Standardized care projected to produce significant savings

Premier, Inc., is an alliance of inpatient facilities that has team up with the Centers for Medicare and Medicaid Services (CMS) on a pay-for-performce pilot called the Hospital Quality Improvement Demonstration. Premier reported on the pilot's results today.

According to Premier’s analysis, if all pneumonia, heart bypass, heart attack (acute myocardial infarction), and hip and knee replacement patients nationally received most or all (76 to 100 percent) of a set of widely accepted care processes in 2004, it could have resulted in nearly 5,700 fewer deaths; 8,100 fewer complications; 10,000 fewer readmissions; and 750,000 fewer days in the hospital. In addition, hospital costs could have been as much as $1.35 billion lower. While the study findings from patients receiving care for pneumonia, heart bypass, heart attack and hip and knee replacement procedures are extremely positive, the findings from heart failure patients demonstrate a need for continued evaluation into the relationship between improved process delivery and outcomes.

The complete report is available here.

Drug Wars Update 8

As I predicted, Judge Stein did issue this afternoon a preliminary injunction barring further Apotex sales of its generic version of the anti-coagulant drug Plavix. However, the Judge denied Bristol Myers motion for an order requiring a recall of the generic Plavix pills that already have been distributed. (Sanofi-Aventis v. Apotex, Inc., Civil Action No. 02-CV-2255 (SHS) (S.D.N.Y.) The Judge's order can be immediately appealed to the U.S. Court of Appeals for the Second Circuit. Absent a successful appeal, the injunction will remain in force until the end of the patent dispute. The trial is set for January 2007.

CBS Marketwatch had reported a significant drop in brand name Plavix sales preceding the issuance of this order. As I previously mused, the Court's order is similar to closing the barn door after the horse is gone as massive quantities of the generic Plavix are now on the market.

Study Affirms Value of U.S. Health Care Spending

The August 31, 2006, issue of the New England Journal of Medicine includes a study on U.S. health care spending since 1960. The report, prepared by a Harvard economist, a Veterans Affairs Department public health expert, and a University of Michigan research physician "compared gains in life expectancy with the increased costs of care from 1960 through 2000." The report surprisingly concludes that "On average, the increases in medical spending since 1960 have provided reasonable value" in terms of increased life span. The study has attracted a lot of press attention.

Successful Gene Therapy Treatment for Melanoma Announced

According to the Los Angeles Times, the journal Science announced today that Dr. Stephen A. Rosenberg and other research physicians at the National Cancer Institute treated two potentially fatal cases of the aggressive skin cancer advanced melanoma by genetically altering the patients' white blood cells to attack the cancer tumors. However, the treatment failed on fifteen other patients, and while the two patients who were treated successfully have remained disease free for two years, there is no guarantee that the cancer will not reoccur. Nevertheless, scientists reportedly are very excited (and so am I) because this is the first major successful use of gene therapy against a deadly cancer. Bravo!

Medicare Private FFS Plans are Popular

One of the new Medicare Advantage options for seniors is the Private Fee for Service Plan. The insurance company offers a traditional indemnity plan, and the providers have to accept Medicare level reimbursement. The Wall Street Journal reports today that seniors are flocking to these plans. (The link is to a reprint in the Pittsburgh Post Gazette that works.)

The Journal article quotes David Lewis, acting director of the Medicare Advantage Group at the Centers for Medicare and Medicaid Services (Mr. Lewis previously was an FEHBP Contracting Officer), "Enrollment in private fee-for-service plans alone jumped to 802,068 as of Aug. 1 from just 20,000 three years ago." Wellpoint, Aetna, and Humana are expanding their private FFS offerings.

The illuminating article explains

As with most [Medicare] Advantage plans, premiums are often lower than the combined premiums for government-run Medicare benefits for physician and hospital services and drugs. Advantage members must still pay the Medicare part B premium for physician and outpatient services, which is $88.50 a month. But Advantage plans may wrap in other benefits such as additional days in the hospital and drugs.

As insurers expand their private fee-for-service offerings, the plans will see "dramatic growth" next year, says Dan Mendelson, president of Avalere Health.

But some wonder how long seniors can take advantage of this program. The Medicare Payment Advisory Commission, which advises the government on Medicare, has warned that the government pays 11 percent more on average to Medicare Advantage plans for physician and hospital services than the traditional ones.

I wonder how many FEHBP eligible annuitants have dropped their FEHBP coverage in favor of a Medicare private FFS plan? Under OPM's rules, an annuitant can suspend his or her FEHBP coverage to enroll in a Medicare Advantage plan with the option to later reenter the FEHBP. Under the general rule, if an annuitant drops FEHBP coverage, the decision is permanent.

