As the backlog of Medicare appeals indicates, Medicare claimants are seeking many more hearings than we can currently provide. The mismatch makes a fundamental question particularly acute: Why do we hold hearings to review Medicare coverage decisions in the first place?
It’s a question worth asking. The Affordable Care Act mandated that denials of private health insurance coverage be reviewed by external, contract medical specialists, without a hearing. (See here.) If we are comfortable with private, sometimes profit-motivated coverage decisions obtaining external review review by someone other than an Administrative Law Judge (ALJ), without a hearing, why do we feel differently about Medicare coverage decisions? Continue reading →
One option for dealing with the backlog of Medicare claims waiting for a hearing is to settle them. That’s up to the Centers for Medicare and Medicaid Services, not the Office of Medicare Hearings and Appeals that actually oversees the process, so it’s not an administrative fix that the Office of Medicare Hearings and Appeals could actually implement alone. But it is worth considering, and the CMS has shown an openness to it by going along with the proposal for facilitated settlement and by offering to settle a big chunk of pending inpatient hospital admission disputes for 68 cents on the dollar. (See Nick Bagley’s post at the incidental economist.)
These settlement efforts have received some high-level scrutiny, however. Last month Representative Brady, Chair of the House Ways and Means Committee, Subcommittee on Health, sent the HHS a strongly-worded letter after the inpatient hospital settlement was announced, arguing that the settlement may exceed CMS’s statutory authority, among other problems. (See the letter linked here (“I question whether HHS has statutory authority for this settlement process.”)
Next week (on October 29) Medicare’s Office of Medicare Hearings and Appeals (OMHA) is holding another appellant forum to discuss the ongoing backlog of Medicare claims waiting for a hearing. In one sense, a lot has happened since the last forum in February (I covered that here): OMHA announced pilot projects to try statistical sampling and facilitated settlement in some cases (see here and here); CMS (effectively the “defendant” for settlement purposes in these appeals; functionally independent from OMHA) announced a willingness to settle a subset of pending inpatient hospital billing claims for 68 cents on the dollar (see Nick Bagley’s post at the incidental economist); the backlog came up at a couple congressional hearings; and two lawsuits were filed to challenge it, one by providers (see here) and another by beneficiaries (see here).
In another sense, not that much has happened. Unless Thursday’s forum brings big news—and I know that OMHA and CMS have been working hard on reforms so perhaps it will—there is still a big backlog of Medicare appeals, there is still not a resource fix in sight, and the influx of Medicare appeals seems to still far outstrip OMHA’s capacity to hold hearings.
In advance of the forum, I’m planning a series of posts offering my thoughts, such as they are, on where we are and where we are going. I invite anyone who disagrees or thinks I’ve gotten something wrong to post their own views in the comments. Or you can email me and I will look into sharing your thoughts as an independent posting. You can get all my posts on this subject, including new ones as they come in, by clicking here.
A caveat: I’m approaching these as blog posts—trying to get my educated thoughts based on everything I have read out in a timely way—but I might be missing something. If the upcoming forum or comments reveal that I am–I won’t be there in person but will be watching remotely–I will either post a general update or go add particular updates in the text of my posts as necessary.
And a disclosure: I’ve said this before but want to do it once more again before pontificating—I worked in government until a little over a year ago, so my views on these matters may be biased. (And of course I will not discuss anything I worked on.) But I’ve done my best to be objective.
For all those who have been following the ongoing fight between pharmaceutical companies and HHS over the 340B Program’s coverage of orphan drugs (I know you’re out there), last week PhRMA filed a new complaint challenging HRSA’s interpretive rule on the subject under the APA. For all those who are not (but should be) paying attention to this battle, here’s what’s happening.
The 340B Program allows certain health care organizations (such as disproportionate share hospitals) to purchase drugs for their patients at significant discounts. The Affordable Care Act expanded the number and kind of organizations that can participate in the 340B Program, but it also added an exception stating that most of the covered organizations could not obtain 340B discounts for orphan drugs — or, as the statute puts it, for “a drug designated … for a rare disease or condition.” 42 U.S.C. § 256b(e).
