Dallas Healthcare Executive Sentenced in Next Health Laboratories Fraud Case

Referral-kickback and bribery schemes that included medical laboratory tests bilked private insurers and government health plans out of $150 million over six-year period

Andrew Hillman, former co-owner of Next Health LLC, a network of drug and genetic-testing laboratories and pharmacies based in Dallas, who pleaded guilty in 2018 to violating federal anti-kickback laws, has been sentenced to 66 months in prison and ordered to pay $3 million in restitution for his role in Medicare fraud, money laundering, healthcare bribes, and doctor kickbacks, reported The Dallas Morning News.

Dark Daily’s sister publication The Dark Report (TDR) previously reported on the federal lawsuit filed by UnitedHealthcare (NYSE:UNH) against Next Health in 2017 for allegedly running fraudulent drug testing and doctor kickback schemes from 2012-2018 in Dallas.

The two owners of Next Health, Andrew Hillman and Semyon Narosov, pleaded guilty to “multiple medical kickback schemes in Dallas in which doctors were paid to steer patients to certain hospitals,” The Dallas Morning News reported. One scheme involved clinical laboratory test specimens that “were sent to the Next Health labs for a battery of unnecessary and expensive tests under the guise of a wellness study, court records say, and doctors were paid kickbacks for referring patients.”

Hillman and Narosov admitted to defrauding both government and private insurance through the phony “wellness” program and through a separate physician kickback scheme in which doctors were paid to refer patients to the now-closed Forest Park Medical Center (FPMC) in Dallas. In court filings, they admitted that “Next Health billed private and government health insurance plans more than $450 million between 2012 and 2018 and collected about $150 million in fraudulent proceeds,” Dallas Morning News reported.

Though Hillman’s guilty plea could have resulted in a 15-year prison sentence, he cooperated with federal investigators in the FPMC bribery scheme investigation and for that he received a reduced sentence. Narosov also pleaded guilty in both cases, but he has not yet been sentenced. 

UnitedHealthcare Uncovers Multiple Healthcare Fraud Schemes

Clinical laboratories were at the center of the Next Health money laundering scheme, which involved multiple shell companies, limited liability companies (LLCs) and umbrella corporations to shield the unlawful conduct from detection. And it worked for five years until 2017, when UnitedHealthcare (UHC) filed a $100 million federal lawsuit against Dallas-based Next Health and its subsidiary labs:

Additionally, two individuals also were charged: former Next Health marketing representative Erik Bugen and Kirk Zajac.

As outlined in the lawsuit, UnitedHealthcare initially uncovered the fraud during a review of routine medical laboratory test claims to identify abnormal testing activity. Upon a deeper investigation, the insurer discovered an array of bribes and kickbacks and other potential crimes. In one illicit arrangement, Next Health sales consultants provided $50 gift cards to people who provided urine samples in a Whataburger bathroom as part of the “wellness study.”

Clinical laboratory specimens were sent to Next Health laboratories for “multiple unnecessary and expensive drug tests that were later billed to United and its customers,” the lawsuit states.

The lawsuit contends the defendants:

  • Paid bribes and kickbacks to referral sources, including physicians, sober homes and sales consultants, in exchange for requesting out-of-network lab services;
  • Billed for lab services that were not ordered by medical providers;
  • Inflated claims by utilizing standing protocols for blanket testing, regardless of patients’ medical histories, clinical conditions, or needs;
  • Billed for services the defendants did not perform; and
  • Billed charges the defendants never intended to collect from patients.
UnitedHealthcare Director of Communications Matthew Rodriguez (above) told the Dallas Morning News, “UnitedHealthcare has taken an active role in recent years in prosecuting instances of lab fraud, and this decision will continue to shine light on companies engaged in inappropriate lab services that put patients at risk and drive up costs.” He said the nation’s largest single health insurer will continue to go after clinical laboratories they suspect may be defrauding the healthcare industry. [Photo copyright: BusinessWire.]

