Is Medicare’s System for Challenging Coverage Determinations Unintentionally Unfair?

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.

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New regulatory pathways and incentives for sustainable antibiotics: Recent European & US Initiatives

Please find attached a ppt presentation on “New regulatory pathways and incentives for sustainable antibiotics: Recent European & US Initiatives” given on March 7, 2014 at the Broad Institute of MIT and Harvard.  The presentation was followed by a discussion moderated by US patent attorney Melissa Hunter-Ensor, Partner at Saul Ewing, Boston.

I started out by emphasizing increasing problems of antimicrobial resistance (AMR) on a global level, providing new statistics and facts. This was followed by a discussion of main reasons for these alarming developments, such as inappropriate use in agriculture and medicine, insufficient precautions, lack of education, climate change, travel behavior, insufficient collaboration and funding of R&D, scientific complexities, and the problem that incentives provided by the traditional innovation system model often fail in the case of antibiotics.

Next the presentation focused on a variety of solution models that could be discussed to fight AMR. These include both conservational and preventive approaches comprising use limitations, increased public awareness, and better hygiene, but also reactive push & pull strategies, such as increased investments, new collaborative models for R&D in antibiotics, prizes, “sui generis” IP-related incentives, regulatory responses and new pathways for approval.

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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

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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Two Pills: “That Will Be $307,000, please.”

So reads the cover of the MIT Technology Review this month.  The article is available for free online.  The article begins with the story of Kalydeco, which is priced at $294,000 per year.

The company also pledged to provide it free to any patient in the United States who is uninsured or whose insurance won’t cover it. Doctors and patients enthusiastically welcomed the drug because it offers life-saving health benefits and there is no other treatment. Insurers and governments readily paid the cost.

Hold on.  If patients can get the medicine for free even when their insurers decline to pay the cost, why would insurers “readily pay the cost?”

Coupling Genetic Counseling to Test Coverage

By Michael Young

As debates surrounding genetic patent rights begin to settle, new questions and disputes have started to emerge around insurance coverage for genetic testing.  For the first time, a U.S. health insurance provider (Cigna) has decided to require evaluation by an American Board of Medical Genetics or American Board of Genetic Counseling certified counselor before covering the costs of genetic testing, including genetic tests for susceptibility to breast and ovarian cancer (e.g., BRCA1 and BRCA2).  Cigna specifies in its new coverage policy statement, which goes into effect on September 15, 2013, that coverage for such testing will require recommendation by a certified genetic counselor based on pre-test individual evaluation, pedigree analysis, and intent to engage in post-test counseling.

By mandating genetic counseling prior to testing, this requirement aims to reduce unnecessary tests and to increase the efficiency and efficacy of health risk management and service delivery. Earlier this week, however, the American Society of Clinical Oncology (ASCO) took aim at Cigna’s policy, claiming that it can “negatively impact the care of cancer patients by serving as a barrier to the appropriate use of genetic testing services.”  At least four key considerations appear to underpin ASCO’s apprehensions about Cigna’s new policy.

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Sex, People with Disabilities, Prostitution, and Universal Health Care: Reflections on “The Sessions”

[Cross-Posted at PrawfsBlawg]

One of my favorite initiatives at Harvard Law School, where I teach, is that faculty members get to offer an optional 10-12 student not-for-credit “First-Year Reading Groups” on a topic of interest to them that is related to law in some way but not too law-class like. I’ve taught a reading group on bioethics and law through film that pairs films with papers/topics in bioethics (e.g., A.I. with readings on personhood, Minority Report and neuroscience and law and predicting criminality, Dirty Pretty Things and organ sale and exploitation, The Constant Gardener with clinical trials in the developing world, Eternal Sunshine for the Spotless Mind and therapeutic forgetting and “cosmetic neurology” and many others…)

Next year I will add The Sessions, a film I found very enjoyable starring John Hawkes, Helen Hunt, and William H. Macy from last year that I also found very bioethically interesting. The film is based on a true story and follows Mark O’Brien, a poet who lives in an Iron Lung due to complications from Polio. After unsuccessfully proposing to his caretaker, and believing the end of his life may be nearing, he decides he wants to lose his virginity. He hires Cheryl Cohen-Greene, a professional sex surrogate, who will offer him a maximum of six sessions but makes clear to him this is therapy not romance. I will stop there to avoid ruining the film, but on to the bioethics…

There are fairly clear issues raised about commodification, exploitation, the difference between sex therapy and prostitution, that I have written about in various forms in various places. These are certainly interesting issues but familiar enough. What the film newly prompted me to think about, though, is actually universal health care. In particular, as I have written about indirectly in a couple of papers, what would some of the most prominent theories explaining why we need universal health care say about whether the state should pay for sex therapy (or perhaps even prostitution) for people with disabilities like Mark who find themselves otherwise unable to have sex?

