An “Unknowable” Number of Bureaucrats

Perhaps I’ve just read too much Kafka for this to be a comfortable paragraph, but I’ll let you decide. From Politico, in “Health reform’s bureaucratic spawn“:

Don’t bother trying to count up the number of agencies, boards and commissions created under the new health care law. Estimating the number is “impossible,” a recent Congressional Research Service report says, and a true count “unknowable.”

The modern course of the law is administrative. In the end, the appropriate scope of the Congressional delegation of power falls to the Supreme Court’s “intelligible principle” doctrine and the acknowledged need for technical expertise in complex areas that require rules–such as Health Law and Health Law Finance. But that doesn’t make it all that much less scary.

The rest of the Politico article is worth a quick read. And if you’re an aspiring attorney, you might want to consider taking Administrative Law. And, of course, Health Law.

CMS Regulations: In the Best Interest of Patient Care or the Industry?

By James Hlavenka

Suppose you are an uninsured individual who has been severely injured in a car accident.  After the accident, you are rushed to a hospital with a dedicated emergency room, subject to the requirements of the Emergency Medical Treatment and Active Labor Act of 1986 (”EMTALA”).  Upon being screened, the hospital learns that you need further, immediate treatment to be stabilized.  After admitting you as an inpatient for further stabilization purposes, the hospital discovers that you have severed a critical nerve in your spine.  The hospital is incapable of stabilizing your emergency medical condition and appropriately attempts to transfer you to an available specialty hospital two towns over that specializes in nerve repair.  Under EMTALA and the 2003 Centers for Medicare and Medicaid Services (”CMS”) regulations, there was no direct answer addressing whether the specialty hospital was required to accept your transfer from the original hospital and stabilize your emergency medical condition.

In 2008, CMS proposed rule 73 FR 23669 containing significant policy changes relating to the requirements of EMTALA to address the obligations of specialty hospitals.  Under the proposed 2008 CMS rule, the answer would have been clear: assuming the specialty hospital was subject to EMTALA, it must accept your transfer.  The proposed rule would have clarified the interaction of EMTALA’s transfer provisions with the 2003 CMS regulations that hold EMTALA obligations cease when an individual is admitted into a hospital as an inpatient.  The proposed 2008 CMS rule ensured that EMTALA’s primary purpose of patient stabilization under its transfer provisions would not be contravened by the 2003 CMS regulations.  After solicitation of comments on the proposed 2008 rule, however, CMS ultimately declined to adopt this critical policy clarification in its 2009 Final Rule, CMS-1390-F.

Background

In general, EMTALA imposes specific obligations on certain Medicare-participating hospitals to both screen and stabilize individuals who visit those hospitals’ emergency departments.  For a comprehensive, attorney-prepared EMTALA FAQ page, please click here. After a hospital screens an individual and determines that the individual has an emergency medical condition, it is obligated to provide that individual with necessary stabilizing treatment or provide an appropriate transfer to another medical facility that can achieve stabilization.

EMTALA’s transfer provisions are contained within the “specialized care” requirements of Section 1395dd(g).  Section 1395dd(g) requires a receiving hospital with specialized capabilities to accept a request to transfer an individual with an unstable emergency medical condition as long as the hospital has the capacity to treat that individual and regardless of whether the individual had been an inpatient at the admitting hospital.  These provisions would seem to answer the above hypothetical without the need for any further clarification.  In 2003, however, CMS muddied the answer with a new Final Rule.

In 2003, CMS published Final Rule 68 FR 53263 regarding the applicability of EMTALA requirements to inpatients.  The 2003 CMS rule amended section 489.24(d)(2)(i) of CMS regulations to state that a hospital’s obligations under EMTALA cease when the hospital admits an individual with an unstable emergency condition as an inpatient, so long as the admission is in good faith.  CMS reasserted that EMTALA was not intended to be a federal malpractice statute and that after admission inpatients are protected by State malpractice laws and Medicare Conditions of Participation (”CoPs”).  The 2003 CMS rule was entirely silent, however, as to how EMTALA’s specialized care requirements would continue to apply to inpatients, if EMTALA obligations cease upon admission.

As a result, in 2008, CMS proposed a rule amending Section 489.24(f) of the CMS regulations.  The amendment added a provision requiring a receiving hospital with “specialized capabilities or facilities” to accept an unstabilized inpatient with an emergency medical condition from an admitting hospital, thereby continuing the specialty hospital’s obligation under Section 1395dd(g) of EMTALA.  Thus, when the 2008 proposed CMS rule was analyzed in conjunction with the 2003 Final Rule, EMTALA obligations would not end for all hospitals once an individual is admitted as an inpatient.  Rather, EMTALA obligations would cease only at the hospital where the individual is first admitted as an inpatient.  EMTALA’s transfer provisions would continue to apply, however, to all other participating hospitals with higher levels of care, should an inpatient need to be transferred for stabilization of the original emergency medical condition.

