Don't Cry for Me, Brazil - UnitedHealth May Buy Brazilian Managed Care Company

While Health Care Renewal's bloggers are at the moment all Americans, and hence tend to focus on the wild and crazy US health care system, we have suggested that many of the issues we discuss have global implications.  In fact, the first article I managed to publish on health care dysfunction was in a European journal, and framed the US experience as a cautionary tale for other countries. [Poses MD. A cautionary tale: the dysfunction of American health care.  Eur J Int Med 2003; 14: 123-130.  Link here.]

The Possible Acquisition by UnitedHealth of Brazil's Leading Managed Care Company

However, sometimes it appears that the US experience might be directly exported.  Today Bloomberg reported,

UnitedHealth Group Inc., the biggest U.S. health insurance company, is in talks to buy a stake or all of the Brazilian insurer and hospital operator Amil Participacoes SA, according to people familiar with the matter.

Acquiring all or part of Brazil’s biggest managed-care company, which carries a market value of 9.01 billion reais ($4.47 billion), would give Minnetonka, Minnesota-based UnitedHealth access to a growing private-insurance market in the world’s second-biggest emerging economy. It also may generate more opportunities for UnitedHealth’s Optum unit, which provides technology and consulting to health systems in India, China, the U.K. and elsewhere.

UnitedHealth's Ethical Record

UnitedHealth would be the company whose CEO once was worth over a billion dollars due to back dated stock options, some of which he had to give back, but despite all the resulting legal actions, was still the ninth best paid CEO in the US for the first decade of the 21st century (look here). UnitedHealth would be the company whose current CEO made a cool $106 million in 2009 (look here).

Moreover, UnitedHealth would also be the company known for a string of ethical lapses:
- as reported by the Hartford Courant, "UnitedHealth Group Inc., the largest U.S. health insurer, will refund $50 million to small businesses that New York state officials said were overcharged in 2006."
- UnitedHalth promised its investors it would continue to raise premiums, even if that priced increasing numbers of people out of its policies (see post here);
- UnitedHealth's acquisition of Pacificare in California allegedly lead to a "meltdown" of its claims paying mechanisms (see post here);
- UnitedHealth's acquisition of Sierra Health Services allegedly gave it a monopoly in Utah, while the company allegedly was transferring much of its revenue out of the state of Rhode Island, rather than using it to pay claims (see post here)
- UnitedHealth frequently violated Nebraska insurance laws (see post here);
- UnitedHealth settled charges that its Ingenix subsidiaries manipulation of data lead to underpaying patients who received out-of-network care (see post here).
- UnitedHealth was accused of hiding the fact that the physicians it is now employing through its Optum subsidiary in fact work for a for-profit company, not directly for their patients (see post here).

Exporting Health Care Dysfunction

So while the deal discussed above might be good for UnitedHealth, it is not so clear that it would be good for Brazil, as it would give a big toe-hold in Brazil to a US company whose actions have not always been exemplary, and hence may give Brazil a whiff of US health care dysfunction.


Health care dysfunction in the US has been manifested by continuously rising costs while access and quality have been threatened.  While it is possible that our recent Affordable Care Act reforms will improve access, and perhaps quality, it is likely the country will continue to lag other developed countries in providing health care value (for examples, look at this Commonwealth Fund site including international comparisons.) 

Moreover, health care dysfunction may have resulted in a uniquely distressed physician population in the US compared to those in other countries.  Here we discussed a recent large-scale survey showing nearly half of all US physicians, and more than half of generalist physicians are burned-out.  Here we discussed another recent large-scale survey showing that more than a third of US academic physicians want to quit their institution and/or academia. That survey may have suggested that their dissatisfaction was due to concerns that their leaders did not share their values about patient care and academics, their leaders may put revenue ahead of these values, their leaders may have suppressed dissent, free speech, academic freedom, and whistle-blowing, and their leaders may have acquiesced to a culture of dishonesty and deceit.

 On Health Care Renewal, we have postulated that our unique mix of health care misery may be due to a witch's brew of  concentration and abuse of power in health care, bad (that is, ill-informed, incompetent, mission-hostile, self-interested, conflicted or corrupt) leadership of health care, tactics used by bad health care leadership such as use of perverse incentives, creation of conflicts of interest, deception, disinformation, propaganda, intimidation, etc

Thus we would not recommend that other countries look to our health care system as a role model, and that their citizens should be very skeptical of US health care organizations, particularly large, for-profit health care corporations with spotty ethical records, when they come calling. Meanwhile, we in the US must do a better job solving our own health care problems, and should avoid trying to export them.

