Prescription Costs Returning to the Wild

By Clive Riddle, March 13, 2015

Numerous studies have been warning that prescription cost increases, domesticated and docile for some time now, have returned to the wild - resurging and rearing their unpleasant head.

During last fall, Evaluate published a new 18-page report , "Budget-busters: The Shift to High-Priced Innovator Drugs in the USA." that addresses the growth of high-end prescription drugs. Evaluate tells us that "the median price of the Top 100 drugs has skyrocketed from $1,260 in 2010 to $9,400 in 2014, representing a seven-fold increase," and that "the average patient population size served by a Top 100 drug in 2014 was 146,000 down from 690,000 in 2010. The number of treatments costing in excess of $100,000 per patient per year rose to seven in 2014 versus four in 2010."

When Segal released their 2015 Segal Health Plan Cost Trend Survey, they stated “Health benefit plan cost trend rates for 2015 are forecast to drop slightly for some coverage, but to increase substantially for prescription drug coverage...…The increase in the cost of prescription drug carve-out coverage for actives and retirees under age 65 is expected to jump to nearly 9 percent. Prescription drug trend for retirees age 65 and older is expected to rise to 7.5 percent, more than twice the rate of retiree medical cost trends. The projected specialty drug/biotech trend rate for 2015 is an exceptionally high 19.4 percent.”

A number of other studies cite similar concerns, and this week Express Scripts weighed in with their annual Drug Trend Report. They state “new hepatitis C therapies with high price tags and the exploitation of loopholes for compounded medications drove a 13.1 percent increase in U.S. drug spending in 2014 – a rate not seen in more than a decade.”

Here’s some key selections from Express Scripts findings:

“Hepatitis C and compounded medications are responsible for more than half of the increase in overall spending. Excluding those two therapy classes, 2014 drug trend (the year-over-year increase in per capita drug spending) was 6.4 percent.”

“Specialty medications – biologic and other high cost treatments for complex conditions, such as multiple sclerosis and cancer – accounted for more than 31 percent of total drug spending in 2014. As Express Scripts forecasted last year, specialty drug trend more than doubled in 2014, to 30.9 percent. Hepatitis C medications accounted for 45 percent of the total increase in specialty spend despite having the second lowest prescription volume among the top 10 specialty conditions. Medicare plans – required to follow Medicare Part D formulary guidelines – were the hardest hit, as their annual specialty drug spend increased 45.9 percent.”

“Spending on traditional classes of medications continues to rise as a result of compounded drugs, which emerged in the top 10 traditional therapy classes for the first time. Despite having the least number of prescriptions among the top 10 classes, compounded medications accounted for 35 percent of the increase in spending, the most of any traditional therapy class of drugs.”

“Drugmaker consolidation and drug shortages also led to increases in traditional drug trend, which rose to 6.4 percent in 2014. Diabetes remains the leading traditional therapy class for a fourth straight year based on total costs; Express Scripts expects double-digit increases in spend in this class over the next three years due to once-weekly oral and injectable drugs in the pipeline.  Cost for medications to treat pain increased 15.7 percent in 2014, due in part to new tamper-resistant formulations for opiates.”


Medical Identity Theft Impact on Health Care

By Claire Thayer, March 12, 2015

According to findings from The Fifth Annual Study on Medical Identity Theft, published by the Medical Identity Fraud Alliance, the number of patients affected by medical identity theft increased nearly 22 percent in the last year, an increase of close to half a million since 2013. Many of us by now have heard about the massive Anthem breach, affecting up to 80 million people and considered to be the largest security breach involving a major health organization. Anthem notes that "the information accessed may have included names, dates of birth, Social Security numbers, health care ID numbers, home addresses, email addresses, employment information, including income data."  However, while, yes, the breach at Anthem was massive, they’re far from alone! 

