Health Business Blog

Sara Rosenbaum’s has an informative Perspective (Can States Pick up the Health Reform Torch?) in the current New England Journal of Medicine. She argues that reforming health care at the state level is not a realistic alternative to national health care reform.

I agree with her conclusion but don’t find all of her arguments  persuasive.

Rosenbaum highlights four hurdles:

1. Fiscal reality
2. Practical considerations
3. The law
4. The “reality of health care today”

In number 1, fiscal reality, Rosenbaum cites the high costs of subsidizing health insurance and says “an infusion of federal resources” is needed. I agree that the magnitude of spending is high and that states would have a hard time raising the money. However, the country is just a collection of the states, so on average if the feds can do it at least some states should theoretically be able to afford the same resources. In truth, the federal government has an easier time running large deficits than the states do. But this reason doesn’t seem very strong to me.

Number 2, practical considerations, refers to states tackling  “discriminatory tactics, such as price gouging and exclusion, that insurers use to deny enrollment or provide coverage that is grossly inadequate in relation to medical need. Even if individual states are willing to intervene, insurers are free to evade state regulation simply by pulling up stakes in any jurisdiction with an unappealing political and regulatory climate.” This argument is the least persuasive to me. Sure, national plans might avoid certain states, but in doing so they will alienate national employers and lose business as a result. And much of the commercial market is made up of local Blues plans. Those local plans aren’t going to close up and go elsewhere.

Number 3, the law, makes the most sense. Rosenbaum mentions that ERISA “exempts from state regulation self-funded employer plans that use large insurers only as plan administrators.” Because even smaller companies self-fund these days, it excludes more than half the commercial market from state regulation.

Number 4, “reality of health care today”, has some merit. As an example, Rosenbaum points to the Washington, DC area where she lives. People may live in Maryland, work in DC, and seek care in Virgina. Obviously no single state can control its neighbors.

In my view, Rosenbaum has missed the biggest hurdle of all: Medicare. Medicare spending is so large and influential that it overwhelms anything going on in the commercial market. No matter what happens at the state level (including with Medicaid, where states have at least some influence) providers are going to be profoundly influenced by what Medicare does. For example, the 21 percent rate cut due to go into effect on Monday is of far more interest than any state activity. And Medicare is a federal program, so there’s nothing at all the states can do about.

So Rosenbaum is right: states can’t lead reform. If reform is to occur, the federal government will have to act. And it will need to tackle Medicare.

Share

In addition to my consulting work and writing the Health Business Blog, I’m chairman of the board of Advanced Practice Strategies, a medical risk management firm that provides litigation support for malpractice defense and an eLearning curriculum focused on enhancing patient safety. Here’s the Advanced Practice Strategies case of the month.

Share

Share

Almost no one wants to enter a nursing home, yet sometimes it’s unavoidable. Since the 1980s a “culture change” movement has been underway. Its objective is to transform nursing homes from their hospital-like, institutional, clinical model, to a resident-centered home-like model. I learned a lot about the topic by reading Person-Centered Care For Nursing Home Residents: The Culture Change Movement, in February’s Health Affairs. I’m totally on board with the culture change principles, but disappointed at how few nursing homes have been transformed.

A consensus meeting in 2006 outlined a set of characteristics of an “ideal” facility:

1. Resident direction, e.g., residents decide what to wear, when to go to bed
2. Home-like atmosphere. That means units of 10-15 people, meals prepared in the units, resident access to frigs, and elimination of institutional features like overhead PA systems
3. Close relationships. In particular, the same nurse aides should take care of a resident over time
4. Staff empowerment to respond to residents’ needs
5. Collaborative decision making so frontline employees have more autonomy. (This and #4 seem closely related)
6. Quality improvement processes to encourage continuous improvement with specific, measurable outcomes

A Commonwealth Fund survey found that just 5 percent of nursing directors at nursing homes reported their facilities had made it all the way to the “culture change” goal, while another 10 percent had made significant progress and a total of one-third had done something. I find those results pretty discouraging.

The authors highlight barriers in workforce, regulation and reimbursement that hinder the transformation of nursing homes.  For example, they point to staff turnover in the 50 percent per year range, regulations preventing residents from rearranging their furniture, and rules forbidding open kitchens. Meanwhile nursing home quality report cards such as those on the Nursing Home Compare website emphasize clinical aspects rather than resident experience measures.

The authors make a number of reasonable suggestions on how to address the situation including direct engagement to encourage nursing homes to embrace culture change, payment incentives, facility replacement, regulatory tweaks and public reporting.