12:07 PM

Are the Health Plans of the Very Rich Different from Yours and Mine?

Yesterday, the New York Times published an intriguing story about "Cadillac" (that is, expensive) health insurance plans,

Goldman Sachs is one of the nation’s richest banks, and hundreds of top Goldman employees have a health care package to match — one of the 'gold-plated Cadillac' plans cited by those involved in the health care debate in Washington.

Goldman’s 400 or so managing directors and its top executive officers participate in the bank’s executive medical and dental program as part of their benefits, according to documents filed with the Securities and Exchange Commission. The program generally costs the bank $40,543 in premiums annually for each participant’s family.

Those taking part in the plan include the company’s chief executive, Lloyd C. Blankfein, and four other top officers, as well as managing directors, whose base salary is $600,000.

Goldman’s medical coverage entered the health care discussion on Sunday when David Axelrod, senior adviser to President Obama, cited the Goldman program as an example of the expensive benefits the administration might consider taxing to help pay for its health care program.

'The president actually was asked this the other day by Jim Lehrer, and what he said was that this was an intriguing idea to put an excise tax on high-end health care policies like the ones that the executives at Goldman Sachs have, the $40,000 policies,' Mr. Axelrod said.

A proposal by Senator John F. Kerry, Democrat of Massachusetts, would impose an excise tax on the insurers that issue policies like Goldman’s, with the expectation that the insurers would pass along most, if not all, of the cost to employers who buy the plans.

Leaders of the Senate Finance Committee, which is working on bipartisan version of the health care legislation in Congress, had long expressed interest in taxing some employer-provided benefits — a move many budget experts say would help slow the steep rise in health costs.

Negotiators have not yet determined the value of the plans that would set off a tax on the insurance companies; the numbers under discussion range from $20,000 to $40,000 annually, a senior administration official said.

The lower end of that range would increase the amount of money the tax would raise but would also hit some middle-class workers, whose unions in some cases negotiated robust health benefits in lieu of pay increases. Typical employer-provided plans cost $13,000 to $20,000 per family, depending on the location and the age of the plan participants.

A health care package costing $40,000 or more a year would generally have no co-payments or deductibles, according to Paul Fronstin, an analyst at the Employee Benefit Research Institute, a Washington nonprofit that studies benefits. It would also have no limits on doctors or procedures, no restrictions on pre-existing conditions and no requirements for referrals.

Few people have such policies, Mr. Fronstin said. 'It would only be top executives who run big businesses, mainly people in the C suite,' said Mr. Fronstin, referring to companies’ chief officers.

It was not clear from this article how many top corporate executives have such plans, and whether leaders of other kinds of organizations, like large not-for-profits, also have them.

My main concern about such plans is not how much they contribute to top corporate leaders' compensation packages. Such packages are generally already so outrageously huge that providing $40,000 rather than $13,000 worth of health insurance is a trivial increase. My concern is not that plan recipients' demands for health care will collectively increase health care costs, because they include only a tiny portion of the population.

My main concern, instead, is how much these plans further insulate already cocooned top executives from the vicissitudes of daily life, particularly related to coping with our current dysfunctional health care system. What benefits executive health care plans provide is not clear, but presumably they insulate executives from having to deal with the managed care/ health insurance bureaucracy which frustrates patients seeking particular services, but not necessarily the most expensive, or least beneficial services. Such executives might thus not have gut level appreciation of how dysfunctional the health care system has become for even insured patients. Since top executives often are disproportionately influential members of the "superclass," their disconnection from the realities of dysfunctional health care is likely to translate into little real support by the powers that be for meaningful health care reform. There support may be further retarded by the influence of their fellow superclass members whose personal fortunes depend on the status quo in health care.

Real improvement of health care may depend on finding leaders who have better understanding of the plight of real people.

1:50 PM

Managed Care Executives Will Not Limit Rescissions

We have posted before about how certain health care insurance companies/ managed care organizations in California were found to have cancelled individual health insurance policies after the people holding them made substantial claims, supposedly rationalized by minor errors or omissions in the information the people supplied to the companies on their individual applications found after the claims were made. Several companies were subsequently disciplined by the state government for these "rescissions." See posts on rescissions by WellPoint here, here, and here, and by Health Net here.

Executives of several such companies testified before a US congressional committee recently, with remarkable results, as reported by Lisa Girion writing in the Los Angeles Times. First, by way of background, the article suggested that rescissions are widespread:

An investigation by the House Subcommittee on Oversight and Investigations showed that health insurers WellPoint Inc., UnitedHealth Group and Assurant Inc. canceled the coverage of more than 20,000 people, allowing the companies to avoid paying more than $300 million in medical claims over a five-year period.