Since 2009, 109 health-plan related security breaches have been reported to the Department of Health & Human Services Office for Civil Rights.  Breaches affecting 500 or more individuals is public information and accessible directly via the aptly named Breach Portal, where you can search by covered entity, state, type of entity (i.e., health plan, healthcare provider, etc), individuals affected, breach submission date, type of breach (theft, hacking/IT, improper disposal, etc., location of breached information).

MCOL's infoGraphoid this week highlights health plan related security breaches since 2009 and how patients found out that their medical identity was exposed:

MCOL’s weekly infoGraphoid is a benefit for MCOL Basic members and released each Wednesday as part of the MCOL Daily Factoid e-newsletter distribution service – find out more here.


Medicare Obesity Counseling – it’s Free!

By Claire Thayer, March 5, 2015

The Center for Disease Control and Prevention shows alarming obesity trend rates among the elderly population within the United States.  Thirty-six percent of men aged 65-74 are considered obese, along with slightly over 44% of women in this same age bracket, as highlighted on the CDC’s FastStats for Older Persons’ Health web page:

These findings continue to trend upward from the data previously available from the National Center for Health Statistics that found more than one-third of older adults aged 65 and over were obese in 2007–2010. 

Consider that over the next thirty years, the number of U.S. older adults is expected to more than double, rising from 40.2 million to 88.5 million. Primary care providers are critically important in helping to reverse these trends. The Kaiser Family Foundation reminds us in an article published this week, Few Seniors Benefiting From Medicare Obesity Counseling, that the Affordable Care Act included a new Medicare benefit offering face-to-face weight-loss counseling in primary care doctors’ offices. Doctors are paid to provide the service, which is free to obese patients, with no co-pay.  Surprisingly, as reported in USA Today, a mere 1% of Medicare's 50 million beneficiaries have used the free counseling benefit.


2015 – Another Year of Uncertainty?

By Cathy Eddy, February 25, 2015

This year on March 23, we will mark the 5th anniversary of the passage of the Affordable Care Act. Typically, you would expect that most of the unknowns that go along with a new law would have been worked out by now. Yet as we look ahead, we have several key elements that may change. There are also other drivers that are challenging our health plans.

Here are some of the uncertainties still ahead:

  • We now have a Republican Congress with the Senate flipping in the 2014 election. This will allow for legislative changes to ACA to make it to President Obama’s desk, but veto power will block most of these without some Democratic support. Some areas, such as eliminating the device tax and redefining the 30 hour “full time” work week to 40 hours, have bi-partisan support. 
  • The Supreme Court has agreed to hear arguments in March about the subsidies on the public exchanges in states where the federal exchange,, is in place. The wording in ACA indicates that subsidies will only be given if there is a state-run exchange and that would impact about 2/3 of the states using the federal exchange. Their decision is due by June. 
  • The health plans on the public exchanges had to set rates for 2015 with little experience about those members in these programs. It will become clearer as this year progresses just what the MLR is for this line of business. By the time open enrollment starts for the public exchanges in 2016, we’ll find out if premiums go significantly higher or stay at current levels. The impact of the 3 Rs on the plans will also become clearer. Standards for being a QHP remain unclear. Introduction of compliance requirements such as consumer satisfaction measurements will be tested in 2015. Technology bugs still abound with data flowing between plans and CMS.
  • Individual mandates are in place with increasing penalties for not having insurance coverage, but the implementation of the employer mandate is still uncertain. 
  • A new type of insurance company – the state Co-ops – were created by ACA with federal loans. Not all states were able to offer this model. In 2015, some of the established Co-ops are expanding to new states. Others are offering coverage through off-exchange products in the commercial space. Some are struggling to maintain the necessary level of capital.  The future of the Co-op model still has a level of uncertainty. 
  • Providers have been embracing the concept of “value based reimbursement,” and the movement away from fee-for-service, but the implementation of this strategy has been much slower than first expected. 
  • The trend for the past couple of years has been for providers to become payers and for payers to move more into the provider space. Many members of the Health Plan Alliance have been approached to work with health systems that don’t have their own health plans. Will this trend continue or will providers find that entering the insurance space and taking on more risk is outside of their comfort zone?
  • Will 2015 be the year that ICD-10 is finally implemented or will there be another delay? 
  • Many states are looking at their Medicaid expenditures and trying to find ways to control increases. Some states have made major changes to their programs and are implementing the changes. Dual eligibles are being moved into managed care programs. Will more states take the federal dollars for Medicaid expansion? 
  • Plans that are in the Medicare Advantage line of business continue to be challenged by risk adjustment, STAR ratings and reimbursement levels, as well as multiple audits. As plans expand these programs they continue to deal with uncertainty.