Other Healthcare Frauds and Kickback Schemes Against UnitedHealthcare

As TDR detailed in “Allegations in UHC Health Insurance Fraud Case Involve Multiple Defendants,” January 22, 2018, Hillman and several other defendants were not novices in devising healthcare kickback schemes. TDR noted the UnitedHealthcare lawsuit was the “visible tip of a large iceberg,” with the insurance giant the latest victim in a pattern of potential fraud and abuse that extended back almost a decade. Included in the laundry list of other allegedly illegal schemes was one distinctly similar to the Next Health fraud.

A year earlier, the US Attorney’s Office of the Northern District of Texas brought indictments against 21 persons affiliated with the physician-owned Forest Park Medical Center in Dallas. Next Health’s Hillman and Narosov were also included in that indictment, as well as 38 subsidiaries of U.S. Health Group, an earlier incarnation of Next Health.

The pair’s ownership and management positions within Next Health and its subsidiaries created “an illegal scheme that was similar to the one in place at Forrest [sic] Park,” UnitedHealthcare stated in its complaint.

The indictment alleged FPMC paid approximately $40 million in bribes and kickbacks to physicians, recruiters, and others in exchange for referring lucrative patients—particularly those with high-reimbursing, private health insurance or benefits under certain federal programs—to the out-of-network hospital.

Hillman, who was among 10 defendants who pleaded guilty before the FPMC case went to trial, testified for the government, the federal Department of Justice (DOJ) said in a statement.

In addition, seven others were convicted of conspiracy to pay or receive healthcare bribes.

“The verdict in the Forest Park case is a reminder to healthcare practitioners across the District that patients—not payments—should guide decisions about how and where doctors administer treatment,” US Attorney for the Northern District of Texas Erin Nealy Cox, JD, said in a press release announcing the guilty verdicts.

US District Court Judge John Parker, JD, who served as US Attorney for the Northern District of Texas when the FPMC indictments were handed down, explained the impact of fraud on the healthcare system.

“Medical providers who enrich themselves through bribes and kickbacks are not only perverting our critical healthcare system, but they are committing a serious crime,” Parker said in a statement announcing the FPMC indictments. “Massive, multi-faceted schemes such as this one, built on illegal financial relationships, drive up the cost of healthcare for everyone and must be stopped.”

The lesson for clinical laboratory leaders is that vigilance is key to spotting bad actors who wish to defraud the healthcare system. This is double critical at a same time when labs are under increased scrutiny from payers, federal and state regulators, and law enforcement.

—Andrea Downing Peck

Related Information:

Architect of Massive Medical Kickback Schemes Gets Light Prison Term after Giving Feds the Goods

Feds Raid Another Pharmacy as Dallas becomes Hot Spot for Physician Kickbacks

UnitedHealthcare Servs., Inc. v. Next Health, LLC

Prison Time for Another Man Who Ripped Off Health Insurance Program for Troops

Executives, Surgeons, Physicians, and Others Affiliated with Forest Park Medical Center (FPMC) in Dallas Indicted in Massive Conspiracy

Seven Guilty in Forest Park Healthcare Fraud Trial

Surgeons, hospital owner convicted in massive kickback scheme involving Forest Park Medical Center

Allegations in UHC Health Insurance Fraud Case Involve Multiple Defendants

Trends Reshaping Hospitals Worldwide Also Impact Clinical Laboratories and Anatomic Pathology Groups

As hospitals are forced to innovate, anatomic pathologists and medical laboratories will need to adapt to new healthcare delivery locations and billing systems  

As new challenges threaten the survival of many hospitals worldwide, medical laboratories may be compelled to adapt to the needs of those transforming organizations. Those challenges confronting hospitals are spelled out in a recent report from management consulting firm McKinsey and Company with the provocative title, “The Hospital Is Dead, Long Live the Hospital!

A team of analysts led by McKinsey senior partner Penny Dash, MB BS, MSc, looked at nine trends affecting hospitals in North America, Europe, Asia, and other regions. These trends, the authors contend, will force hospitals to adopt innovations in how they are structured and how they deliver healthcare.

