Health Care Reform and Brand Drug Rebates; Follow The Money

The Washington Post today in an article by Ceci Connolly reports that budget plans to increase the rebate for brand drugs to Medicaid from 15% to 21% would create $19.5B in savings over 10 years. "This move is expected to spark strong opposition from the industry".

A question the public interest requires an answer to is why the PBM's or insurance companies administering Medicaid would get to keep 85% or 79% of the rebates paid on brand drugs?

Another question would be how does the generic utilization rate under Medicaid compares to the VA which has a formulary primarily populated with generics. I mean, if its a good enough drug for our veterans it should be good enough for medicaid recipients, right?

Last year, CMS required pass through of reimbursement levels paid to the pharmacy. I wonder if they are also viewing what the PBM's bill the plan? I suspect they are not and this is a failure most self-respecting benefit manager in the private sector could ill afford. True transparency requires a view both of what the plan paid as well as what the pharmacy was reimbursed along with complete 100% pass through of all rebates from brands. So lets look at what CMS is doing with a hat tip to Mcdermott, Will & Emery;

CMS has revised an earlier proposal to require Plans who contract with
pharmacy benefit managers (PBMs) to report costs on a pass-through basis. The
negotiated price that must be made available to a member (when, the member is in
a coverage gap, for example) must be the price the PBM pays the pharmacy—not the
price the Part D sponsor pays the PBM. Similarly, CMS proposes to require
Plans to report drug costs based on the price paid to the pharmacy or other
dispensing entity, rather than the price the Plans pay to a PBM. CMS has
taken the position that any net profit to the PBM as a result of a difference between the amount the PBM pays the pharmacy and the amount it collects from Plans is effectively a risk premium paid to shield the sponsor from price variabilities, and is therefore an administrative expense rather than a drug cost. The amount of drug costs affects reinsurance and risk corridor payments to the Part D sponsor. The proposal would be effective for coverage year 2010.

I wonder how much pharma and the PBM's paid lobbyists for that position?

It is common knowledge to savvy benefit managers the the magnitude of their brand rebate is directly correlated to their success in achieving appropriate levels of generic utilization. The bigger the rebate for brands the bigger the problem and the higher the pharmacy trend. Yes, your administrative costs will increase when you eliminate rebates from your PBM and price spreads from your generics but if you couple those efforts with an emphasis on therapeutic infusion you will reduce your overall claim costs. Its OK to have higher retention levels if the services you pay for reduce your claims costs as any decent group man would tell you. The cost of claims dwarfs the cost for truly transparent PBM administration costs. Psst...Washington Post...follow the money...there is a Pulitzer for the individual who exposes this sordid mess.

The Mischief In Obama's $634B Health Care Fund

No man is exempt from saying silly things; the mischief is to say them deliberately. - Michel de Montaigne

Last week as reported in The Houston Comical Kelsey Seybold clinic announced plans to stop accepting Medicare patients except those enrolled in a Medicare Advantage Plan. The stated reason is that the reimbursement from Medicare is below the cost of actually providing that care. The article notes that in TX the percentage of physicians accepting Medicare is down from 78% in 2000 to 64% recently.

The WSJ reports today in an article by Laura Meckler that President Obama is proposing a $634B in new taxes as well as cuts in spending to fund a down payment on Health Care reform. The single largest spending cut is designed to come from Medicare.

The biggest chunk of savings in the budget proposal, estimated at $177
billion over 10 years, would come from changing the pay structure for private
managed-care plans that participate in Medicare. Under current law, payments for Medicare Advantage plans are set by a formula, and the result is that private
companies are paid, on average, 14% more to care for a Medicare patient than the
government would normally spend through the traditional Medicare plan.

So the bottom line is that for years physicians have been moving out of traditional Medicare due to poor reimbursement that has shifted costs to employers and individuals with insurance and cash payers which has fueled health care inflation and increased the number of uninsured Americans. Many have moved to Medicare Advantage where there remained an opportunity for a profit. That profit has now been targeted. Don't believe me? Managed care stocks with Medicare Advantage exposure are in free fall as pointed out here.

