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 March Drug industry spends $1 billion on consumer ads Three years ago, drug firms spent just $200 million. "As part of our commitment to your health care needs, we are writing to remind you that it may be time to refill your prescriprion," begins a letter from a big drug store chain. "Call for your refill today. If you have already filled your prescription - Excellent! We enjoy being your partner in health care." Clearly, the drug store chain "isn't doing this because they're good citizens," said John Santa, MD, HealthFirst's medical director. To Santa, the letter summarizes some of the biggest factors driving the fastest-rising cost segment of health care: prescription drugs. "Studies show advertising to consumers is doing exactly what it's supposed to do: convince people to take more expensive medication," he said. Studies also show brand companies spend more on marketing and advertising than on research and development. Speight: 'I'm like a kid in a chocolate factory' Administrator of the Office of the Oregon Health Plan talks candidly with Oregon Health Forum. With a proposed $2.8 million budget next biennium and 18 staffers, Speight is ready for new challenges. "We have the macro perspective, public-private, across agencies," he said. "We're involved with PEBB, with the purchasers. We can be a forum to raise issues and propose solutions, which is important when $12 billion a year is spent on health care in Oregon." PacifiCare rebounds with $2.4 million in 1998 While announcing its new-found success, the company was fined $50,000 for failing to comply with state standards. In 1997, PacifiCare of Oregon's net income stood at $3.8 million in the red. Its CEO, Bart McMullan, MD, was fired, along with with finance director Mark Charpentier. Then Pacificare rounded out 1998 with an operating profiit of $2.4 million and an investment portfolio valued at $5 million, according to Steve Lynch, vice president of public affairs. But its success was blemished by a $50,000 fine from Oregon's Department of Consumer and Business Services for problems with claims handled by physician groups. Specifically, PacifiCare failed to acknowledge or pay claims within 20 working days, denied claims without conducting a reasonable investigation and didn't send patients a written explanation of 67% of denied claims. Contract comes back to haunt Cascade 'It was a bad business deal,' said Don Jacobs, attorney for Axis Healthcare. '... Utilization far exceeded expectations.' When Cascade Benefits Group reviewed the contract from Axis Healthcare, it seemed too good to be true. So in April 1998, Cascade signed a two-year deal covering 1,000 United Way employees and their dependents at an astounding rate of $2.92 per person per month with a $5-15 copay for chiropractors, naturopaths, acupuncturists and massage therapists. "Immediately claims started coming in, and Axis tried to cancel us," said Cindy Owen, Cascade's president. To handle the claims volume, Axis cut remibursement. Instead of paying chiropracters $60 per visit, it gave them $8-16. But the chriopractors demanded full payment and sent bills to United Way employees, threatening to send them to collections. Also in this issue...
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