Here are nine challenges hospitals face that have implications for medical laboratories:

1. Aging Patient Populations

“Patient populations are getting older, and their needs are becoming more complex,” McKinsey reports, and this is imposing higher cost burdens. The US Census Bureau projects that by 2030 approximately 20% of the US population will be 65 or older compared with about 15% in 2016.

The federal Centers for Medicare and Medicaid Services (CMS) reports that this age group accounts for a disproportionate share of healthcare costs. In 2014, CMS states, per-capita healthcare spending was $19,098 for people 65 or older compared with $7,153 for younger adults.

The Census Bureau graphic above illustrates how the age of the US population is changing. People are living longer, and as Dark Daily reported in May, this could present opportunities for medical laboratories and anatomic pathologists, as early detection of chronic diseases affecting older patients could ultimately reduce treatment costs. (Photo copyright: US Census Bureau.)

2. Patients Are Behaving More Like Consumers

“Patients—along with their families and caregivers—expect to receive more information about their conditions and care, access to the newest treatments, and better amenities,” McKinsey reports.

Dark Daily has reported extensively on the rise of healthcare consumerism and the opportunities this might offer for clinical laboratories.

3. More Community-based Outpatient Care

Clinical advances are increasing the range of treatments that can be performed in outpatient settings, McKinsey reports. The authors point to multiple studies suggesting that patients can receive better outcomes when more care is delivered outside the hospital. Dark Daily has often reported on the impact of this trend, which has reduced demand for in-hospital laboratory testing while increasing opportunities for outpatient services.

4. Move Toward High-Volume Specialist Providers

Compared with general hospitals, specialized, high-volume “centers of excellence” can deliver better and more cost-effective care in many specialties, McKinsey suggests. As evidence, the report points to research published over the past 12 years in specialist journals.

Some US employers are steering patients to top-ranked providers as part of their efforts to reduce healthcare costs. For example, Walmart (NYSE:WMT) pays travel costs for patients to undergo evaluation and treatment at out-of-state hospitals recognized as centers of excellence, which Dark Daily reported on in July.

UnitedHealthcare’s new preferred lab network also appears to be a nod toward this trend. As The Dark Report revealed in April, the insurer has designated seven laboratories to be part of this network. These labs will offer shorter wait times, lower costs, and higher quality of care compared with UnitedHealthcare’s larger network of legacy labs, the insurer says.

5. Impact of Clinical Advances

Better treatments and greater understanding of disease causes have led to significantly lower mortality rates for many conditions, McKinsey reports. But the authors add that high costs for new therapies are forcing payers to contend with questions about whether to fund them.

As Dark Daily has often reported, new genetic therapies often require companion tests to determine whether patients can benefit from the treatments. And these also face scrutiny from payers. For example, in January 2018, Dark Daily reported that some insurers have refused to cover tests associated with larotrectinib (LOXO-101), a new cancer treatment.

6. Impact of Disruptive Digital Technologies

The McKinsey report identifies five ways in which digital technologies are having an impact on hospitals:

  • Automation of manual tasks;
  • More patient interaction with providers;
  • Real-time management of resources, such as use of hospital beds;
  • Real-time clinical decision support to enable more consistency and timeliness of care; and
  • Use of telemedicine applications to enable care for patients in remote locations.

All have potential consequences for medical laboratories, as Dark Daily has reported. For example, telepathology offers opportunities for pathologists to provide remote interpretation of blood tests from a distance.

7. Workforce Challenges

Many countries are contending with shortages of physicians, nurses, and allied health professionals, McKinsey reports. The authors add that the situation is likely to get worse in the coming decades because much of the current healthcare workforce consists of baby boomers.

An investigation published in JAMA in May indicated that, in the US, the number of active pathologists decreased from 15,568 to 12,839 between 2007 and 2017. In January, Dark Daily reported that clinical laboratories are also dealing with a generational shift involving medical technologists and lab managers, as experienced baby boomers who work in clinical laboratories are retiring.

