Health and life insurance companies have access to a powerful new tool for evaluating whether to cover individual consumers: a health "credit report" drawn from databases containing prescription drug records on more than 200 million Americans.
Collecting and analyzing personal health information in commercial databases is a fledgling industry, but one poised to take off as the nation enters the age of electronic medical records. While lawmakers debate how best to oversee the shift to computerized records, some insurers have already begun testing systems that tap into not only prescription drug information, but also data about patients held by clinical and pathological laboratories.
Traditionally, insurance companies have judged an applicant's risk by gathering medical records from physicians' offices. But the new tools offer the advantage of being "electronic, fast and cheap," said Mark Franzen, managing director of Milliman IntelliScript, which provides consumers' personal drug profiles to insurers.
The trend holds promise for improved health care and cost savings, but privacy and consumer advocates fear it is taking place largely outside the scrutiny of federal health regulators and lawmakers.
Ingenix, a Minnesota-based health information services company that had $1.3 billion in sales last year -- and Wisconsin-based rival Milliman -- say the drug profiles are an accurate, less expensive alternative to seeking physician records, which can take months and hundreds of dollars to obtain. They note that consumers authorize the data release and that the services can save insurance companies millions of dollars and benefit consumers anxious for a decision.
"Some insurers can make a decision in the same day, or right on the spot," Franzen said. "That's the real 'value-add.' "
But the practice also illustrates how electronic data gathered for one purpose can be used and marketed for another -- often without consumers' knowledge, privacy advocates say. And they argue that although consumers sign consent forms, they effectively have to authorize the data release if they want insurance.
"As health care moves into the digital age, there are more and more companies holding vast amounts of patients' health information," said Joy Pritts, research professor at Georgetown University's Health Policy Institute. "Most people don't even know these organizations exist. Unfortunately the federal health privacy rule does not cover many of them. . . . The lack of transparency with how all of this works is disturbing."
Ingenix and Milliman create the profiles by plumbing rich databases of prescription drug histories kept by pharmacy benefit managers (PBMs), which help insurers process drug claims. Ingenix, for instance, has servers in the PBM data centers, updating the drug files as frequently as once a day, said John Stenson, senior vice president of consulting for Ingenix, which is a division of UnitedHealth Group. The corporation also owns UnitedHealthcare, the nation's second-largest insurer.
When an insurer makes an online query about an applicant, Ingenix or Milliman's servers scour the data and within minutes or less return reports to a central server at the company. The server aggregates the information going back as far as five years, including the drugs and dosages prescribed, dates filled and refilled, the therapeutic class and the name and address of the prescribing doctor.
Then comes the analysis.
Ingenix's MedPoint tool provides insurers a "pharmacy risk score," or a number that represents an "expected risk" for a group of people, such as 30- to 35-year-old women who have taken prescription drugs, Stenson said. Higher scores imply higher medical costs.
Milliman's IntelliScript codes drugs red, yellow or green, according to the insurer's instructions, with red signaling the greatest risk, Franzen said. Red codes could include the so-called AIDS cocktail drugs and cancer medications, he said.
The companies receive data only on individuals who are in clients in PBMs' databases, generally excluding, say, people who pay for drugs in cash. The profiles cost insurers about $15 a search. IntelliScript gets about 1 million queries from insurers a year, largely individual health insurers.
The system can save money for insurers, said Richard Dick, an entrepreneur who built the database system that Ingenix acquired in 2002.
For instance, if MedPoint produces a report that an individual has been on the highest dose of the cholesterol-reducing drug Zocor for 18 monts, the insurer "would be able to know that you have a very high, near-intractable cholesterol problem," Dick said, and could avoid a costly blood test.