And as researchers, of course they didn’t forget to include a call for more research!

They also mention that “[t]he number one challenge in long-term care today is securing a large enough and adequately trained workforce.” They make the usual suggestions for workforce improvement, e.g., improve training, revise licensing requirements to increase flexibility. This plan is fine as far as it goes, but I don’t it will ever be completely successful. It will be hard to dramatically increase the supply of nursing home staff, especially as the overall population ages, we continue to restrict immigration, and the jobs remain low-pay. In addition, it’s hard to instill culture change and consistency to the degree required.

I return to my (controversial) enthusiasm for robot nurses. Sure, it sounds like a great idea to have a consistent nurse’s aide for a resident as called for in principle 4, but how is that really going to happen considering turnover and work schedules? Why not have a robotic assistant assigned full-time to each resident and under the resident’s control, rather than under the control of the nursing home? That would be empowering and resident-centered in my book. Instead of calling it a robot nurse, call it a resident’s personal assistant.

Well-trained nurses will still be needed to handle higher complexity work, but they’ll be relieved of the need to do mundane tasks and to continuously bring new staff up to speed.

Share

An article in the Lancet advocates the use of placebos for active treatment, according to MedPage Today (Placebos Advocated as Active Treatments).

Finniss and colleagues reviewed the literature on the placebo effect, which suggests that it is far more complicated than many people think.

It is more than just taking a pill that patients think is, or could be, an active drug. The act of receiving a pill brings a whole “psychosocial context” into play, according to Finniss and colleagues: it includes not only the patient’s desires and expectations but also those of the clinician; their past experiences; and their interaction with each other and with their physical and social environment,” they wrote.

“The placebo is inert but the psychosocial context is not,” the researchers asserted.

The authors acknowledge potential ethical issues, but advocate the use of non-deceptive practices in prescribing and administering placebos.

Placebos can be helpful for treatment but they can also be harmful in new drug development. In particular, when people who respond to placebos participate as subjects, it can seem as though a drug isn’t effective when in fact it is. If drug companies can find ways to eliminate placebo responders from trials then the robustness of those trials will increase and more drugs will make it to market.

If those same companies are particularly clever, they’ll find ways to maximize the placebo response in the treatment arm while minimizing it in the control, thus making non-effective drugs seem to work. That may be hard to do in a double-blind study but I wouldn’t call it impossible.

Share

I’ll be hosting the next Cavalcade of Risk blog carnival at the Health Business Blog.

Please use the Blog Carnival Submission form.

Share

I’ve been on vacation this week so no posting.

Share

This is the transcript of my recent podcast interview with Medco’s Chief Medical Officer Dr. Robert Epstein and DNA Direct’s CEO, Ryan Phelan.

David Williams: This is David E. Williams, co-founder of MedPharma Partners and author of the Health Business Blog. I’m speaking today with Dr. Robert Epstein, Chief Medical Officer of Medco Health Solutions and Ryan Phelan, founder and CEO of DNA Direct, which Medco has just acquired.  Thanks for speaking with me today.

Ryan Phelan: Our pleasure.

Williams: What is DNA Direct?

Phelan: DNA Direct is a company that started here in San Francisco in early 2005. The services we offer primarily evolve around interpretation, information and resources around genetic expertise.  So in some ways David, you could think about us a virtual medical genetic center.

We help people identify when a test is appropriate.  We help them identify –in some cases with the payer– whether or not it’s going to be covered under their benefits plan. And at the end of the day we help interpret it: What does that test result mean for patients and physicians? We also do it to some degree for health care plans regarding clinical policy around testing.  So from soup to nuts around genetics.

Williams: What’s the fit between Medco’s personalized strategy and DNA Direct?

Phelan: I’ll give you my perspective from DNA Direct and then Rob will weigh in on Medco’s perspective.  We’ve been watching Medco now for the last year and they’ve been the most innovative company in health care that I know of.  They started embracing personalized medicine several years ago and they’ve been running programs.  Most recently people know about their programs around tamoxifen and warfarin. From DNA Direct’s perspective, they’re actually working with large employers providing this as a covered service to their employees. That’s pretty innovative today in terms of the adoption of personalized medicine.

So from our perspective, Medco is really a frontrunner in translating pharmacogenetics into health care practice.  DNA Direct has been an innovator in bringing guidance and decision support services around genetics to the health care industry and I think the combination of the two allows DNA Direct to go broad and deep in this area and at the same time for Medco to move beyond pharmacogenetics into the underlying field of molecular diagnostics.

