June 29, 2008 
In pharmacy, there is a rarely used benefit structure called Therapeutic MAC (Maximum Allowable Cost). What this does is say that in any class of drugs (e.g., cholesterol lowering drugs) there is a maximum amount of money that will be paid by the plan. But the individual can get any drug.
That can be controversial since a patient could end up being required to take a more expensive drug by their physician costing them a lot of money. (Although most pharmacy plans allow for a clinical prior authorization in cases like this where they might pay less.)
My thought is why not do the same thing at least for physician visits. If my health plan simply published statistics that said they will pay $100 for any visit to a physician’s office. I could then go to any physician and that physician would know they were going to get $100 for my visit plus whatever they charge me. It would eliminate a whole process of constantly managing the network and focus patients on the price that their physician charged.
I am sure there is something that I am oversimplifying, but it seems logical.
Enabling Healthy Decisions 
George,
Have you looked at either HealthMarket or their acquirer, also known as UICI, HealthMarkets, or MEGA?
They have a MAC approach, which has received quite a large amount of negative press (they do this on a per-diagnosis basis I believe).
The problem you face at the level of the doctor visit is that it simply incents large numbers of repeat visits (volume). With pharma, there is supposedly a diagnostic barrier to receipt of the drug. With current network-based approach to everyday health needs, the major advantage the insurance companies have in everyday health is the network discount negotiated (part of the major advantages of the Blues). The whole gatekeeper/pre-authorization stuff didn’t work as a means of controlling expenses, and your approach would require that element to keep balance sheets predictable and rationing mechanisms in place (or they could stray to access by reducing the MAC to an absurdly low level, just like Medicare/Medicaid).
The Price of Innovation and the Progression of Illness And Biopharmaceuticals
Recently, you may have heard or read in mass media sources about the issue of what are known as pharmacy benefit managers that have clients who are prescribed medications created by what are known as red biopharmaceutical companies. Being truly innovative therapies for patients, they are very costly and require those who are prescribed such drugs to pay a great deal of money due to the placement of these meds on their PBMs on the highest level, which is a 4 on a tier 4 system.
PBM is an acronym for a pharmacy benefit manager and is insurance for prescription medications, along with perhaps being owned by your health insurance company. The co-pay that is asked of you is at the discretion of both the PBM and your employer who may provide the PBM to you, without you being involved in such a dialogue. Kickbacks and collusion are possible between employers and PBMs, so how medications are tiered on a PBM may have nothing to do with what is best for you, as variables that are considered in such a negotiation are known only by the PBM employee and your employer. Regardless, biopharmaceuticals presently require co-pays that at times may be 1000 percent or more than medications on other levels of the 4 level systems. And many believe the surreal price tag placed on these biologic treatments is no justified.
Beginning in the 1970s, followed by the implementation of the Bayh-Dole Act in 1980, biopharmaceuticals were being created at a notable rate for new treatment for those who typically have a serious medical disorder. They were a new paradigm of medical treatment, as biopharmaceuticals make and modify large molecules, such as a hormone or a protein, by utilizing a living biological system. The medications that existed before this advent were synthetic, small molecule and carbon based medications. Some say the cost to make a biopharmaceutical is only a third more expensive than the older generation drugs Yet the price of biopharmaceuticals can be 10 times or greater than other medications, and perhaps the cost was determined for what previous treatments cost, such as chemotherapy, which I understand can cost quite a bit as well.
Synthetic insulin is an example of such a biopharmaceutical treatment option for the patients with diabetes who need insulin replacement. Furthermore and presently, generic biopharmaceuticals are not allowed, which will be called biosimiliars. And with biopharmaceuticals, there are about ten types of large molecular therapies for various disease states. Yet out of close to 200 biopharmaceutical companies, only a small fraction of them are remotely profitable.
Biotechnological medications began to be used primarily in the 1980s and now presently make over 60 billion a year, with about 20 percent growth in this market annually. This creation of innovation occurred soon after the activation of the Bayh/Dole act of 1980, which basically created capitalists out of academics using your tax dollars. This may explain the rapid growth of this new technology.
With anemia patients, oncology and dialysis clinics are targets for two biopharmaceuticals that are identical, yet owned and named differently, which are Procrit by Johnson and Johnson, as well as Epogen, made by Amgen. These biopharmaceuticals treat anemia is associated with the treatment and conditions for certain deadly and chronic diseases, such as cancer and kidney failure patients. Because of giving the doctors of these patients monetary rebates for the more they used of these two drugs. Because doctors chose to perhaps overdose very sick patients, these patients were harmed, as it kills them quicker if such biopharmaceuticals are not given at a low dose. Amgen produces the most popular therapies regarding this, and is the largest company as a result.
Soon, nanotechnology will be the next innovation in creating similar medications. Yet for now, biopharmaceuticals will arrive with great anticipation of many to treat various forms of cancer soon, as this disease is the focus of biopharmaceutical development at this time. In fact, I have heard that about 30 percent of pending therapies are biopharmaceuticals that now have captured 10 percent of the pharmaceutical market. Arthritis therapies are anticipated as well.
Another successful type of this type of therapy is a biopharmaceutical called Enbrel for RA, which is a devastating type of arthritis. The treatment was so popular due to the relief it provided for such patients, at one time, at least 1,000 patients each week had to wait for the drug to arrive, as it could not be created fast enough. Launched by Immunex in 1998, RA patients clearly benefited and were relieved by this treatment that now exists for them. Anticipating the need and success of Enbrel, a large pharmaceutical company which is now Wyeth bought Immunex soon before or after Enbrel was launched, yet acquired most of the stock of Immunex before its approval. Today, Enbrel is promoted by both Amgen and Wyeth and is the top selling biologic available.
Another biopharmaceutical company that got noticed was Genzyme, and they made anti-viral meds that were biotech products, and marketed them after acquiring the presumed business acumen of Don Rumsfeld in 1977, who shared in the profits because of this mutual relationship of the two. Genzyme produces biopharmaceutical for rare, but deadly diseases, and are known to charge the most for their products.
Furthermore, Mr. Rumsfeld was CEO and president of a pharmaceutical company called G.D. Searle in 1997, which is now part of Pfizer.
Yet, some claim that the benefit value provided to these sick patients is a bit limited, considering the high cost of biopharmaceuticals. Very few extend life of these sick patients much. However, at this time they may be limited to their treatment options. Is it really worth tens of thousands of dollars a year for the very sick to have their lives extended minimally for the most part?
Presently, there are many that approach the FDA and aggressively insist that generic biologics therapies be allowed into the market for the benefit of these critically ill patients, and this would be of great benefit for such patients, and this can be done, as far as the generic creation of these meds that presently, and unlike traditional drugs, now have unlimited patents. And this situation illustrates one of many flaws in the U.S. Health Care System- when the sickest have to complicate their illnesses by possible if not likely financial stress, such as the case with biologic drugs discussed. Relief is needed for those of such great illness, and should be demanded by the public. Bills by both the house and senate were introduced to lawmakers in 2007. After all, why be so sick, and then be financially ruined during the last chapter of your life?
Oh, and speaking of such administrations as the FDA, consider regulating those such as the previously mentioned anemia reps better so people will live a bit longer.
Dan Abshear