Apologies for the appalling pun, but HSC is out with a very thorough and readable analysis of the for-profit conversion of many Blues plans, and what the impact of these conversions has been. They note that virtually all the converted Blues are ending up in one big organization (the new Anthem) and their conclusion pretty much matches my opinion–it doesn’t really make any difference whether the Blues are for-profit or not, they always acted the same way (i.e. like a health insurer!). But on the other hand the amount of money gained by the states or Foundations that resulted from the conversions is more than enough to exhaustively study all of health care’s problems. It’s just not enough to actually solve any of them.
Above the Fold
Ouch! Internal Bleeding exposes medical errors
Modern Physician has an interview with Bob Wachter, who’s new book is called Internal Bleeding. There are something in the region of 20 odd medical errors written up in the book, with a view to showing the system problems behind them. This is something of an old story, and Michael Millenson’s Demanding Medical Excellence gave a great account of the overall safety/quality environment a few years back. But the more the story can be told the better the chance that the battleship will be turned in the direction of safer medical care. In fact several large health organizations are actively working on these programs, such as Ascension’s Healthcare that’s safe.
BLOGS: Congratulations, Don
Congrats to Don Johnson who’s excellent blog The Business Word is one year old.
QUALITY QUICKIE: EBM goes mainstream (sort of)
With a hat-tip to Lisa Williams, this month’s Atlantic Monthly Journal has the first article I’ve ever seen in a mainstream magazine on EBM. The author calls for a national clinical institute to supplant the NIH and AHCQ, and actually make pronouncements on what works, and try to get the medical profession and health care industry to follow it. I’m so knocked out by an article on this topic getting into a major non-health care journal, that it would churlish to point out that our British cousins have already got one.
POLICY: Health savings accounts-the likely impact
Over at Medpundit, Sydney Smith quotes the WSJ on health care cost breakdowns and argues that HSAs will allow market intervention in the share of spending that goes to doctors and pharmaceuticals, and will bring both that spending under control and enforce market discipline on the providers to give us stuff we want. The WSJ thinks that what the consumer wants is flash computer-based customer service and they may well be right. There are though a couple of problems with this, and it takes a nerdy wonk like me to point them out. First, it’s unclear exactly what the HSA can be used to pay for (OTC drugs? I doubt it; off formulary drugs? Maybe not in Medicare) so there’ll be less of a market in which it can enforce its discipline than might be suspected. Second, about half of physician costs are connected to other costs that involve hospital stays and surgery–in other words they happen after the deductible has already been blown and the HSA spent, and we’re not talking about 33% of spending but more like 20-odd % of the "market" being "managed" by these new HSA bearing consumers–and that’s assuming that everyone gets one. The real issue as George Halvorson points out and Milton Friedman despite his many intelligent view points gets wrong is that almost 70% of the money goes on 10% of the people. That’s where the costs need to be controlled, and there’s nothing in the HSA that can possibly do anything about that.
Now from the other side of my mouth, here’s why I’m getting one. I pay my own insurance and I have medical expenses that don’t reach my deductible and I’d love to pay those in pre-tax versus post-tax dollars. So for people like me, they’ll grow as a niche insurance product. But I’m only 8% of the market. 64% are in employer-based insurance and they’re beginning to flirt with consumer-directed health plans. Some of these consumer-directed health plans give money to the employees to put in their HSA. Once employers figure out that giving real money to employees for their HSA’s means taking it away from their self-insurance pool, they’ll either find the next trendy product OR reduce markedly the amount they give so that it is way less than the deductible. At that point all but the healthiest employees will move back to a more comprehensive plan.
Meanwhile Sydney will have to figure out why she’s creating a understandable consumer price list–and that’s not simply printing out the CPT codes– just for the 10% of patients walking into her office who are now paying with pre-tax but real dollars. My advice is to her is to mark those prices up!
TECHNOLOGY: Pain Control by virtual reality
In the course of some other research I ran across this fascinating site the Virtual Realty Pain Control at University of Washington’s Human Interface Technology Lab. Extreme pain, such as that experienced by burn victims while having their wounds cleaned, is so painful that strong opiates cannot make it bearable. Apparently distracting patients by using virtual reality, can make significant improvements in how they perceive their pain. I don’t know what this says about the mind-body relationship but I found it fascinating.