Schering Plough Settlement results in $435 million payment to the Gov't

The U.S. Attorney for the District of Massachusetts announced earlier today that the Schering Sales Corp., a subsidiary of the Schering-Plough Co., a major drug manufacturer, has agreed to plead guilty to a criminal conspiracy charge and pay a $180,000 criminal fine. Schering-Plough has agreed to settle False Claims Act charges by paying $159,502,000, plus interest, to the United States in civil damages for losses suffered by the Medicare program, the federal portion of the Medicaid program, the Veteran's Administration, the Department of Defense and the Federal Employees Health Benefits program as a result of Scherings's improper drug promotion and marketing misconduct. Schering-Plough’s payments to the Government total $435,000,000. These appear to be the Government’s False Claim Act claims that related to the FEHBP as described in the government's press release:

• Schering induced physicians to start patients on Intron A for Hepatitis C by paying them remuneration through three marketing programs.
  
• Schering induced physicians to use Temodar for certain patients with brain tumors and brain metastases and to use Intron A for certain patients with superficial bladder cancer through improper preceptorships, sham advisory boards, lavish entertainment, and improper placement of clinical trials; and
  
• Schering knowingly promoted off label uses of Temodar for certain brain tumors and brain metastases and Intron A for superficial bladder cancer despite not having FDA approval.
  

Schering Plough subsidiary Schering Sales Corp. also was debarred from participating in federal health care programs.

HIPAA Standard Identifiers Update

As I blogged this week, August 2006 marks the 10the anniversary of the Health Insurance Portability and Accountability Act (HIPAA) as well as Tiger Woods' entry into the world of professional golf. HIPAA provides for four standard identifiers to be used with the standard transactions:

1. Standard employer identifier, which is the employer's employer identification number -- the compliance date for use of this identifier was July 30, 2004 (July 30, 2005 for small health plans as defined by HIPAA).

2. Standard provider identifier, which is an "intelligence-free" ten digit number -- the compliance date for use of this identifier is May 23, 2007 (May 27, 2008. for small health plans). The National Uniform Claim Committee has created a revised HCFA 1500 claim form (8/05) which incorporates the HIPAA standard provider identifier. According to NUCC's recommended timeline, health plans, clearinghouses, and information support vendors are expected to be able to receive the revised HCFA form on October 1, 2006.

3. Standard health plan identifier, which has not yet been proposed by HHS., and according to an American Bar Association report, HHS has no plans to issue this identifier in the near future because there is no industry push for this identifier. However, I understand from health plan clients that this identifier would be useful for coordination of benefits purposes.

4. Standard patient (or individual) identifier, which has not yet been proposed by HHS because since 1998 Congress has prohibited HHS from spending appropriated funds on this initiative. However, the day of reckoning may be approaching because the national health information network, a major HHS goal, will need a standard patient identifier or other means of patient identification in order to operate.

OPM Observations on this week's Executive Order

The U.S. Office of Personnel Management has posted its observations on implementing the President's recent Executive Order about health care quality and pricing tranparency and health information technology interoperability. Also available online are the President's remarks on the Executive Order also are online and the transcript of a "press gaggle" aboard Air Force One during which HHS Secretary Leavitt describes the Executive Order as "a significant step toward an interoperable system of value-based competition."

Drug Wars Update 7

Judge Stein has not ruled on the Bristol Myers preliminary injunction motion in the Plavix patent infringement case. I took a look at the court's docket today (Sanofi-Aventis v. Apotex, Inc., Civil Action No. 02-CV-2255 (SHS) (S.D.N.Y.) I surprised to find that the National Association of Chain Drug Stores had filed an amicus brief in opposition to the preliminary injunction motion. The brief argues that Bristol Myers lacks the "clean hands" necessary to obtain such equitable relief and that chain drug stores and their customers would be harmed by the entry of a preliminary injunction that would cause Plavix prices to jump.

Public Health Aspects of HIT, Take 2

Earlier this week, I wrote about the potential public health advantages of electronic medical records and the President's Executive Order encouraging improvement in health care quality. Health insurers are not waiting for the National Health Information Network to be established in order to reap public health benefits from claims data. I should have mentioned at the time that the Blue Cross Blue Shield Association recently announced that it is pooling its claims data (without personal identifiers) in an effort to help employers and other health care consumers improve the quality of health care. Similarly, a coalition of employers and insurers organized by Mercer Human Resources Consulting under the banner Care Focused Purchasing Inc. has created a similar data warehouse for health care quality improvement purposes. These efforts build on the work of organizations such NCQA and the Leapfrog Group.

