[Med-privacy] prescription privacy

[peter marshall]

Special Report July 23, 2008
They Know What's in Your Medicine Cabinet
How insurance companies dig up applicants' prescriptions=97and use them=20=

to deny coverage

by Chad Terhune

That prescription you just picked up at the drugstore could hurt your=20
chances of getting health insurance.

An untold number of people have been rejected for medical coverage for=20=

a reason they never could have guessed: Insurance companies are using=20
huge, commercially available prescription databases to screen out=20
applicants based on their drug purchases.

Privacy and consumer advocates warn that the information can easily be=20=

misinterpreted or knowingly misused. At a minimum, the practice is=20
adding another layer of anxiety to a marketplace that many consumers=20
already find baffling. "It's making it harder to find insurance for=20
people," says Jay Horowitz, an independent insurance agent in Overland=20=

Park, Kan.

The obstacle primarily confronts people seeking individual health=20
insurance, not those covered under an employer's plan. Walter and Paula=20=

Shelton of Gilbert, La., applied to Humana (HUM) in February. They were=20=

rejected by the large Louisville insurer after a company representative=20=

pulled their drug profiles and questioned them over the telephone about=20=

prescriptions from Wal-Mart Stores (WMT) and Randalls, part of the=20
Safeway grocery chain, for blood-pressure and anti-depressant=20
medications.

Mental Health Is a Red Flag

Walter Shelton, a 57-year-old safety consultant in the oil and gas=20
industry, says he tried to explain that the medications weren't for=20
serious ailments. The blood-pressure prescription related to a minor=20
problem his wife, Paula, had with swelling of her ankles. The=20
antidepressant was prescribed to help her sleep=97a common "off-label"=20=

treatment doctors advise for some menopausal women. But drugs for=20
depression and other mental health conditions are often red flags to=20
insurers.

Despite his efforts to reassure Humana, the phone interview with the=20
company representative "just went south," Walter recounts. He and his=20
wife remain uninsured.

"I want to know what's in there if there's a black mark against us,"=20
Walter says. Paula, 51, adds: "We can't get health insurance because=20
we're taking medications that were prescribed by our doctors. I don't=20
think that's right."

A spokesman for Humana says the company uses "data regarding pharmacy=20
history as part of our assessment process." But he adds that the=20
insurer has a policy of not commenting on particular cases, such as the=20=

Sheltons' failed application.

FTC Investigation

Traditionally, applicants have been asked to provide insurers with a=20
description of past illnesses. About 30% are deemed uninsurable because=20=

of their histories, according to industry veterans. Prescription=20
profiles could add another hurdle, making it especially difficult for=20
the 47 million Americans who lack insurance to acquire coverage. Some=20
18 million people are now covered by individual policies.

Most consumers and even many insurance agents are unaware that Humana,=20=

UnitedHealth Group , Aetna (AET), Blue Cross plans, and other insurance=20=

giants have ready access to applicants' prescription histories. These=20
online reports, available in seconds from a pair of little-known=20
intermediary companies at a cost of only about $15 per search,=20
typically include voluminous information going back five years on=20
dosage, refills, and possible medical conditions. The reports also=20
provide a numerical score predicting what a person may cost an insurer=20=

in the future.

An investigation last year by the Federal Trade Commission found that=20
the two companies supplying these pharmacy profiles=97MedPoint and=20
IntelliScript=97violated federal law for years by keeping the system=20
hidden from consumers. But the FTC has merely required disclosure if=20
prescription information causes denial of coverage or some other=20
adverse action; the agency imposed no penalties. MedPoint and=20
IntelliScript say they are now fully complying with the FTC's order.

Two-thirds of all health insurers are using prescription data=97not only=20=

to deny coverage to individuals and families but also to charge some=20
customers higher premiums or exclude certain medical conditions from=20
policies, according to agents and others in the industry. Some carriers=20=

are also using the data to charge small employers higher group rates.=20
Separately, some 20% of life insurance companies are relying on=20
prescription histories when reviewing applications, according to=20
experts in that business.
Designed for Emergency Use

"The fundamental breakthrough is that this is the first time ever we=20
have had near-instantaneous access to objective, third-party=20
information," says Tia Goss Sawhney, an actuary and consultant to the=20
health insurance industry. She says she tested the prescription=20
profiles last year while designing a new insurance policy for American=20=

Community Mutual Insurance in Livonia, Mich.

IntelliScript says it sells prescription data to more than 75 health,=20
life, and long-term-care insurance companies. Milliman, a large Seattle=20=

consulting firm, acquired the company in 2005. A rival service,=20
MedPoint, has been offered by UnitedHealth's Ingenix data-mining unit=20
since 2002. MedPoint says it has access to more than 5 billion pharmacy=20=

claims.

The data were originally sought to help inform doctors treating=20
patients, especially in emergencies. But that use hasn't widely caught=20=

on, and today the information is primarily employed by insurance=20
companies.