TECHNOLOGY: Problems for medical groups working with WebMD
In an article yesterday Modern Physician reports that several medical groups are having technical problems submitting claims via WebMD. Given that WebMD took over several claims clearing houses and transaction systems in its roll-up phase in 1999-2001, the complaint from several medical associations may signal bad news for the company. WebMD’s stock has recovered from its tumble in September-October over accounting problems at one of its taken-over subsidiaries. But, given the extent of it’s roll-up shopping spree in 1999-2001, (which as Steve Hoffman points out is ongoing!) when it engulfed many of the big claims transaction companies and clearing houses, WebMD plays a central role in much of the HIPAA mandated electronic administrative transactions in the country. (For more on WebMD’s history see my post here)
Don’t forget that it was late payments that caused the final unraveling of Cigna, Aetna and the other national "managed care" plans and effectively ended the 1990s style of cost-constraints as we knew them. This problem may be just a technical hitch, but on the other hand it could indicate deeper problems within the bowels of WebMD, which will of necessity reverberate around the system. So this is one to keep an eye on.
INDUSTRY/QUALITY: Better Health Technologies DSM e-Newsletter
Just in case you haven’t seen it before take a look at the e-Newsletter from Better Health Technologies. It’s written by a smart veteran of the DSM wars, Vince Kuraitis, and this month’s has a particularly fine analysis of recent studies on the cost-effectiveness of DSM. The answers are, by the way, "Yes it works", "No it doesn’t", "Be careful out there", and "Just Do it Anyway", depending on who you believe. The most recent newsletter has Vince’s 7 Key Trends on DSM in 2004. You can sign up here and the price is very good indeed.
PHARMA/PHYSICIANS: The oncologists dilemma, by Matt Quinn
Regular contributor Matt Quinn who used to work in this obscure part of the health care business, reminded me of the Medicare Bill’s provisions to reduce the ability of oncologists to make money off the drugs they dispense:
- The proverbial other ball is about to drop in the injectible drug game…
The game is actually decreasing AWP (average wholesale prices, which drug manufacturers report artifically high so that docs make money on the “spread” between what they actually pay and what they’re reimbursed), then reimbursing based on ASP (average sales price, i.e. the actual price that docs pay) and/or just getting the drugs shipped to them. It’s good to see that CMS has looked to boost service payments to offset the lost income from drug game, but you can expect LOTS of grumbling and ads about cancer patients dying in the streets for lack of an available oncology practice. My take is that it’s removing an oft-denied but all-to-available opportunity for docs to succumb to perverse incentives (i.e. designing cancer regimens around drug profitability; continuing treatments until expiration, etc.).
CMS has also slipped in a provision to reimburse “functionally equivalent” drugs at the same rate as their predecessors. So, for example, Aranesp, which I assure you has a completely different name and package than Procrit, will be reimbursed at the same rate as the older version of the drug that
does the same thing and costs less. Again, expect LOTS of resistance, as drug companies will have to make their money from actual innovation/novel
drugs vs. “extended release” or new packaging of old ones. I wonder if this will address combination drugs (i.e. taking to drugs and putting them together and calling it a new drug) – another tactic to drive profits without innovation? 1/2 ASP of both?
I think the bigger question is: if the government can exercise such cost restraint on drug costs on injectible market, why wouldn’t it make sense to do so for the rest?
Of course some other intended consequences could be more chemotherapy heading back into the inpatient setting (i.e. the oncologists pushing the less profitable patients into the arms of the hospitals) and more shenanigans from the pharma cos on raising AWP and ASP. This one will be an interesting niche to watch to see if overall cost control is possible or if the providers and pharmas will collectively find a way around it.
PHARMA: Love the sin, hate the sinner?
The latest Harris Interactive/WSJ poll compares various ratings of the trust of the public in institutions and professions "to do the right thing" versus their trust in specific people, products and companies "to do the right thing for you". They then lay out the difference between the trust in the profession/the individual etc. The results make rough reading for many groups (including health plans) but the worse is for the pharmaceutical industry which has been losing the public over the re-importation issue for a couple of years. There’s a 34% difference between those who don’t trust the Rx they take versus those who don’t trust the pharmaceutical companies (and yes more people trust the drug rather than the companies). So in general we’re OK with the product but hate the producer, or perhaps we love the sin but hate the sinner!