8. Financial Challenges

In the United States and other countries, growth in healthcare spending will outpace the gross domestic product, the McKinsey report states, placing pressure on hospitals to operate more efficiently.

9. More Reliance on Quality Metrics

McKinsey cites regulations in Canada, Scandinavia, and the UK that require hospitals to publish quality measurements such as mortality, readmittance, and infection rates. These metrics are sometimes linked to pay-for-performance programs, the report states. In the United States, Medicare regularly uses quality-of-care metrics to determine reimbursement, and as Dark Daily reported in July, a new Humana program for oncology care includes measurements for medical laboratories and anatomic pathology groups.

The McKinsey report reveals that several trends in healthcare are forcing healthcare leaders to adopt new strategies for success. The report’s authors state that their “results show that contemporary healthcare providers around the world are facing several urgent imperatives: to strengthen clinical quality; increase the delivery of personalized, patient-centered care; improve the patient experience; and enhance their efficiency and productivity.”

These pressures on hospitals typically also require appropriate responses from clinical laboratories and anatomic pathology groups as well.

—Stephen Beale

Related Information:

The Hospital Is Dead, Long Live the Hospital!

The Nine Forces Changing the World for Hospitals

Older People Projected to Outnumber Children for First Time in US History

CMS: Health Expenditures by Age and Gender

Results of Harvard Study into Medicare Costs Offers Opportunities for Clinical Laboratories

Pathology Groups and Clinical Laboratories Have Unique Opportunity to Take Leadership Role in Healthcare Consumerism

Consumer Trend to Use Walk-In and Urgent Care Clinics Instead of Traditional Primary Care Offices Could Impact Clinical Laboratory Test Ordering/Revenue

Walmart Flies Employees to Top Hospitals for Surgeries in a Bid to Cut Healthcare Costs

New UnitedHealthcare Preferred Lab Network Launches July 1

Precision Medicine Requires Targeted Cancer Therapies, but Payers Reluctant to Pay for Some Genetic Testing Needed to Match a Patient with Right Drug

Telemedicine Gaining Momentum in US as Large Employers Look for Ways to Decrease Costs; Trend Has Implications for Pathology Groups and Medical Laboratories

Trends in the US and Canadian Pathologist Workforces From 2007 to 2017

With Experienced Baby Boomers Retiring in Ever-Larger Numbers, Clinical Laboratories and Pathology Groups Use New Methods to Improve Productivity, Reduce Costs

Humana’s New Oncology Value-based Care Program Includes Quality and Cost Measurements of Provider Performance, Clinical Laboratories, and Pathology Groups

Humana’s New Oncology Value-based Care Program Includes Quality and Cost Measurements of Provider Performance, Clinical Laboratories, and Pathology Groups

“Pathologists and medical laboratories may have to demonstrate efficiency and effectiveness to stay in the insurer’s networks and get paid for their services

In recent years, Medicare officials have regularly introduced new care models that include quality metrics for providers involved in a patient’s treatment. Now comes news that a national health insurer is launching an innovative cancer-care model that includes quality metrics for medical laboratories and anatomic pathology groups that deliver diagnostic services to patients covered by this program.

Anatomic pathologists and clinical laboratories know that cancer patients engage with many aspects of healthcare. And that, once diagnoses are made, the continuum of cancer care for these patients can be lengthy, uncomfortable, and quite costly. Thus, it will be no surprise that health insurers are looking for ways to lower their costs while also improving the experience and outcomes of care for their customers.

To help coordinate care for cancer patients while simultaneously addressing costs, Humana, Inc., (NYSE:HUM) has started a national Oncology Model-of-Care (OMOC) program for its Medicare Advantage and commercial members who are being treated for cancer, Humana announced in a press release.

What’s important for anatomic pathologists and clinical laboratories to know is that the program involves collecting performance metrics from providers and ancillary services, such as clinical laboratory, pathology, and radiology. These metrics will determine not only if doctors and ancillary service providers can participate in Humana’s networks, but also if and how much they get paid.