Dr. Robert Epstein: We have spent the last several years focusing on a small number of pharmacogenetic testing programs while DNA Direct has gone much broader and deeper on all of genetic testing. The good news is we’ve sold clinical programs –including the facilitation of testing– into our customer base of more than 200 paying clients.  The bad news has been that they’re anxious for a lot more, a lot faster. It’s been really exciting getting to know the folks at DNA Direct and now having the opportunity to help them gain access to payers.

We have a hungry group of payers waiting for more and they’ve got more waiting for payers.  So we’re in a really nice position now to make one plus one equal two.

Williams: When I heard about DNA Direct originally, I understood it was kind of a direct to consumer company that was working to promote the uptake of genetic tests to patients without necessarily involving the patient’s physician.  That may have changed, but I know that Medco is more focused on business-to-business and cost containment.

So I am wondering: do those two things go together in the new model? And is the consumer oriented approach something that will continue or will that be phased out over time with the acquisition?

Phelan: Well let me answer that a couple of different ways.  First of all, both companies are focused on business to business as a business model.  DNA Direct, for the last year, has been focused on the payer market and with our contract with Humana for preauthorization and utilization management services around genetics.

But I do want to correct one thing that’s so important to our integrity, which is that when we started DNA Direct you are absolutely correct that we marketed direct to the consumer. But our services were always provided through physician medical director oversight and we’re really the only company to provide clinically valid medical genetic tests.  So I need to distinguish that because it’s really that core architecture software and policy that DNA Direct created that is what, I think, makes us a valuable entity today to a company like Medco.

Epstein: We really want to be the go-to place for consumers, providers and payers in the genetic space and I think DNA Direct takes us there that much faster.

Phelan: At the end of the day, this is all about translating information around genetics and we have to be able to translate at all these different levels because they really are different stakeholders.  There is the patient, the consumer where nobody, I think, does it as well as we do. From the provider side, Medco and DNA Direct have been working on provider education. From the health care plan side DNA Direct has been helping health care plans gain visibility into this testing area.

We’re the only company that is URAC credentialed.  We really are leading the way here in developing a new way for the health care industry to integrate genomic medicine.

Williams: What impact do you think personalized medicine or genomic medicine will have on cost and quality over the next few years?

Epstein: At Medco we think this is serious and important.  It’s one of our top three strategic priorities in the next five years.  We believe that the science is popping.  New findings and discoveries are coming every day. It compels people to define what’s real and what’s not, what’s ready for prime time and what’s not, how to interpret what’s out there.

That’s the beauty of DNA Direct.  That’s the next step: filtering down to what’s real, what is ready for prime time and how do you interpret it once you’ve done it.  It’s an area of science that’s hopping.  It’s going to have more and more discoveries over the next few years and it’s an area that needs somebody to step in and provide some clarity. That’s really the opportunity that we have.

Phelan: And David, I think what’s interesting about Medco is they’re the one company that is actually looking at and evaluating this return on investment around health care outcomes and use of genetic testing.

Are you familiar with all that they are doing at their R&D center?

Williams: I don’t think I’m familiar with everything so I would be interested in the highlights.

Phelan: Let me speak a little bit about that because I think that people don’t realize that it’s one thing to translate the science and to get the science correct and make it medically viable while it’s another thing to actually help a health care plan or an employer understand the economics.

Epstein: A couple years ago, we heard from a lot stakeholders that while it’s all fascinating, they want to understand the return on investment.  Should we cover these tests and if we do, what’s the potential return?

So right around that time period we hired Felix Frueh (see my podcast with him) who was a chief architect of the genomic submissions at the FDA to open up a new research branch down in Bethesda, Maryland. We have about 15 people there today and we’re conducting collaborative research studies. We are not trying to discover new genetic findings but are trying to understand the return on investment or the payer payback for covering some of these tests.

That’s really the burning question these days.  People aren’t so concerned about analytics or clinical validity. They want to know what’s the clinical utility of these tests.  So we’re taking on a broader perspective here of not only having tools and information for providers and members but we’re taking part in the actual research and development of some of this technology. We put the payer hat on, though.

Williams: A lot of what you’ve done, at least in the initial stages, has focused on the relation between genetic tests and pharmaceuticals.  I’m wondering whether there is a broader approach that you’re taking as well that might fit in with some corporate wellness programs or if that’s beyond the scope of this.