For example, in his wonderful book Just Health, my colleague Norman Daniels, coming from a more Rawlsian tradition (i.e., a liberal tradition focused on promoting liberty and distributive justice through giving priority to the worst-off), grounds the state’s role in promoting health in the obligation, as a matter of political justice, to ensure access to the “normal opportunity range” to pursue the “array of life plans reasonable persons are likely to develop for themselves.” Although Daniels’ focus is on health care, it seems to me that sexual satisfaction is also part of that normal opportunity range and part of a life plan most of us would like to pursue.

Similarly, Martha Nussbaum in her great book Frontiers of Justice, writing from a more aretaic (i.e., Aristotelian, focusing on character and virtue) perspective, has argued that the state’s role is to enable human flourishing by raising people above the threshold level on a number of “capabilities.” Among these she mentions “bodily integrity,” as including “having opportunities for sexual satisfaction and for choice in matters of reproduction.” I have previously discussed how this kind of approach may justify funding reproductive technologies, but it seems to me as though it also fairly directly establishes an argument for funding Mark’s attempts to lose his virginity.

Now this is meant to be provocative, of course. And for some this is no doubt a reductio ad absurdum against universal health care. Fair enough. But for those who believe there is a moral case for funding universal health care, does the argument also lead to funding these kinds of sex therapies? Health is important, of course, but let’s be frank (and my parents can stop reading at this point) so is sexual satisfaction, and both seem to me essential parts of the normal opportunity range and/or human flourishing.

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Live Blogging from FDA in the 21st Century Conference, Panel 5: Major Issues in Drug Regulation

 [Live-blogging off-the-cuff, all errors, typos, etc, are my fault]

Geoffrey Levitt, Pfizer, Drug Safety Communication: The Evolving Environment

A drug by itself is just an object. Because of that fact it creates turf, governance. You must have effective processes for communicating accurate info.

Pharmacovigilance is the accuracy part. Spontaneous adverse event reports are flooding to companies. 600,000 of such reports go to Pfizer a year, with 2000 a day on avg. Each has to be classified, reported, and followed-up. If you mess up you get a warning letter. But it has limits: passive, haphazard, poor signal to noise value. Main value is generating safety signals to follow up on. But studies of that kind for follow-up are very expensive and competing with other possible safety studies and new drug development for funding.

For this reason there has been interest in active real-time drug safety monitoring, like Sentinel.

Once you have accurate and up to date info, how do you communicate it to the audiences that need it. It is not static info, dynamic and constantly changing, and often not fully baked. Timing is everything. That leads to governance. Who owns it? Which stakeholders get to drive it. In Wyeth v. Levine, S. Ct says drug sponsor owns the label, and is responsible at all times for content of the label, including safety info. In reality not that simple. Today there is a number of players outside health authority and drug sponsor who have emerged as powerful forces. Academic researchers, drug payers, detailers, and many others.  This is not by accident. One reason is emergence of vocal critics who have critiqued the sponsors ability to directly communicate. Claim that this is a form of collusion  of which Levitt does not agree.

Vioxx sparked a few important developments. IOM produced one of the most important recommendations that led to FDAAA especially as to post-market surveillance and power over the safety label. Balance of authority shifted from that authority towards FDA. FDA also began to be more proactive about communicating, even before fully confirmed and without participation of sponsor. Also put into place obligations to post clinical trial results on public website, so clinicaltrials.gov is born. In retrospect, that was the opening shot in a full barrage of FDA on clinical trial transparency. In Europe this had led to a drastic new policy of affirmatively publishing clinical study reports full-scale not just trial results.

Critics of the current model want to tear down the gate, and reinterpret data themselves by own standards. That may lead to different results and different conclusions. Will the erosion of the primacy of the sponsor and FDA lead to more truth or more confusion?

W. Nicholson Price II, Petrie-Flom Center, The Role of Innovation Policy in Pharmaceutical Manufacturing

M & M manufacturing is more precise than drug manufacturing. Poor innovation in drugs. 200 to 300 billion dollars a year are spent on drug manufacturing. This is very expensive and inefficient, contrary to the typical story that drug manufacturing is cheap. Drugs are way behind computers and electronics. Uses same processes as decades ago. A 20% reduction in manufacturing costs would lead to a gain annually 50 billion for consumers if paid back directly, or even more if invested in R & D. Connected also to drug shortages.

