Monday, March 7, 2011

Groupon: Are coupons really the right answer for health care?

I'm always fascinated by new technology and particularly ways social media works in our world.

So it was natural for me to sign up for, the internet based deal program that works with local vendors to offer special coupons and discounts for products or services.

Sometimes these deals are just incredible - from 50% off food products to half price golf to yoga for $19 per month rather than $140.

But what about using coupons for health care services?

Sounds odd, I know, but this has been a common practice for years with aesthetic services and cosmetic procedures or treatments.

It's not uncommon at all to see deals for "free Botox" or discounts on micro-dermabrasion or chemical peels.

But would you be influenced by a coupon for "free prostate exam" or "buy one get one free mammogram"?  Or would you just think that provider was weird?

It may sounds strange, but actually this happens every day.

It's hidden behind the cloak and dagger world of the pharmaceutical sample closet.

For years the drug sample has been the easiest tease to entice patients to try a different medication.  Sometimes they are very helpful -- a difficult medication to use (like an unusual dispenser for a spray on product), unusual side effects ("try it before you buy it"), or most commonly the patient has no money and they leave with a bag full of free drugs.

But these are certainly short term solutions and may or may not lead to a patient actually buying the product.

It's no surprise that most of the samples in the closet are for chronic medications -- not for something you have to take for a week or less.

But the interesting invasion into the sample closet has been the coupon.

Now not quite "groupon-like," coupons are now available for almost all name brand, non-generic medications -- particularly if they are early in their evolution of release.

This is how it usually works:  you decide you want to prescribe a new anti-hypertensive (an expensive way to say blood pressure medication).  Compared to a generic medicine which might fall under the $4 per month Walmart plan, this medication might be $300 per month.

But, there might be some advantages:  lower incidence of side effects, easier dosing regimen, or maybe its more effective.  There usually is a real medical reason despite what some Washington pundits might say.

Newer drugs usually work better.

But, nevertheless it costs $300. That's roughly half of some people's Social Security check.

Now with insurance this medication would be a lot cheaper (for the patient) but it is very likely that it would not fall under the "preferred plan" of their prescription drug coverage.

That means that it would likely cause a higher co-pay such as $50 as opposed to $5.

This is where the pharmaceutical coupons come into play.  Now, instead of advertisement laden boxes of pills, the sample closet is full of boxes full of coupons or discount cards.

Patients are asked to call a 1-800 number to activate the card, "register" (which means the company collects information on the patient, disease, and provider), and then the card can be used to off set part of the extra cost related to use of the expensive medication.

These cards usually function as "discount cards."  That is, they will provide either a certain reduction in your copay amount, or they will fix the total cost of medication at a certain point.

Most of the cards require you have insurance to use them.  There is no free lunch here, and the drug companies themselves don't want to be out the total cost of the drug, only part of their margin.

Sometimes there are limits on the amount of benefit you can receive.  The card may only be good for three refills, or it may be unlimited.  You want to make sure you check this carefully before you continue to refill your medication.

Pharmacies as rule don't like to deal with these cards.  Much like grocery stores don't like to deal with coupons.

There is an extra step for them, possibly some activation required on their part and certainly they have to carry additional float, in addition to your insurance, before they will get paid.

What's fascinating to me is that these provide a direct incentive to use a more expensive medication.

Now, as I've outlined here, there are some benefits of these cards.  But let's face it, these are expensive medications -- there is no free lunch.

It's the incentive that seems bizarre.  Physicians and hospitals are forbidden from discounting co-pays, not collecting deductibles, or for offering covered services for less than the contracted amount in most insurance contracts.

There have been several lawsuits already between rival health care systems in communities where one hospital might write off co-pays or deductibles to entice patients to choose their facility over the competitor.

This might be like a patient knowing that regardless if he has Blue Cross Blue Shield insurance, for example, they could choose either emergency room -- because the cost would be the same to them.

Patients with high deductible insurance plans are particularly susceptible to this type of gaming.  The catch is that the hospital is able to collect enough money on the subsequent procedure or test to offset the loss of the deductible.

The problem is for the insurance company and the other insured patients that are on the policy.

It removes the incentive to stay within network and comply with the contract that makes indemnity insurance work in the first place.

Everyone has to play by the same rules.

So why do pharmaceutical companies get to use these discount cards?

I'm not sure I can answer that question, but I hope I've been able to shed some light on these type of cards and discounts.

In some situations they may be very helpful.  If you require an expensive medication, particularly one that is new, be sure to ask your physician if the company offers any type of discount card.

If not, then asked them for a lower priced, generic alternative.

Otherwise, just be aware that these cards can get you established on an expensive medicine for you only to find out that the benefits were temporary.

Also be careful if the company is going to send you a rebate.  This puts the risk on you for collecting the money.

So although not quite type coupons, there are some discounts available for expensive medications.

You just may have to shop around and be an educated consumer-patient.


  1. I think Groupon health care could be an interesting way for people without health care to get them. It would be interesting if there was a company would could package all these deals together for customers who could then pay a monthly rate...who knows

  2. Great idea Yochai! Maybe somebody will read this and pull the data together on a website.

  3. i have no idea but believe on those products which you have used

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  4. great idea and Nice post.Thank you for sharing some good things!!

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  5. Thanks for the nice comments!