Personal Responsibility for Health Care

I am sure that I am not the first person to think that Americans should take more personal responsibility for their health care. It turns out that in May 2006 the State of West Virginia, with U.S. Department of Health and Human Services approval, implemented a Medicaid reform plan that is intended to reward responsible Medicaid beneficiaries, and other states are considering similar reforms. According to the HHS press release,

West Virginia will offer enrollees a choice of two benefit packages, a basic plan based on the current Medicaid service package and an enhanced package that includes benefits not traditionally offered under Medicaid. To enroll in the new advanced benefit package, enrollees will be asked to sign a member agreement with the state that they will comply with all recommended medical treatment and wellness behaviors. Enrollees who chose not to join the enhanced plan or who decide they do not wish to continue in it will receive the standard Medicaid benefit package.

This week's issue of the New England Journal of Medicine includes two "perspectives" on the West Virginia reform plan. The perspective of Drs. Bishop and Brodsky is that "The plan asks physicians to violate all three fundamental principles enumerated in the Physician Charter on Medical Professionalism: the primacy of patient welfare, the principle of patient autonomy, and the principle of social justice." (How was the play Mrs. Lincoln?) The conclusion reached by Dr. Steinbrook in his perspective is that

Although personal responsibility for health and for obtaining health care may seem intuitively attractive, the design and implementation of specific insurance initiatives may be complicated. Before such plans are implemented, it would be best to evaluate them rigorously in a controlled trial conducted by an independent group. If they do not improve health or save money, or have unanticipated negative effects, they can be discarded or revised.

It's an interesting debate. I believe that jury is still out, and the end result hopefully will be similar to the successful welfare reform that Congress passed ten years ago.

Happy 10th Anniversary HIPAA!

Monday August 21 was the 10th anniversary of the day that President Bill Clinton signed the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The centerpiece of the legislation was a set of changes to ERISA and the Public Health Service Act to improve the portability of employer sponsored health insurance coverage through certificates of creditable coverage and other tools.

HIPAA also included a set of "Administrative Simplification" provisions requiring the Secretary of Health and Human Services ("HHS") to issue various transaction and code set standards and national identifiers in order to facilitate the electronic transmission of health plan claims and related transactions such as explanations of benefits and eligibility inquiries. The duty also fell to HHS to issue privacy and security rules. Needless to say a cottage industry (of which I am a part) grew up around these Administrative Simplification provisions, and ten years later HHS is still not done issuing the all of the required standards, such as the MIA claims attachment standard, and national identifiers, such as the MIA health plan identifier. Before HHS's initial HIPAA work is done, the government has moved onto the brave new world of interoperable electronic medical records and personal health records. Modernhealthcare.com recently featured an interesting retrospective on this law.

Executive Order Follow-up

Govexec.com features an interesting article this morning about the President's executive order on health care transparency and technology standardization issued yesterday. Several organizations, including America's Health Insurance Plans and the National Association of Manufacturers have expressed their support for the executive order. The medical community appears to be taking a more nuanced view of the order.

The Govexec.com article mentions a press release by Sen. George Voinovich (R Ohio) who states that

I have been working with Senator Carper on the Electronic Personal Health Records Act -- bipartisan legislation we will introduce in September which provides for the establishment and maintenance of electronic personal health records for individuals and family members enrolled in the Federal Employee Health Benefits Plan (FEHBP).

Health Plan Coverage of Over the Counter Drugs

I was impressed when in 2001 Wellpoint successfully petitioned the Food and Drug Administration to convert the non-sedating antihistamine Claritin to an over-the-counter ("OTC") drug. (An over-the-counter drug can be taken without physician supervision.) Traditionally, when a drug goes to OTC status, health plans stop covering the drug, and the member pays the full cost. This generally was the case with Claritin.

The AMA News (subscription wall) became exercised this week over the practice of two Minnesota insurers to cover OTC versions of Claritin and the proton pump inhibotor Prilosec with a prescription. Its front page headline warns "Physicians are concerned whether patients will get the drugs they need." The health plans, however, are not forcing members to use OTC drugs, and as a Claritin user I think that the average person recognizes when an OTC drug will work just as well as a stronger prescription drug. My Google search reveals that other health plans have adopted this approach as have many Medicaid plans. Another health plan innovation.

President Signs HIT Executive Order

HHS Secretary Leavitt informed the National Governors Association on August 6 that the President soon would be signing an executive order on health information technology. I expected that the order would be signed in September but President Bush is not taking a vacation this August. He signed the order today in Minneapolis, and it directly impacts the Federal Employees Health Benefits Program, as well as Medicare, TRICARE, and the Indian Health Service, and the Veterans Affairs Department health care programs. (Medicaid is not subject to the EO).

