interesting to note that a version of these things appears in the Kerry plan too.

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