The battle between PhRMA and HHS is over is whether this statutory exclusion applies to orphan drugs or orphan indications. There are many drugs which have received an orphan designation for certain indications but are also FDA-approved and prescribed more generally for non-orphan indications. In such a case, can a 340B facility purchase the drug at a discount if it is being prescribed for a non-orphan indication? Continue reading →
For all those who are interested in issues of global health, access to medicines, and drug pricing, yesterday Gilead formally announced its access program for enabling many developing countries to purchase its new Hepatitis C drug, Sovaldi, at low prices. This announcement is particularly noteworthy because Sovaldi represents a significant improvement over the current standard of care for Hepatitis C, as it can cure a much greater percentage of sufferers than could standard therapies, and it does so with many fewer negative side effects. Gilead’s partnership-based program will permit seven Indian generic drug companies to produce and sell the drug in 91 developing countries. The discounts are significant: although Gilead formally charges $1,000 a pill (or $84,000 for a course of treatment) for Sovaldi in the United States, it will charge just 1% of that, or $10 a pill, in India (the total cost there is estimated at $1,800, given the difference in strain prevalence).
The global health community has reacted to the announcement with mixed reviews. The 91 countries in the program include more than half of the world’s Hepatitis C patients. But tens of millions of other patients in large nations like China, Brazil, Mexico, and Thailand are left out of the program. Going forward, some of the excluded nations may seek to issue compulsory licenses in an effort to expand access to Sovaldi.
Gilead has also drawn fire in the United States for Sovaldi’s $84,000 sticker price (which, for various reasons, very few if any will actually pay), to the degree that members of both houses of Congress haveasked Gilead to justify the price of the drug. Those opposing Sovaldi’s price have generally not come out publicly against the high price of many orphan drugs, which can cost $250,000-$350,000 per year. But because Hepatitis C afflicts about 2.7 million people in the US, as compared to the few thousand people with one of the relevant orphan diseases, its impact on insurers (both public and private) is likely to be much larger (as this very blog has previously noted). Continue reading →
I have blogged a few times about the current backlog in Medicare’s coverage appeals process, including observations about a lawsuit by providers challenging the backlog in federal court in the District of Columbia. (See here.) Yesterday a new lawsuit was filed, this one a class action lawsuit by beneficiaries represented by the Center for Medicare Advocacy. (See their press release here.) The case is Lessler et al. v. Burwell, 3:14-CV-1230 (D.Conn.). I am blocked from accessing the complaint on PACER but am working on getting a copy.
Without access to the complaint it is dangerous to speculate, but I wonder whether this suit may be subject to many of the exhaustion-based arguments that I thought could lead to dismissal of the provider suit. But the Center for Medicare Advocacy has had success pursuing class action suits on behalf of Medicare beneficiaries before, most notably the Jimmo case that led to a significant change in the standard of qualification for skilled nursing care. (See here.)
One thing about this suit that may only be interesting to administrative law buffs is the choice of forum. This case was filed in Connecticut, not the District of Columbia (where the providers filed their suit). As I have written about elsewhere, there are pros and cons to channeling administrative law cases through DC, among them DC’s expertise in exhaustion and other administrative law issues.
I can’t say whether the Center for Medicare Advocacy chose to file in Connecticut rather than the District solely because that is their home forum, or whether they thought they’d get a more sympathetic judge/more plaintiff-friendly exhaustion doctrine. And the same goes for the providers’ choice to file in the District rather than some other state. I can say from experience, though, that the choice can really matter; DC judges’ familiarity with administrative law issues just makes them perceive these cases differently from the start. So it would not surprise me at all if there are considerations beyond mere location at play here. (Not that there’s anything wrong with that!)