Anatomic pathologists and medical laboratory leaders will want to study Humana’s OMOC program carefully. It furthers Humana’s adoption of value-based care over a fee-for-service payment system.

How Humana’s OMOC Program Works

According to Modern Healthcare, “Humana will be looking at several measures to determine quality of cancer care at the practices including inpatient admissions, emergency room visits, medications ordered, and education provided to patients on their illness and treatment.”

As Humana initiates the program with the first batch of oncologists and medical practices across the US, it also will test performance criteria that anatomic pathologist groups will need to meet to participate in the insurer’s network and be paid for services.

The insurer’s metrics address access to care, clinical status assessments, and patient education. Physicians can earn rewards for enhancing their patients’ navigation through healthcare, while addressing quality and cost of care, reported Health Payer Intelligence.

“The experience for cancer care is fragmented,” Bryan Loy, MD (above), Corporate Medical Director of Humana’s Oncology, Laboratory, and Personalized Medicine Strategies Group, told Modern Healthcare. Loy is board-certified in anatomic and clinical pathology, as well as hematology. “Humana wants to improve the patient experience and health outcomes for members. We are looking to make sure the care is coordinated.” (Photo copyright: National Lung Cancer Roundtable/American Cancer Society.)

Humana claims its OMOC quality and cost measurements are effective in the areas of:

  • inpatient admissions,
  • emergency room visits,
  • medical and pharmacy drugs,
  • laboratory and pathology services, and
  • radiology.

To help cover reporting and other costs associated with participation in the OMOC program, Humana is offering physician practices analytics data and care coordinating payments, notes Modern Healthcare.

“The practices that improve their own performance over a one-year period will see the care coordination fee from Humana increase,” Julie Royalty, Humana’s Director of Oncology and Laboratory Strategies, told Modern Healthcare.

Value-Based Care Programs are Expensive

Due to the cost of collecting data and increasing staff capabilities to meet program parameters, participating in value-based care models can be costly for medical practices, according to Scottsdale, Ariz.-based Darwin Research Group (DRG), which studies emerging payer models.

Some of the inaugural medical practices in the Humana OMOC include:

  • Southern Cancer Center, Alabama;
  • US Oncology Network, Arizona;
  • Cancer Specialists of North Florida;
  • Michigan Healthcare Professionals;
  • University of Cincinnati Physicians Company; and
  • Center for Cancer and Blood Disorders, Texas.

Other Payers’ Value-Based Cancer Care Programs

“Depending upon which part of the country you’re in, alternative payment models in oncology are becoming the norm not the exception,” noted the DRG study. “Humana is a little late to the party.”

Darwin Research added that Humana may realize benefits from having observed other insurance company programs, such as:

Humana is not the only payer offering value-based cancer care programs. The Centers for Medicare and Medicaid Services (CMS) Oncology Care Model is a five-year model (2016 through 2021) involving approximately 175 practices and 10 payers throughout America (see above). The healthcare networks and insurers have made payment arrangements with their patients for chemotherapy episode-of-care services, noted a CMS fact sheet. (Graphic copyright: Centers for Medicare and Medicaid Services.)

Humana’s Other Special Pay Programs

Humana has developed other value-based bundled payment programs as well. It has episode-based models that feature open participation for doctors serving Humana Medicare Advantage members needing:

  • total hip or knee joint replacement (available nationwide since 2018); and
  • spinal fusion surgery (launched in 2019).

Humana also started a maternity episode-of-care bundled payment program last year for its commercial plan members.

In fact, more than 1,000 providers and Humana value-based relationships are in effect. They involve more than two-million Medicare Advantage members and 115,000 commercial members.

Clearly, Humana has embraced value-based care. And, to participate, anatomic pathology groups and medical laboratories will need to be efficient and effective in meeting the payer’s performance requirements, while serving their patients and referring doctors with quality diagnostic services.

