The trials of the Veterans Administration (VA) continue as one of its contractors, Unisys, had a desktop computer stolen from its Reston Virginia offices . The computer which did have password protection included the unencrypted protected health information of 38,000 veterans who received healthcare services from the VA in Pennsylvania. Unisys was collecting VA healthcare fees from third party payers. Can anyone identify the HIPAA violation?

The VA is taking remedial action by contracting with ID Analytics to “conduct a computerized analysis across multiple industries to detect patterns of misuse and determine whether or not there is any suspicious activity specifically related to the May 3, 2006, laptop theft which threaten the personal records of 26 million veterans.”

Medco Health Solutions, another one of the big three prescription benefit managers, has announced that it will begin dispensing Apotex’s generic version of the anti-blood clotting drug Plavix tomorrow. According to Marketwatch.com, “Medco members account for 24% of Plavix’s U.S. market share, and more than half of Medco’s Plavix prescriptions are filled through the company’s mail-order pharmacies.” Apotex evidently is trying to flood the market with the generic drug before the brand name manufacturers can get to court under an earlier settlement agreement.

According to a Washington Post report, Health and Human Services Secretary Leavitt informed the National Governors’ Association meeting that President Bush will sign an executive order next month requiring “all providers of federally financed health care [to] adopt quality-measurement tools and uniform standards for their information technology.” The Executive Order is expected to include standards that have been the focus of the American Health Information Community workgroups: “registering patients, reporting lab results, writing prescriptions and providing secure communication channels.” Presumably, federally financed health care will include the Federal Employees Health Benefits Program. The Secretary also “promised that by year’s end, a majority of the 100 largest private employers will sign similar contracts with the hospitals and doctors they use to care for their workers.”

What’s more, HHS also has created a spiffy new HIT website!

Plavix is an anti-blood clotting drug that is prescribed for many conditions. Its manufacturer Bristol-Myers Squibb had Plavix sales of $5.9 billion in 2005, second only to Pfizer’s Lipitor which also lost its patent protection in June.

Apotex, a Canadian drug manufacturer, was the first company to received FDA approval of a generic version of Plavix. Apotex also was engaged in a legal battle with Bristol Meyers and its co-marketer Sanofi-Aventis over the validity of the Plavix patent. Last month, several state attorneys general successfully challenged the validity of a proposed settlement of that case as anti-competititive, and the U.S. Justice Department is now investigating that settlement.

Apotex announced today that it is launching its generic Plavix, and Express Scripts, one of the big three prescription benefit managers, announced that it plans to begin dispensing that generic drug tomorrow. Apotex reportedly has five days to sell the generic drug before Bristol Myers and Sanofi-Aventis can apply for a court order blocking the sale on patent infringement grounds.

The Center for Studying Health System Change has published a study in the journal Health Affairs titled “Specialty-Service Lines: Salvos in the New Medical Arms Race.” The study postulates that during the 1990s hospitals competed primarily based on price due to the strict utilization controls and risk contracting imposed by health plans. The consumer backlash against those controls caused health plans to revert more or less to a fee for service environment in this decade.

The study observes that

In some ways, the first decade of the twenty-first century has seen a reemergence of hospital and physician interactions that were dominant prior to the managed care era, when hospitals competed for physicians’ loyalty by building the best facilities and obtaining the most up-to-date technologies. Contrary to mainstream economic theory, hospitals in more competitive environments had higher costs per case and per day than those in less competitive environments, when other factors were controlled for.

Although public policy attention has focused on specialty services provided by physician-owned specialty hospitals, resulting in a temporary federal moratorium on these facilities, the phenomenon of specialty services is a more pervasive development. Moreover, the rapid expansion of physician-owned ambulatory diagnostic and treatment facilities is threatening hospitals’ hegemony over a number of service lines. Aware of the threat posed by specialist physicians’ ability to raise capital on their own, some hospitals have established joint ventures with physicians, primarily as a defensive move. In short, while hospitals find a competitive need to promote a service-line orientation, an approach that requires the committed participation of key physicians, at the same time they often face growing competition from physician-owned service lines [in cancer treatment, cardiac care, orthopedic care, etc.].

