Medicare commission explores national reporting of industry gifts to physicians; House expands mental health coverage

At a March 5, 2008, commission meeting, the Medicare Payment Advisory Commission (MedPAC) discussed the feasibility of requiring pharmaceutical companies and medical product manufacturers to report financial relationships and gifts to physicians on a national basis. With Medicare now spending more than $50 billion per year on prescription drugs, policy makers are more closely scrutinizing how industry-doctor relationships may boost drug prescribing, particularly for more expensive therapies.

Some academic medical centers, health plans, and state governments require disclosure and limit gifts and payments to physicians. Minnesota bans companies from providing physicians with gifts or meals that are worth more than $50 and requires disclosure of payments greater than $100 related to consulting, clinical trial services, or continuing medical education activities. Vermont and Maine require that physicians disclose any gifts or fees greater than $25, whereas West Virginia has a $100 reporting threshold.

Separately, Congress has raised concerns about the growing number of physician-owned specialty hospitals and ambulatory surgical centers. Medicare has proposed extending its disclosure rules on hospital financial relationships to these specialty facilities, a policy that is gaining support on Capitol Hill.

These developments have generated interest in the establishment of a national system for hospitals and medical product manufacturers to publicly report financial relationships with physicians. These relationships would include doctor ownership positions in hospitals, as well as fees and gifts paid to physicians by manufacturers.

Such disclosure could reveal whether these types of financial relationships actually influence the use of drugs and medical devices and how well companies comply with voluntary industry guidelines. It also could indicate whether individual physicians have conflicts of interest that are likely to affect their roles on advisory boards or pharmacy & therapeutics (P&T) committees and could affect the credibility of research articles and reports. MedPAC analysts say the data collected under state reporting programs are not particularly useful for patients or payors. Only Minnesota makes detailed information available to the public, whereas other states merely compile an annual report of aggregate payments.

Although detailed disclosure requirements would require greater time and attention from pharmaceutical companies and physicians, it might be easier to comply with one uniform set of reporting rules rather than increasingly diverse state requirements. Specific details regarding what type of information will be required and in what form have yet to be established.

Changes in mental health coverage

Recently approved legislation aims to boost insurance coverage of care for mental health disorders, but the legislation has raised concerns among insurers and could instead prompt reductions in mental health coverage. The bill, adopted March 5, 2008, by the House, requires employer-sponsored insurance that covers mental health services to provide the same level of coverage as is provided for medical benefits (ie, most group plans could not have higher co-pays or stricter coverage limits for mental health conditions). The measure also requires coverage of a broad range of conditions that fall under the mental health umbrella, including substance abuse.

The expanded scope of the House bill is projected to increase public and private outlays by $4.3 billion over 10 years. To offset that amount, the legislation proposes to gain $2.4 billion by restricting activities of physician-owned specialty hospitals.

The bill also would raise $2 billion by increasing Medicaid prescription drug rebates from the current 15.1% to 20.1% of the average manufacturer price.  Moreover, an additional rebate would be available if a drug’s price rose faster than inflation, boosting total rebates into the 30% range. Coming on the heels of revisions in the drug rebate formula in 2005, the added increase threatens to adversely affect biomedical research and new drug development, says the Pharmaceutical Research and Manufacturers of America (PhRMA).

Pharmaceutical marketers and health insurers are looking to the Senate to modify the House policy. The Senate approved a much narrower version of mental health parity legislation last fall; it provides insurers and payors with more flexibility and carries no cost offsets. Patient advocates have been pressing for years for legislation to boost mental health benefits, but the wide differences between the 2 measures may make compromise difficult.