Much attention has been paid recently to the contradicting decisions issued on the Halbig and King cases, which challenged the Obamacare subsidies offered to individuals purchasing insurance on federal exchanges. In a piece for Politico Magazine, Abbe R. Gluck finds a weakness in the Halbig plaintiffs’ arguments, in their own words. As Gluck writes:
What’s less known, however, is that in the 2012 constitutional case, these same challengers filed briefs describing Obamacare to the court in precisely the way they now say the statute cannot possibly be read. Namely, they assumed that the subsidies were available on the federal exchanges and went so far as to argue that the entire statute could not function as written without the subsidies. That’s a far cry from their argument now that the statute makes crystal clear that Congress intended to deny subsidies on the federal exchanges.
I am not a fan of the “gotcha” flavor that some aspects of this case have taken on, but the challengers’ 2012 statements are relevant as a legal matter because what the government has to prove to win—as a matter of black-letter law under the Chevron doctrine—is that the statute is ambiguous. (Chevron says that federal courts defer to the relevant agency’s reading of the statute when a federal statute is unclear—here, that agency is the IRS.)
The challengers have spent more than a year arguing that no reasonable reader of text could construe the statute in any way other than denying federal subsidies to insurance purchasers on exchanges operated by the federal government. But what about their statements from 2012—statements then echoed by Justices Scalia, Kennedy, Thomas and Alito in their joint dissent to the Supreme Court’s ruling in the constituitional challenge, NFIB v. Sebelius?
You can read more, including the relevant passages from the NFIB v. Sebelius briefs, here.
Few people know that new prescription drugs have a 1 in 5 chance of causing serious reactions after they have been approved. That is why expert physicians recommend not taking new drugs for at least five years unless patients have first tried better-established options and need to. Faster reviews advocated by the industry-funded public regulators increase the risk of serious harm to 1 in 3. Yet most drugs they approve are found to have few offsetting clinical advantages over existing ones.
Systematic reviews of hospital charts by expert teams have found that even properly prescribed drugs (aside from misprescribing, overdosing, or self-prescribing) cause about 1.9 million hospitalizations a year. Another 840,000 hospitalized patients given drugs have serious adverse reactions for a total of 2.74 million. Further, the expert teams attributed as many deaths to the drugs as people who die from stroke. A policy review done at the Edmond J. Safra Center for Ethics at Harvard University concluded that prescription drugs are tied with stroke as the 4th leading cause of death in the United States. The European Commission estimates that adverse reactions from prescription drugs cause 200,000 deaths; so together, about 328,000 patients in the US and Europe die from prescription drugs each year. The FDA does not acknowledge these facts and instead gathers a small fraction of the cases.
Perhaps this is “the price of progress”? For example, about 170 million Americans take prescription drugs, and many benefit from them. For some, drugs keep them alive. If we suppose they all benefit, then 2.7 million people have a severe reactions, it’s only about 1.5 percent – the price of progress?
However, independent reviews over the past 35 years have found that only 11-15 percent of newly approved drugs have significant clinical advantages over existing, better-known drugs. While these contribute to the large medicine chest of effective drugs developed over the decades, the 85-89 percent with little or no clinical advantage flood the market. Of the additional $70 billion spent on drugs since 2000 in the U.S. (and another $70 billion abroad), about four-fifths has been spent on purchasing these minor new variations rather than on the really innovative drugs.
In a recent decade, independent reviewers concluded that only 8 percent of 946 new products were clinically superior, down from 11-15 percent in previous decades. (See Figure) Only 2 were breakthroughs and another 13 represented a real therapeutic advance.