The study concludes

Based on our interviews, hospitals associate some of their recent financial success to the use of service-line strategies. Hospitals still have sufficient control over many profitable service lines and continued contracting leverage with managed care plans, such that rate increases from private health plans make up for losses of business to competing hospitals and physician-owned ambulatory facilities. However, as more care moves to physician-owned ambulatory sites of service through gene therapy, robotic surgery, and other “disruptive technologies,” the role of the hospital in the health care system could change markedly.

Whether health care delivery is controlled by hospitals, physicians, or joint ventures between the two, one thing is certain: It is increasingly organized through specialty-service lines, which are already leading to early signs of increasing health care costs and having as-yet-unquantified effects on the quality of care. These salvos in the new medical arms race bear monitoring as the century unfolds.

This study is worth a read at the beach.

The Los Angeles Times reported last week about a new trend in overseas coverage — employers are sending their plan participants to hospitals in India and Thailand for surgical procedures.

[Dr. Arnold} Milstein, of Mercer Health & Benefits, says hospital quality is not a major worry [at these particular overseas facilities] because over the years, the same agency that accredits most American hospitals for participation in Medicare [JCAHCO] * * * has accredited 88 foreign hospitals through a joint international commission.

Bumrungrad Hospital in Bangkok, Thailand, and Apollo Hospitals in India, for example, are internationally recognized institutions. Despite the Third World conditions outside, the hospitals resemble five-star hotels and are equipped with the latest technology, American patients have reported. Many of the doctors are trained in the U.S., and visiting Americans are pampered around the clock, they have said.

A coronary artery bypass surgery costs about $6,500 at Apollo Hospitals in India, Milstein estimated. The average price in California is $60,400.

The article mentions a North Carolina employer with 2,000 employees that contracted with a medical tourism agency IndUSHealth to arrange for surgical care in India. What next?

Measles is a highly contagious, viral infection that can be dangerous to young children. (I suffered through the illness as a child, and it was not fun. The vaccine became available after I had the disease which creates immunity.) Measles was thought eradicated in the United States in 2000 due to a high effective and safe measles, mumps, and rubella vaccine. In 2005, 34 cases of measles occurred in an Indiana community, the largest outbreak in years.

The New England Journal of Medicine this week published a study on this outbreak written by Amy Parker and others. Mayoclinic.com summarizes the NEJM study’s findings as follows:

In 2005, an unvaccinated 17-year-old from Indiana traveled to Romania and unknowingly contracted the measles virus, according to a study in the New England Journal of Medicine. When she returned home, the virus quickly spread. Within six weeks, 34 cases of measles were confirmed — the largest documented measles outbreak in the United States since 1996. Most cases were among children and teenagers ages 5 to 19 who hadn’t been vaccinated. More than 70 percent of these children were home-schooled. The measles outbreak was mostly confined to children whose parents had not consented to vaccination, primarily due to concern about vaccine safety. Researchers concluded that high vaccination levels in the surrounding community and low rates of vaccine failure prevented an epidemic.

FEHB plans routinely cover childhood vaccinations, such as the MMR vaccine. ABC News notes

Why do some people choose not to vaccinate their kids? In 1998, the Lancet, a British medical journal, published an article that claimed that the MMR (measles-mumps-rubella) vaccine caused autism in children. The article has since been retracted, but the worry has remained.

That’s a shame. The NEJM study concludes that

The outbreak in Indiana shows that states, localities, and health care organizations need to implement more effective policies to protect persons traveling abroad, home-schooled children, and health care workers against measles and other vaccine-preventable diseases. In addition, to preclude the experience of those countries where vaccine-preventable diseases have become epidemic through the refusal of vaccination, better communication strategies are needed concerning the adverse events associated with vaccines. These efforts will be necessary to sustain the elimination of measles in the United States.

The Commonwealth Fund released the “Framework for a High Performance Health System for the United States” a report today prepared by an 18 member commission formed by the Fund. Not surprisingly the commission members find that

[A]lthough some of the best medical care in the world is delivered in the United States, when examined as a whole our country falls far short of providing high-quality, safe, well-coordinated, and efficient care, accessible to all Americans—and that we are failing to deliver adequate value for the very high proportion of resources we devote to health care in this country.The report * * * states that there are concrete steps that could be taken to improve value, for example:

• Implementing major known quality and safety improvements;
• expanding the use of information technology;
• rewarding performance for quality and efficiency through our payment systems;
• increasing public reporting on quality and costs; and
• importantly, expanding health insurance coverage.

