Comment on Medicare Advantage and Prescription Drug Benefit Programs: Final Marketing Provisions (Parts III & IV)

[Ed. Note: This post is a continuation of a post we published the other day regarding "modifications and additions to initial marketing regulations implementing The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ("MMA"), which "established the Medicare Prescription Drug Benefit Program (Part D) and made revisions to [] provisions” of the Medicare Advantage Program.” The initial post, detailing the modifications, can be found here.]

By Michael Rabasca

PART III

The strongest argument against these final regulations is that they prevent eligible enrollees “from learning about their full range of healthcare options” and, thus, unduly hinder the market for Part C and Part D plans. (Federal Register, Volume 73, No. 182 at p. 54214). In order for consumers to make informed healthcare decisions, they need to have ready access to information. Marketing is all about the strategic distribution of information, and placing restrictions on plan marketing activities limits the information available to potential enrollees. Thus, regulating the marketing activities of Part C and Part D plans could lead to consumer ignorance and severely limit the choices of Medicare eligible individuals.

These new rules significantly hinder the ability of potential Part C and Part D plan participants to both obtain plan information and enroll in plans. Many individuals who are eligible for Medicare are hospitalized or living in nursing homes where healthcare is delivered. Under these rules, Part C and Part D plans would be unable to make marketing presentations, distribute enrollments applications, or collect completed applications from these individuals. Unfortunately, these potential enrollees are often the people who would benefit the most from enrolling in these plans and these regulations severely limit their ability to do so.

PART IV

I think that government oversight of Part C and Part D plans’ marketing activities provides vital protection to the individuals who are eligible to participate in these plans. I feel that Medicare participants are particularly vulnerable to questionable marketing practices, and these final regulations provide important modifications and additions and to CMS’s marketing regulatory scheme. Nevertheless, I am not convinced that these rules do enough to deter Part C and Part D plans from engaging in impermissible marketing activities. Although CMS may impose civil monetary penalties or marketing/ enrollment sanctions on plans that violate its marketing regulations, these penalties are merely discretionary. I agree with one commenter who suggested that CMS should mandate civil monetary penalties for plans that violate the marketing rules in order to ensure that violators are punished. (Federal Register, Volume 73, No. 182 at p. 54211). Additionally, I feel that CMS should provide some sort of financial incentive for both individuals and competing plans who report marketing violations in order to increase the likelihood that violations are discovered and reported. These additional enforcement tools would help to ensure that the new final marketing regulations serve their purpose by effectively protecting individuals who are eligible to participate in Part C and Part D plans from inappropriate marketing tactics.

Comment on Medicare Advantage and Prescription Drug Benefit Programs: Final Marketing Provisions (Parts I & II)

By Michael Rabasca

Part I

These rules represent modifications and additions to initial marketing regulations implementing The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (”MMA”), which “established the Medicare Prescription Drug Benefit Program (Part D) and made revisions to [] provisions” of the Medicare Advantage Program (Part C). (Federal Register, Volume 73, No. 182 at p. 54208). The Centers for Medicare and Medicaid Services’ (”CMS”) enacted these final regulations pursuant to §§ 1851(h) and 1860D-1(b)(1)(B)(vi) of the Social Security Act, which empower the CMS to “implement standards consistent with ‘fair marketing.’” (Federal Register, Volume 73, No. 182 at p. 54210).

The most significant aspect of these final regulations is the new restrictions they place on Part C and Part D plans’ marketing activities. Specifically, these rules prohibit the following:

(1) unsolicited direct contact with potential enrollees, including telemarketing (42 C.F.R. §§ 422.2268(d), 423.2268(d));

(2) selling non-healthcare related products during a plan marketing event or presentation (42 C.F.R. §§ 422.2268(f), 423.2268(f));

(3) conducting marketing presentations or distributing and/or collecting enrollment applications “in provider offices or other areas where healthcare is delivered to individuals, except . . . where such activities are conducted in common areas in healthcare settings” (42 C.F.R. §§ 422.2268(k), 423.2268(k));

(4) conducting marketing presentations or distributing and/or collecting enrollment applications at “educational events”  (42 C.F.R. §§ 422.2268(l), 423.2268(l)); and

(5) offering meals to potential plan enrollees at marketing events (42 C.F.R. §§ 422.2268(p), 423.2268(p)).

These regulations also implement new rules regarding CMS’s procedure for reviewing Part C and Part D plan marketing materials. Generally, Part C and Part D plans must submit all marketing materials to CMS at least forty-five days before distribution. (42 C.F.R. §§ 422.2262(a), 423.2262(a)). However, the regulations provide for an abbreviated “file and use” procedure, under which CMS deems certain materials approved five days after submission. (Federal Register, Volume 73, No. 182 at p. 5410). Previously, Part C plans could use the “file and use” procedure to obtain approval of marketing materials if: 1) the plan had a record of continued exemplary performance in CMS reviews of its marketing materials; or 2) the plan certified that the marketing materials in question did not contain “substantive content” or, alternatively, only used “model language already reviewed and approved by CMS.” (Federal Register, Volume 73, No. 182 at p. 54210).  Part D plans, on the other hand, could only obtain “file and use” approval through plan certification. (Federal Register, Volume 73, No. 182 at p. 54210). However, these final regulations “eliminate file and use status based on an organization’s track record” for Part C plans, and implement “a uniform policy of applying the file an use policy to marketing materials that either use model language without substantive modification, or materials identified by CMS as not containing substantive content warranting CMS review” for both Part C and Part D plans. (Federal Register, Volume 73, No. 182 at p. 54210-54211).

Additionally, these final regulations implement licensure requirements for plan marketing representatives. Specifically, the rules require Part C and Part D plans to exclusively use State licensed marketing representatives to conduct direct marketing activities targeted at potential plan enrollees. (42 C.F.R. §§ 422.2272(c), 423.2272(c)). Plans must also notify states that they are using licensed representatives in a manner that is “consistent with the appointment process provided for under State law.” (42 C.F.R. §§ 422.2272(c), 423.2272(c)).