After last week’s foray into patents and pharmaceutical policy, which is perhaps the most technical and specialized area of pharmaceutical policy, I will return to the never-ending story of pharmaceutical prices and the controversy over Sovaldi, Gilead’s break-through Hepatitis C drug. Sovaldi has a “sticker price” of $84,000 for a 12-week course of treatment, at the end of which 90% or more of patients would be expected to be cured. Since Sovaldi is a pill that is given once a day, the 12-weeks of treatment means that there are 84 daily doses. The math is easy, even if the price, unlike the pill, is hard to swallow–$1,000 per pill. The drug has been a huge financial success for Gilead, which reported $2.274 billion in sales in just the first quarter of 2014. However, the backlash has been equally huge. In a rare display of bipartisanship in Washington, Senator Ron Wyden (D.-Ore), the Chair of the Senate Finance Committee and Senator Chuck Grassley (R.-Iowa), the Ranking Member of the Finance Committee, sent a demand for information concerning the development costs of Sovaldi and Gilead’s pricing decision. However, even more than the investigation by two senior senators, the impetus for today’s post came from the blog RxObserver, which featured a post entitled Sovaldi: A Poster Child for Predatory Pricing [sic]. Before discussing the epithet “predatory pricing,” the perspective of RxObserver requires a bit of explanation. RxObserver is a site that primarily provides the views of pharmaceutical benefit managers (PBMs), or as the blog itself states its purpose: “the Clearinghouse of the Future for Pharmacy Benefits.” It is, in general, a very high-quality blog, with an editorial staff composed primarily of well-recognized academic and government experts in health care policy. I regularly read it and find it useful, although I was taken aback by that “predatory” epithet. Continue reading →
Several months ago, I promised to post my thoughts on the viability of the American Hospital Association’s threatened lawsuit against the Secretary of Health and Human Services challenging the growing backlog of coverage appeals. (See my post here). That issue has become timely, because the AHA and several providers filed suit in May in the District of Columbia, and a few days ago filed a motion for summary judgment. (See here). There has been some coverage of the suit. (See here and here.) In short, their argument is that the statute says that a hearing must be held in 90 days and Medicare officials admit that the plaintiffs will not get a hearing for years, so therefore the court should order “mandamus,” forcing compliance with the 90 day deadline.
When I was in practice before moving to academia, I represented the Secretary in cases like this, so keep in mind my view might be biased. But the government’s response to the complaint is due (by my calculation) Monday, July 28, so I wanted to offer my quick reactions about the case and what sort of response we might hear from the government. I’ve just read over the AHA’s motion for summary judgment and I think that in a case like this, with an admitted violation of a statutory requirement, you have to start with the presumption that things could go bad for the government. But with that said, I don’t think that the government’s case is as gloomy as it might at first appear, so this could be an interesting case to watch going forward.
As mentioned in co-blogger Matthew Lawrence‘s prior posts (here) and (here), Medicare’s Departmental Appeals Board (DAB) recently vacated a decades-old National Coverage Determination (NCD) precluding coverage for sex change therapy. That opens the door for Medicare coverage for sex change therapy, but does not guarantee coverage.
In this second blog of a two-part post, we will discuss how we got here: the somewhat unique process taken by the Centers for Medicare & Medicare Services (CMS) to invalidate its old coverage decision.
The decision has a somewhat odd procedural history. On the morning of March 29, 2013, the CMS announced that it was reconsidering the NCD through the formal process for doing so, and sought public comment on what it should do. (See enthusiastic coverage here.) The statutory, public process for reconsideration of an NCD includes the opportunity for comment and so on, analogous to notice and comment rulemaking. And the ultimate decision is subject to judicial review. (See here for more on the NCD process.) The NCD reconsideration process could have not only vacated the old standard, but offered specific standards to govern coverage across claimants (and thereby avoided some of the limbo discussed in our last post).
But on the night of March 29, 2013, the CMS rescinded its call for public comment, saying that it would instead allow a “just filed” appeal challenging the NCD before the DAB to proceed. (See here.) The DAB process is more adversarial and pits a single beneficiary challenging CMS policy in his or her case against the CMS. (Although there are opportunities for amici to participate. In this case, six amici participated, and all of them argued that the ban was unlawful.) The CMS went on to decline to defend the policy, which made the ultimate DAB decision vacating the (undefended) policy unsurprising.
We can’t say why the CMS chose to rescind the reconsideration process rather than push for the individual appeal before the DAB to be held in abeyance pending the outcome of the reconsideration. (In federal court, the doctrine of “ripeness” would have made the pendency of the NCD reconsideration grounds for dismissal of the individual appeal.) And for transgender persons seeking coverage, the process by which their cause was furthered is surely of little moment. But we can’t help but note that, for better or worse, proceeding through the DAB rather than the formal NCD reconsideration process meant less public attention on the proceeding, and less opportunity for comment by interested groups.