In a note today downgrading both HealthSpring and Humana, along with
$575 million Universal American Corp. (UAM)
to “Underperform” from “Market Perform,” BMO Capital analyst Dave Shove writes today that Medicare’s profitability growth “will all but disappear” as a result. Medicare programs will see “significant” reductions in enrollment in 2010 and a 1.5 percentage-point drop in profit margins, writes Shove, and the movement of many of the insured to public programs away from private Medicare coverage. The last time HHS “dealt a crushing blow to Medicare Advantage capitation rates,” in 2000, writes shove, “the program lost roughly 10% of enrollees in the first year, and bottomed out with 22% participation loss over a three year span.” (Bear in mind, the capitation rates statement is preliminary: final rates will be decided on April 6 and could potentially be higher, meaning, more
profitable.)

For decades the US government has shifted costs for entitlements like Medicare to the private sector leading to rampant health care inflation. As we move towards the promised land of universal coverage such policies will no longer work. I only hope the media will begin to point out the mischief when silly statements crafted as policy are reported. As for me I am not amused.

NY Times Gets It Wrong Again

The rule is perfect: in all matters of opinion our adversaries are insane. - Mark Twain

The New York Times has reported today in an article by Robert Pear that The Health Care Industry is in Talks with Senator Edward Kennedy's staff about reforming the US Healthcare System.

The article notes Senator Kennedy's staff is conducting the secret meetings behind closed doors, which is "unusual". Republicans so far have stayed away we are told, as they" felt they would be relegated to a secondary role,with no opportunity to set the agenda or choose the outside participants." Here's where it gets really good. Senator Kennedy has often held such secret stakeholder meetings in the past we are told. Then we have this gem;

"It is not clear whether such back-room negotiations are still
viable at a time when politicians are promising a new transparency and condemning the influence of lobbyists."

Not Clear? This is transparent? A sector of the economy worth 17% of GDP does not have all constituents with some skin in the game at the table while its future is decided? Maybe to the NYT. Its pretty clear to anyone with a brain what is happening here--Senator Kennedy's staff is utilizing Mark Twain's time tested rule and excluding their insane adversaries. At a time when the stock price of the NYT is below the cost of its Sunday edition is it any wonder the print media is in shambles?

So much for Transparency In Government HeathCare Goals

Thank God some people are actually reading and reporting on the the actual provisions included in the current stimulus package as it relates to Health Care and providing insight into the hidden agenda this package includes.

Ruin Your Health With the Obama Stimulus Plan: Betsy McCaughey

The stimulus bill will affect every part of health care, from medical and nursing education, to how patients are treated and how much hospitals get paid. The bill allocates more funding for this bureaucracy than for the Army, Navy, Marines, and Air Force combined (90-92, 174-177, 181).

Hiding health legislation in a stimulus bill is intentional. Daschle supported the Clinton administration’s health-care overhaul in 1994, and attributed its failure to debate and delay. A year ago, Daschle wrote that the next president should act quickly before critics mount an opposition. “If that means attaching a health-care plan to the federal budget, so be it,” he said. “The issue is too important to be stalled by Senate protocol.”

More Scrutiny Needed

On Friday, President Obama called it “inexcusable and irresponsible” for senators to delay passing the stimulus bill. In truth, this bill needs more scrutiny.

The health-care industry is the largest employer in the U.S. It produces almost 17 percent of the nation’s gross domestic product. Yet the bill treats health care the way European governments do: as a cost problem instead of a growth industry. Imagine limiting growth and innovation in the electronics or auto industry during this downturn. This stimulus is dangerous to your health and the economy.

Mom Passed Away February 8, 2009

Mary Catherine Buckle passed away peacefully at home on Sunday, February 8, 2009 after battling brain cancer. Born Mary Catherine McFadden in Moyra, Falcarragh, a small village in County Donegal, Ireland on August 17, 1932, Mary joined her sister Anne McFadden for the opportunity available in the U.S. and arrived in Philadelphia, PA in 1951. Over the years she worked in both Philadelphia and New York City and became a naturalized US Citizen in 1956.