Finally, these rules mandate that Part C and Part D plans make certain disclosures to plan participants. Under these final regualtions, plans must now disclose the information specified in §§ 422.111(b) and 423.128(b) to all plan participants both “[a]t the time of enrollment and at least annually thereafter, 15 days before the annual coordinated election period.” (42 C.F.R. §§ 422.111(a)(3), 423.128(a)(3)).

PART II

The best argument in support of these final regulations is that they provide necessary consumer protections. Generally, individuals age sixty-five and older, and people with disabilities are eligible for Medicare programs. This group of potential enrollees is particularly vulnerable to dubious marketing tactics. Allowing insurers to market their Part C and Part D plans unchecked could be harmful potential participants. Indeed, permitting plans to distribute information and solicit enrollment applications at any place and in any manner they chose has the potential to confuse potential enrollees and, in some cases, could result in plans coercing individuals into participating. Thus, a free market philosophy as to plan marketing practices is inappropriate in the Part C and Part D setting, and strict regulation is required.

These new rules protect consumers by: 1) prohibiting certain problematic marketing activities; and 2) limiting the places where plans may conduct marketing activities. Indeed, prohibiting Part C and Part D plans from offering meals or selling non-healthcare related products to potential participants prevents hurried “enrollments without personal attention to the appropriateness of the plan.” (Federal Register, Volume 73, No. 182 at p. 54215). Additionally, prohibiting plans from conducting marketing activities and soliciting enrollments at educational events and anywhere healthcare is delivered prevents plans from targeting individuals for enrollment when they are vulnerable to suggestion, and avoids the appearance that individual providers and facilities recommend or support specific plans.

Pharma Marketing, Advanced

With the Senate’s bill clearing late night hurdles, the coverage in the mainstream media is, at least for the moment, broad. But there was a segment on NPR’s All Things Considered in the midst of all that Health Reform bill coverage that is well worth a listen. The segment, “How A Bone Disease Grew To Fit The Prescription,” (transcript linked, audio below) functions as a sort of biography of the evolution of both a drug and a disease– which was not, it seems, an entirely independent process.

The drug is Merck’s Fosomax, the disease is Osteopenia. Fosomax had sales in 1996 of $281.8 million; by 2005, on the heels of what qualifies as a comprehensive and wildly successfull marketing effort, the drug had sales of $3.2 billion.  Osteopenia derives its origin as somewhat of an afterthought, when in 1992 “a group of osteoporosis experts gathered under the auspices of the World Health Organization” and drew a somewhat arbitray bright line to determine what level of bone mass loss was normal and what amount constituted a disease. The term “Osteopenia” was coined, on the spot, to give clinical researchers a term which described those whose bone loss was considered normal, but was close to the line. They never imagined that Osteopenia would come to be considered a disease in itself, but it did. Millions of women are said to have it; millions treat it with Fosomax. The story of how this came to be (and the implications regarding the role of Pharma in health care) is fascinating.

“You’re Going to Die”: the “Paranoid” Style of Reform Opposition

An AP story on Wednesday quoted Tom Coburn, a Republican Senator and former obstetrician, addressing the reform bill’s Medicare cost-containment provisions, and delivering a message to seniors:  “I have a message for you: you’re going to die sooner.”  Some Democrats, such as Senator Pat Murphy, are clearly frustrated that Republican Senators, having opposed many recent Medicare improvement measures (see MIPPA 2008, which expanded primary care and suspended a scheduled cut in physician reimbursement), now cast themselves as the pro-Medicare party.  And standing with Coburn was Senator McCain, whose ‘08 presidential campaign argued for health reform financed in part with savings from Medicare and Medicaid.

The health reform bills contain interlocking provisions concerning coverage, finance, and delivery reform.  I doubt that any two thoughtful people would agree on every aspect of the current bill.  Comments of two sorts seem in order under these circumstances  (and hopefully are reflected in the posts on this site):  specific comments providing reasoned support or opposition to particular provisions and/or proposing amendments thereto, or general and reasoned comments supporting or opposing the overall package.  Coburn’s comment fits most nearly into the second category, but “reasoned” it ain’t.  It made me think of the classic Richard Hofstadter essay, The Paranoid Style in American Politics. (H/t to CBC’s Ideas, broadcast on November 28, podcast available here.)  Hofstadter, a Pulitzer Prize-winning Columbia University historian and commentator on American anti-intellectualism, wrote in his 1964 essay of the dark tradition in American politics of outrageous argumentation calculated to see “how much political leverage can be got out of the animosities and passions of a small minority.”  He was clear that he was not using “paranoid” in a clinical sense, but instead as a label to evoke a “sense of heated exaggeration, suspiciousness, and conspiratorial fantasy.”

Hofstadter was clear that the “paranoid style” was not used only by one movement, or even by only one slice of the American political spectrum.  He argued that examples could be found on the left and the right, and on both sides of many major issues.  It is not Coburn’s position that harkens to Hofstadter’s characterization of irresponsible speakers.  Rather, it is the style of his speech.  Hofstadter explained it this way:

Of course this term is pejorative, and it is meant to be; the paranoid style has a greater affinity for bad causes than good. But nothing really prevents a sound program or demand from being advocated in the paranoid style. Style has more to do with the way in which ideas are believed than with the truth or falsity of their content.

American history is filled with examples of political spokespersons resorting to this sort of extreme speech:

In the history of the United States one finds it, for example, in the anti-Masonic movement, the nativist and anti-Catholic movement, in certain spokesmen of abolitionism who regarded the United States as being in the grip of a slaveholders’ conspiracy, in many alarmists about the Mormons, in some Greenback and Populist writers who constructed a great conspiracy of international bankers, in the exposure of a munitions makers’ conspiracy of World War I, in the popular left-wing press, in the contemporary American right wing, and on both sides of the race controversy today, among White Citizens’ Councils and Black Muslims.

Joining all of these examples together are several factors: extreme overstatement; the use of specific “facts” as the basis for factually unsupportable positions; and the apparent intent to inflame rather than reason.  There are of course, examples of such political speech today on the right and left.  It is no longer surprising — although regrettable — to hear simplistic and hateful comments from “entertainers” and “commentators” on cable news and talk radio programs.

