Book Review published on SSRN

Three weeks ago I blogged about my recent review of  ”Pharmaceutical Innovation, Competition and Patent Law – a Trilateral Perspective” (Edward Elgar 2013). The full review, which is forthcoming in a spring issue of European Competition Law Review (Sweet Maxwell), is now available at SSRN: http://ssrn.com/abstract=2396804.

News from OMHA Appellants Forum: Statistical Sampling Coming, Backlog Growing

Yesterday the HHS Office of Medicare Hearings and Appeals (OMHA) held a forum for appellants affected by its decision, which I blogged about last month, to hold off on assigning incoming appeals to ALJs while they work to clear a large backlog.  I was able to go, and enjoyed every minute.  This issue has received its share of attention in the news (Washington Post here, National Review online here), as well as controversy (see here and here), but I have not yet seen an article discussing some of the policy developments that came out of yesterday’s forum.  So I am going to play journalist for a minute, rather than academic, and share yesterday’s developments.  There were a lot of them: Continue reading

The AOL Babies: Our Healthcare Crisis in a Nut

By Nicolas Terry

Cross-posted from HealthLawProf Blog.
Where does one start with AOL CEO Armstrong’s ridiculous and unfeeling justifications for changes in his company’s 401(k) plan. Cable TV and Twitter came out of the blocks fast with the obvious critiques. And the outrage only increased after novelist Deanna Fei took to Slate to identify her daughter as one of the subjects of Armstrong’s implied criticism. Armstrong has now apologized and reversed his earlier decision.
As the corporate spin doctors contain the damage, Armstrong’s statements likely will recede from memory, although I am still hoping The Onion will memorialize Armstrong’s entry into the healthcare debate (suggested headline, “CEO Discovers Nation’s Healthcare Crisis Caused by 25 Ounce Baby”). But supposing (just supposing) your health law students ask about the story in class this week. What sort of journey can you take them on?

Treating Addiction in Pregnant Women and New Mothers: A Promising Application for Social Impact Financing?

By Kate Greenwood

Cross-Posted at Health Reform Watch 

Last week, vtdigger.org ran an interesting article by Laura Krantz on the difficulties pregnant women and new mothers who are addicted to drugs have accessing not just drug treatment but also all of the other services and supports they need. Krantz reported on a hearing before the Human Services Committee of the Vermont House of Representatives at which a new mother in recovery from addiction, “a neonatalogist, a substance abuse clinician, a Health Department employee and a representative from the Phoenix House, a residential treatment facility in Brattleboro … all said women need not only treatment, but housing, transportation and help finding jobs.”

Alice Larned, a substance abuse clinician at the Lund Family Center in Burlington, told Krantz that spaces in residential detoxification facilities are increasingly scarce. The demand for transitional housing for women who have completed inpatient detoxification also exceeds the supply. Add to this the sad fact that women can wait a year or more for an appointment with a physician who can treat them with methadone or buprenorphine. Larned told Krantz that many of the women who start treatment with her are taking buprenorphine they bought illegally, an “indication they want help ‘yet we don’t have the legitimate means for them to get this medication[.]’”

In another story that ran last week on NPR, Steve Zind spoke with Harry Chen, the Commissioner of the Vermont Department of Public Health, who emphasized the complexities inherent in treating addiction in pregnant women and new mothers. To do so successfully, Commissioner Chen explained, “requires so many different systems working together well: the social service system, the health care system, the substance abuse system and even to some extent the correctional system.”

I confess that one reason that these two articles caught my attention is that Alice Larned is my sister.  Another reason, though, is that the problem described in the articles seems like a promising application for social impact financing, something that has been in the news here in New Jersey in recent weeks.

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Encouraging Innovation in Chronic Care Management

By Michael Young

The growing burden of managing chronic illness has long been a critical issue for policy makers and clinicians seeking to improve the quality, cost and efficiency of healthcare systems in the United States. According to the Institute of Medicine, the costs of treating and managing the segment of the population living with chronic illnesses currently represents nearly $1.5 trillion of the over $2 trillion in annual healthcare spending in the U.S.  Over 90% of Medicare costs are allocated to beneficiaries living with two or more chronic conditions, with close to 50% of spending on individuals living with 6 or more chronic conditions (approximately 14% of beneficiaries).  The immense share of healthcare spending attributable to chronic illness is expected to climb as the population ages. 