On September 9, 1961 Mary married Edward I. Buckle. Mary committed herself to her family and she and Ed had 3 sons. The family lived in Philadelphia, PA and Carol Stream, IL before moving to Texas in 1970. In Texas, Mary worked as a cashier for Handy Andy (which later became Randall’s) in stores located at Dairy Ashford Rd. & Memorial as well as Wilcrest & Westheimer. Mary had many customers who became her friends. She was active in the St John Vianney Catholic Church community including the guild and Perpetual Adoration. Following a move to Missouri City in 2003, Mary and Ed became active in the St Laurence Catholic Church community.

Following her retirement from Randall’s in 1998, Mary spent many hours in prayer and service to her church family. She gave tirelessly and freely of her time, love, money and her faith to all who asked of her, even strangers. She believed in the sanctity of human life and was an unapologetic advocate of Life, her catholic faith and the healing power of prayer. Mary touched many in the St. Laurence community, and was a devoted member of her prayer group.

Mary was preceded in death by her parents, John and Mary McFadden of Moyra Falcarragh in County Donegal Ireland, along with her brothers James and Barney, and Sisters Grace McFadden Ferry and Bridgett McFadden Russell.

Mary is survived by her husband of 47 years Edward Irving Buckle; Sons; Edward John Buckle and wife Sharon Pavlik Buckle and their Children Joseph, Grace, Anne Marie and Erin; Daniel Francis Buckle and wife Leslie Ann Buckle and their children Katherine Ann and Brian Patrick; Joseph Michael Buckle and wife Cherry Buckle and their children Brianna and Kaitlin.

Mary’s sister Madge Duffy and husband Christie reside in Cumbernauld Scotland. Her sister Sally Bailey and Husband Dennis live outside of London, England. Her sister Sr. Marie McFadden is a retired nun in Birmingham, England. Her sister Anne Clapper and husband Joe are residents of Springfield, PA. Mary has many nieces, nephews and cousins too numerous to mention.

The family wishes to thank the doctors and nurses of Kelsey-Seybold Clinic, especially Dr. Cynthia Lowder, Dr. Stuart Weil, Dr. Priya Ramshesh and Dr. David McCants, the nurses at St. Lukes Hospital, and Dr. Elizabeth Arzu of MD Anderson, Oak Bend.

Grateful thanks also to the staff of Houston Hospice for the compassionate care they provided to Mary at home.

The family will forever be indebted to the loving caregivers Moreino, Noreen, Rita, Helen and Uche, who cared for Mary in her home.

In lieu of flowers please consider a contribution to The American Cancer Society to benefit brain tumor research.


Services
Visitation Thu., Feb 12, 20095:30 pm-8:00 pmSt. Laurence Catholic Church3100 Sweetwater Blvd.Sugar Land, TX 77479Get Directions T: 281-980-9812Website

Rosary Thu., Feb 12, 20097:00 pmSt. Laurence Catholic Church3100 Sweetwater Blvd.Sugar Land, TX 77479Get Directions T: 281-980-9812Website

Funeral Mass Fri., Feb 13, 200910:00 amSt. Laurence Catholic Church3100 Sweetwater Blvd.Sugar Land, TX 77479Get Directions T: 281-980-9812Website

Burial Fri., Feb 13, 2009Following ServiceForest Park Westheimer Cemetery12800 WestheimerHouston, TX 77077Get Directions

The Federal Coordinating Council for Comparative Effectiveness Research

Buried in the current stimulus bill is a provision that will alter forever the delivery of health care in the United States,

As reported in The Washington Times 2/5/2009 article by Amy Menefee the stimulus bill would create a government council which would determine the effectiveness of various treatments. You will want to read the link to the story above. When the stimulus bill passes, perhaps this weekend, in the dead of night no doubt, if this is part of the final version, Americans will be outraged. Not only are employers who have invested in wellness and engaging their workforce being saddled with an additional $39-$65B in costs from the COBRA changes they also face more regulation from The Federal Coordinating Council for Comparative Effectiveness Research. Welcome to rationing America.