But Colburn is not an entertainer.  He is in a leadership position in the United States Senate.  He might speak factually — rhetorical flourishes and all — about aspects of the bill with which he disagrees.  He might forcefully explain why he believes Americans should decide that we’d be better off without this version of health reform.  Instead, he has taken himself out of the discourse, and has used “factual” arguments for the purpose of misleading and inflaming.  He has, in short, removed himself from reasoned debate and embraced the demagoguery decried by Hofstadter.  Americans deserve better from our Senators.

The FDA Steps In: Regulating Prescription Drug Promotion on the Internet

The FDA has been widely criticized for not providing guidance for drug companies eager to promote their products on the internet.  Earlier this year, the FDA expressed the view that the message was what was important, not the medium, meaning that companies should simply apply the rules governing prescription drug advertising in print media to the internet.  On April 2, 2009 the agency issued Notice of Violation letters to 14 companies who sponsored links on internet search engines advertising their products; the links gave the name of the drug and, in some cases, its indicated use, without including the required “fair balance,” i.e., safety information such as contraindications and potential side effects.  In reliance on the so-called “one-click rule” — which had never actually been adopted by the FDA — the companies had put the required safety information one click away on a separate page.

In recent months, the FDA has indicated that it is open to providing internet-specific marketing guidance.  Yesterday and today (November 13^th) the agency is holding a hearing on “Promotion of FDA–Regulated Medical Products Using the Internet and Social Media Tools.”  Representatives from advertising agencies, consumer groups, health-related websites, pharmaceutical companies, and search engines are scheduled to testify.

In written testimony released before the hearing, PhRMA, the pharmaceutical industry’s trade group, proposed that the FDA approve a standard universal warning: PhRMA suggests “All drugs have risks.  Click here for more information from the manufacturer.” — for use “in places throughout the Web where there is not enough room for complete disclosure of all warnings, indications, and contraindications (e.g., search results and microblog posts.)”  Such a warning would, PhRMA argues, allow companies to take advantage of sponsored links, make full use of Twitter, etcetera, while also providing easy access to safety information.  PhRMA even suggests that the warning incorporate the FDA’s logo, arguing that this could mitigate against “the dangers posed by illegal Internet drug sellers.”

It will be interesting to see whether and how the proposals of the other groups represented at the hearing differ from PhRMA’s, and, of course, whether the FDA in the end decides that its “fair balance” requirements should be modified for the web.  Among the other interesting issues FDA may address is companies’ responsibility for web content they do not control.  Google’s introduction of Sidewiki, which allows anyone visiting a pharmaceutical company’s website to leave a comment, has brought this issue to the fore, raising, for example, the prospect of doctors discussing a product’s off-label uses on the manufacturer’s site.

Anyone who wishes to comment on these or other internet-specific promotion issues may do so through February 28, 2010.

Under the Radar: Health Care Reform & Drug Advertising & Marketing

At the Food and Drug Law Institute’s 21^st Annual Advertising & Promotion Conference John Kamp of the pro-industry Coalition for Healthcare Communication discussed four proposals addressing drug advertising and marketing issues that may be incorporated into the final health care reform bill but have not been widely debated.  Mr. Kamp’s presentation is available here.  

Off the Table (For Now)

Of most concern to industry is an oft-floated proposal to eliminate the tax deduction for drug advertising.  (See, for example, bills sponsored by Representative Jerrold Nadler (D-NY) and Representative Daniel Lipinski (D-IL) here and here.)  Most recently, on September 11, 2009 Senator Bill Nelson (D-FL), a member of the Senate Finance Committee, announced his plan to put forth an amendment to the Baucus Bill that would eliminate the “tax break drugmakers get for TV advertising.”

Direct-to-consumer advertising is a prime target because, as the New York Times put it, for many “the ads are a daily reminder of a health care system run amok,” which “prompt people to diagnose themselves with chronic quality-of-life problems like insomnia or restless leg syndrome; lead people to pressure their doctors for prescriptions for expensive brand-name drugs to treat these conditions; and steer people away from cheaper generic pills.”   There is also concern that DTC ads do not present an accurate picture of drug risks and benefits and that they drive uptake of new drugs before their safety is fully known.

Another obvious driver is the need to pay for health care reform.  Senator Nelson echoed a claim made earlier this year by Congressman Charles Rangel (D-NY) that eliminating the tax break for TV ads would free up $37 billion over the next ten years.  Industry representatives contest the $37 billion figure, arguing that drug companies spend far too little on direct-to-consumer advertising to achieve that level of additional tax revenue.  They contend that Congress would have to eliminate the tax deduction for physician advertising and other marketing expenditures to garner $37 billion.

Less than a week after he announced it, Senator Nelson backed off his plan, perhaps under pressure from other members of Congress who come from districts with a strong media presence and have spoken out against eliminating the deduction.  According to Mr. Kamp, however: “Somebody else will raise this again before it’s over, you bet … Baucus says the reforms will cost $850 billion, the Congressional budget office $750 billion. Three-quarters of a trillion dollars is a lot of real money in Washington. The $37 billion will continue to be in the buffet of options as they try and figure out healthcare.”  

Still on the Table

Three proposals related to drug and device promotion are still on the table, with varying chances for inclusion in the final health care reform bill.

First, health care reform bills in both the House and the Senate contain transparency provisions akin to those in the Physicians Payments Sunshine Act of 2009 introduced in January by Senator Chuck Grassley (R-IA).  Seton Hall Law’s Center for Health & Pharmaceutical Law & Policy recommended that disclosure of drug and device company payments to doctors be federally mandated in its January 2009 white paper.  As the Sunshine Act has widespread support, including from industry, transparency provisions are likely to be included in the final bill.

Second, Section 138 of the health care reform bill reported out of the House Education and Labor Committee   bans the commercial use of “prescription information containing patient identifiable and prescriber identifiable data,” essentially adopting as federal law New Hampshire’s ban on prescription data mining which survived a First Amendment challenge in the First Circuit.  If passed, Section 138 would end drug reps’ current practice of tailoring their sales messages to each doctor’s prescribing history, which many believe creates undue pressure on doctors to prescribe newer more expensive medications.

Third, a bill sponsored by Senator Jack Reed (D-RI) would authorize the FDA to evaluate whether use of a “drug facts box” format for presenting a drug’s benefits and risks would improve healthcare decision making and, if so, to promulgate regulations requiring that drug facts boxes be added to drug labels.  Senator Reed’s bill also empowers the FDA to set standards for comparative clinical effectiveness information included in drug labeling and advertising.