According to the White House fact sheet,

This Executive Order Directs Federal Agencies That Administer Or Sponsor Federal Health Insurance Programs To:

1. Increase Transparency In Pricing. The Executive Order directs Federal agencies to share with beneficiaries information about prices paid to health care providers for procedures.

2. Increase Transparency In Quality. The Executive Order directs Federal agencies to share with beneficiaries information on the quality of services provided by doctors, hospitals, and other health care providers.

3. Encourage Adoption Of Health Information Technology (IT) Standards. The Executive Order directs Federal agencies to use improved health IT systems to facilitate the rapid exchange of health information.

4. Provide Options That Promote Quality And Efficiency In Health Care. The Executive Order directs Federal agencies to develop and identify approaches that facilitate high quality and efficient care.

OPM has explained that the Executive Order is a continuation of the long term process that began with this year's call letter for 2007 FEHB Program benefit and rate proposals.

Public Health Aspects of HIT

The New York Times included an overview of health information technology developments in yesterday's business section. Because I am not a public health expert, I generally have looked at the advantages of electronic health records from an individual patient's perspective. Former House Speaker Newt Gingrich reinforces this viewpoint with his "paper [records] kill" mantra.

I was struck by the section of this article that discussed how researchers hope to comb through electronic health records to find out what treatments work and which don't. The article provides the example of Kaiser Health Plans and the Veterans Administration which discovered from a review of patient records that less expensive lovastatins work just as well as Lipitor and Zocor for many patients. (Of course, this finding occurred before Zocor lost its patent protection in June 2006.) The article quotes J. Mark Gibson, deputy director of the Center for Evidence-Based Policy at the Oregon Health and Science University who observed “The whole blockbuster model relies on prescribing a drug for a whole lot of people who don’t really need it.”

The article also explains that such studies also may lead to fine tuning the dosage of potentially harmful medications such as anti-coagulants, for particular types of patients.

Drug Wars Update 6

A second day of hearings on Bristol Myer's preliminary injunction motion was heard today before Judge Sidney H. Stein of the U.S. District Court for the Southern District of New York in Manhattan. An MIT economics professor, Jerry Hausman, testified for Bristol Myers that the damage has already been done to Bristol Myers' Plavix patent. "According to data from pharmaceutical market clearinghouse IMS Health Inc. (RX), about 65% of prescriptions filled nationally for Plavix on Friday (and 78% of new prescriptions) were for the generic version, Hausman said." Evidence from the hearings also has disclosed that Apotex has been manufacturing its generic version of Plavix for almost a year. No ruling on the Bristol Myers motion has been issued yet.

Drug Wars Update 5

Yesterday U.S. District Judge Sidney Stein heard the first of two days of hearings on Bristol Myers Squibb's motion for a preliminary injunction barring Apotex from continuing to sell its generic version of the anti-coagulant drug Apotex. Apotex will present its defense on Monday. It is not known how soon Judge Stein will rule after the hearing. My gut reaction is that Judge Stein will issue the preliminary injunction, the purpose of which is to preserve the status quo. Preliminary injunctions are immediately appealable to the U.S. Court of Appeals.

But the issuance of a preliminary injunction here may be akin to closing the barn door after the horse has run away. The Wall Street Journal has described this patent dispute as a "debacle" for Bristol Myers Squibb, thereby making it a takeover target. Barry Sherman, the billionaire owner of Apotex, is generally credited with outmanuevering Bristol Myers' CEO Peter Dolan.

HIT Update

While Congress is in August recess, Government Health IT magazine published an article on the status of the major health information technology (IT) bills in Congress, HR 4157 (passed by the House in July) and S. 1418 (passed by the Senate in November 2005. The article notes that time is running out to reconcile the bills and enact a comprehensive health IT law in this session of Congress.

The article erroneously suggests that the ICD-10 mandate is not in the House bill, but in fact it is found in Section 203 with an October 1, 2010 compliance date. What's more Section 202 of H.R. 4157 would require replacement of the ASC X12 4010 electronic claim standards with the ASC X12 5010 standards and the adoption by pharmacies of the latest National Council for Prescription Drug Programs (NCPDP) Telecommunications Standards by April 1, 2009.

Drug Wars Update 4

The Food and Drug Administration approved another use of Plavix today; the Bristol Myers Squibb board of directors issued a statement in response to the Justice Department's anti-trust investigation, and I just saw a Plavix ad on television. I therefore must conclude that Bristol Myers Squibb is not giving up on its patent which in that company's view has five years left before it expires.