Epstein: Without question we start started just with pharmacogenomics. But honestly, to your point, payers today are interested in the full spectrum of genetic testing including predisposition testing.  So whether it’s early intervention or prevention, clients have been asking questions about it. We’re so delighted to have DNA Direct as part of the family to help address those questions.

Williams: There’s obviously been a change in the outlook for health care reform, thanks partly to what’s happened here in Massachusetts. But is there a tight link between what might (or might not) occur in health care reform and a personalized medicine approach? What do you expect to see from your clients?

Epstein: Personalized medicine is part of a solution package no matter what happens, because we can’t go on having imprecise health care where it’s trial and error and it costs a lot of time and money that we don’t have any more.  So personalized medicine is really one of the solutions that we have to have. Thank goodness the science has come along at the right time.

Phelan: Not only that, I think there would be a greater call to action no matter what because of the electronic exchange of health information. What we know is that where genetics can impact patient care, the greater visibility providers have to that data the better patient care will be.

Williams: The HITECH part of ARRA included a number of e-health initiatives, including statewide health information exchanges, Regional Extension Centers, and Beacon Communities.  Do you expect to see an integration of some of the pharmacogenomic findings with the actual electronic health record information that should be available from the government initiatives?

Epstein: Well you know, we’ve actually done that today at Medco.  For a year now, we have been putting genomic information into our information warehouse. If a patient receives a prescription even three years from now that in some way would be informed by that genetic test, we’ve written a rule structure on top of it that warns the pharmacist and the physician about that gene drug interaction.  It’s automated.  So we’re already there.  We’re already starting there. We’re just looking forward to more pipes to hook into in this kind of idea.

Williams: And what about the personal health record?  Will that have an impact or is this mostly going to be driven from the physician side?

Epstein: I think that remains to be seen.  Not often are physicians directly getting their genetic test results to put into the personal health record. To the extent that they do, then I think that would be part of a PHR.  Not all physicians feel the same way about that and not all labs do either.

Phelan: Consumers –on another level– are certainly sharing their medical information with their physicians and with others through social networking, as we know.

Williams: I’ve been speaking today with Dr. Robert Epstein, Chief Medical Officer of Medco Health Solutions and with Ryan Phelan, she is Founder and CEO of DNA Direct.  Thanks so much.

Share

Pharmaceutical Benefit Manager Medco Health recently acquired DNA Direct, which provides genetic testing and support services for genomic medicine. The acquisition represents a broadening of Medco’s focus from pharmacogenomics to a fuller range of genetic tests, and helps DNA Direct continue its transition from its roots as a consumer-oriented play toward Medco’s model of working with employers and health plans.

In this podcast interview Medco Chief Medical Officer Dr. Robert Epstein and DNA Direct CEO Ryan Phelan discuss the rationale for the acquisition and anticipated developments over the next few years.

Share

David Williams interviews Medco and DNA Direct Play Now | Play in Popup | Download

Anthem’s getting a lot of grief for planned increases on individual premiums in California of up to 39 percent. No doubt they deserve some blame. And yet those who decry the move as price gouging and point to Anthem’s multi-billion annual profit don’t have the whole picture either.

Anthem and other commercial carriers are seeing younger, healthier people –even those with moderate to higher incomes– take a pass on health insurance. With the monthly cost of insurance approaching the cost of rent or food, it’s not a completely irrational move. Twenty and thirty-something’s figure they won’t get sick or injured and even if they do they’ll blow off their bills completely or have someone like Medical Bill Helper negotiate bills on their behalf.

Without the younger, healthier folks in the risk pool, the average medical cost per member rises. As it rises, health plans raise premiums and more people drop out. In the end only the older, sicker folks remain. Sure, California or the US could regulate premiums more, but it won’t solve the problem of high costs per member.

The stalled health care legislation in Congress is based on the notion that getting nearly everyone into the insurance system will help keep costs under control. Once everyone is in, then banning medical underwriting (e.g., discriminating based on prior conditions) and establishing price controls are more realistic.

Even in such a system individuals and small businesses may get squeezed. Consider the situation in my home state of Massachusetts. We have health care insurance reform that largely parallels the pending/dying federal reform bills. There is pressure on health plans to offer affordable plans to those who use the “Connector” and to limit rate increases. Meanwhile large employers have negotiating power to keep rates down.

In that scenario, small employers (like my firm) get whacked with annual increases of 25 percent or more even when the subsidized plans are going up at half that amount or less.

We’ll have to look closely at how medical care is delivered and paid for in order to fully address the problem of high and rising insurance premiums.

Share