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News in brief - May 19, 2003

Illinois Blues offers quality pay

Joining a national trend, Blue Cross Blue Shield of Illinois has laid out plans to pay hospitals more for meeting quality measures.

The insurer has distributed profiles to the general acute care centers with which it contracts in Illinois, and it hopes to start working quality bonus agreements into contracts later this year.

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Report details drug marketing costs

Pharmaceutical companies spend an average of $6.6 million more per product to market and sell primary care drugs than specialty drugs, according to a new report.

The report, published by Durham, N.C.-based Cutting Edge Information, a pharmaceutical business research company, found spending on primary care products averaged $31.9 million per product last year, compared with $25.3 million spent per specialty drug.

The report, "Pharmaceutical Sales Management: Conquering the New Marketplace," found salaries for sales reps make up more than half of the budgets, while samples, travel and promotional budgets make up about 25%. Some of the larger drug companies spend more than $900 million annually to sell primary care drugs.

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Study: Calif. review not working

An independent medical review process run by the California Dept. of Managed Care is failing because few patients or doctors know the system can be used to appeal unfavorable HMO decisions, a report says.

The study, by the California HealthCare Foundation, found only 1,700 patients have used the law, passed in 1999, that gives plan members the right to external, independent reviews by medical experts if they are denied coverage and have exhausted the payer's customary appeals mechanism. The state has 18 million residents insured by managed care programs.

Two-thirds of patients surveyed had no knowledge of the state-sponsored appeals program and three-quarters of doctors were unaware of it "until it was actually needed," the foundation said.

More widespread promotion of the review process needs to be done, the report said, such as using managed care plan denial letters to clearly outline what steps are available to appeal rejections. Doctors also need to be informed more effectively about the plan, the foundation said.

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Health Net sues over sex-change case

California-based Health Net Inc. has sued the state's department of health services to try to avoid paying for a patient's sex-change surgery.

A state administrative law judge, as well as the health services agency, ruled this year that Health Net is responsible for paying for the operation desired by the patient.

The patient is covered under Health Net's Medi-Cal program, which is California's version of Medicaid. Last year Health Net declined coverage for the surgery by upholding the decision of one of its member medical groups not to cover it. The patient appealed to state authorities.

Sexual reassignment is not explicitly covered under the Medi-Cal contract, but the administrative law judge ruled such requests must be handled on a case-by-case basis to determine medical need. Health Net, which generally does not cover sex-change operations under its commercial plans, does not believe the surgery is medically necessary in this case, said David Olson, spokesman for the Woodland Hills, Calif.-based plan.

The operation would cost Health Net "well into the six figures," he said.

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