Nevertheless, the Wall Street Journal reported yesterday that according to an analyst's report Apotex has supplied prescription benefits managers with a year's supply of its generic version of Plavix over the past week. Under a settlement agreement, Apotex was allowed five days beginning last week to sell its generic version before Bristol Myers could file a motion for a preliminary injunction (no temporary restraining order motion was permitted under the terms of that agreement). That motion will be heard tomorrow in federal district court in Manhattan. That settlement agreement also limits the damages that Bristol Myers and its co-marketer Sanofi-Aventis can obtain from Apotex if they prevail in the patent litigation.

VA Secretary Announces Remediation Measures

Veterans Affairs Department Jim Nicholson announced today that his Department has contracted with Systems Made Simple Inc to encrypt all of the Department's laptop computers and portable electronic devices using GuardianEdge and Trust Digital technology. "Nicholson has also directed advanced enterprise encryption solutions to be explored as a follow-on to the laptop and desktop encryption program, including all VA servers and data centers." These actions are directed at remedying the problems identified when an unencrypted VA laptop and storage device, including personal data on 26.6 million veterans, was stolen in May 2006. The stolen laptop subsequently was recovered and the FBI has concluded that the personal data was not misused.

Drug Wars Update 3

This afternoon, Bristol-Myers Squibb and Sanofi-Aventis, the co-marketers of the blockbuster anti-coagulant Plavix filed a motion for an order (preliminary injunction) barring Apotex from marketing a generic version of the drug. The motion was filed in the federal district court in Manhattan, the court where the Plavix patent litigation is pending. The court has scheduled a hearing for Friday August 18. Bristol Myers CEO Peter Dolan posted a public message about this action.

Drug Wars Update 2

Next Tuesday, August 15, Bristol Myers Squibb is expected to seek an court order (known as a preliminary injunction) blocking Apotex from continuing to sell a generic version of its blockbuster anti-coagulant drug Plavix. A hearing on the motion may be held as early as Wednesday. Meanwhile the U.S. Department of Justice antitrust investigation of an aborted deal between the two companies continues.

Here We Go Again

The Centers for Medicare and Medicaid Services (CMS) has started the annual merry-go-round of announcing Medicare cuts that Congress subsequently restores. The merry-go-round is created by the Medicare law's formula for annual changes to payments for physicians and other Medicare Part B services. Last year, CMS announced a 4.4% cut for 2006 that Congress reversed in January of this year.

Yesterday, CMS proposed a 5.1% cut for 2007. The CMS press release explains

The negative update is projected for 2007 because spending on physicians’ services and other Part B services has been growing at a much faster rate than target spending. Expenditures for physicians’ services in 2005 increased 10 percent over 2004, even faster than had been previously projected, mainly due to an increase in the number and complexity (or volume and intensity) of services furnished to Medicare beneficiaries, including more frequent and intensive office visits, and rapid growth in the use of imaging techniques, laboratory services, and physician-administered drugs. * * * Additional details on recent expenditure growth in Part B and the impact of growth in physician-related spending are available on the CMS website .

Every year since 2002, in response to this rise in spending, the statutory update formula would have operated to impose payment cuts. In 2002, an update of negative 4.8 percent was applied to payment rates. To avoid further payment reductions, Congress intervened and temporarily suspended the requirements of the formula in favor of specific, statutorily dictated updates for 2003 through 2006. In passing these measures, Congress did not adjust the target, further increasing the gap between actual spending and the targets, and exacerbating the already difficult situation.

As a result of continued rapid growth in utilization of services, coupled with legislative action to eliminate the payment reductions, Part B spending has increased more rapidly than had been forecast, and beneficiary premiums for Part B services have increased as well.

The American Medical Association immediately began its grass roots campaign against the proposed reduction. CMS likely will finalize the rule in October.

CMS also proposed changes yesterday to Medicare payments to outpatient hospital departments and ambulatory surgical centers (ASCs). CMS proposes to modify its payment policies for ASCs and increase by 14 the number of procedures that Medicare will cover when performed at ASCs.
Due to proposed changes in outpatient hospital care payment policies, "CMS estimates that hospitals will receive an overall average increase of 3.0 percent in Medicare payments for outpatient department services in 2007." The CMS press release further explains that

In order to promote greater value in Medicare hospital outpatient services, the rule proposes to tie payment rate increases to the reporting of quality measures beginning in 2007. In the approach proposed in the rule, hospitals that report quality measures for purposes of the update in the inpatient prospective payment system (IPPS) would receive a full update on outpatient payments as well. Those hospitals required to report quality measures for inpatient services in order to receive the full IPPS update, but fail to do so, would receive the OPPS update minus 2.0 percentage points.