—Donna Marie Pocius

Related Information:

Humana Launches Oncology Model of Care Program to Improve the Patient Experience and Health Outcomes in Cancer Care

Humana Launches Oncology Payment Model

Humana Launches Value-based Care Oncology Program for MA Members

Humana Launches New Oncology Payment Model

CMS Fact Sheet: Oncology Care Model

Humana Launches Value-based Model for Cancer Patients

Insurance Companies and Healthcare Providers Are Investing Millions in Social Determinants of Health Programs

Clinical laboratories could offer services that complement SDH programs and help physicians find chronic disease patients who are undiagnosed

Insurance companies and healthcare providers increasingly consider social determinants of health (SDH) when devising strategies to improve the health of their customers and affect positive outcomes to medical encounters. Housing, transportation, access to food, and social support are quickly becoming part of the SDH approach to value-based care and population health.

In “Innovative Programs by Geisinger Health and Kaiser Permanente Are Moving Providers in Unexplored Directions in Support of Proactive Clinical Care,” Dark Daily reported on two well-known companies that are investing millions in SDH programs to bring food and affordable housing to vulnerable patients. These activities are evidence of a new trend in healthcare to address social, economic, and environmental barriers to quality care.

For clinical laboratory managers and pathologists this rapidly-developing trend is worth watching. They can expect to see more providers and insurers in their communities begin to offer these types of services to individuals and patients who might stay healthier and out of the hospital as a result of SDH programs. Clinical laboratories should consider strategies that help them provide medical lab testing services that complement SDH programs.

Medical laboratories, for example, could participate by offering free transportation to patient service centers for homebound chronic disease patients who need regular blood tests. Such community outreach also could help physicians identify people with chronic diseases who might otherwise go undiagnosed.

Anthem Offers Social Determinants of Health Package

In fact, health benefits giant Anthem, Inc. (NYSE:ANTM) partly attributes its 2019 first quarter 14% increase of Medicare Advantage members to a new “social determinants of health benefits package” comprised of healthy meals, transportation, adult day care, and homecare, according to Forbes.

“Our focus on caring for the whole person is designed to deliver better care and outcomes, reduce costs, and ultimately accelerate growth,” Gail Boudreaux, Anthem President and CEO, stated in a call to analysts, Forbes reports.

An Anthem news release states that SDH priorities for payers, providers, and other stakeholders should focus on enhancing individuals’ access to food, transportation, and social support.

In the Anthem news release, which announced the publication of a white paper that “outlines key differences in how individuals and the public perceive social determinants of health,” Jennifer Kowalski (above), Vice President of the Anthem Public Policy Institute stated, “By better understanding how individuals view and talk about social determinants, payers and providers alike can identify new and improved ways to engage with them to more effectively improve their health and wellbeing and the delivery of healthcare.” (Photo copyright: LinkedIn.)

CMS Expands Medicare Advantage Plans to Include Social Determinants of Health

The Centers for Medicare and Medicaid Services announced that, effective in 2019, Medicare Advantage plans can offer members benefits that address social determinants of health. Medicare Advantage members may be covered for services such as adult day care, meal delivery, transportation, and home environmental services that relate to chronic illnesses.

Humana’s ‘Bold Goal’

Humana, Inc. (NYSE:HUM) calls its SDH focus the Bold Goal. The program aims to improve health in communities it serves by 20% by 2020.

“The social barriers and health challenges that our Medicare Advantage members and others face are deeply personal. This requires us to become their trusted advocate that can partner with them to understand, navigate, and address these barriers and challenges,” said William Shrank, MD, Humana’s Chief Medical Officer, in a news release.

UnitedHealthcare Investing More than $400 Million in Housing

Meanwhile, since 2011, UnitedHealthcare (NYSE:UNH) also has invested in affordable housing and social determinants of health, Health Payer Intelligence reported.