Well, at least 2015 won’t  be boring!


How the Mighty Haven't Fallen

By Kim Bellard, February 17, 2015

I recently read an article that speculated on how even the mighty Google could fade into irrelevance faster than we might think.  It made me wonder why that kind of change doesn't seem to happen in health care.

The Google article, by Farhad Manjoo in The Wall Street Journal, cited one-time technology leaders like Wang and DEC, and pointed out that other long-time powerhouses such as Hewlett Packard and even Microsoft are furiously trying to reestablish themselves after decades of (relative) decline.  

Then there's health care.

Just out of curiosity, I looked at share of spending by type of service in the National Health Expenditures, from 1960 to 2013.  Here's what I found:

For all our many clinical and technological advances, the same three health sectors that dominated health care spending in 1960 still command virtually the same shares in 2013 -- over 60% of our overall spending.  They've "lost" less than 2% of share to other types of spending during those decades.  

It hasn't all been smooth sailing, of course.  Hospital spending reached almost 40% in the early 1980s, dipped below 30% in the early 21st century, and rebounded this decade.  The physician share has been steadier -- a peak of around 22% in the early 2000's, a low of 18.3% in 1978, but mostly stayed around 20%.  Prescription drugs spending, on the other hand, got to as low as 4.5% in 1981-82, reached a peak of 10.4% in 2006, and now seems to be on a slow decline.  But, all in all, the composition of Big 3 of the medical-industrial complex remains unchanged over a very long time.

It's as if the Big 3 U.S. auto manufacturers still maintained their 1960 dominance today, or the 3 TV broadcast networks still had their pre-cable/Internet share of viewers.  Both trios still have hefty market shares, still play key roles, but are nowhere near their historical dominance. New competitors emerged to give consumers more options, and took away significant shares of those markets.  

Unlike what has happened in health care.  

Hospitals, physicians, pharmaceuticals, and the health care industry generally have certainly evolved significantly in the past 50+ years, but it is more incremental evolution than the kind of "punctured equilibrium" Steve Jay Gould and others posit that result in rapid changes that overthrow species.  

I don't have anything against hospitals, doctors, or prescription drugs, at least not in principle.  It just doesn't feel like progress that we're not coming up with radically new care and delivery options that don't rely on them.  

Unlike most markets, health care isn't really driven by consumer demand.  A couple years ago, JAMA published a survey of physicians, in which  they blamed rising costs on pretty much everyone else but themselves, more than half even blaming patients.  A new study has cast doubt on the view that patient demand is driving unnecessary spending.   The saddest thing for me from the study was that only 8.7% of patient encounters included a patient demand.  We're a long, long way from informed patients taking responsibility for their own care, or their own health.

Having control over what constitutes the "practice of medicine" is certainly an effective way of forestalling new kinds of competitors.  That control has been placed in the hands of the providers practicing care, ostensibly to safeguard patients' interests,. but it's getting harder and harder to believe those interests are primary.  It seems more like protecting turf.  

A couple months ago I wrote a post that raised the question of whether, in a world where microbiome treatments, gene therapy, even nanobots may emerge as prevailing types of treatment, we'll even need physicians, at least in the same way we do now.  I received a number of comments that were aghast at the notion that we might not always need physicians to deliver our care.  I believe it is this kind of thinking that has allowed the Big 3 of health care to retain their dominance.  

If we can't even imagine a health care system that doesn't solely rely on the traditional sources of care, we'll certainly never achieve one.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

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