A Desktop is Missing

The trials of the Veterans Administration (VA) continue as one of its contractors, Unisys, had a desktop computer stolen from its Reston Virginia offices . The computer which did have password protection included the unencrypted protected health information of 38,000 veterans who received healthcare services from the VA in Pennsylvania. Unisys was collecting VA healthcare fees from third party payers. Can anyone identify the HIPAA violation?

The VA is taking remedial action by contracting with ID Analytics to "conduct a computerized analysis across multiple industries to detect patterns of misuse and determine whether or not there is any suspicious activity specifically related to the May 3, 2006, laptop theft which threaten the personal records of 26 million veterans."

Drug Wars Update

Medco Health Solutions, another one of the big three prescription benefit managers, has announced that it will begin dispensing Apotex's generic version of the anti-blood clotting drug Plavix tomorrow. According to Marketwatch.com, "Medco members account for 24% of Plavix's U.S. market share, and more than half of Medco's Plavix prescriptions are filled through the company's mail-order pharmacies." Apotex evidently is trying to flood the market with the generic drug before the brand name manufacturers can get to court under an earlier settlement agreement.

HIT Executive Order in the Works

According to a Washington Post report, Health and Human Services Secretary Leavitt informed the National Governors' Association meeting that President Bush will sign an executive order next month requiring "all providers of federally financed health care [to] adopt quality-measurement tools and uniform standards for their information technology." The Executive Order is expected to include standards that have been the focus of the American Health Information Community workgroups: "registering patients, reporting lab results, writing prescriptions and providing secure communication channels." Presumably, federally financed health care will include the Federal Employees Health Benefits Program. The Secretary also "promised that by year's end, a majority of the 100 largest private employers will sign similar contracts with the hospitals and doctors they use to care for their workers."

What's more, HHS also has created a spiffy new HIT website!

Drug wars!

Plavix is an anti-blood clotting drug that is prescribed for many conditions. Its manufacturer Bristol-Myers Squibb had Plavix sales of $5.9 billion in 2005, second only to Pfizer's Lipitor which also lost its patent protection in June.

Apotex, a Canadian drug manufacturer, was the first company to received FDA approval of a generic version of Plavix. Apotex also was engaged in a legal battle with Bristol Meyers and its co-marketer Sanofi-Aventis over the validity of the Plavix patent. Last month, several state attorneys general successfully challenged the validity of a proposed settlement of that case as anti-competititive, and the U.S. Justice Department is now investigating that settlement.

Apotex announced today that it is launching its generic Plavix, and Express Scripts, one of the big three prescription benefit managers, announced that it plans to begin dispensing that generic drug tomorrow. Apotex reportedly has five days to sell the generic drug before Bristol Myers and Sanofi-Aventis can apply for a court order blocking the sale on patent infringement grounds.

Specialty Services == The New Battleground between Doctors and Hospitals

The Center for Studying Health System Change has published a study in the journal Health Affairs titled "Specialty-Service Lines: Salvos in the New Medical Arms Race." The study postulates that during the 1990s hospitals competed primarily based on price due to the strict utilization controls and risk contracting imposed by health plans. The consumer backlash against those controls caused health plans to revert more or less to a fee for service environment in this decade.

The study observes that

In some ways, the first decade of the twenty-first century has seen a reemergence of hospital and physician interactions that were dominant prior to the managed care era, when hospitals competed for physicians’ loyalty by building the best facilities and obtaining the most up-to-date technologies. Contrary to mainstream economic theory, hospitals in more competitive environments had higher costs per case and per day than those in less competitive environments, when other factors were controlled for.

Although public policy attention has focused on specialty services provided by physician-owned specialty hospitals, resulting in a temporary federal moratorium on these facilities, the phenomenon of specialty services is a more pervasive development. Moreover, the rapid expansion of physician-owned ambulatory diagnostic and treatment facilities is threatening hospitals’ hegemony over a number of service lines. Aware of the threat posed by specialist physicians’ ability to raise capital on their own, some hospitals have established joint ventures with physicians, primarily as a defensive move. In short, while hospitals find a competitive need to promote a service-line orientation, an approach that requires the committed participation of key physicians, at the same time they often face growing competition from physician-owned service lines [in cancer treatment, cardiac care, orthopedic care, etc.].

The study concludes

Based on our interviews, hospitals associate some of their recent financial success to the use of service-line strategies. Hospitals still have sufficient control over many profitable service lines and continued contracting leverage with managed care plans, such that rate increases from private health plans make up for losses of business to competing hospitals and physician-owned ambulatory facilities. However, as more care moves to physician-owned ambulatory sites of service through gene therapy, robotic surgery, and other “disruptive technologies,” the role of the hospital in the health care system could change markedly.