Predictive analytics, or the use of electronic algorithms to forecast future events in real time, makes it possible to harness the power of big data to improve the health of patients and lower the cost of health care. However, this opportunity raises policy, ethical, and legal challenges. In this article we analyze the major challenges to implementing predictive analytics in health care settings and make broad recommendations for overcoming challenges raised in the four phases of the life cycle of a predictive analytics model: acquiring data to build the model, building and validating it, testing it in real-world settings, and disseminating and using it more broadly. For instance, we recommend that model developers implement governance structures that include patients and other stakeholders starting in the earliest phases of development. In addition, developers should be allowed to use already collected patient data without explicit consent, provided that they comply with federal regulations regarding research on human subjects and the privacy of health information.
I will also have a related paper on mobile health coming out later this summer that I will blog about when it comes out…
Last month Medicare’s policy on coverage for sex change therapy changed somewhat. (See Matt’s earlier post here.) Specifically, Medicare’s Departmental Appeals Board invalidated the long-standing National Coverage Determination that dubbed sex change therapy to be non-covered, per se.
Co-blogger Elizabeth Guo and I have done some further digging on this issue and put together two posts answering some questions left open by Medicare’s decision and the news coverage surrounding it. In this post we discuss next steps: what the change in coverage policy means for Medicare beneficiaries who want coverage for sex change therapy, and what, if any, additional developments are likely to follow. In a companion post, we will be discussing the somewhat unusual process that was used to make this policy change.
Yesterday, Medicare’s Departmental Appeals Board set aside a thirty-year-old National Coverage Determination excluding Medicare coverage for sex change surgery. As a result, Medicare beneficiaries may now seek coverage for sex change surgery, though the ruling does not make such coverage automatic; it only lifts the blanket national exclusion. Regional and case-by-case determinations that such surgery is not “medically necessary” could still apply. For news coverage, see here, here, and here.
The decision is not entirely surprising, Medicare had already in December reopened consideration of the National Coverage Determination precluding coverage. One question to watch is whether this decision, and the changed Medicare policy that ultimately results from it, winds up furthering the case for coverage in private insurance. There is an unmistakable trend in this area toward more coverage. Connecticut recently mandated coverage for many plans, and California and Oregon expanded coverage last year. And let’s not forget prison, in the First Circuit, at least, the refusal to provide sex change surgery to Michael Kosilek that doctors deemed to be medically necessary was ruled “cruel and unusual punishment.” (Coverage in the Globe here.)
Nearly three years ago, in July of 2011, Tara Adams Ragone wrote a blog post for Seton Hall Law’s Health Reform Watch blog entitled “Community Based Medicaid ACOs in New Jersey: A Signature Away”. As Professor Ragone explained, a month earlier the New Jersey legislature had passed Senate Bill 2443, which established a Medicaid accountable care organization (ACO) demonstration project, but Governor Chris Christie had not yet signed it. “It’s an exciting time for growth and innovation in the Garden State,” Professor Ragone wrote, “if we just get that signature.”
Governor Christie did go on to sign Senate Bill 2443 into law, in August of 2011, but the implementation process has been protracted. The act required the Department of Human Services to “adopt rules and regulations” that provided for oversight of the quality of care delivered to Medicaid recipients in the ACOs’ designated geographic areas and set standards for the gainsharing plans that participating ACOs must develop. The deadline for adopting the regulations was in June of 2012, but they were first issued, in draft form, in May of 2013. The final regulations were not adopted until earlier this week, one day before the proposed regulations were due to expire.
As Andrew Kitchenman reports here, with the regulations in place, the three community-based organizations that have been preparing to launch Medicaid ACOs, one in Camden, one in Trenton, and one in Newark, can finally get started. Unlike the State, they will have to move quickly; the deadline for applying to participate in the three-year demonstration is July 7th.
There is, in Kitchenman’s words, “a final piece to the puzzle”—the participation of managed care organizations (MCOs). Continue reading →
In this next installment of today’s live-blogging of the conference (and with all of the caveats of live-blogging mentioned by my colleagues and my apologies for any errors or misrepresentations) we have Professors David Hyman (DH), Mark White (MW) and Andrea Freeman (AF) in a panel moderated by Glenn Cohen (GC) on the “Potential Problems and Limits of Nudges in Health Care”.