Earlier this month, a bipartisan bill entitled the Better Care, Lower Cost Act was introduced in Congress which aims to address the complex issues involved in chronic care management.  The legislation outlines three key innovations toward this end.

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Medicare Stops Hearing Provider Appeals in Hopes of Clearing Backlog

When Medicare refuses to cover a treatment (such as inpatient hospitalization) or device (like diabetes testing supplies), the statute gives the disappointed beneficiary the right to appeal.  Furthermore, there are mechanisms by which the provider–which may be a hospital, doctor, durable medical equipment manufacturer, etc.–that recommended the treatment (and often stands to profit if it is covered) can appeal on the beneficiary’s behalf (or on their own if the claim is assigned).

The statute sets deadlines for decisions on appeal, but in recent years a flood of new cases has led to a growing backlog and long delays.  (The backlog is caused in large part by the Recovery Audit Contractor program, through which Medicare has been revisiting and revising coverage determinations from the past several years.   That is a subject for another day.)

On Christmas Eve, the office in the Department of Health and Human Services responsible for hearing appeals (that is, the Office of Medicare Hearings and Appeals), adopted a controversial mitigation measure: They’ve stopped hearing new appeals, while they work to clear the backlog.  Which will take at least two years.  (See recent coverage here.)

Yes, the law says that Medicare must hear appeals, so yes, this temporary measure is technically inconsistent with the law (which is not to say it is illegal, more below on that).  But in my view it is actually a good idea, and consistent with what I think is the best ultimate solution to the “backlog” problem.  Here’s why:

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Capturing Value in Advanced Medical Imaging

On December 12, a bipartisan bill entitled the Excellence in Diagnostic Imaging Utilization Act of 2013 (HR 3705) was introduced in the House of Representatives which would require clinicians to use electronic clinical decision support tools (CDS) before ordering advanced diagnostic imaging tests for Medicare patients.  Structured around appropriate use criteria  developed by professional medical societies, the tools would aim to increase the value of advanced imaging studies by informing and guiding practitioners’ decisions across a variety of clinical settings.

Such tools would provide active feedback on the appropriateness and evidence base of various imaging modalities, and would require physicians to furnish rationales for ordering tests that are inconsistent with appropriate use criteria.  The bill also envisions the creation of registries that document how diagnostic tests are used in order to facilitate research and to enable feedback to clinicians on metrics related to appropriate use criteria.  In a press release, the American College of Radiology lauded the proposed legislation, stating that it would “revolutionize the specialty of radiology.”

Mandating the use of electronic clinical decision support tools portends at least three key improvements in clinical workflows and healthcare quality more broadly.

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Sleep versus Training: The NY Times on Surgical Work Hours

Pauline Chen at the NY Times Blog has an article on cut backs on the number of hours of training for young surgeons.

According to her story:

“For the past decade, in response to increasing pressure from politicians, unions and sleep experts, the Accreditation Council for Graduate Medical Education, the organization responsible for accrediting American medical and surgical training programs, has been working to cap the hours that residents work. In 2011 the council passed the strictest limits yet. To maintain their accreditation, residency training programs had to abide by a 22-page set of scheduling rules that limited all in-hospital work including any elective “moonlighting” jobs to 80 hours per week, mandated the number of hours “free of duty” after different “duty periods” (eight hours off after 16-hour duty periods and 14 hours off after 24-hour duty periods) and even specified the timing of “strategic napping” in no uncertain terms (after 16 hours of continuous duty and between the hours of 10 p.m. and 8 a.m.).

While most residency programs chafed under the exhaustively detailed regulations, surgical training programs had particular difficulty adopting the new mandates. For nearly a century, surgical residency had been a period of both intensive experience and increasing responsibility under the guidance of more experienced surgeons. More recent research has affirmed that approach, demonstrating the strong link between a surgeon’s operative skill, the number of operations performed and patient outcomes. With limits set on their time at the hospital, young surgeons-in-training had fewer opportunities to care for patients or scrub in on operations. While previous generations of trainees had the luxury of participating in at least one operation a day, new trainees had only enough time to be involved in two or maybe three operations each week.

Calculating the number of hours “lost” by cutting back on in-hospital time, surgical leaders estimated that young surgeons-to-be were now missing out on as much as a year’s worth of experience”

She relies heavily on an new Annals of Surgery Article, wherein, as Chen reports,

“Researchers sent questionnaires to the directors of subspecialty fellowship training programs and asked them to comment on the bedside and operating skills of the young surgeons enrolling in their programs. These fellowships are a kind of high-level and often prestigious surgical “gap year” where young surgeons who have completed the basic five-year surgery residency can delay independent practice to pursue an additional year or two of training.