It is difficult to predict whether the data mining ban or Senator Reed’s bill will be included in the final health care reform bill.  Mr. Kamp calls Senator Reed’s bill’s chances a “toss up;” regarding the data mining ban, he has “no idea.”

What “Free Markets” Really Look Like

In health reform, as so many continue to extol the virtues of an unfettered private market– a “free market” if you will–it may be of some help to consider just what a free market is. What that calculus entails. Considered by many as the theoretical underpinning of the modern market (though, as Professor Frank Pasquale has noted, the economics of Health Care are decidedly “unconventional”) the work of Adam Smith is worth considering. Smith championed self-interest as the best means to societal benefit. “Self-interested competition in the free market, he argued, would tend to benefit society as a whole by keeping prices low, while still building in an incentive for a wide variety of goods and services.”  In Robert L. Heilbroner’s, “The Worldly Philosophers: The Lives, Times, and Ideas of the Great Economic Thinkers, we may find the following:

To Adam Smith, laborers, like any other commodity, could be produced according to the demand. If wages were high, the number of workpeople could multiply; if wages fell, the numbers of the working class would decrease. Smith put it bluntly: “…the demand for men, like that for any other commodity, necessarily regulates the production of men.”

Nor is this quite so naïve a conception as it appears at first blush. In Smith’s day infant mortality among the lower classes was shockingly high. “It is not uncommon,” says Smith, “… in the Highlands of Scotland for a mother who has borne twenty children not to have two alive.” In many places in England, half the children died before they were four, and almost everywhere half the children lived only to the age of nine or ten. Malnutrition, evil living conditions, cold, and disease took a horrendous toll among the poorer element. Hence, although higher wages might have affected the birth rate only slightly, they could be expected to have a considerable influence on the number of children who would grow to working age.

Hence, if the first effect of accumulation would be to raise the wages of the working class, this in turn would bring about an increase in the number of workers. And now the market mechanism takes over. Just as higher prices on the market will bring about a larger production of gloves and the larger number of gloves in turn press down the higher prices of gloves, so higher wages will bring about a larger number of workers, and the increase in their numbers will set up a reverse pressure on the level of their wages. Population, like glove production, is a self-curing disease-as far as wages is concerned.

And that is the free market calculus with regard to working people. Higher wages equals more food, better shelter and medical care and more babies living which in turn will produce more workers which in turn will force that greater number of living workers to compete for jobs which will then lower wages. Those lower wages will then produce less food, worse shelter, and less medical care which will produce less babies living– which in turn will produce less workers. A cycle of sweat, blood and tears unencumbered by the “distortions” of regulation.  That is the “human element” of a sheer free market calculus for workers. No regulation, no aid to dependent children or social security, no FDA–just the invisible hand of the market– that most efficient of instruments– “correcting itself” through infant mortality.

So as pundits, tea bag protesters and blog commenters across the nation call out in favor of “private markets,” “free markets” and the like, let us realize that few have the stomache for an actual pure free market. As is as it should be. So when we talk about governmental intervention in the market– let us be clear: we speak only of extent and degree– not principle.

This passage from Dickens, remembering life as a 12 year old boy working ten hours per day, 6 days per week in  early 1800’s industrial England gives some view of life under a veritable Laissez-Faire free market, as do many of his books:

As told to John Forster (from The Life of Charles Dickens):

Dickens at the Blacking Warehouse

The blacking-warehouse was the last house on the left-hand side of the way, at old Hungerford Stairs. It was a crazy, tumble-down old house, abutting of course on the river, and literally overrun with rats. Its wainscoted rooms, and its rotten floors and staircase, and the old grey rats swarming down in the cellars, and the sound of their squeaking and scuffling coming up the stairs at all times, and the dirt and decay of the place, rise up visibly before me, as if I were there again. The counting-house was on the first floor, looking over the coal-barges and the river. There was a recess in it, in which I was to sit and work. My work was to cover the pots of paste-blacking; first with a piece of oil-paper, and then with a piece of blue paper; to tie them round with a string; and then to clip the paper close and neat, all round, until it looked as smart as a pot of ointment from an apothecary’s shop. When a certain number of grosses of pots had attained this pitch of perfection, I was to paste on each a printed label, and then go on again with more pots. Two or three other boys were kept at similar duty down-stairs on similar wages. One of them came up, in a ragged apron and a paper cap, on the first Monday morning, to show me the trick of using the string and tying the knot. His name was Bob Fagin; and I took the liberty of using his name, long afterwards, in Oliver Twist.

“You’re not being Bipartisan.” “No, You’re not being Bipartisan.”

The Obama administration and the gang of six’s Republican Senators Charles Grassley and Mike Enzi continue to trade barbs about who is “not being bipartisan.”

The latest response comes from Senator Grassley responding to David Axlerod who had responded to statements Senators Grassley and Enzi had made over the summer recess.

Mr. Axlerod had the temerity on Monday to accuse the Senators of “negotiating in bad faith,” offering that the Senators actions suggested “that they don’t want to participate” in bipartisan talks. Mr. Axlerod further stated:

“If you’re sitting at a table negotiating in good faith, then you probably don’t send out mailers saying, ‘Help me stop Obama-care.’ That’s just common sense.”

According to A.P.,

Enzi, in a radio address Saturday, said Democratic proposals would restrict medical choices and make the country’s “finances sicker without saving you money.”

In an August fundraising letter, Grassley asked for “support in helping me defeat Obama-care.” He said Democratic-drafted bills would be “a pathway to a government takeover of the health care system.”

Far be it from me to define “bipartisan cooperation,” but I must admit “Help me defeat Obama-care” doesn’t really seem to capture the essence of that spirit.

Jill Kozeny, a spokeswoman for Senator Grassley defended the statement saying, according to A.P., that “Grassley was simply restating his well-known opposition to a government-run health insurance plan.”

In addition, Ms. Kozeny in turn responded to Mr. Axlerod’s  accusation as follows:

“Attacks by political operatives in the White House undermine bipartisan efforts and drive senators away from the table,” but added that “the so-called “Group of Six” senators would continue to work for a compromise despite his comments.”

