May 2010

You are currently browsing the monthly archive for May 2010.

Will CVS Caremark split up?

May 20, 2010 in Business, Pharmaceuticals | No comments

CVS is the second largest pharmacy in the U.S. with over 7000 stores.  Caremark Pharmacy Services is a pharmacy benefit management (PBM) company, providing benefit management services to health plans.  In March of 2007 the two firms merged.  The combined firm not only has $99 billion in sales, CVS Caremark also has the ability not to recommend drugs to health insurance plans and to dispense them.

Fortune Magazine wonders whether CVS Caremark should in fact be split up.  The Federal Trade Commission is not investigating as to whether the merger results in a conclict of interest.  Critics say this is in fact the case “because PBMs are supposed to be drugstore-agnostic–and Caremark can’t help but favor CVS.  Five pharmacists (NCPA members) have told Fortune that Caremark steers members into CVS stores by offering lower co-payments or automatically filling prescriptions there.”  This follows an earlier $370 million lawsuit that that accused the PBMs (including Caremark) of “…encouraging doctors to switch to brand-name medications and keeping the rebates.”

Regulators may not, in fact, be the ones who break up the organization.  Caremark lost $4.8 billion in contracts this year.  Thus, CVS may not be willing to shoulder these losses much longer and a self-imposed breakup may be in the works.  This breakup of a PBM with a drug supplier will not be the first.  Medco and Merck ended their merger in 2003.

Tags: , , ,

Cavalacade of Risk

May 19, 2010 in Carnivals | No comments

The latest edition (#105) of the Cavalcade of Risk is up at Insurance Copywriter.

Tags:

Regional Variation in Diagnosis Frequency

May 18, 2010 in Medicaid/Medicare, Supply of Medical Services | 1 comment

For many years, the Dartmouth Atlas has chronicled how variation in medical resource use across the country.  Despite glaring differences in the cost and volume of care across the nation, regions with higher health care costs do not necessarily have better health outcomes.

However, medical treatment is a two step process.  First, the physician must diagnose a disease, and next the physician must decide the course of treatment given the disease the patient is assigned.  Thus, the reason regions have more intensive use of medical services could be 1) they are more likely to diagnose patients as having a more severe disease, or 2) they are more likely to use more expensive medical services in the treatment of that disease.

A recent paper in the New England Journal of Medicine does find that there is significant regional variation in how patients are diagnosed.  Simply examining regional variation in diagnoses may simply indicate that one region has more sick people than another.  To get around this problem, the authors examine what happens when Medicare beneficiaries move.  As people age, they are more likely to become sicker and thus accumulate more diagnoses.  However, individuals who moved to high cost regions were more likely to acquire more and more serious diagnoses than those who moved to lower cost regions.

To determine diagnose severity, the authors used Hierarchical Condition Categories (HCCs)–which Medicare uses as a risk adjustment mechanism to reimburse Medicare Advantage managed care plans–to create a risk score. Ranking individuals by risk score quintile,  this chart clearly shows a trend that when individuals move to higher cost regions, they are more likely to accumulate more diagnoses and increase their HCC risk score.

The authors conclude by pointing out the following:

“A major concern about both payment reforms and performance-measurementinitiatives is their potential for adversely affecting behavior. For example, if providers are more highly compensated for treating patients with more diagnoses, they could conceivably be inclined to perform more intensive screening and diagnostic testing, with clear effects on costs and uncertain effects on health outcomes.”

Tags: , , , , ,

California Task Force on Affordable Care’s Top 10 Recommendations

May 17, 2010 in Public Policy, Supply of Medical Services | 2 comments

How can we improve health care?  The California Task Force on Affordable Care gives its top 10 recommendations in this report.  The report’s slogan is “ten ways Californians can save over $300 billion.”  These recommendations include:

  1. Implement bundled payments
  2. Hold hospitals accountable for progress in reducing utilization in targeted areas such as imaging
  3. Directly act to reduce hospital readmissions and hospital acquired infections
  4. Develop best practice guidelines that protect providers who use appropriate medical judgments in  targeted high-cost areas
  5. Common standards for billing, eligibility, and contracting
  6. Merge California’s two health insurance regulators, the Department of Insurance and the Department of Managed Healthcare.
  7. Create a sole-source insurance exchange for individuals and small businesses
  8. Increase support for shared decision making
  9. Impose a tax on high calorie, sweetened beverages.
  10. Make walking, biking, and the use of public transit viable, affordable, safe, and attractive

I will divide these ideas into the Good, the Mixed and the Bad.