MedPoint and IntelliScript buy the data they disseminate mostly from=20
another group of middleman companies known as pharmacy-benefit managers=20=

(PBMs). Large PBMs, such as Medco Health Solutions, provide services to=20=

insurers and employers. In playing that role, the PBMs gain broad=20
access to prescription information from drugstores. Some retail chains=20=

operate their own PBMs. No privacy laws or other regulations prevent=20
the gathering of this data, according to the FTC.
Fodder for Denials

In its marketing to the insurance industry, MedPoint says prescription=20=

histories help "identify high-risk individuals, reduce costs, lower=20
loss ratios, and increase revenue." Despite that pitch, John Stenson,=20
an Ingenix executive who helps oversee MedPoint, says he doubts that=20
his company's information causes insurers systematically to reject more=20=

people for coverage. "This is about insurance companies getting at the=20=

information quickly and clearly," he says.

BlueCross BlueShield of Tennessee, the state's biggest insurer, has=20
used MedPoint since April 2007, ordering prescription profiles for=20
about 75% of individual applicants. Since February, when the federal=20
disclosure requirement went into effect, BlueCross says it has notified=20=

1.5% of applicants that their prescription reports have resulted in=20
denial or other negative action. But the company acknowledges that it=20
doesn't alert consumers if the profiles lead to requests for more=20
medical information that result in subsequent denial. "This doesn't=20
make it any harder for consumers," Kevin Ashpole, director of=20
individual products at Tennessee BCBS, maintains. "It ensures the right=20=

decision is made."

But skeptics worry that more people inevitably will be turned down for=20=

coverage as a result of growing reliance on prescription histories.=20
Most consumers would be shocked to learn that information about their=20
past prescriptions is being bought and sold=97and could come back to=20
haunt them, says Gary Claxton, director of the Health Care Marketplace=20=

Project, a research organization run by the Kaiser Family Foundation in=20=

Washington, D.C. Rejection by one insurer commonly becomes grounds for=20=

denial by others, and the industry has ready access to who has been=20
turned down through a separate database.
Is Disclosure Enough?

When applying for insurance, individuals routinely sign paperwork=20
allowing providers to review their medical history. To comply with the=20=

privacy provisions of the federal Health Insurance Portability &=20
Accountability Act, most insurers have now added a reference to=20
prescription history in the lengthy fine print consumers are instructed=20=

to read.

The FTC forced the industry to begin disclosing the use of prescription=20=

information under a different federal statute, the Fair Credit=20
Reporting Act. Insurers now are required to tell applicants the address=20=

of the company that assembled the data. Copies of prescription reports=20=

are supposed to be available to consumers at no charge under federal=20
law.

"As soon as we were alerted by the FTC, we cooperated fully, and we=20
began sending out notices to [insurance industry] clients of their=20
obligations" under federal law, says Mark Franzen, managing director of=20=

IntelliScript. "This wasn't the result of a consumer complaint or=20
privacy being violated." The FTC confirms that its investigation didn't=20=

stem from consumer concern but won't say what did spark the inquiry.

Insurance companies say that they use prescription data responsibly and=20=

that it isn't the sole basis of decisions to deny coverage. A spokesman=20=

for UnitedHealth (UNH) adds that when there are discrepancies between=20
the data and information provided directly by applicants, "the=20
applicant is contacted and given the opportunity to provide additional=20=

information."

But privacy watchdogs and some insurance agents question how insurance=20=

carriers can guarantee that they are obtaining accurate prescription=20
histories, especially for people with highly common names. The skeptics=20=

also worry about whether legitimate off-label use of prescription drugs=20=

by patients such as Paula Shelton could hurt some applicants unfairly.

IntelliScript's Franzen says it's the responsibility of the insurance=20
company to deal with issues such as off-label use. He says=20
IntelliScript has reported the wrong person's drug file in several=20
instances but that mistakes occur in fewer than 1 in 10,000 cases.=20
MedPoint says it has had only "two cases of matching errors in more=20
than 2 million queries." Most searches include full name, date of=20
birth, Social Security number, and address.

"Is it perfect? No," Franzen says. "But it's pretty darn good."


Maine, Oregon, and Washington state are noted for protecting access to=20=

health insurance. California and others crack down on wayward carriers=20=

who drop customers with high claims.

Healthy States

The liberal advocacy group Families USA graded states on access to=20
health insurance, regulation of premiums, and coverage of preexisting=20
conditions. In a June report (familiesusa.org), the organization gave=20
Maine, Oregon, and Washington State high marks. Illinois, Pennsylvania,=20=

and Texas received low grades.
Punishing Insurers

California and other states are cracking down on health insurers that=20
cancel coverage after people incur medical bills. Carriers may revoke=20
policies if applicants lie, but it's illegal to dump customers simply=20
because they have expensive claims. On July 18 the Los Angeles Times=20
reported that California imposed stiff fines against two major plans:=20
Blue Shield of California and Anthem Blue Cross, the latter a unit of=20
WellPoint (WLP).
Tattered Safety Net

Many states offer backup insurance programs for people denied=20
insurance. But a panel convened in July by the Kaiser Family Foundation=20=

(kaisernetwork.org) found that the safety nets often don't work=20
because, for example, premiums are so expensive.


Terhune is a senior writer for BusinessWeek based in Atlanta .

Copyright 2000-2008 by The McGraw-Hill Companies Inc.=20=