Having been in a schoolyard tussle or two in my time, I can’t help but feel the similarity as each side accuses the other of failing to be “bipartisan.” As a kid growing up in the late sixties and seventies in working class New Jersey, schoolboys everywhere labored under the same admonition from our fathers: “Don’t you start a fight–but if anyone hits you first–or says something about your Mother–you can hit him.” Except for the truly spontaneous outbreaks, most fights (or putative fights) began with ten or twenty minutes of some form of verbal interchange designed to try to get the other guy to throw the first punch, followed by shoving, and then–if no one broke it up–a fight.

And I’m not entirely sure which category “You’re not bipartisan.” “No, you’re not bipartisan” fits (though I suppose there’s no question as to where all that talk about “pulling the plug on grandma” belongs) –but as I’ve said, the similarity to schoolboys trying to engage in a tussle without blame is keen–far too keen. It would be funny–if it weren’t for all those sick people and the fact that we somehow manage to spend considerably more for health care and get considerably less than most everyone in the world.

Obama is said to be scheduled to address Congress about Health Care Reform on prime-time television come the Wednesday after Labor Day. Maybe he can break it up. If not, it might be time to start shoving– or at least twisting some arms– LBJ style.

Health Reform, the Dog Days of Summer & T.S. Eliot, or: “I do not think they will sing to me”

As summer wears on to an inauspicious health reform end, and we await pronouncements and more posturing from the gang of six (who, through the compromise which is our legislative system, represent less than 3% of the nation’s populace yet seem to have been left holding the relative financial and physical health of the other 97% as well), we are left with the vagaries of legislation inchoate to ponder. Many versions, nothing firm. The debate wandering to and fro and fueled by hyperbole, the desire for “victory” (whatever that may mean), and lobbyist dollars descending upon the corridors of Washington until they have become, in the words of T.S. Eliot,  ”Streets that follow like a tedious argument / of insidious intent.”

And at this juncture, as the debate seems increasingly beyond “the swell of a progress” and into the hands of the true powers within this country, Eliot somehow seems appropriate; if you haven’t read The Love Song of J. Alfred Prufrock in awhile, now might be a good time. If you’ve never read it–you have something to look forward to.

Or perhaps The Waste Land is more appropriate–more particularly, considering the demagoguery which has removed end of life counseling from consideration in the Senate’s bill, the poem’s Latin and Greek epigraph:

“Nam Sibyllam quidem Cumis ego ipse oculis meis vidi in ampulla pendere, et cum illi pueri dicerent: Σιβυλλα τι θελεις; respondebat illa: αποθανειν θελω.”

Which according to the folks from Norton is

A quotation from Petronius’s Satyricon (first century A.D.) about the Sibyl (prophetess) of Cumae, blessed with eternal life by Apollo but doomed to perpetual old age, who guided Aeneas through Hades in Virgil’s The Aeneid: “For once I myself saw with my own eyes the Sibyl at Cumae hanging in a cage, and when the boys said to her ‘Sibyl, what do you want?’ she replied, ‘I want to die.’”

The Lewin Group: Cited Often, Owned by UnitedHealth

In a recent Chicago Tribune article, “Health-care reform: Medical insurers poised to reap a healthy ‘bonanza,’”   the following paragraph concerning The Lewin Group caught my eye

One of the Democratic proposals that most concerned insurers was creation of a “public option” government-sponsored insurance plan. The industry launched a campaign on Capitol Hill, distributing arguments opposing the government option that often were grounded in a study published by The Lewin Group, a health policy consulting firm owned by UnitedHealth.

In an effort to stay abreast, I read a fair amount of opposition commentary–and “The Lewin Group” comes off the lips of Republicans and others opposed to the Public Option often enough. Although The Lewin Group connection with UnitedHealth has been made public by a number of sources, I’m not sure that it’s common knowledge. And perhaps, as always, when dealing with information–especially information doing duty as a foundation upon which Medical Insurers stand “poised to reap a healthy bonanza”–considering the source– and considering that the source of that information is owned by one of the nation’s largest insurers– may be worth a moment or two.

This description of The Lewin Group comes from The Lewin Group in their Testimony before the before the Energy and Commerce Committee, U.S. House of Representatives, dated June 25, 2009, and updated July 9, 2009

The Impact of the House Health Reform Legislation on Coverage and Provider Incomes

About The Lewin Group

The Lewin Group is a health care and human services policy research and management consulting firm. We have over 25 years of experience in estimating the impact of major health reform proposals. The Lewin Group is committed to providing independent, objective and nonpartisan analyses of policy options. In keeping with our tradition of objectivity, The Lewin Group is not an advocate for or against any legislation. The Lewin Group is part of Ingenix, Inc.,which is a wholly owned subsidiary of the UnitedHealth Group. To assure the independence of its work, The Lewin Group has editorial control over all of its work products. (emphasis added)

The Lewin Group was purchased by Ingenix (and thus UnitedHealth) in 2007, somewhat presciently in time for the Health Care debate. I do not doubt that The Lewin Group has a stated and formal editorial control over its work products; I do doubt that it looks to bite the hand that feeds it. And I would suggest that as an arm of UnitedHealth, despite Mr. Kellar’s claims above, self decapitation– at least in the corporate world– is less a “mystery” than it is an illusion.

A recent Washington Post article also noted The Lewin Group’s relationship to its immediate parent

Ingenix, a UnitedHealth subsidiary that was accused by the New York attorney general and the American Medical Association, a physician’s group, of helping insurers shift medical expenses to consumers by distributing skewed data. Ingenix supplied its parent company and other insurers with data that allegedly understated the “usual and customary” doctor fees that insurers use to determine how much they will reimburse consumers for out-of-network care.

In January, UnitedHealth agreed to a $50 million settlement with the New York attorney general and a $350 million settlement with the AMA, covering conduct going back as far as 1994.

Ingenix chief executive Andrew Slavitt said the Ingenix data was never biased, but Ingenix nonetheless agreed to exit that particular line of business. “The data didn’t have the appearance of independence that’s necessary for it to be useful,” Slavitt said.

