Healthcare Reimbursement for Marijuana Costs?

Marijuana Reimbursement Claims Highlight How Pot Could Be Gold for
Employers

A medical billing company may be blowing smoke, but could reimbursing
patients for medical marijuana lower drug costs for employers?

By Jeremy Smerd
Workforce Management Online, July 2009

In mid-June, Rhode Island became the third state to legalize the
sale of marijuana for medical use, giving momentum to advocates who
believe the legalization of the drug offers a dose of sanity for the
nation's costly health care system.

Now that more states are legalizing the sale of the marijuana used
solely as a medicine, the next hurdle for reformers who say the drug is
more cost-effective than pharmaceuticals is getting those who pay for
health care—insurers and employers—to reimburse patients for its
use.

"It's going to take an employer that says, `We're
not interested in marijuana as a gateway drug or any of that reefer
madness. We want to talk about dollars and cents,' " says Allen
St. Pierre, executive director of NORML (the National Organization for
the Reform of Marijuana Laws). "If the idea here is saving money,
then there's no question that medical marijuana should be part of
the ambit of choices that doctors, patients and employers can have."

The effort to legalize the sale of medical marijuana has focused
mainly on whether the medical effectiveness of the drug justifies making
it legal to obtain in plant form. The medical benefits have been most
closely tied to treating weight loss, nausea, pain, inflammation,
spasticity and other symptoms associated with cancer, AIDS, cerebral
palsy, muscular dystrophy and arthritis.

Advocates for its legalization say its medical benefits should be
made available to ease the suffering of patients. In a nod to the
plant's medicinal powers, pharmaceutical companies have produced
synthetic forms of some of its active chemicals.

Less attention, though, has been focused on whether paying for
patients' medical marijuana is a cost-effective way to manage
certain illnesses. Advocates argue that marijuana is an effective
medicine that can also be a cost-effective alternative to
pharmaceuticals.

Reimbursing patients who use it could push them away from otherwise
costly drugs that some advocates say are not as effective. Employers, as
payers of health care, should champion the legalization of medical
marijuana as a potential cost-saving tool, advocates say.

Despite the recent legislative victories, however, even employers
that want to reimburse patients who use medical marijuana cannot.

Stephen DeAngelo, chief executive of Harborside Health Center, a
medical marijuana dispensary in Oakland, California, has tried to
provide a medical marijuana benefit through the health plan he provides
to his 67 full-time employees.

"Blue Cross Blue Shield will not reimburse for medical
marijuana; we checked," he says. "It's illegal under federal
law and they can't do anything that will break federal law."

Instead, he provides his employees, all of whom are medical
marijuana patients, with a free gram of marijuana for every shift they
work, a policy he says has lowered his company's health insurance
costs.

"Many of these patients had drug bills of several hundred
dollars a week before they began using medical marijuana," he says.
"Now they are about $40 or $50 a week."

A week before Rhode Island legalized the sale of medical marijuana,
a medical billing company in Los Angeles said it had successfully
enabled medical marijuana patients to get reimbursed by major health
insurance companies.

GE Medical Billing, which is not affiliated with General Electric
Corp., says it contracts with California marijuana dispensaries, where
patients with "recommendations" from doctors are allowed, under
state law, to purchase the cannabis plant in forms smokeable, edible and
generally ingestible, then helps the dispensaries' patients get
reimbursed from insurance companies for the money they spend on
marijuana.

Patients can pay dispensaries around $60 for marijuana with names
like Purple Flo and Hindu Kush, or—for patients not wanting to
inhale—Bomb Brownies that are the specialty of one Los Angeles
dispensary called Bakedery.

Dispensaries that contract with GE Medical Billing send expense
claims of customers to insurers via the billing company. The
company's medical director, a licensed obstetrician and gynecologist
named Gil Mintz, says he has helped patients get reimbursed by such
insurers as Aetna, Cigna, UnitedHealth, and that at least one union, the
Field Ironworkers Union in Arizona, Nevada and California, uses its
services.