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Will Your Law Firm (or Other Employer) Pay for Your Egg Freezing? Should It? (Online Abortion and Reproductive Technology Symposium)

As John Robertson mentioned in his post earlier this week, in order to avoid age-related infertility many women are considering or will soon consider using egg freezing, as the technology has dramatically improved. As compared to freezing preembryos, for example, this is an attractive option since many of these women (heterosexual or otherwise) may not yet have chosen a reproductive partner, and also may want to hedge their bets to have options should they divorce. Still, the technology is not cheap.

At least one participant at the the bricks-in-mortar symposium reported to me that they knew of one Am Law 100 firm that will cover egg freezing for its lawyers. I would be grateful if folks in the comments section could indicate whether they knew whether their firm covers it as well. [Ed. Note: If you have any trouble with the comment function on the blog, which is still giving us trouble, send a note and we'll get it posted for you through the admin account.] My own impression is that this is not yet widespread, but that might change as the practice becomes more common and thus the market converges (perhaps with a push from Above the Law).

Should law firms cover egg freezingt? I have made the argument elsewhere for coverage of reproductive technologies by insurance more generally from a moral and economic perspective. In the case of law firms, I am curious about the PR implications for the firm. Would potential female associates welcome this option knowing that they can work hard early on and still reproduce, if they so desire, later on? Or would they take this as a signal that the firm thinks that working there as an associate and pregnancy are incompatible? Would this option help remedy the deficits faced by women who want to have children on the partnership track or would it in fact exacerbate discrimination against women who do choose to have families early on while at the firm, with the thinking being “she could have waited.” More generally, would this be a blow for or against gender equity at law firms?

New Paper on Coercion and the Constitutionality of the Affordable Care Act

I have a new paper on the Supreme Court’s decision on the Affordable Care Act, just published in the European peer-reviewed philosophy journal Ethical Perspectives. It is available for free download here.  Here is the abstract:

While NFIB v. Sebelius largely upheld the Affordable Care Act (ACA), it did not do so as as to the proposed expansion of Medicaid. Seven of the nine U,S, Supreme Court Justices (all except Justices Ginsburg and Sotomayor) endorsed a ‘coercion’ argument that gave individual States a right of objection grounded in the Constitution’s Spending Clause, wherein individual states could refuse to expand Medicaid as demanded by the federal government without being directly penalized by a denial of federal funding. Two Justices in dissent focused on the lack of judicial administrability of such a standard, and suggested it would open up a Pandora’s box of future constitutional challenges without any clear rules.

In this article, part of a symposium on philosophical analysis of the Court’s decision published in the peer-reviewed journal Ethical Perspectives, I discuss what I see as a more fundamental question: by what theory is the Medicaid expansion coercive, and even if coercive, by what theory is it coercive in a problematic way that justifies constitutional redress?

The Court’s failure to address this issue stems, in part, from confusion over what it means for an offer to be coercive. In some sense, Justice Kagan seemed to recognize this issue in a question to Paul Clement, the lawyer for the challengers to the ACA, at oral argument: “Why is a big gift from the federal government a matter of coercion?” Kagan asked. “It’s just a boatload of federal money for you to take and spend on poor people’s health care,” Kagan added. “It doesn’t sound coercive to me, I have to tell you.” The exchange is all the more curious because, despite her scepticism, Kagan signed on to the Court’s holding that the Medicaid expansion was coercive.

I will examine this issue by first discussing whether Medicaid itself and the ACA’s expansion are coercive (as stand-alone offers). I will then examine whether the offer to change from the existing Medicaid program to the ACA’s Medicaid expansion was problematic. I will analyze these questions under the assumption that the Court is not committing a category error by treating States as the kinds of entities subject to this kind of coercion inquiry. In my conclusion, however, I briefly consider whether that assumption is warranted.

Is Obama Winning or Losing on Medicaid Expansion Under the Affordable Care Act?

By: Katie Booth

The Obama administration announced in February that it would allow Arkansas to use the federal money intended for Medicaid expansion to buy private health insurance plans for individuals with incomes up to 133% of the federal poverty level. This week, Florida’s senate rejected the Medicaid expansion but left open the possibility that it would try to negotiate a similar deal with the Obama administration. Indiana and Ohio may follow suit.

At first glance, this seems like a political loss for Obama. Several states with Republican governors may now expand healthcare for the poor using a private payer model—the type of model Mitt Romney supported during the 2012 presidential race. Yet Obama’s compromise in Arkansas may ultimately be a win for the president. All of the 14 states that are not participating (as of now) in the Medicaid expansion have republican governors. The private insurer model would allow these governors to save face while ultimately expanding access to healthcare for the poor.