Furthermore,

The committee's investigation found that WellPoint's Blue Cross targeted individuals with more than 1,400 conditions, including breast cancer, lymphoma, pregnancy and high blood pressure. And the committee obtained documents that showed Blue Cross supervisors praised employees in performance reviews for rescinding policies.

One employee, for instance, received a perfect 5 for 'exceptional performance' on an evaluation that noted the employee's role in dropping thousands of policyholders and avoiding nearly $10 million worth of medical care.

Nonetheless, the executives were not prepared to abandon rescissions:

Executives of three of the nation's largest health insurers told federal lawmakers in Washington on Tuesday that they would continue canceling medical coverage for some sick policyholders, despite withering criticism from Republican and Democratic members of Congress who decried the practice as unfair and abusive.

The executives -- Richard A. Collins, chief executive of UnitedHealth's Golden Rule Insurance Co.; Don Hamm, chief executive of Assurant Health and Brian Sassi, president of consumer business for WellPoint Inc., parent of Blue Cross of California -- were courteous and matter-of-fact in their testimony.

But they would not commit to limiting rescissions to only policyholders who intentionally lie or commit fraud to obtain coverage, a refusal that met with dismay from legislators on both sides of the political aisle.

Sassi said rescissions are necessary to prevent people who lie about preexisting conditions from obtaining coverage and driving up costs for others.

'I want to emphasize that rescission is about stopping fraud and material misrepresentations that contribute to spiraling healthcare costs,' Sassi told the committee.

But rescission victims testified that their policies were canceled for inadvertent omissions or honest mistakes about medical history on their applications. Rescission, they said, was about improving corporate profits rather than rooting out fraud.

Also,

Late in the hearing, Stupak, the committee chairman, put the executives on the spot. Stupak asked each of them whether he would at least commit his company to immediately stop rescissions except where they could show 'intentional fraud.'

The answer from all three executives:

'No.'

This is just amazing. Here are executives of three of the country's largest for-profit health care insurance companies/ managed care organizations asserting they will continue cancelling peoples' policies after they make claims, simply because of minor errors or omissions in the application documents that have no bearing on the particular claims, or on discrepancies between information provided by patients and doctors, given that patients may not have full access to or understanding of what is in their charts. What good is an insurance policy that is liable to be cancelled as soon as one makes a claim on it?

Whatever these companies are selling, it is not insurance. Basing our health care system on their products is foolish, but that is what we are doing, and what many political leaders would continue to do.

In my humble opinion, if we are going to have a system based on privately provided insurance, that insurance has to be honest, unlike what some of our largest insurance companies seem to be peddling.

12:13 PM

Pharmacy Benefit Managers as Pharmaceutical Marketers

We posted a number of times about questionable practices Eli Lilly used to market its atypical anti-psychotic drug Zyprexa (olanzapine). A post from 2007, with links backward, is here, and our most recent post is here. The company remains entangled in litigation over its marketing of this drug. That litigation has lead to the release of numerous internal documents that provide quite a view of Lilly's marketing practices. Bloomberg continued its reporting on these documents, with its latest effort here via the Boston Globe, describing yet another surprising way this drug was sold:

A unit of CVS Caremark Corp. used its access to doctors to market Eli Lilly & Co.'s Zyprexa antipsychotic while it was under contract to bargain with the drug maker on behalf of health insurers, internal Lilly files disclosed in a multibillion-dollar lawsuit by insurers show.

The subsidiary of CVS, the largest US drugstore chain, touted Zyprexa starting in 2003, according to e-mails made public by lawyers suing Lilly for overpayment. CVS's AdvancePCS, a pharmacy benefit manager, or PBM, offered to send 120,000 letters to doctors promoting the drug, Lilly's top-seller with $4.7 billion in sales last year, according to a confidential 2004 proposal. The CVS unit said it would charge $5 per letter.

AdvancePCS, acquired by Woonsocket, R.I.-based CVS in 2007, said in the documents that the direct-mail campaign was 'designed to influence key prescribers' as part of a 'tactical plan for Zyprexa.'

Furthermore,

In AdvancePCS's 2004 pitch to Lilly offering to send out letters promoting Zyprexa, Kevin Aholt, the company's assistant vice president in charge of strategic alliances, said he could target physicians based 'on the most recent AdvancePCS claims data,' according to the unsealed documents.

Aholt also said that one of the 'key issues' in the market for antipsychotic drugs was finding ways to 'accelerate the growth of new patient starts,' according to the proposal.