The Commission finds that central to implementing these changes is the need to establish more organized systems of care so that individual practitioners and hospitals can have:

• A structure within which to implement known quality and safety improvements;
• a structure to invest in and support appropriate information technology advances;
• a sufficiently broad base to enter into pay-for-performance contracts which reward quality and efficiency;
• the ability to provide reliable and objective public comparison of results among systems and providers; and
• the ability to care for patients across a range of needs for acute and chronic services.

The subways were delayed today in DC today due to the heat which gave me an opportunity to read this week’s Business Insurance issue. I found an interesting point-counterpoint article on pill splitting. United Healthcare has been one of the most prominent insurers to encourage the practice. It turns out that for example Pfizer charges the same price for a 40 mg pill of the statin Lipitor as it does for a 20 mg pill of the same drug. So if the member on a 20 mg daily dose of the drug gets a 30 day supply of 40 mg pills, she can get two months of the medication for one co-pay.

“According to Tim Heady, chief executive officer of UnitedHealth Pharmaceutical Solutions, [United Healthcare’s] Half Tablet Program offers a potential savings of up to 1 to 2 percent of total drug spend, and members can save up to $300 annually.” Moreover, Stanford University researchers have concluded that the practice has significant potential for cost savings.

The [Stanford] researchers emphasized that pill-splitting must be implemented with drug-specific and patient-specific criteria to ensure patient safety. Just as certain types of medications are unsuitable for pill-splitting – including extended-release medications and those with enteric coatings – certain patients may be unable to split tablets consistently and accurately. Such patients may include those with poor eyesight, loss of a limb, tremors, debilitating arthritis, dementia or psychosis. The researchers noted that results are best when the patient uses a pill-splitting device and is trained to use it. Pill-splitting should be embarked upon only after a discussion between physician and patient, Stafford explained. “We’re not advocating this as a global solution. It needs to be conducted in the context of doctor-patient communication.” He noted that the list of 11 medications he identified for pill-splitting isn’t exhaustive and may differ depending on local practices and prices.

The American Medical Association similarly accepts voluntary pill splitting programs that require doctor input in the pill splitting decision. However, many members do not want to split pills (but if bakeries can slice bread that you purchase from them, why can’t pharmacists split the pills you buy from them ?)

Other insurers, such as Cigna Healthcare, prefer focusing member attention on using low cost generic drugs which are available in all the classes of drugs recommended for splitting, according to Business Insurance. What’s more the brand name manufacturer practice of charging the same price for several dosages is not as prevalent with generic drug manufacturers. Yet other insurers, such as Health Partners, include generic drugs in their pill splitting program.

U.S. Department of Health and Human Services (HHS) Secretary Michael Leavitt announced two final rules that will be published in the August 8, 2006, Federal Register. These rules are intended to foster the spread of health information technology.

The Centers for Medicare and Medicaid Services will be creating two exceptions from the physician self-referral prohibitition (Social Security Act § 1877) — one for donations of electronic prescribing (“e-prescribing”) equipment that meets Medicare Part D standards and the other for interoperable electronic health record (“EHR”) software. Recipient physicians must contribute at least 15% of the donor’s cost for the interoperable EHR software, but can accept the e-prescribing equipment for no charge, but subject to other prerequisites described in the rule.

The HHS Inspector General will be creating e-prescribing equipment and interoperable EHR software safe harbors from the federal health programs anti-kickback act (from which the Federal Employees Health Benefits Program is exempt.) These safe harbors like the physician self-referral law exceptions impose no limit on the value of e-prescribing equipment but require a 15% copay toward the value of EHR software.

According to HHS’s press release,

The scope of donors and recipients under the final rules is considerably broader than in the proposed rules. Donations protected under the exception may be made to any physician by entities furnishing DHS. The exception requires compliance with criteria similar to those listed in the electronic prescribing exception, as well as additional criteria, such as those requiring cost sharing and selection of physician recipients of donated technology. The corresponding OIG safe harbor is similar. However, consistent with underlying statutory differences, the safe harbor covers a broad array of providers, suppliers, practitioners and health plans when they provide electronic health records technology to physicians and others engaged in the delivery of health care.

These rules take effect sixty days after Federal Register publication. The self-referral law exception and safe harbor for EHR software donations will expire at the end of 2013. There is no corresponding sunset limitation on the exception and safe harbor for e-prescribing equipment.On a related note, CCHIT certified two new EHR products as interoperable yesterday.