In a news release, UnitedHealthcare, the nation’s largest health insurer, described how it is investing more than $400 million in 80 affordable US housing communities, including:

  • $12 million, PATH Metro Villas, Los Angeles;
  • $11.7 million, Capital Studios, Austin;
  • $14.5 million allocated to Minneapolis military veterans housing;
  • $7.9 million, New Parkridge (in Ypsilanti, Mich.) affordable housing complex;
  • $21 million earmarked to Phoenix low- and moderate-income families needing housing and supportive services;
  • $7.8 million, Gouverneur Place Apartments, Bronx, New York; and
  • $7.7 million, The Vinings, Clarksville, Tenn.

“Access to safe and affordable housing is one of the greatest obstacles to better health, making it a social determinant that affects people’s well-being and quality of life. UnitedHealthcare partners with other socially minded organizations in helping make a positive impact in our communities,” said Steve Nelson, UnitedHealthcare’s CEO, in the news release.

Housing, Transportation, Food Insecurity Impact Health, Claim AHA, HRET

According to the American Hospital Association (AHA) and the Health Research and Educational Trust (HRET), housing, or lack of it, impacts health. In “Housing and the Role of Hospitals,” the second guide in the organizations’ “Social Determinants of Health Series,” AHA and HRET state that 1.48 million people are homeless each year, and that unstable living conditions are associated with less preventative care, as well as the propensity to acquire diabetes, cardiovascular disease, chronic obstructive pulmonary disorder, and other healthcare conditions.

The AHA and HRET also published SDH guides on “Transportation” and “Food Insecurity.”

Social determinants of health programs are gaining in popularity. And as they become more robust, proactive clinical laboratory leaders may find opportunities to work with insurers and healthcare providers toward SDH goals to help healthcare consumers stay healthy, as well as reducing unnecessary hospital admissions and healthcare costs.   

—Donna Marie Pocius

Related Information:

Anthem’s Social Determinants Benefits Package Boosts Medicare Enrollment

Bridging Gaps to Build Healthy Communities

New Anthem Public Policy Institute Report Outlines Key Differences in How Individual sand the Public Perceive Social Determinants of Health

CMS Finalizes Medicare Advantage and Part D Payment and Policy Updates to Maximize Competition and Coverage

Humana’s 2019 Bold Goal Progress Report Details Focus on Social Determinants of Health and Improved Healthy Days

Humana 2019 Bold Goal Progress Report

UnitedHealthcare Invests Over $400 Million in Social Determinants of Health

UnitedHealthcare Affordable Housing and Path Metro Villas

Social Determinants of Health Series: Housing

Innovative Programs by Geisinger Health and Kaiser Permanente are Moving Providers in Unexplored Directions in Support of Proactive Clinical Care

Utah Public Employees Receive Transportation and a $500 Cash Bonus to Purchase Prescriptions in Mexico

Pharmaceutical tourism, like medical tourism, casts light on healthcare’s true costs and identifies patient populations that bear the brunt of growing drug prices

You’ve heard of medical tourism, where patients travel to other countries to receive low-cost, high-quality medical care. Now the State of Utah is introducing “pharmaceutical tourism” to state employees, who will be paid to make trips to Mexico to purchase certain prescription drugs.

The State of Utah is not alone in its use of this strategy. Prescription medication costs are skyrocketing for many critical drugs. To reign in those costs, several organizations are incentivizing their employees to purchase those drugs less expensively outside of the US. Clinical laboratories and anatomic pathology groups that perform companion diagnostic tests associated with certain high-priced therapeutic drugs might see more of their patients decide to cross international borders to access the drugs they need.

This pharmaceutical tourism highlights how complex US laws hide the true cost of prescription drugs from patients and their employers. It also raises the question: how might pharmaceutical tourism impact retail pharmacies in this country?

Saves Patients Money, but at What Cost?

The Public Employees Health Plan (PEHP) for Utah state employees recently announced a pharmacy tourism program. Its members can receive free air travel and $500 in cash to fill 90-day prescriptions in Mexico for certain higher-cost medications.