Also,

Steven Fuchs, an official at the PBM, asked Lilly officials in an April 2004 e-mail whether he should include information about Zyprexa's ability to calm agitated patients in the next round of letters to doctors.

'Would a discussion of that be something you would want to include?' Fuchs asked, according to the document.

Lilly marketing executive Scott Dell responded in an e-mail that officials at the drug maker had discussed asking AdvancePCS to include material highlighting 'the new bipolar maintenance indication for Zyprexa.'

AdvancePCS was not the only pharmacy benefits manager (PBM) that offered to help sell Zyprexa.

CVS rival Express Scripts Inc. also sent out Zyprexa marketing letters, according to the unsealed documents and also isn't named as a defendant in the suits.

So here we have at least two pharmacy benefit managers (PBMs) offering to help market a particular drug, for money, of course. What is the problem here?

CVS's contracts with insurers and pensions meanwhile place it in an adversarial posture with Lilly, requiring it to use its buying power as leverage in drug-price negotiations.

'The problem is that PBMs are negotiating these hidden deals while at the same time telling employers that they represent them at the negotiating table,' said Gerry Purcell, a former PBM executive who advises companies on their drug plans. 'These documents will add fuel to the perception that the companies and the PBMs are in cahoots with each other.'

Also,

While PBMs negotiate on behalf of insurers, most states don't designate them as agents of the benefit plans, said Robert Garis, a pharmacy professor at Creighton University in Omaha who studies the industry. As a result, they aren't legally required to act only in the best interest of their clients, he said. Maine is one of a few states that have specified PBMs as fiduciaries, or agents, he noted.

'The companies have gotten around that by adding language to their contracts that exclude them from having to meet those fiduciary duties,' Garis said.

Apparently, in this case, one PBM said it disclosed its relationship to the drug company to physicians, but it is not clear whether it was disclosed to the health care insurers and managed care organizations which paid the PBM to reduce the costs of drugs:

CVS, which isn't a defendant in the Lilly suit, said that it tells doctors when it has 'financial relationships' with drug makers and that they are free to opt out of mailings.

'To engage in a point/counterpoint in a media outlet rather than in court would not be productive,' said Lilly spokeswoman Marni Lemons.

Lemons declined to answer specific queries about the CVS or Express Scripts letters, whether Lilly paid for the practice, or other questions raised by the unsealed documents....

CVS said in its e-mailed statement that it has 'no active educational programs' related to Zyprexa.

'CVS Caremark discloses to its PBM clients that it may have financial relationships with pharmaceutical manufacturers in connection with these educational programs,' said Christine Cramer, a spokeswoman for the chain. 'CVS Caremark's PBM clients are aware of these programs and have the opportunity to opt out.'

Maria Palumbo, a spokeswoman for Express Scripts, didn't respond to eight telephone and e-mail requests seeking comment.

CVS covers 82 million people, with a market share of 12 percent, and is the largest pharmacy benefit manager, according to Atlantic Information Services. Express Scripts, which covers 55 million people, is the fifth largest. PBMs process about 75 percent of the retail prescriptions written annually in the United States, according to the insurance plans.

The insurance plans sued the drug maker in 2005, contending it used researchers, pharmacy benefit managers, advocacy groups, and public agencies to promote Zyprexa.

Whether or not the PBMs disclosed their relationships to the pharmaceutical company to everyone who might be interested, it does seem that having PBMs who are supposed to help insurers and managed care organizations control drug costs be paid by pharmaceutical companies to market drugs is yet another new species of institutional conflict of interest. Like the many other conflicts of interest, individual and institutional, we have discussed, this one appears to be mutually advantageous to the parties involved. However, it could have adverse consequences for physicians, patients, and the health care system. If the organizations that are supposed to be controlling drug costs are also promoting expensive drugs, the likely result would be excess prescription of expensive drugs to patients who may not derive benefits from the drugs outweighing their harms.

This is another reminder how much we need more sunshine shone on the multitudinous conflicts of interest affecting just about every type of actor within the current US health care system.

6:00 PM

The Minneapolis...Or Is It Hartford?...Two-Step

Conjure yourself as a wallflower: You are a shy early-adolescent compelled by your parents (who at all times adhere to the operative cultural norms) to attend your first dance.  You would rather not be there at all.  Your life as it was was perfectly acceptable.  You were happy with the old, self-sufficient ways.  But now, along with your peers, you are entering a new phase.  From now on the world will work dyadically.  More and more, you will be required to operate in conjunction with a second party.  And this second party, in many respects, is not sympatico. Its motives and methods and  do not always align with yours.  Yet still you hope for the best...