The "stimulus" establishes a new government body to assess Americans' health care and to make sure drugs and treatments "that are found to be less effective and in some cases, more expensive, will no longer be prescribed." That's how House Appropriations Chairman David Obey (D-Wis.) described it...

The predecessor of this new bureaucracy operates in the United Kingdom. The British National Health Service (NHS), revered by fans of government health care, has a body that compares and assesses drugs and treatments. It's called the National Institute for Health and Clinical Effectiveness (not-too-aptly nicknamed NICE). It became infamous for denying cancer patients new drugs that had proven to be effective. They were deemed medically effective - but not cost-effective.Patients can opt to buy these drugs out of their own pockets, while still paying the taxes that fund the NHS, of course.

One man has wanted a similar board to govern the treatment of U.S. patients: Tom Daschle, who just ended his quest to be the new Secretary of Health and Human Services after being investigated for tax evasion. He laid out his entire vision in a book, "Critical: What We Can Do about the Health Care Crisis."The focus is a federal health board modeled on the Federal Reserve. This board would oversee the entire health sector, including research on drugs and treatments known as comparative effectiveness research. And, like the British version, it would concern itself not only with helping patients, but with the costs of treatment.

"We won't be able to make a significant dent in health-care spending without getting into the nitty-gritty of which treatments are the most clinically valuable and cost effective," Daschle wrote.

I am Taking a bow

For my 100th post let me just take a bow and point out that I noticed a major consulting firm just made a press release pointing out the potential impact of proposed changes to COBRA that I detailed on January 26, 2009 on these pages. Now that Harry Reid claims to have the votes it may be too late to call your Senator so just remind yourself again you selected them because they are big, not speedy. Just saying...

FMLA Nightmares

Ouch!

The Failure That Is Canadian Healthcare

There is an incisive article in the Canadian Free Press written by Klaus Rohrich on the utter failure that is the single payer Canadian Healthcare System. Here are just a few facts;

Canada, who along with Cuba and North Korea, is one of the
world’s only three countries where private, for profit healthcare is illegal.Canada outlawed all private medical care with the passage of the Canada Health Act of 1984. Within the first decade governments were forced to control their healthcare expenses by rationing care. Rationing was achieved by limiting enrollments in medical schools, which served to reduce the number of healthcare professionals dramatically and, of course created huge shortages in the healthcare system. Twenty-five years after the enactment of the Canada Health Act, Canada’s healthcare expenditures are among the highest of all countries offering universal access to healthcare. In fact the only country out of 28 that spends more on healthcare than Canada is Iceland.

The Fraser Institute concluded that the Canadian healthcare model “is inferior to those that are in place in other countries of the OECD. It produces inferior age-adjusted access to physicians and technology, produces longer waiting times, is less successful in preventing deaths from preventable causes and costs more than almost all of the other systems that have comparable objectives.”

...access to medical specialists is so curtailed that it
routinely takes upward of two months from the time a patient is referred to a specialist before the patient is even called back with an appointment. A four to six-month wait for an appointment with a specialist is the rule, not the
exception, with some procedures, such as joint replacements, taking in excess of three years from initially being seen by a general practitioner to having the procedure completed.

While 15% of the US population currently doesn’t have health insurance, 20% of the Canadian population does not have ready access to a family doctor.

My aunt lives in the UK where it is common for employers to offer private health insurance for employees. Why you might ask? Because most consumers do not want to wait 4-6 months to see a specialist or 3 years for a knee replacement. After my uncle retired, my aunt no longer had access to private insurance and indeed did wait 3 years for her knee replacement. The pain medicines required over that 3 year wait had an impact on her heart. So many people who talk about single payer as a panacea do not want to talk about the practical impact it has on people.