The panel began with DH, H. Ross & Helen Workman Chair in Law and Director of the Epstein Program in Health Law and Policy, University of Illinois College of Law, and a talk entitled, “what can PPACA teach us about behavioral law and economics” (Patient Protection and Affordable Care Act). DH began with the observation that nudges often work quite well… “unless they don’t”. While many nudges are “sticky”, i.e. they influence behavior in the way they were intended, others are “slippery”, i.e. they fail to influence behavior in the way they were intended. His talk set out to illustrate the phenomenon, and to pose two questions. The first was an empirical question: what makes a nudge sticky vs slippery? The second was philosophical: is it meaningful to talk about a “failed nudge” or when we do, do we really just mean failed marketing? He focused on an analysis of PPACA as a case study.
Behavioral economists are really into giving the cognitive errors they study, and the corrective policy interventions they favor, labels. “Status quo bias,” “availability bias,” “recall bias,” etc., can all be fixed through “nudges” that involve “asymmetric paternalism” and the like.
I’ve thought of my own labels (or rather, euphemisms) for the policy interventions I would suggest in response: “continuing medical education” for the first of these neat little errors, and “resocialization” for the second.
On March 25, Susan Jaffe published a blog post in the New York Times about Medicare’s recent change to cover skilled therapy (e.g. physical therapy, nursing care) where it is “reasonable and necessary” maintain a patient’s condition and to prevent deterioration, even when it is not likely that the patient will improve. Jaffe notes that the revisions will likely have a substantial impact on thousands of Medicare beneficiaries even though the change has been largely unnoticed.
The revision highlights a potential problem with the system in place for challenging Medicare coverage. The revision itself is unremarkable, reflecting what national Medicare policies professed, but what local contractors sometimes ignored. What is remarkable is the time it took for Medicare to make the revision, from when the controversy appeared to when Medicare posted the change in its manuals. This delay is problematic because it reflects a dichotomy in how coverage decisions are challenged and changed under Medicare – due not to medical necessity but to political and financial circumstances beyond patient control.
Constituents can change Medicare coverage policies through two processes. One is through the litigation system. Judges can overturn Medicare coverage decisions after patients have exhausted Medicare’s internal adjudication process. Yet, litigation can take years and judges usually defer to Medicare’s judgment. National Coverage Determinations (NCDs) provide an alternative under which constituents can encourage Medicare to reconsider or overturn a prior coverage decision. NCDs supersede Local Coverage Determinations (LCDs) – coverage decisions that affect a region of the United States. When Medicare determines that the LCDs for a specific technology or service are “inconsistent or conflict with each other to the detriment of Medicare beneficiaries,” Medicare can decide to issue an NCD to provide uniform coverage.
Every year, in order to prevent a statutorily-triggered decrease in physician reimbursements under Medicare, Congress must adjust the statutorily-prescribed fee schedule. This is known as the “doc fix.” The American Medical Association, for what it is worth, has lobbied for a permanent doc fix, but that has not happened yet.
This year’s automatic pay cut was going to be 24%, and for a moment a temporary fix was in doubt because of bipartisan support for a permanent fix. But thanks to some procedural maneuvering yesterday, it looks like a temporary doc fix is through the house, at least. (See coverage in Politico here and Washington Post here. And just for fun, see a show about getting things through the house with procedural maneuvering here.)
In addition to the doc fix, a provision included in the House bill would forbid the Department of Health and Human Services from conducting post-payment review through Recovery Audit Contractors of inpatient hospital admission until March 31, 2015. This will stop for at least a year a review program that, in its last full year of operation, returned to the Medicare trust fund (and took away from hospitals) billions of dollars. (See commentary condemning the delay here and commentary criticizing the Recovery Audit Contractor program here.) It’s a notable development and if passed will kick the can down the road a short ways for Medicare to decide how it wants to handle utilization review in this area.
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 →