The results were abysmal. Fewer than half of the young surgeons could operate or make clinical decisions on their own. Nearly a third of them were incapable of performing even the most basic operations like a gallbladder removal on their own. And a quarter were unable to recognize the early signs of complications.

Even in areas of surgery where the young surgeons had had supplementary online learning modules during their residency, they performed poorly, with more than half unable to perform basic maneuvers.”

While acknowledging that “some observers have criticized the study for being self-serving – most respondents also noted that the young surgeons’ deficiencies resolved after additional training under their auspices —” Chen’s article reads largely as an attack on these new residency work hour rules.

Since I have written on the subject of these residency work hour rules with sleep specialists earlier this year in the Journal of Law, Medicine, and Ethics, it may be unsurprising that I take a somewhat different view.

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Managing All Care

By Nathaniel Counts

Health insurers are beginning to realize the importance of downstream cost-saving.  By paying to keep people healthy now, health insurers avoid major expenditures later when they must cover chronic conditions and hospitalizations.  For example, by paying for nutrition counseling and fitness programs for prediabetics, health insurers can reduce the rate of transition to diabetes for their clients, which both saves the insurer thousands of dollars and keeps their clients happier and healthier.   This type of innovation is possible because the law requires certain expenditures, i.e. doctors must treat individuals at the emergency room, and these expenditures tend to be quite large if incurred.

Social services in general could enjoy this type of innovation if funding were pooled between government services, and healthcare, housing, food, and direct welfare were all managed together.  Currently, each is conceived as a separate welfare program, so one can only recognize reduction within a program, not how the programs interact.  For example, it may be that the expansion of SNAP benefits would decrease emergency room visits and end up being cost-saving overall.  It may also be that certain types of subsidized housing reduce the need for other services and are more cost-saving than others, but this is hard to recognize when each program is segregated.  One could imagine that subsidized housing built in areas with better access to quality food and jobs would be more expensive upfront, but could save in money overall by reducing the need for other benefits.  Because social services currently have a system of mandatory spending in the form of entitlements, there is an incentive to ensure that individuals transition away from use of the more expensive services.

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Great piece on ER pricing

The New York Times has posted another installment of its excellent series, “Paying Till it Hurts,” by Elisabeth Rosenthal, this time on the astonishingly high costs of emergency room visits.  The piece is worth a read in full for its infuriating detail—really, I think the whole series is—but the message is pretty clear.  I’d also be remiss in not noting that the basic message, with its own set of excruciating details, was laid out in Steven Brill’s piece in Time magazine back in March.  But it’s such a big issue that it deserves this kind of attention.

The basic point is that the costs charged by hospitals are incredibly high, highly variable, and invariably opaque.  Hospitals price procedures, products, and everything else based on the typically secret (but not in California!) “chargemaster,” which lists sticker prices for everything.  Hospital executives speaking about the chargemaster say no one pays sticker price.  That may be true, but the discounts from sticker are almost totally opaque, which hampers the market’s cost-checking role (the Times piece describes Sutter Health contracts as having “gag clauses” so that insurers who negotiate with Sutter can’t tell the employers who are paying for the insurance what rates have been negotiated).  In addition, lots of locales are dominated by one or two hospital systems, which consolidate then raise prices without worrying much about competition.  Finally, most people aren’t comparison shopping for an ER visit anyway – even if they could.

The effect of opacity and consolidation looks to be pretty regressive—even if no one plays the sticker price, the people paying closest to it are those without insurance, who have no prenegotiated discounts and no one to argue on their behalf.  Cal. Pacific’s CEO, Dr. Warren Browner, argues for opacity for pseudo-progressive goal of fleecing rich foreigners (“You don’t really want to change your charges if you have a Saudi sheikh come in with a suitcase full of cash who’s going to pay full charges.”), but that seems a lot rarer than near-poor coming in to ERs uninsured and getting billed full fare (especially if, a la a certain recent presidential candidate, ERs are our health care system for the uninsured).

As in the rest of the US health care system, higher costs appear to be totally divorced from quality of care or outcomes (national variation here (pdf), international comparison here).

