News & Trends

HCA joins Leapfrog, MBGH says 30% health care costs unnecessary, Rush Prudential v. Moran with ERISA, BCBSM compares prices of brand name drugs with generics, Kaiser study on state-by-state prescription drug cost



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Yeowch! Employers predict that their medical plan costs per employee could top $6,000 next year, according to the latest annual Deloitte & Touche/Business & Health Employer Health Care Strategy Survey. Still, they're not rushing for radical changes in the face of inflation. Jump to our feature article on what's working and what's old hat.

FACTOID: Four out of five employees still can't manage benefits online, according to a survey from CIGNA, and nearly half would like to have a bigger role in managing their health care and retirement benefits. Currently, 67 percent of benefits are processed on paper, 53 percent over the phone and 58 percent with the help of benefits managers. Those numbers suggest that a significant percentage of benefit transactions are not settled on the first attempt.


The nation's largest for-profit chain has joined the Leapfrog Group. HCA Inc., a 200-hospital system based in Nashville, Tenn., follows the Promina Health System, an eight-hospital chain that was first to sign on. Leapfrog was founded by employers like General Electric and General Motors to use their market clout to improve patient safety in hospitals. Its members encourage their employees to use hospitals that:

  • Use computerized systems to order prescriptions.

  • Always have an intensive care specialist in the ICU.

  • Perform high volumes of specific surgical procedures.

The American Hospital Association says those are costly goals and hospitals can find less expensive means of improving patient safety. Meanwhile, Blue Cross Blue Shield and Johnson & Johnson are among founders of The National Alliance for Health Information Technology, which plans to create voluntary standards for health information technology. First on the agenda is a bar coding project for medication and biological product packaging.

FACTOID: Statins can be used without fear to lower cholesterol levels and the risk of heart disease, according to the combined wisdom of the American College of Cardiology, American Heart Association and National Heart, Lung and Blood Institute. Their joint advisory assured physicians that serious and sometimes fatal side effects that forced withdrawal of cerivastatin last year were not found with statins on the market today.


A study by the Midwest Business Group on Health (MBGH), the Juran Institute and the Severyn Group says that 30 percent of health care expenditures are unnecessary. The waste is generated not only by unnecessary surgical procedures, tests and medicines but also by what isn't done. The missing pieces include tests for breast cancer, depression and venereal diseases, flu and pneumonia vaccinations, and follow-up tests and medications for patients with heart conditions and diabetes.

Jim Mortimer, president of MBGH, talks about the survey's results: "We're hoping that the 30 percent number does mainly one thing. And that's to get the attention of business community leaders to see that quality problems are in fact costing money and that there is a financial reason for them to be working on improving that, and learning more about specific problems with the measurement tools that are available to help find those overuse/underuse/misuse problems in their home community."

Mortimer realizes that the process will take time and that "getting [from 30 percent] to zero is not realistic." To measure progress, "what I think we could use as a gauge would be other industries where serious quality improvement efforts have been guided by cost of quality estimates."

While health care waste is a national problem, Mortimer suggests that employers can be part of locally based solutions: "It is getting your data together… taking your own experience, taking the information you can get from your health plans about where they see quality problems, taking information from tools like the Dartmouth Atlas… and just pulling together the facts as best you can for the communities where you have a covered population."

For more information on this survey, visit the publications section of MBGH's web site.

FACTOID: By the ages of 35 to 37, 26 percent of men and 28 percent of women were obese, according to a study in the June 18 issue of the Annals of Internal Medicine." The researchers also found that the percentage of obese adults is twice what it was in the 1960s.


The Supreme Court recently ruled on the case of Rush Prudential HMO, Inc. v. Moran et al., deciding that the Employee Retirement Income Security Act (ERISA) does not preempt state laws requiring an independent medical review when a patient's medical funding request is denied. In the late 1990s, Debra Moran wanted medical coverage for thoracic outlet syndrome surgery. Rush Prudential HMO denied her request; its consultants did not believe that Moran's surgery was necessary. Rush then refused to receive the report of any reviewer outside of the Rush system, although the Illinois Health Maintenance Organization Act requires that HMOs accept independent reviews. The HMO claimed that ERISA preempted a review, but the Supreme Court (5-4) upheld a decision to the contrary: .

FACTOID: Consumers will now be able to roll over unused Health Savings Account (HSA) funds to premiums or approved medical costs in the following year. IRS Notice 2002-45 also removed dollar limits on HSA savings.


Blue Cross Blue Shield of Michigan (BCBSM) is continuing its attempt to save money on prescription drug costs by promoting generics. Online price comparisons list the prices of BCBSM's 25 most-prescribed brand name drugs and their generic equivalents. By increasing the generic dispensing rate by at least 1 percent, money saved for BCBSM customers could reach $17 million and $35 million for the state of Michigan. Some of the drugs with the biggest differences between brand name and generic 30-day costs:

Zantac $113.90 vs. ranitidine HCl $12.60
Pepcid $121.67 vs. famotidine $24.91

Anti-anxiety agent:
Buspar $141.80 vs. buspirone HCl $48.46

Pain reliever:
Darvocet N 100 100 $105.42 vs. proproxyphene/acetaminophen $19.08

Prozac $93.38 vs. fluoxetine $10.50

Previously, BCBSM distributed similar comparisons on reference cards for local doctors, a practice that will continue. Read more: .

FACTOID: The Work-Loss Data Institute studied the costs of worker disability and discovered that total long-term disability costs (direct and indirect) are higher than short-term medical costs. In 2000, disability costs were $458,150 per 100 workers, and medical costs were $268,539 per 100 workers.


A Kaiser Family Foundation study compiled state-by-state information on prescription drug cost, spending and prevalence. Here are highlights of retail prescriptions in 2001:

Average Price
   High: Alaska $59.83
   Low: Alabama $41.25
   Total U.S.: $49.84

Percent change in average price from 2000
   High: Tennessee 13.7 percent
   Low: Maine 4.4 percent
   Total U.S.: 9.7 percent

Number Per Capita
   High: Tennessee 16.8
   Low: Alaska 7.0
   Total U.S.: 10.9

Percent Change in Total Number from 2000
   High: Alaska 16.3 percent
   Low: Arkansas 4.1 percent
   Total U.S: 6.9 percent

Percent change in total sales from 2000
   High: Alaska 25.2 percent
   Low: Maine 12.0 percent
   Total U.S.: 17.3 percent

See additional study information at .

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