This may give us some idea of where Mr. Slavitt’s bar for data’s  “appearance of independence that’s necessary for it to be useful” is set. But there is of course a possible difference to be had between “useful” and “valid” and “valid as used.”  Distinctions the video below, as well as the Chicago Trib article, may help to clarify.

It should be noted, however, that according to WaPo,

Lewin Group Vice President John Sheils said his firm had nothing to do with the allegedly flawed Ingenix reimbursement data. Lewin has gone through “a terribly difficult adjustment” since it was bought by UnitedHealth in 2007, because the corporate ownership “does create the appearance of a conflict of interest.”

“It hasn’t affected . . . the work we do, and I think people who know me know that I am not a good liar,” Sheils said.

Mr. Sheils also noted to WaPo that those who pay for studies also have the option of “burying” those studies:

But not all of the firm’s reports see the light of day. For example, a study for the Blue Cross Blue Shield Association was never released, Sheils said.

“Let’s just say, sometimes studies come out that don’t show exactly what the client wants to see. And in those instances, they have [the] option to bury the study — to not release it, rather,” Sheils said.

I wonder if UnitedHealth gets the in-house rate.

Top 20 Lobby Expenditures Equals Over 1 Billion Dollars in the Last 2 1/2 Years

The Wall St Journal’s Health Blog recently ran a piece on health reform lobbying using data from the Center for Responsive Politics. This link will give you Lobby’s top 20 spenders, many of which have major interests in the outcome of the health reform debate.

The U.S. Chamber of Commerce (which opposes a Public Option) led the field with $26.2 million this year. PhRMA spent $13.1 million, Pfizer $11.7, BC/BS $9.5, AARP $9.4, the AMA $8.5, American Hospital Association $8.5, the Business Roundtable $7.4, Eli Lilly $7.

Remember, those are all just half-year numbers. The numbers over the last few years for the 9 companies and organizations listed above are worth taking a look at.

The numbers below are rounded, you can access exacts (and a nifty graph of money spent since 1998) by clicking on each company or organization.

Interestingly enough, the U.S. Chamber of Commerce, at $26.2 million for the half year thus far is actually on pace this year to spend less than last year (2008: $91.7 million) and about even with the year before (2007: $53 million plus change).

PhRMA, with $13.1 million thus far, spent $20.2 million last year, and $22.7 million the year before.

Pfizer, $11.7 million thus far, spent nearly $12.2 million in the whole of last year, and $13.8 million the year before. But perhaps the additional spending this year may be, at least in part, attributable to antitrust concerns regarding the acquisition of Wyeth.

Blue Cross & Blue Shield has spent $9.5 million thus far this year, spent $15.5 million last year, and a little more than $10 million in 2007.

AARP has spent $9.4 million this year, $27.9 million in 2008, and $19.5 million in 2007.

The AMA has spent $8.5 thus far in 2009, $20.7 million in 2008, and $22.1 million in 2007.

The American Hospital Association has also spent $8.5 million this year, but spent $20.1 million last year, and close to $20 million the year before.

The Business Roundtable has spent $7.4 million this year, $13.3 million last, and $10.2 million in 2007.

Finally, Eli Lilly has spent $7 million thus far this year, $12.5 million in 2008, and $4.3 million in 2007.

Importantly, these are not per se political contributions, as those are listed separately and by party (the recent, but very significant rise in contributions to Democrats is in itself rather revealing of the power= money equation) by clicking on the links to the organizations above and then clicking “Major Political Contributor.”

As we’ve posted before, in the first quarter of this year, $1.4 million per day was said to have been spent on healthcare lobbying.

The 9 companies and organizations above account for:

2009: $101.3 million

2008: $234.1 million

2007: $175.6 million

————————–
Total= $511 million, 2 ½ years.

And in case you were wondering,

the total spent by the entire Top Twenty on Lobbying was:

2009: $205 million

2008: $451.7 million

2007: $351.5 million
—————————
Total: $1,000,800,000

Or, over a Billion Dollars in 2 and a half years.

That’s simply a lot of money. And the phrase “Return on Investment” immediately comes to mind. Presumably there is one, or why would they persist? One of the finer things that one can say about someone is that they “Speak Truth to Power.” Speaking money, however,  seems the preferred means of communication.

Will Conflicts of Interest Sabotage Health Reform?

With health care reform in full gear, one crucial question is that of prioritization. Where should we focus our efforts? Who needs greater treatment, and what type of care is missing from the everyday lives of everyday Americans? Unfortunately, the politicians crafting the legislation may be swayed–not surprisingly–by stakeholders and lobbyists who are concerned with how reform will affect their bottom line. Interestingly, it is not just private insurance companies and pharmaceutical companies that are influencing the legislation.

A recent New York Times piece underscores how the emerging landscape of physician-owned hospitals is helping to shape congressional legislation.

The Times article states that one of the largest sources of campaign contributions for the Senate Democrats Campaign Committee is from the Doctors Hospital at Renaissance for a not-so-paltry sum of $500,000. Ironically, the event that raised the sum was at the home of Alonzo Cantu, a real estate developer in–you guessed it–McAllen Texas. Another event at Cantu’s house “brought in at least $800,000 for the committee’s House counterpart, the Democratic Congressional Campaign Committee.”

McAllen became (in)famous as the town depicted by Atul Gawande in his now oft-cited piece exposing the framework of incentives available to providers and hospitals to perform a greater number of tests and procedures in order to increase their bottom line, even when the greater volume of tests and procedures does not necessarily correspond to an increase in quality of care. Health Reform Watch has discussed the “cost conundrum” before.  Nevertheless, the incessant media and blog coverage of our inefficient system does not seem to have dissuaded those with a stake in that inefficient system from advocating for the status quo. As the Times points out that:

…like others here, he [Mr. Cantu] is not pleased about the president’s depiction of health care in McAllen.

“What’s so upsetting,” he said, “is that to make his case he threw McAllen under the bus.”