It’s hard to see what effect PPACA/ACA/Obamacare might have on this problem.  The Independent Payment Advisory Board has lots of power (or will once it has members), but is still Medicare-focused.  Cost-savings in Medicaid or Medicare payments might spill over into the private insurance market, but if the opacity and market power mechanisms remain, it’s not obvious to me how and why that would really happen.  Medicare is already paying by care episode much more than private insurers, who are still usually fee-for-service.  More competition and transparency might help (More vigorous antitrust enforcement?  Required disclosure of billed/paid costs? (maybe, but maybe not)).  Maybe the fact that more people will be insured will make a difference; if the biggest burden is borne by the uninsured, who have little leverage, lowering that numbermight lower the burden.  But it could also just make it even more unfair for those who remain outside the system.

[UPDATE 12/5/13: I missed Section 9007 of the act, which requires charitable hospitals to publish their chargemasters and prohibits charging chargemaster rates to individuals who qualify for financial assistance (instead, they'd be charged insurer-negotiated rates).  Unfortunately, the implementing regulations haven't been promulgated by HHS or Treasury, so these provisions aren't yet applicable.  But eventually they may help, once they're implemented.  Steven Brill has a piece on this here, and Sarah Alder here.]

In any case, the Times piece is worth a read.  And so are the previous four entries (on colonoscopies, pregnancy, joint replacement (with a nice discussion of medical tourism), and prescription drugs).

CORRECTED DATE: 12/2: Petrie-Flom Health Law Workshop with Christopher Robertson

Christopher Robertson is an associate professor at the James E. Rogers College of Law, University of Arizona and an associate with the Safra Center for Ethics at Harvard. For 2013-2014, he is a visiting professor at Harvard Law School. He is also a regular contributor at Bill of Health.

He will present two papers at the Petrie-Flom Health Law Workshop on Monday, December 2, at 5:00pm: ”Scaling Cost-Sharing to Wages” and “A Presumption against Expensive Healthcare Consumption.”

For more details on the workshop, including information on how to obtain copies of the papers, please visit the Petrie-Flom Center’s website.

TOMORROW: Neil Flanzraich, “Responsibility and Integrity in the Pharmaceutical Industry”

Please join the Petrie-Flom Center for a lecture by Neil Flanzraich on responsible pricing strategy, access to care, clinical trial design, outsourcing, and other topics that raise thorny but crucial issues for pharmaceutical and biotechnology companies.  There will be substantial time for Q&A.

Mr. Flanzraich graduated from HLS in 1968, and was appointed by Dean Martha Minow as an Expert in Residence at the Harvard Innovation Lab (i-lab) in fall 2012. He is the Executive Chairman of Kirax Corporation and the Executive Chairman of ParinGenix, Inc., both of which are privately owned biotech companies. He previously served as the Vice Chairman and President of Ivax Corporation, an international pharmaceutical company, which was sold to Teva in 2006 for an enterprise value of $10 billion.

For more information, please visit our website.

New Blog, “ACA Death Spiral,” by Houston Law’s Seth Chandler

In case the title of the blog doesn’t make its thrust clear, here’s a snippet from Seth’s opening post:

This blog is going to chronicle what I believe will be the implosion of the Affordable Care Act.  I do not believe the Exchange based system of providing health insurance without medical underwriting is likely to work or that, if it does, it will not need far more massive propping up from federal taxes than is conventionally recognized. We’ll be looking at current events, the history of the Act, important court cases, and regulatory developments. Our tools will be a careful review of primary documents, some graphical and mathematical analyses, and references to important and insightful articles written by others.

Also, there is more to the Affordable Care Act than the Exchanges.  There is more than the individual mandate. There is the employer mandate, the complex systems of federal reinsurance needed to backstop the Act, the reintroduction of medical underwriting under the “wellness label” and so much more.  We’ll try as time permits to take a look at developments in these important areas too.

Seth — who is an insurance law expert — notes the “need for some hard and at least somewhat scientific look at what is going on.” So far, since beginning the blog some 48 hours ago, he has tackled the Upton Bill intended to address the “if you like your health care plan you can keep it” issue (which passed the House this afternoon with the help of 39 Democrats and now heads to the Senate); yesterday’s announced “Obamafix,” intended to address the same issue; whether the ACA’s little-known reinsurance and risk adjustment provisions could make exchanges more resilient to the underenrollment that many, including Seth, anticipate; and five questions journalists should be asking about the ACA (hint: fewer questions about how the rollout is likely to affect the careers of pols; more questions about the winners and losers under the ACA among the rest of us).

Welcome to the blawgosphere, Seth.

