Health Business Blog

Grand Rounds, the best of this week’s medical blogging is up at KidneyNotes. Next week’s host is the MSSP Nexus Blog.

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Kevin MD reports on a new study that indicates that health care costs are inflated by physicians ordering too many tests, referrals, and treatments. That’s something insurers have known for a while, and it’s a key reason they use high co-pays to keep patients out of the office. It’s also a good rationale for providing coverage for webVisits –doctors order fewer tests when they don’t see the patient in person.

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Health Care Renewal lists the pharmaceutical and medical device companies cited in Volcker report on corruption in the UN oil for food program.

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As previously noted, the FDA is going to review the use of celebrity endorsements in Direct to Consumer pharmaceutical advertising. (See Rise of celebrity testimonials spurs FDA scrutiny.) The FDA is worried that consumers will let their guards down when they hear celebrity testimonials and rush to their doctors to demand unsafe and inappropriate medications. Proposals are being floated to have the pharmaceutical companies educate doctors about new drugs for a year or two before unleashing advertising on the public.

This line of reasoning is pathetic. Consider the restrictions already in place for prescription products:

• First, the FDA must approve drugs and their labeling
• Second, patients cannot get drugs without a doctor’s prescription
• Third, insurance won’t reimburse fully for drugs that aren’t on formulary

Rather than relying on pharmaceutical companies to “educate” physicians, can’t we expect physicians to know how to deal with patients who demand drugs for the wrong reasons, and can’t we expect patients to take what they hear from celebrities with a grain of salt?

This is a separate issue from the now discontinued practice of having celebrity endorsers appear on talk shows to talk about how specific drugs helped them without disclosing that they were being paid to make these endorsements. That’s unethical and misleading, but greater scrutiny by the talk shows themselves could have prevented the problem.

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There’s a fairly inane, tongue in cheek article in the Boston Globe about the Cost of Living Extremely Well (CLEW) index, which is apparently rising much faster than the Consumer Price Index (CPI). While the CPI is rising about 3.6 percent per year, the CLEW is rising at 4 percent or more. The point of the article seems to be that when the prices of luxury goods are rising quickly, that means the economy is in good shape.

According to the article:

Basically, the best stuff is rising out of reach even faster than everyday stuff — you know, things like food, gasoline and healthcare.

Actually health care costs have been rising by about 10 percent for the last several years, and the price of gasoline is up at least 50 percent recently. Caviar and champagne are a lot more stable.

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I pointed out on Wednesday that Wal-Mart could face discrimination claims for favoring healthier workers. Apparently employee-rights lawyers agree.

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The Oregon Association of Hospitals and Health Systems has posted an informative, easy to use hospital quality tool on its website. Users can view state and national benchmark data as well as data for individual hospitals on CMS-mandated measures for heart attack, heart failure, pneumonia, and surgical infection prevention. It’s one of the best sites of this type that I’ve seen.

Clicking on a specific indicator (like aspirin at arrival for heart attack) ranks the hospitals in order of performance.

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The Medicare Drug Benefit needs to enroll people who don’t need drugs, otherwise premiums will rise dramatically and encourage disenrollment among those who sign up initially. That’s the message from a new Kaiser Family Foundation report (The Impact of Enrollment in the Medicare Prescription Drug Benefit on Premiums).

Medicare Part D (the drug benefit) is designed so that enrollees pay 25 percent of the cost on average. If only the big drug users sign up, the 25 percent will be calculated on a higher number. This will affect premiums in 2007 and later.

The Congressional Budget Office (CBO) has estimated enrollment at 80 percent of eligibles. The Center for Medicare and Medicaid Services (CMS) has estimated 91 percent. These numbers are based on enrollment levels in Medicare Part B (outpatient coverage), which is also voluntary. However, there is a key distinction. Medicare beneficiaries are presumed to want Part B, unless they opt out. Anyone who wants Part D has to go out and sign up.

The Bush administration has been hard at work pitching the drug benefit to seniors. They have their work cut out for them and I won’t be upset if they don’t succeed.

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Tobacco firm Philip Morris is entering the drug delivery market, developing inhalers that have the potential to deliver a variety of drugs. Of course, the science of how to get particles deep into the lungs comes out of the tobacco business.

The medical community is not quite sure what stance to take towards Philip Morris, considering the damage its products have done to human health and the company’s history of not coming clean on the health risks of smoking.

My view is the new products should be judged on their merits. If they’re as innovative as they sound it would be a real mistake to let Philip Morris’s legacy hold them back.

For details, see the lead article in today’s Wall St. Journal, “Second Wind; Rx From Marlboro Man: Device That Delivers Drugs, Not Smoke.”

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Wal-Mart’s critics have rightly noted that the company is stingy on health care benefits. (See If it worked for deadbeat dads and tax scofflaws, why not for Wal-Mart?) As noted on Monday (Can Wal-Mart help Romney?), Wal-Mart is responding to the pressure by offering an innovative health plan to increase the percentage of its employees that are covered.

A leaked internal Wal-Mart memo on the topic (written by McKinsey and Co.) in today’s New York Times confirms that the company’s motivation for the new plan is partly to mollify the critics.

Wal-Mart’s healthcare benefit is one of the most pressing reputation issues we face because well-funded, well-organized critics, as well as state government officials, are carefully scrutinizing Wal-Mart’s offering. Moreover, our offering is vulnerable to at least some of their criticisms, especially with regard to the affordability of coverage and Associates’ reliance on Medicaid.

The problem with pressuring Wal-Mart into offering health insurance is that it also encourages Wal-Mart to think like an insurance company, seeking to exclude undesirable risks from coverage. In this case it also means excluding less healthy people from employment.

Satisfaction [with benefits] varies significantly by… segment of Associates. Most troubling, the least healthy, least productive Associates are more satisfied with their benefits than other segments and are interested in longer careers with Wal-Mart.

Wal-Mart is looking for ways to favor healthier people over others for jobs, partly by redesigning the positions to include physical activity. Wal-Mart will be vulnerable to discrimination claims if it goes too far, but it’s an open question whether Wal-Mart’s response to pressure will benefit society in the aggregate.

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