One might ask–given Gawande’s seemingly accurate portrayal of the overly-entrepreneurial nature of McAllen’s health care system–why we shouldn’t throw McAllen under the bus, especially when we can put a face on a problem undermining our system? Mr. Cantu and other Doctors Hospital officials are said to have offered the following argument for why Doctors Hospital and other physician-owned hospitals were beneficial and shouldn’t be singled out:

They have argued they are being unfairly grouped with boutique specialty hospitals that do not have emergency departments and that cater to privately insured patients. Eighty-eight percent of Doctors Hospital patients are either on public insurance or uninsured, 750 babies are delivered there a month, and no one is turned away because of inability to pay, they said.

Physician ownership, they added, has meant major investments in the latest equipment and good staffing ratios for nurses. Appealing to local pride, the hospital markets itself as the first in the area to offer services like PET scans, robotic surgery and breast imaging, which once required trips to Houston or San Antonio.

It is perhaps important to remember, as the McAllen boys attempt to mitigate the damages of the Gawande article, just what Gawande found. As we wrote prior:

Gawande writes that McAllen “is one of the most expensive health-care markets in the country. Only Miami-which has much higher labor and living costs-spends more per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.”

El Paso, Texas, similarly situated, spends significantly less– half as much.

Might I suggest that there is little consolation in the fact that the largesse found in McAllen is largely funded through “public insurance,” or that there are “boutique hospitals” which charge even more?

In addition, “Local pride” aside, the real question is whether McAllen needs a PET scan facility or robotic surgery. Importantly, Texas is not a Certificate of Need (C.O.N.) law state. Therefore “local pride” (i.e. desire of a local, often private, facility) may often trump the actual “need” of the community. This idea is reinforced when taking into account that a PET scanner may have an annual operational cost of over $1 million, in addition to the upfront construction costs that can also venture into the millions. Altruism aside for the moment (or perhaps, it seems, longer), the investors in those machines will seek to recoup their cost plus profit. To do so, they simply must use that machine.

Thus, as it stands, the allocation of expensive high-tech machinery in physician-owned hospitals is based upon the government subsidized decision of private investors regarding the liklihood of turning a profit (for the subsidies, think “depreciation” and “expensing” for business equipment; think “public insurance” for billables). Perhaps we should not be quite so surprised when they then comport themselves in a way which ensures such a profit. But, it certainly may be argued that with our health care system in its precarious state, without a showing of actual need, the trip to Houston or San Antonio for very advanced high-tech procedures is a price we must be willing to pay and that the allocation of medical resources (and government subsidies for such) should be based on public need and not private profit.

In addition, given the overlap between physician-owned hospitals and single specialty hospitals, as Professor Frank Pasquale points out, these single specialty hospitals may siphon scarce health resources and undercut the care that community hospitals provide.

In a previous post, I discussed comparing a health care system to a pyramid, the foundation of the pyramid requiring a solid base of primary, preventive, and wellness care, that tapers to the top of the pyramid where we find the specialists utilizing, for example, advanced equipment and procedures like robotic surgery. However, a stable foundation for the pyramid is necessary, and the favoritism described above may stymie actual reform–reform that will provide Americans with the basics that they need at an affordable price.

Democrats are surely not the only ones to blame, and money has flowed to Republicans as well. As we discussed in an earlier post, a Common Cause report finds that $1.4 million dollars per day is being spent by healthcare interests lobbying Congress this year. From the perspective of the physician-owned hospitals and private health insurance companies, donating to both sides of the aisle makes sense; it ensures that both political parties have a financial stake in preventing legislation that would limit physician-owned hospitals from being subject to greater restrictions (like CON laws), or tightly regulating insurer practices. Though there are some restrictions governing physician-owned facilities in the House bill, these have been watered down, and will now allow facilities like Doctors Hospital to maintain their current structure, and even expand in certain future circumstances. As the Times reports:

The Senate Finance Committee has yet to release its final draft, but bills passed by two House committees would prevent the opening of new physician-owned hospitals by disqualifying them from receiving Medicare reimbursements. Existing facilities like Doctors Hospital would be grandfathered in.

One key provision would limit a hospital’s ownership by doctors to the level in place at the time of enactment. That is a change from previous language in House bills to restrict physician ownership to 40 percent. It would have forced Doctors Hospital, where physicians have an 82-percent stake, to be sold or required some of its owners to divest.

The future disallowance by Congress of Medicare funding for procedures performed at physician-owned hospitals is a tacit acknowledgment that the structure is one in which conflicts of interest abound; that he who owns a machine and will profit from its use is apt to refer patients for its use–regardless of actual need. It is the acknowledgment that the foxes are essentially guarding the henhouse–and that hens cost money. The exception made for Doctors Hospital and others of its ilk, however, considering the large campaign contributions, gives rise to other questions about conflicts of interest.

The problem is not simply the amount of money that is being funneled to Congress by the health care industry. The more pertinent issue at this point is: Read more

Small is Beautiful

I was wondering how the right would respond to repeated debunkings of the Canada-health-nightmare ads now running on television. After reading Phantoms in the Snow, what can you say?

Well, Canada does have ten times less population than the US. . . .

So How Much Does that Can of Soda Really Cost?

Externalities. The concept is, rather simply put, that “an externality or spillover of an economic transaction is an impact on a party that is not directly involved in the transaction. In such a case, prices do not reflect the full costs or benefits in production or consumption of a product or service.”

Which is to say, there’s a cost beyond the price–and that cost may be borne by someone other than the buyer or seller.

Smoking and drinking alcohol are often given as prime examples, as the affect of such can have social costs outside their price. Beyond the health costs, numerous studies have shown, for instance, a high incidence of arrest and incarceration to be alcohol related. It costs approximately $39,000 per year to imprison someone in New Jersey. The cost of incarceration, if the incarceration is caused by, or sufficiently related to, alcohol consumption, is an externality, or more precisely, an external cost. A cost which is simply not reflected in the price of a bottle of booze. With external costs taxes are often imposed upon products which produce such to both help defray what are commonly known as the social costs, and to inhibit use.

In New Jersey, the total tax on each pack of cigarettes amounts to $3.58 ($2.575 state/ $1.0066 federal). A portion of the federal tax goes to fund SCIP.

And the question is: What about soda and other such sugary soft drinks? A growing number conclude that soft drinks bear such a cost.

The Wall St. Journal reports that:

New research shows medical spending averages $1,400 more a year for an obese person than for someone who’s normal weight.