[Cross-posted at The Faculty Lounge]

PAPER NOW AVAILABLE for 11/18 Health Law Workshop w/Aaron Kesselheim

Aaron Kesselheim is a physician and an Assistant Professor of Medicine at the Harvard Medical School. He will be speaking at the Petrie-Flom Health Law Workshop on Monday, November 18, at 5:00pm, on “Do March-In Rights Protect Public Interests in Medical Products Arising from Federally-Funded Research?”

For more details on the workshop, including information on how to obtain a copy of the paper, please visit the Petrie-Flom Center’s website.

11/21: Neil Flanzraich on “Responsibility and Integrity in the Pharmaceutical Industry”

Please join the Petrie-Flom Center for a lecture by Neil Flanzraich on responsible pricing strategy, access to care, clinical trial design, outsourcing, and other topics that raise thorny but crucial issues for pharmaceutical and biotechnology companies.  There will be substantial time for Q&A.

Mr. Flanzraich graduated from HLS in 1968, and was appointed by Dean Martha Minow as an Expert in Residence at the Harvard Innovation Lab (i-lab) in fall 2012. He is the Executive Chairman of Kirax Corporation and the Executive Chairman of ParinGenix, Inc., both of which are privately owned biotech companies. He previously served as the Vice Chairman and President of Ivax Corporation, an international pharmaceutical company, which was sold to Teva in 2006 for an enterprise value of $10 billion.

For more information, please visit our website.

11/21: Neil Flanzraich on “Responsibility and Integrity in the Pharmaceutical Industry”

Please join the Petrie-Flom Center for a lecture by Neil Flanzraich on responsible pricing strategy, access to care, clinical trial design, outsourcing, and other topics that raise thorny but crucial issues for pharmaceutical and biotechnology companies.  There will be substantial time for Q&A.

Mr. Flanzraich graduated from HLS in 1968, and was appointed by Dean Martha Minow as an Expert in Residence at the Harvard Innovation Lab (i-lab) in fall 2012. He is the Executive Chairman of Kirax Corporation and the Executive Chairman of ParinGenix, Inc., both of which are privately owned biotech companies. He previously served as the Vice Chairman and President of Ivax Corporation, an international pharmaceutical company, which was sold to Teva in 2006 for an enterprise value of $10 billion.

For more information, please visit our website.

Action of Ohio Controlling Board on Medicaid Expansion

According to Professor Wilson R. Huhn of the University of Akron School of Law, the Ohio governor’s action expanding Medicaid in Ohio is valid. He writes:

On Monday, October 22, at the urging of Governor Kasich, the  Controlling Board of the Ohio Legislature voted 5-2 to accept $2.5  billion in federal funding to expand Medicaid in the State of Ohio.  Under the laws of Ohio this action was valid.

The Controlling Board is a state agency created by statute. The agency  has two principal powers: it can transfer funds and authorize purchases  by state agencies, and it can decide to accept federal funding on behalf of these agencies. Section 131.35(A)(5) of the Ohio Revised Code  states: “Controlling board authorization for a state agency to make an expenditure of  federal funds constitutes authority for the agency to participate in the federal program providing the funds ….”

Two advocacy organizations (the Buckeye Institute and the 1851 Center  for Constitutional Law) as well as several Ohio lawmakers have announced that they intend to challenge the legality of the action of the  Controlling Board. They contend that the action of the Board violates  Section 127.17 of the Ohio Revised Code, which provides that the Board  is bound by the intent of the Ohio General Assembly. The challengers  quite correctly point out that both houses of the General Assembly voted not to accept federal funding to expand Medicaid. Governor Kasich  vetoed this bill, but the challengers argue that despite the Governor’s  veto it’s clear that the General Assembly did not want the Controlling  Board to accept federal funding to expand Medicaid.

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Disruptive Innovation and the Rise of the Retail Clinic

By Michael Young

The Association of American Medical Colleges (AAMC) projects that by 2025 the United States will face a shortage of 130,600 physicians, representing a near 18-fold increase from the deficit of 7,400 physicians in 2008.  The widening gap between physician supply and demand has grown out of a complex interplay of legal, political, and social factors, including a progressively aging population, Congressionally mandated caps on the number of Medicare-funded residency slots and funding for graduate medical education, and waning interest among medical school graduates in pursuing careers in primary care.

These issues generate unprecedented opportunities for healthcare innovators and entrepreneurs to design solutions that can effectively address widening disparities between healthcare supply and demand, particularly within vulnerable and underserved areas.

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