Bring up the music, turn down the lights - the moment has arrived.  Your expectations are shaped by what you believe you are owed: a polite and respectful pairing; civility, if nothing else.  Instead you are greeted with a rude awakening.  Your partner is an arrogant lummox, indifferent to your sensibilities. While the band plays waltz music you are dragged through a lumbering bump-and-grind.  In the process your hair is mussed, one foot is mashed,  an earring is dislodged. What's worse: at the end, there's no apology, no acknowledgement of the brutishness of what has just transpired; indeed, you are quite convinced that you are not alone - you are merely the first of many hapless victims for that evening alone.

Welcome to the rhythms of "step therapy," yet another barbed arrow in the quiver of managed care, still seemingly in ascendency, a galling procedure whereby "prior authorization" for a prescriber's first choice of medication is "denied" until such time as (usually two) "preferred alternatives" from an insurance company's formulary have been tried and have proven either ineffective or intolerable.  I had thought it insult enough that patients be required to "fail" two trials of medications with inferior clinical profiles (e.g., adolescents in my psychiatric practice are now "required" to try two generic stimulants whose short or intermediate duration of action is guaranteed to leave them without any therapeutic benefit during the second half of the school day - unless, that is, they wish to submit to the stigma of presenting to the school nurse every day for their "stupid pill" - before they can receive the long-acting medication that is the standard of care recommended by the American Academy of Child and Adolescent Psychiatry) before gaining access to what, from the beginning, simple common sense held to be the proper choice.  Despite years of steeling myself to callousness of the managed care organizations, I was nonetheless appalled by my most recent encounter with step therapy requirements, since the process has been rendered EVEN MORE LUDICROUS by the inventive touches of faceless executives bent on achieving promotion, I would wager, through demonstrations of their ability to concoct ever more sociopathic obstructionistic schemes. Consider this excerpt: A new patient presents to my practice, having moved to Rhode Island from a different state.  For a year or more, she has been taking Strattera, with good results, for her ADHD, having experienced adverse effects from previous trials of methylphenidate and mixed amphetamine salt preparations.  In conjunction with her move, however, her health insurance has changed. When the first prescription for Strattera reimbursable under the new plan is presented to a Rhode Island pharmacy, a prior authorization form is faxed to us by the insurer.  The PA asks for documentation of failures on two formulary drugs, a condition which the patient's clinical history does satisfy.  My office submits the PA form, properly executed.  Several days later, we receive notification that the PA request has been denied, because, in the standard boilerplate, the Strattera is not "medically necessary."  I then instruct my office manager, as I do quite frequently these days, to request a "peer to peer" review in appeal of the decision.  More time passes.  Finally, I am called by a retired (probably on the basis of "burn-out," if he has had many such experiences as I am relating) psychiatrist NOW EMPLOYED BY THE INSURER (no conflict of interest there!).  After a little perfunctory back-and-forth, he informs me that the denial will have to stand because, as I have failed to note in the fine print, treatment failure with the formulary alternatives did not occur IN THE LAST SIX MONTHS.  My efforts to cajole him into a different opinion through the use of logic fail.  His decision is firm.  In essence, I am told: IT DOESN'T MATTER THAT THE FORMULARY PRODUCTS WERE ALREADY TRIED AND PRODUCED ADVERSE EFFECTS.  IF YOU WANT THIS PATIENT TO RECEIVE REIMBURSEMENT FOR STRATTERA UNDER OUR PLAN, WE WILL REQUIRE YOU TO AGAIN GIVE THE PATIENT MEDICATIONS WHICH, AS THE PATIENT HAS TOLD YOU, PRODUCED ADVERSE EFFECTS.  End of conversation.  Click.

Expletive deleted.

How will the story end?  Happily, I predict.  The reason being that I will prescribe one tablet of Ritalin to the patient and, then, one tablet of Adderall.  The patient will be instructed to fill each prescription in sequence, and then flush each tablet down the toilet.  The insurer's preconditions will thus be satisfied and the patient will be able to use their insurance benefit.

At least two lessons, it seems to me, can be derived from this anecdote.  Number one: the chaperones have failed at their task.  Which is to say, WHERE ARE THE INSURANCE REGULATORS?  How can this kind of grossly manipulative, illogical protocol be allowed to exist?  And sadly, number two: PLAYING THE SAME KIND OF MENDACIOUS LITTLE GAMES THAT THE INSURANCE COMPANIES PLAY OFTEN IS THE ONLY ETHICAL COURSE OF ACTION.  And so it goes - two-stepping with the Leviathan.

5:00 AM