Whether health care delivery is controlled by hospitals, physicians, or joint ventures between the two, one thing is certain: It is increasingly organized through specialty-service lines, which are already leading to early signs of increasing health care costs and having as-yet-unquantified effects on the quality of care. These salvos in the new medical arms race bear monitoring as the century unfolds.

This study is worth a read at the beach.

A New Twist on Overseas Coverage

The Los Angeles Times reported last week about a new trend in overseas coverage -- employers are sending their plan participants to hospitals in India and Thailand for surgical procedures.

[Dr. Arnold} Milstein, of Mercer Health & Benefits, says hospital quality is not a major worry [at these particular overseas facilities] because over the years, the same agency that accredits most American hospitals for participation in Medicare [JCAHCO] * * * has accredited 88 foreign hospitals through a joint international commission.

Bumrungrad Hospital in Bangkok, Thailand, and Apollo Hospitals in India, for example, are internationally recognized institutions. Despite the Third World conditions outside, the hospitals resemble five-star hotels and are equipped with the latest technology, American patients have reported. Many of the doctors are trained in the U.S., and visiting Americans are pampered around the clock, they have said.

A coronary artery bypass surgery costs about $6,500 at Apollo Hospitals in India, Milstein estimated. The average price in California is $60,400.

The article mentions a North Carolina employer with 2,000 employees that contracted with a medical tourism agency IndUSHealth to arrange for surgical care in India. What next?

Indiana Measles Outbreak Curbed by High Vaccination Rate

Measles is a highly contagious, viral infection that can be dangerous to young children. (I suffered through the illness as a child, and it was not fun. The vaccine became available after I had the disease which creates immunity.) Measles was thought eradicated in the United States in 2000 due to a high effective and safe measles, mumps, and rubella vaccine. In 2005, 34 cases of measles occurred in an Indiana community, the largest outbreak in years.

The New England Journal of Medicine this week published a study on this outbreak written by Amy Parker and others. Mayoclinic.com summarizes the NEJM study's findings as follows:

In 2005, an unvaccinated 17-year-old from Indiana traveled to Romania and unknowingly contracted the measles virus, according to a study in the New England Journal of Medicine. When she returned home, the virus quickly spread. Within six weeks, 34 cases of measles were confirmed — the largest documented measles outbreak in the United States since 1996. Most cases were among children and teenagers ages 5 to 19 who hadn't been vaccinated. More than 70 percent of these children were home-schooled.

The measles outbreak was mostly confined to children whose parents had not consented to vaccination, primarily due to concern about vaccine safety. Researchers concluded that high vaccination levels in the surrounding community and low rates of vaccine failure prevented an epidemic.

FEHB plans routinely cover childhood vaccinations, such as the MMR vaccine. ABC News notes

Why do some people choose not to vaccinate their kids? In 1998, the Lancet, a British medical journal, published an article that claimed that the MMR (measles-mumps-rubella) vaccine caused autism in children. The article has since been retracted, but the worry has remained.

That's a shame. The NEJM study concludes that

The outbreak in Indiana shows that states, localities, and health care organizations need to implement more effective policies to protect persons traveling abroad, home-schooled children, and health care workers against measles and other vaccine-preventable diseases. In addition, to preclude the experience of those countries where vaccine-preventable diseases have become epidemic through the refusal of vaccination, better communication strategies are needed concerning the adverse events associated with vaccines. These efforts will be necessary to sustain the elimination of measles in the United States.

New Commonwealth Fund Report on Improving Our Healthcare System

The Commonwealth Fund released the "Framework for a High Performance Health System for the United States" a report today prepared by an 18 member commission formed by the Fund. Not surprisingly the commission members find that

[A]lthough some of the best medical care in the world is delivered in the United States, when examined as a whole our country falls far short of providing high-quality, safe, well-coordinated, and efficient care, accessible to all Americans—and that we are failing to deliver adequate value for the very high proportion of resources we devote to health care in this country.

The report * * * states that there are concrete steps that could be taken to improve value, for example:

• Implementing major known quality and safety improvements;
• expanding the use of information technology;
• rewarding performance for quality and efficiency through our payment systems;
• increasing public reporting on quality and costs; and
• importantly, expanding health insurance coverage.

The Commission finds that central to implementing these changes is the need to establish more organized systems of care so that individual practitioners and hospitals can have:

• A structure within which to implement known quality and safety improvements;
• a structure to invest in and support appropriate information technology advances;
• a sufficiently broad base to enter into pay-for-performance contracts which reward quality and efficiency;
• the ability to provide reliable and objective public comparison of results among systems and providers; and
• the ability to care for patients across a range of needs for acute and chronic services.