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Is Paying For Medical Care Like Buying A Used Car?

Nadia N. Sawicki

Two recent publications prompt me to ask this question.

The first, forthcoming in JAMA Internal Medicine, is a study by Jaime Rosenthal, a student at Washington University in St. Louis.  Rosenthal and her colleagues set out to obtain pricing data for total hip arthroplasty from 20 top-ranked orthopedic hospitals and 102 representative general hospitals (two from each state and Washington DC).  Rosenthal, posing as the granddaughter of a 62-year old woman without health insurance, contacted each hospital numerous times to inquire about the total cost of the procedure.  Only 45% of the top-ranked hospitals and 10% of other hospitals were able to provide a complete bundled price; price estimates were obtained at 15% of ranked hospitals and 53% of other hospitals by contacting the hospital and physicians separately.  And perhaps most startlingly, the prices quoted for the procedure ranged from $11,000 to $125,798.  The authors’ conclusion is a modest one – that patients “may find considerable price savings through comparison shopping” – but I believe its impact is far greater.  In part because of the way health care is financed in our country, the average American consumer has little awareness of how much any given medical procedure actually costs.  But who can blame the consumer in this market, when those who provide the services themselves have no baseline against which to set costs?

This brings me to the second piece –  Steven Brill’s excellent article in Time Magazine, “Bitter Pill: Why Medical Bills are Killing Us,” which my co-blogger Patrick O’Leary blogged about last week.  ).   Brill spent half a year trying to understand why some nonprofit hospitals seem to function like prosperous businesses – with brand-new facilities, impressive executive compensation, and high profit margins.  He approached this problem by analyzing patients’ medical bills from hospitals, physicians, drug companies, “and every other player in the American health care ecosystem.”  Brill offers a scathing commentary on a system where patients are billed $18 per diabetes testing strip that can be purchased in boxes of 50 on Amazon.com for about 55 cents per strip.  Another example: one patient was billed $7,997.54 for a CT scan stress test that Medicare pays $554 for; and $3 for a reusable pen that marked where an incision would go.  These prices, Brill explains, are based on the chargemaster, a master document of prices kept by every hospital that is the basis for insurance negotiation reductions.  Nearly every executive he spoke with said that the chargemaster prices are irrelevant because “nobody gets charged those prices,” but Brill’s research suggests the contrary. Those without insurance, as we in the health law and policy community have long known, are charged more that those who are covered by insurance.  Brill’s article also follows medical billing advocates who negotiate patient bills down dramatically for patients who are willing to pay their fees; however, not every patient is so lucky.

The findings in Rosenthal’s and Brill’s articles are startling.  Few consumers, I would image, participate in the health care market with the understanding that the costs they might pay vary widely from institution to institution; that the prices they are asked to pay for a given procedure are far in excess of how much federal health programs believe the procedure is worth; or that they can “bargain down” their charges through skilled negotiation by someone with inside knowledge of the system.  Readers of this blog might chafe at the comparison between the market for health care and the market for used cars, but perhaps it is the used car dealer who should feel offended.  His customers, at least, can rely on the Kelley Blue Book.

Impact of the Sequester on Health Care: By the Numbers

By: Katie Booth 

The looming sequester will have a significant impact on health care, including cuts to Medicare, FDA, CDC, NIH, and Affordable Care Act programs. Budget cuts could slow down the drug approval process, impede the tracking of infectious diseases, and lead to layoffs for hundreds of thousands of workers in the health care sector. Read on for sequestration by the numbers…

Medicare:

  • Medicare cut by 2% ($11 billion) (not set to begin until April 1st, 2013, unlike other sequestration cuts, which are set to begin on March 1, 2013)
  • Physicians’ payments cut by 2%
  • Hospital Medicare reimbursement cut by $5.8 billion
  • Hospitals could end up with especially large cuts under the sequester because other parts of healthcare system run on longer term contracts
  • Loss of almost 500,000 health care sector jobs in the first year of the sequester according to an American Medical Association and American Hospital Association study, including job losses for 40,000 practitioners such as physicians and dentists

FDA:

  • FDA cut by 8% ($318 million)
  • FDA public funding cut by $206 million
  • FDA industry user fees cut by $112 million (for an interesting discussion of user fee cuts and the sequester, see Patrick O’Leary’s Bill of Health blog post)
  • Cuts by department (assuming 8% across-the-board cuts): $71 million to Foods, $39 million to Human Drugs, $17 million to Biologics, $11.3 million to Animal Drugs, and $26.5 million to Devices
  • Longer drug approval process is likely
  • Layoffs and furloughs likely
  • 2,100 fewer food safety inspections