Read the rest of this entry »

Tags: , ,

The cost of being unusual

May 15, 2010 in Uncategorized | No comments

“Overall the more mixed the crowd, and the greater the number of dimensions of status and achievement, the greater the chance that unusual people will find a means of excelling or just surviving or fitting in.  To put it another way, the mixing of populations lowers the cost of being unusual.  That’s why gay people are especially likely to choose the coasts and major cities rather than small towns in the Midwest.”

Latvian ‘Robin Hood’

May 15, 2010 in Current Events | No comments

On Thursday I blogged that fiscal stimulus and bail outs may improve economic performance in the short run, but rarely in the long run.  Often these bailouts are accompanied by mandatory salary decreases for key company leadership.  It turns out that these bailouts may not even help in the short run…unless you are a company CEO.

A hacker nicknamed the Latvian Robin Hood gained access to confidential tax documents detailing that paycuts promised by the top brass of firms receiving bailouts often never materializes.

“Data leaked so far includes pay details of managers from a Latvian bank that received a bail-out.  It reveals that many did not take the salary cuts they promised.  Other data shows that state-owned companies secretly awarded bonuses while publicly asking the government for help.”

With Latvian unemployment nearing 23%, the public mood generally supports the Robin Hood Hacker and feels resentment at the company leaders who accepted public funds without sacrificing their own salary.

Tags: , , ,

Anti-depressants and Fiscal Stimulus

May 13, 2010 in Economics - General, Pharmaceuticals | 7 comments

Conventional wisdom holds that physicians can use anti-depressants to treat long term depression.  Many patients, however, spend years or even decades taking these drugs.  Is this how the inventors of anti-depressants believe they would be used?

Author Robert Whitaker believes not:

You find that even with major depression, in the pre-antidepressant era – and this is depression so severe people were hospitalized – they could expect to get better. The episode would eventually pass.

… So when antidepressants were introduced, the thought was okay, we really can hope to improve on this sort of natural recovery, but maybe we can help people recover quicker? So that really was the rationale for the use of antidepressants.

But it’s really interesting if you follow this course through, forward in history. The minute they start using antidepressants in any sort of large numbers, doctors start saying, “Well, you know, my patients may be getting better, the depression maybe lifting faster, but then we’re noticing that they’re also relapsing more frequently than before, back into depression.”

So right away you get this question: Does the drug treatment actually put people on a more chronic course than before?”

This reminds me of government “temporary” spending programs.  In times of fiscal crisis, the government often institutes temporary spending packages to revive the economy (e.g., the Stimulus Bill or ARRA).  Although these actions may help revive the economy in the short run, in the long run they often lead to reduced growth prospects.  Oftentimes, however, as the status quo changes, entrenched interests make it difficult to repeal a bill.

Similarly, giving someone anti-depressants changes the status quo from one of a non-drug user to a drug user.  Physicians become accustomed to treating the patient with drugs and many believe it stabilizes the patient.  Further, the patient often experiences withdrawal symptoms if they attempt to change their status quo from that of a user to a non-user.

Mr. Whitaker also cites a Duke University study from the 1990s examining 3 patient groups: 1) Exercise only 2) Exercise plus antidepressant 3) Antidepressant only.

“After six weeks, the drug-only group was doing slightly better than the other two groups. However, after 10 months of follow-up, it was the exercise-only group that had the highest remission and stay-well rate.”

Both anti-depressants and stimulus packages offer short run relief for the patient or economy.  Excessive use of these short run measures, however, leads to worse outcomes in the long run.

Tags: ,

The Health Wonk Review is up

May 13, 2010 in Carnivals | No comments

The latest edition of the Health Wonk Review is up at Hank Stern’s InsureBlog.

Tags:

Links

May 12, 2010 in Current Events | No comments

Tags:

End of the War on Drugs?

May 11, 2010 in Current Events | 1 comment

According to Businessweek:

President Barack Obama’s plan to fight drug abuse and trafficking proposes spending $15.5 billion next year and shifting the emphasis from fighting a war on drugs to treating the problem as a national health issue, the administration’s top drug-policy adviser said in an interview.

“It’s a disease, it’s diagnosable and it’s certainly something that can be treated — but it’s not a war,” said Gil Kerlikowske, director of the White House Office of National Drug Control Policy.

Just because the President increased spending on drug treatment, however, does not mean that the war is over.  In fact, President Obama plans to increase spending on domestic law enforcement by “1.9 percent to $3.9 billion under the plan, with $579 million going to the Organized Crime Drug Enforcement Task Force.”  Plus, the U.S. still supports Colombian efforts to destroy cocaine growing plants in South America.  Drugs are still illegal and penalties for drug use–although moving gradually towards decriminalization in many states such as California–have not changed on the federal level.

Despite the rhetoric, the War on Drugs continues.

Tags: ,

« Older entries § Newer entries »