Pill splitting

The subways were delayed today in DC today due to the heat which gave me an opportunity to read this week's Business Insurance issue. I found an interesting point-counterpoint article on pill splitting. United Healthcare has been one of the most prominent insurers to encourage the practice. It turns out that for example Pfizer charges the same price for a 40 mg pill of the statin Lipitor as it does for a 20 mg pill of the same drug. So if the member on a 20 mg daily dose of the drug gets a 30 day supply of 40 mg pills, she can get two months of the medication for one co-pay.

"According to Tim Heady, chief executive officer of UnitedHealth Pharmaceutical Solutions, [United Healthcare's] Half Tablet Program offers a potential savings of up to 1 to 2 percent of total drug spend, and members can save up to $300 annually." Moreover, Stanford University researchers have concluded that the practice has significant potential for cost savings.

The [Stanford] researchers emphasized that pill-splitting must be implemented with drug-specific and patient-specific criteria to ensure patient safety. Just as certain types of medications are unsuitable for pill-splitting - including extended-release medications and those with enteric coatings - certain patients may be unable to split tablets consistently and accurately. Such patients may include those with poor eyesight, loss of a limb, tremors, debilitating arthritis, dementia or psychosis. The researchers noted that results are best when the patient uses a pill-splitting device and is trained to use it.

Pill-splitting should be embarked upon only after a discussion between physician and patient, Stafford explained. “We’re not advocating this as a global solution. It needs to be conducted in the context of doctor-patient communication.” He noted that the list of 11 medications he identified for pill-splitting isn’t exhaustive and may differ depending on local practices and prices.

The American Medical Association similarly accepts voluntary pill splitting programs that require doctor input in the pill splitting decision. However, many members do not want to split pills (but if bakeries can slice bread that you purchase from them, why can't pharmacists split the pills you buy from them ?)

Other insurers, such as Cigna Healthcare, prefer focusing member attention on using low cost generic drugs which are available in all the classes of drugs recommended for splitting, according to Business Insurance. What's more the brand name manufacturer practice of charging the same price for several dosages is not as prevalent with generic drug manufacturers. Yet other insurers, such as Health Partners, include generic drugs in their pill splitting program.

HHS to issue HIT safe harbors

U.S. Department of Health and Human Services (HHS) Secretary Michael Leavitt announced two final rules that will be published in the August 8, 2006, Federal Register. These rules are intended to foster the spread of health information technology.

The Centers for Medicare and Medicaid Services will be creating two exceptions from the physician self-referral prohibitition (Social Security Act § 1877) -- one for donations of electronic prescribing ("e-prescribing") equipment that meets Medicare Part D standards and the other for interoperable electronic health record ("EHR") software. Recipient physicians must contribute at least 15% of the donor's cost for the interoperable EHR software, but can accept the e-prescribing equipment for no charge, but subject to other prerequisites described in the rule.

The HHS Inspector General will be creating e-prescribing equipment and interoperable EHR software safe harbors from the federal health programs anti-kickback act (from which the Federal Employees Health Benefits Program is exempt.) These safe harbors like the physician self-referral law exceptions impose no limit on the value of e-prescribing equipment but require a 15% copay toward the value of EHR software.

According to HHS's press release,

The scope of donors and recipients under the final rules is considerably broader than in the proposed rules. Donations protected under the exception may be made to any physician by entities furnishing DHS. The exception requires compliance with criteria similar to those listed in the electronic prescribing exception, as well as additional criteria, such as those requiring cost sharing and selection of physician recipients of donated technology.

The corresponding OIG safe harbor is similar. However, consistent with underlying statutory differences, the safe harbor covers a broad array of providers, suppliers, practitioners and health plans when they provide electronic health records technology to physicians and others engaged in the delivery of health care.

These rules take effect sixty days after Federal Register publication. The self-referral law exception and safe harbor for EHR software donations will expire at the end of 2013. There is no corresponding sunset limitation on the exception and safe harbor for e-prescribing equipment.

On a related note, CCHIT certified two new EHR products as interoperable yesterday.

CMS to Moderate Proposed Medicare Cuts

On July 17, the FEHBlog noted Robert Pear's article in the New York Times warning that the Centers for Medicare and Medicaid Services' proposed Medicare diagnostic related group (DRG) reforms would whack Medicare reimbursements to hospitals by 20 to 30%. Modern Healthcare.com reports that CMS Administrator Mark McClellan stated at a press conference today that CMS now is planning to phase in the reforms over a three year period and that only 2% of hospitals would experience Medicare reimbursement reductions as a result of the reforms.