But health insurers dispute this. They say they cannot and do not
reimburse patients for drugs, including medical marijuana, that are not
approved by the Food and Drug Administration. A spokesman for Cigna
cited this fact when explaining that the Philadelphia health insurer has
no business relationship with GE Medical Billing.

"We don't provide reimbursement for the medical use of
marijuana," said spokesman Mark Slitt. "We don't have a
business relationship with GE Medical Billing nor did we give them
permission to use our logo on their Web site."

An Aetna spokeswoman also said the insurer does not cover medical
marijuana either as a pharmacy or medical benefit.

Neither UnitedHealth nor the ironworkers union responded to several
requests for comment. Cigna says it does reimburse patients for the use
of a generic version of a drug, Marinol, which is a synthetic version of
one of the marijuana plant's active chemicals, tetrahydrocannabino l,
more commonly known as THC.

Indeed, it appears that GE Medical Billing uses an insurance code
for what appears to be a synthetic marijuana substitute called
"cannarettes, " says Harborside's DeAngelo, who asked his
insurance broker to investigate GE Medical Billing's assertions.

DeAngelo and other marijuana reform advocates say that until a
federal agency says there is a use for medical cannabis, no insurance
company will reimburse patients who use it.

While it is unlikely to happen anytime soon, the stance of both
state and federal governments appears to be softening. Thirteen states
have legalized the use of medical marijuana, and the Obama
administration, in a reversal of Bush administration policy, has said it
will not prosecute citizens who comply with states marijuana laws.

On June 18, Reps. Barney Frank, D-Massachusetts, and Ron Paul,
R-Texas, introduced legislation that would eliminate federal penalties
for the personal possession of cannabis and the not-for-profit transfer
of up to one ounce of pot.

The next step, advocates say, is to study whether medical marijuana
does indeed reduce health care costs.

No formal, peer-reviewed study of the cost-effectiveness of medical
marijuana has been conducted, says Jeffrey Miron, an economist at
Harvard University who has written about the cost of the federal
prohibition against marijuana. And while $1.1 billion has been budgeted
to compare the effectiveness of different treatments for the same
condition, there is no plan to research the effectiveness of medical
marijuana, says a spokeswoman for the Agency for Healthcare Research and
Quality.

One informal study on the cost-effectiveness of using marijuana for
medical purposes was conducted in 2006 and published in
O'Shaughnessy' s, a non-academic journal that examines how
cannabis is used in doctors' practices. In it, many doctors said the
use of marijuana led their patients to cut back on more expensive
pharmaceutical drugs to treat the same symptom.

Until then, politicians and voters should not be the ones to decide
which drugs are safe for patients, says one opponent of medical
marijuana, Robert L. DuPont, a former drug czar under Presidents Nixon
and Ford and currently the president of the Institute for Behavior and
Health, a drug policy group in Washington.

"The idea of approving drugs through ballot initiative and
legislative action is a scary precedent for any medicine," he says,
though he agrees that buying whole-leaf marijuana is probably cheaper
than buying pharmaceuticals.

While studies have shown marijuana to have medical benefits, it
also has potential hazards, not least of which comes from smoking. An
article in May in the journal Chemical Research in Toxicology said
carcinogens in marijuana made smoking three joints equal to 20 or more
tobacco cigarettes.

"I don't know when the last time you went to a doctor and
he said go out and get some weeds and burn them and that's a
medicine," DuPont says. "Because smoke is toxic."

Advocates, who are hoping that the FDA will recognize the
plant's benefits and allow patients to get reimbursed for ingesting
the drug, say the push will have to come from the people who pay for
health care—not just patients, but health insurers and employers
too.

"Health care costs would go down, I assure you," says
Lester Grinspoon, associate professor emeritus of psychiatry at Harvard
Medical School and author of Marijuana: The Forbidden Medicine.

"The argument it should be legal is not just a medical point of
view, but also from a point of view that … it will be less expensive
than modern pharmaceuticals are. Those are two powerful arguments for
making it legal."

Jeremy Smerd is a Workforce Management staff writer based in New York.
E-mail editors@workforce. com to comment.

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