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The High Cost of Health Care: Why Some Pay $240 for a $9 Bottle of Pills

By Jonathan J. Darrow

An earlier post discussed the equivocal efficacy of Propecia (finasteride) as a baldness remedy, ending with the provocative assertion that, efficacy aside, “there is little reason for anyone ever to buy or consume Propecia (finasteride), or any doctor ever to prescribe it, since a much cheaper and identical chemical sold under the trade name Proscar (finasteride), is available.” This post continues the discussion, addressing one small component of the rising cost of healthcare—the cost of finasteride.  It explores why consumers pay as much as $240 for a bottle of Propecia (finasteride) when a $9 bottle of an equivalent, FDA-approved supply of the identical chemical is readily and legally available at nearby stores.

In the exorbitantly priced landscape of prescription drugs, there is at least one low-cost oasis: Wal*Mart.  Though some find reason to criticize the discount store, few would disapprove of the dozens of prescription medications Wal*Mart offers for an unbeatable $4 for a 30-day supply.  Cost-sensitive consumers can purchase everything from blood thinners to antidepressants to antibiotics at this price, while a 90-day supply is only $10 (and this price includes shipping to your doorstep).  A handful of drugs that cannot be sold at $4 per month sell for a still-modest $9.  For the 300 or so drugs on Wal*Mart’s list, this means there is no longer a need for $10 co-pays or snowy treks to the pharmacy in 15 degree weather.  That’s right: the Wal*Mart total price is less than most insurance company co-pays.  Finally, a major industry player seems to have put effective downward pressure on prescription drug prices.  Continue reading

Sebelius v. Auburn Regional Medical Center: Hospitals Allege Medicare Intentionally Underpaid Providers–And Got Away With It

By Katie Booth

In the Supreme Court’s recent decision in Auburn Regional Medical Center, the Court held that a suit against HHS by eighteen hospitals alleging intentional underpayment of Medicare reimbursements was barred by a 180-day internal agency deadline for appeals of reimbursement decisions. The rub is that the hospitals only found out about the underpayments, which allegedly occurred from 1987 to 1994, in March of 2006. These underpayments affected thousands of hospitals and added up to billions of dollars. Yet under Auburn, since the hospitals did not sue within 180 days of the underpayment (or even within an extended three-year window for “good cause”), they cannot recover. The Court in Auburn rejected the hospitals’ argument that equitable tolling should apply, finding instead that “the presumption in favor of equitable tolling does not apply to administrative appeals of the kind here at issue.”

The Auburn decision raises important questions about the ability of the federal government to intentionally underpay healthcare providers. In oral argument, the lawyer for the hospitals characterized HHS’s actions as “intentional concealment . . . [and] misconduct by the Secretary, that caused the statute of limitations time to be missed.” While there are good reasons not to disturb decades-old reimbursement decisions, it is sobering that the federal government can intentionally conceal underpayments and—if it conceals the underpayment for only 180 days—never have to reimburse the injured party. This situation presents a striking contrast “to 42 CFR § 405.1885(b)(3) (2012), which permits reopening of an intermediary’s reimbursement determination ‘at any time if it is established that such determination . . . was procured by fraud or similar fault of any party to the determination.’” In other words, HHS can reopen reimbursement decisions if a provider intentionally conceals important information, but not vice versa.

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The Readmission Penalty Begins to Bite

By Nicolas Terry

As is well known ACA § 3025 (§1886(q) Social Security Act) established the Hospital Readmissions Reduction program. This is operationalized through deductions built into the Hospital IPPS (Inpatient Prospective Payment Systems) Rule which sets the Medicare reimbursement amounts, here. The excess readmissions ratio initially only applies to readmissions based on MI, Heart Failure, and Pneumonia. Initially the maximum deduction is 1% but that rises to 2% in October 2013 and 3% in October 2015.

A parallel program for Medicaid designed to reduce hospital-acquired infections was introduced in the 2005 Deficit Reduction Act, here. However, Lee and colleagues, here, found no change in infection rates. Nevertheless, the dollars associated with readmissions reduction may give that program greater traction.

Jordan Rau in the New York Times, here, notes that 307 hospitals are already facing the maximum reduction involving many millions of dollars. Not surprisingly some hospitals view the penalties as a distraction while others blame their patients for everything from their level of sickness and poverty to non-compliance. Overall, however, Rau’s article and Amy Boutwell’s recent post at Health Affairs, here, suggest that CMS is succeeding in getting the industry’s attention.