Mid week update

Health plans have been paying attention to the Internal Revenue Service's recent proposed rule on the Affordable Care Act required fee to fund the Patient Centered Outcomes Research Institute ("PCORI").  PCORI's Board of Governors recently announced amendments to its draft research agenda.

The Board, during a public teleconference/webinar, also authorized $30 million in funding over two years for a slate of 50 pilot projects that will address a broad range of questions about methods for engaging patients in various aspects of the research and dissemination process.

A full final version of the National Priorities and Research Agenda, including accepted revisions, will be posted May 21 after final Board review and approval at its next public meeting, in Denver.

The FEHBlog noticed a news report suggesting that the enormous Walgreen's pharmacy chain and the enormous Express Scripts prescription benefit manager would kiss and make up after Express completed its acquisition of Medco Health Solutions which occurred recently. But no reconciliation has occurred yet. The Chicago Tribune reports that  "Drugstore operator Walgreen Co. said Thursday monthly revenue from stores open at least a year slipped again in April largely due to its split with pharmacy benefits manager Express Scripts Inc." On the flip side, Business Insurance reports that "CVS Caremark Corp. raised its full-year forecast on Wednesday after reporting a sharp rise in first-quarter sales as the drugstore operator and pharmacy benefits manager continued to win over former patrons of Walgreen Co. stores." The split has been official now for over one calendar quarter and as Business Insurance points out the longer that the former Walgreen's patrons shop at CVS the more likely that they will remain CVS customers.

The FEHBlog keeps track of the monthly S&P Healthcare Indices which display the yawning gap between statutorily fixed Medicare payments and commercial insurer payments.  AMA News reports about the strain that low Medicare reimbursement rates are placing on physician practices.

The American Medical Association said there is a 20% gap between what Medicare pays — a major factor in keeping down physician prices — and what it costs physicians to treat patients.

“The cost of providing care is going up,” said Glen Stream, MD, president of the American Academy of Family Physicians. “There’s a downward pressure on physician payment. At some point, something is going to break.”

The articles discusses this interesting consequence:

Analysts often cite the lag between practice revenues and costs as the reason why many physicians are seeking what they view as the financial stability of hospital employment over the pressures of owning an independent practice.
In 2001, 3% of residents surveyed by physician recruiting firm Merritt Hawkins & Associates wanted to work as hospital employees. In 2011, that number was 32%.
A total of 91,282 physicians and dentists had full-time employment at community hospitals in 2010, a 47% increase from 61,972 in 2001, and a 7% jump just from 2010, according to the American Hospital Assn.

This consolidation outcomes seems to be an objective of the Affordable Care Act.