Litzman: Four health funds ‘exaggerating’ costs of drugs

Maccabi denounces Health Ministry report as "false, misleading"; Deputy Health Minister says Public’s copayments will be reduced by NIS 50m. from next month.

Meuhedet 311 (photo credit: Marc Israel Sellem/The Jerusalem Post)
Meuhedet 311
(photo credit: Marc Israel Sellem/The Jerusalem Post)
The four health funds have spent significantly less on prescription medications than the drug budget they’ve received for them in health taxes, Deputy Health Minister Ya’acov Litzman said on Thursday.
Litzman said the “extra funding” would be plowed back into the health system, thus allowing “up to a 33 percent reduction” in copayments for prescription drugs in the intermediate range of prices, with the reductions will begin next month.
He based himself on an “independent examination” he initiated.
The report was prepared by Dr. Yoel Lipschitz, an economist and deputy director-general for supervising the health insurers, and by Ariella Toren of the Schiff-Hazenpretz accounting firm. The plan has to be approved by the Knesset Finance Committee to be implemented, but it is unlikely to meet with much opposition there.
The report – issued by Litzman at a press conference – triggered a furious response from Maccabi Health Services, the second-largest health fund, which along with Clalit Health Services, Kupat Holim Meuhedet and Kupat Holim Leumit had received an advance draft. Litzman said he initiated the examination and report when he took office two years ago, when he suspected the insurers were spending less than they took in to cover drug costs.
“This is an important social step that will be expressed in reduced copayments for medications,” adding that he decided to adopt the “exacting and fundamental report” immediately.
Lipschitz told The Jerusalem Post that the other health funds voiced some objections here and there but did not totally reject the ministry report and conclusions.
The health funds, argued the deputy director-general, spent less than they claimed, as the drugs they purchased and supplied to members cost them less because they received significant discounts from the manufacturers and importers.
In addition, some older medications in the basket of medications – which remained on the list as deserving compensation – were not used because they were replaced by newer drugs, he said.
Of the NIS 150 million saved due to improved accounting, said the deputy director-general, a third will be spent in reducing copayments paid by the public who purchase medications; another third will be left to the health funds for “increasing efficiency”; while the remaining third will go to the funds for other uses, such as hospitalization.
The medications whose copayments will be reduced across-the-board are those costing above NIS 100 per unit, but will not include the very expensive drugs or the common ones that are much cheaper.
Maccabi spokesman Ido Hadari (a former ministry spokesman) said the ministry “misleads the public” and the health fund “absolutely rejects the report and the examination technique.”
Lipschitz said he could not say when the “overpricing” by the health funds began, as “such accounting never took place before, but that his own examinations began in 2006 and the report covers more recent years. The lower copayments will be from now on, and self-participation will not be retroactive.
Kupat Holim Meuhedet, the third largest fund and the one that was involved in a major scandal when its former toplevel managers were dismissed over last year’s State Comptroller Report, had the largest excess of income from medications, followed by Clalit Health Services, and then Maccabi and Leumit with about the same amount.
The public committees for recommending the additions to the basket of medical technologies every year were given health fund figures on how much proposed medications would cost, but there was too little transparency compared to more recent years, said Lipschitz.
Maccabi, which reacted a short time after the Litzman press conference because it knew from the draft what was going to be said, said it welcomed a reduction in drug copayments. But it charged that the ministry report “ignored the large groups of medications in which we provide them at a deficit. The long list of exceptions in the ministry report is dramatic, but the public are not exposed to them.”
Maccabi said it exposed the failures in the report before publication but that the ministry nevertheless chose to publish it in a defective way.
“Maccabi is not in a surplus but in a deficit” from covering the cost of its members’ medications,” said Hadari.
He added that it was “scandalous” that copayments will be reduced at the expense of the health system and “will cause serious harm to other services. The ministry failed in obtaining additional budgets from outside, thus it has prepared a false presentation to the public and the media.”
As an example, Maccabi said that in 2006, it spent NIS 43m. on drugs to treat multiple sclerosis but that most of them were covered by the health fund itself. Since 2006, the basket of health services funded with state participation was expanded by NIS 2 billion.
It continued that new, more expensive drugs were added to the basket but payments were calculated by the ministry according to “classes of drugs,” and thus the insurers were not compensated for all the specific drugs’ additional costs.
Maccabi does all it can to cover the costs of important drugs that are not included in the basket but its members need to save and extend lives, Hadari added. Any extra payments help cover these drugs, he said.
“Unfortunately, this is a defective report that ignores significant topics that change the entire picture. We are sorry that for such a central issue, the facts have been made fuzzy. The fact that the ministry claims the insurers have a surplus at the expense of the patients and requires the funds to use this surplus to reduce copayments is serious and objectionable,” he said.
The Association for Medicine and Justice said, “The ministry chose to publicize a populistic and superficial report whose conclusions were apparently known in advance. Reading the report shows that the ministry is trying at all costs to show that the insurers are funded at a surplus. But the report is full of statements that the authors lacked information and were not able to make a full comparison.”
There is no alternative, the association concluded, but to establish a professional public committee to examine the budget for the medications basket and present a report to the Knesset Labor, Social Affairs and Health Committee and to the public.