Overall obesity-related health spending reaches $147 billion, double what it was nearly a decade ago, says the study published Monday by the journal Health Affairs.

The higher expense reflects the costs of treating diabetes, heart disease and other ailments far more common for the overweight, concluded the study by government scientists and the nonprofit research group RTI International.

RTI health economist Eric Finkelstein offers a blunt message for lawmakers trying to revamp the health-care system: “Unless you address obesity, you’re never going to address rising health-care costs.”

Obesity-related conditions now account for 9.1% of all medical spending, up from 6.5% in 1998, the study concluded.

I am not suggesting that soda and sugary soft drinks bear sole responsibility for obesity or the doubling of obesity-related health spending over the last decade.

But as CBS News reports,

“Americans consume roughly 250 more calories every day than they did in the 1970s — and half those calories come from sugary drinks.”

“We’re not saying that calories from sugared beverages are different than any other calories,” said Dr. Kelly Brownell of Yale University. “There’s just too many of them.”

Brownell says a 10 cent tax per can could yield $140 billion in revenue over ten years.
But the beverage industry is pushing back.
“This is no time for Congress to be adding taxes on the simple pleasures we all enjoy like juice drinks and soda,” trumpeted one industry-backed TV ad.

(While researching this article, this ad from “Americans Against Food Taxes” popped up.)

According to the California Center for Public Health Advocacy:

Soft drink consumption has more than doubled since 1971. The average teenage boy drinks two 12 oz sodas per day or more than 700 cans per year. The average teenage girl drinks 1.4 twelve oz sodas per day or more than 500 cans per year. (CSPI, Liquid Candy, 2005 — based on 1999-2002 National Health and Nutrition Examination Survey)

Further:

Despite the first-ever per-capita declines in soft drink sales, companies still sold more than 14 billion gallons of calorie-laden soft drinks in 2008. That is equivalent to about 506 12-oz. servings per year, or 1.4 12-oz. servings per day, for every man, woman, and child.  Those drinks include regular (non-diet) carbonated sodas, energy drinks, sports drinks, fruit drinks, ready-to-drink teas, and vitamin waters.

CBS reports that the plan to tax 10 cents per can, amounting to approximately $140 billion over 10 years, to help pay for healthcare costs has failed to gain “traction” in Congress. The plan, understandably, has met staunch opposition from soft drink manufacturers and their lobby.

The argument against such taxes is that they are regressive and fall more sharply upon the poor than they do the affluent. I understand the argument–and at times I have understood it intimately. But I’m not at all sure it holds up here, as some simple math will show.

First off, because of the variety of sizes in which soft drinks come, a per ounce tax makes more sense to work with. 10 cents per 12 oz. can = .8333 cents per ounce. If the average consumption is 1.4 cans per day, or 16.8 oz, we’re talking about an average tax of roughly 14 cents per day. You simply cannot buy anything with 14 cents– but in the aggregate it can get you a little closer to funding universal healthcare. And perhaps, if the spectre of that 14 cents did cause some to consume slightly less soda, perhaps we as a country would not be the worse for it.

UPDATE: Professor Frank Pasquale on the latest in beverage tax utilitarian calculus.

Do You Want Rats in YOUR Baby’s Crib? The RNC Poses Some Questions

Accompanied by images of a sprawling mass of big black rats, and then a close-up (separate) of a baby asleep in its crib, that’s what the ad for the local TV news said: “Do You Want Rats in YOUR Baby’s Crib? News at 11.”

It was maybe ten years ago, but I remember then just sitting before the TV astonished. I had babies, but I had never been asked that question before. I hadn’t even realized that that particular group of words could amount to a question. After much consideration of what seemed to be a rather limited set of options, I decided to go with “No,” but watched the news anyways just in case I had missed something.

I had not.

It was with similar feeling recently that I pored over the latest health care reform survey from the Republican National Committee. The survey was sent to the RNC faithful and is destined, I’m sure, to be spun into the latest “facts and figures” about the “pulse of the nation.” The introduction to the survey promised the putative survey taker that through the magic of Republican survey math:

Your answers represent the views of thousands of other Republicans living in your area. And your active membership in the new RNC will help us fight the Obama Democrats and recruit and train new Republican candidates nationwide. (emphasis added).

The survey itself is well worth taking the moment or two to read through, if only to get a better idea of how the spin works.  But there are a few questions that simply need to be highlighted.  As follows:

3. Do you believe that your health care decisions should be made by you and your doctor, and not government bureaucrats in Washington, D.C.?

Yes

No

Undecided

7. Rationing of health care in countries with socialized medicine has led to patients dying because they were forced to wait too long to receive treatment. How concerned are you that this would be inevitable in the U.S. under the Democrats’ plan?

Extremely Concerned

Mildly Concerned

Not Concerned

Don’t Care

11. Does it concern you that the Democrats are trying to ram health care legislation through Congress THIS MONTH to limit the American people’s opportunity to evaluate it?

Extremely Concerned

Mildly Concerned

Not Concerned

Don’t Care

12. Does it concern you that the liberal media has gone to unprecedented levels to only give Obama’s views on health care reform and no one else’s?

Extremely Concerned

Mildly Concerned

Not Concerned

Don’t Care

Though I’m told the study is one of subtle difference, I make no claims of expertise regarding the art or science of survey and polling. But in the Law there is an old adage about courtroom practice that one is taught very early on: “Never ask a question that you do not know the answer to.” It is a cardinal rule. No one could accuse the RNC of having broken it.

As we laugh at the crude and unabashed manipulations in the survey above, it may however behoove us to consider this: as the RNC mounts its attack on the Health Reform bills emerging from the House & Senate, Chairman Michael Steele accuses President Obama, Speaker Nancy Pelosi and key congressional committee chairmen of being part of a “cabal,” and then further states that “Republicans will stop at nothing,” perhaps we should believe him.

And when question #7 gets spun into an ad that starts:

“A Majority of Americans polled are ‘extremely concerned’ that the Democrats’ health care plan will ‘inevitably’ kill them. Shouldn’t you be too?”

Some people will listen. Just like I listened to the rats in the baby’s crib story (rat only seen somewhere in apartment building, woman in building had baby). But not everyone who listens will laugh.

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