“The prescription drugs received in Mexico are the same quality and from the same manufacturer as those sold in the US,” said Travis Tolley, Clinical Management Director at PEHP Health and Benefits, in a news release. “The difference is the price you pay. For example, a 90-day supply for the average cost of an eligible drug in the US is over $4,500 per month and is 40-60% less in Mexico. The substantial savings allow us to reward our members for seeking lower-cost options.”

Participants in the program receive round-trip airfare from Utah to San Diego for themselves and a companion, followed by transportation to a clinic in Tijuana where their prescriptions are filled. They also can receive a taxable $500 cash bonus for each trip—up to four trips/year. The airfare from Salt Lake City to San Diego typically costs around $300. 

Health Insurance Right to Shop Amendments
In 2018, Utah passed the “Health Insurance Right to Shop Amendments” bill (H.B. 19), which requires PEHP to offer incentives and a savings reward program to members who seek out and utilize low-cost options for healthcare. State Representative Norman Thurston (above right) sponsored the bill. “Why wouldn’t we pay $300 to go to San Diego, drive across to Mexico, and save the system tens of thousands of dollars? If it can be done safely, we should be all over that,” he told Becker’s Hospital Review. (Photo copyright: Daily Herald.)

PEHP, which covers 160,000 public employees and family members, offers the pharmacy tourism program for 13 specific medications where a vast disparity in cost exists between the US and Mexico.

The drugs that qualify for the program along with the most common illnesses they treat are:

One of the more expensive drugs on the list, Avonex, costs approximately $6,700 for a month’s supply in the US compared to only about $2,200 at the contracted clinic in Tijuana. That’s a savings of approximately $13,500 for a three-month supply, which compensates for the program’s $500 cash reward and transportation costs. 

Not the First Time PEHP Tried Medical Tourism

PEHP previously offered free airfare to members willing to fly to other countries for medical procedures and prescriptions. However, without the cash incentives, participation was low. The health plan hopes the lure of $500 per trip will increase participation rate. 

UnitedHealthcare (UHC) also is experimenting with ways to lower prescription drug costs. Last year, they introduced My ScriptRewards. The program incentivizes members to opt for less expensive medications. Participants in this program receive up to $500 in prepaid debit cards to help defray their medical costs.

Currently, My ScriptRewards can only be used for select antiviral medications (Cimduo plus Isentress or Cimduo plus Tivicay) to treat human immunodeficiency virus (HIV). And, it’s only available to UHC commercial plan members who are covered by group plans. However, UHC plans to expand the program to include other high-cost specialty medications in the future.

According to the Centers for Disease Control and Prevention (CDC), prescription medications account for 9.8% of national health expenditures. And in 2017, Quintiles and IMS Health, Inc. (now IQVIA), a company that compiles data for the pharmaceutical industry, estimated that prescription spending in the US will reach an annual cost of $580-$610 billion by 2021.

Medical tourism is not new. Dark Daily has covered the trend many times in e-briefings such as, “Medical Tourism Continues to Flourish as U.S. Patients Seek Lower Cost Healthcare in Overseas Countries.” Opportunities still exist for pathology groups and medical laboratories in the US to provide reference or esoteric diagnostic services to healthcare providers in other countries.

And, with prescription costs soaring, it’s likely insurance providers will continue to seek new ways to curtail costs. In an era when many medical laboratory companies are charging sky-high prices for their proprietary tests and test panels, might “clinical laboratory tourism” be the next trend to emerge?

—JP Schlingman

Related Information:

UnitedHealthcare to Pay Patients to Choose Cheaper Drugs

To Fight High Drug prices, Utah Will Pay for Public Employees to go Fill

Prescriptions in Mexico

PEHP Health and Benefits Offers Cash Back for Using Low-Cost Healthcare Providers and Prescription Drugs

US Prescription Drug Spending as High as $610 Billion by 2021Medical Tourism Continues to Flourish as U.S. Patients Seek Lower Cost Healthcare in Overseas Countries