2009 CMS Final Rule 1390-F

Upon review of solicited comments, CMS ultimately decided not to adopt the 2008 proposed rule clarifications in its 2009 Final Rule regarding transfer and inpatient care requirements under EMTALA.  Instead, in the 2009 Final Rule, CMS stated that under EMTALA individuals can only be appropriately transferred to another hospital for specialized stabilizing care where two requirements are met: (1) The individual must have an emergency medical condition that requires specialized stabilizing treatment not available at the hospital where the individual is first screened, and (2) The individual has not already been admitted as an inpatient.

Understandably, commenters disagreed about the possible effects of the proposed 2008 CMS rule.  Both opponents and proponents ultimately offered patient-centered rationales for their  policy perspectives.  When read in conjunction with EMTALA as a whole, however, those in favor of the proposed 2008 rule seem to have stayed most true to EMTALA’s original intent–to provide emergency care to all individuals who are determined to have an emergency medical condition.  The commenters’ statements below can be found within the final rule, here.

Opponents of the proposed 2008 CMS rule

The majority of the concerns raised by the dissenting commenters, which ultimately swayed CMS not to adopt the proposed 2008 rule, can be placed into three categories, each to be discussed in turn:

(1) Patient Dumping

Commenters highlighted the danger of patient dumping at hospitals with specialized facilities.  Of particular concern to one commenter was that a hospital, acting in bad faith, could choose to transfer only “medically complex patients requiring extensive lengths of stay, patients who are uninsured, and patients who have been subject to a medical error” and unresolved medical conditions.  Also of concern was that such transfers would be made as a “convenience measure and not a necessity.”  These particularly strong arguments were not overlooked by CMS when proposing the 2008 rule.  It is true that hospitals can act in bad faith, however such actions would violate both EMTALA and the CMS regulations.  Commenters also emphasized that allowing transfer of inpatients may allow hospitals to transfer unstable individuals before using all available resources in an attempt to stabilize the individual.  Again, while entirely possible, this argument is based in an assumption of bad faith, which in itself is a violation of EMTALA and medical ethics.

(2) Patient Care

Commenters expressed concern about how the proposed rule would affect patient health and safety.  Specifically, commenters were concerned that patients’ physical and psychological health could deteriorate as a result of the potential increase in inappropriate and unnecessary transfers mentioned above.  Commenters noted that referring hospitals may transfer patients who deteriorate following admission, thereby risking the life of the patient.  These arguments must raise concern, as any increase in danger to an individual already suffering an emergency medical condition is unwarranted.  These arguments do not seem overly persuasive, however, when read in conjunction with the safety measures already in place under EMTALA to ensure that transfers only occur when the benefit outweighs the risk to an individual.

(3) Futility

Commenters also asserted that the proposed 2008 rule was largely unnecessary for various reasons.  First, it was stated that it is unlikely that a hospital would knowingly admit an individual with an unstabilized emergency medical condition if the hospital did not have the capability to stabilize the individual.  This argument is not particularly strong.  While it is likely that a hospital would not knowingly do so, in daily practice errors can easily occur.  Therefore, there is no harm to ensuring that if such a mistake does occur, it will not adversely affect the suffering individual.  Along the same lines, a commenter stated that “all hospitals which have emergency departments are capable of evaluating an individual who presents to the emergency department and if the hospital does not have the capability to appropriately care for the individual, the hospital should transfer, rather than admit the individual.”  For the same reasons stated above, while a hospital may have the capability to do so, that does not mean that the hospital will make a correct decision every time.

Proponents of the proposed 2008 CMS rule

Commenters in favor of the proposed 2008 CMS rule focused upon the stabilization and safety of individuals suffering from emergency medical conditions.  Overall, commenters in favor of the proposed 2008 rule stated that the policy clarifications were in the best interests of patient care and should be implemented.  A particularly strong argument by one commenter was that inpatient admission status should be irrelevant in determining whether the individual has an emergency medical condition and whether the admitting hospital has the capability to provide the necessary care. The commenter noted that such requirements are “the only operative criteria to whether the transfer is justified under EMTALA” and as a result, EMTALA and CMS regulations must be read in harmony to achieve such a result.  The commenter stressed that EMTALA was enacted because “Congress recognized that patients needing transfers were being denied access to higher levels of care.”  This argument is very strong.  By failing to adopt the proposed 2008 rule clarifications, the will of Congress was hindered in part.

Of particular concern to other commenters were individuals who suffer emergency medical conditions in rural areas.  Such commenters stated that the proposed rule was “especially important for individuals living in rural areas because those individuals are routinely denied transfer to a regional facility for definitive care based on the conclusion that the individuals are already at a ‘hospital.’”  Given that much of our country is comprised of rural areas, such concerns should not have been minimized.  Last, a proponent addressed the concern of inappropriate transfers by suggesting that the clarified process could be adequately monitored for abuse and bad faith.  This suggestion is sound, as such monitoring is already required under the 2003 Final Rule regarding admission into hospitals to end EMTALA requirements.

Did CMS Get it Right?

CMS should have adopted the proposed 2008 rule.  Although finalizing the proposed 2008 rule may have resulted in an increase in inappropriate transfers to hospitals with specialized capabilities, arguments based on an assumption of bad faith should not outweigh the legitimate concerns voiced by many commenters.  Hypothetical risks of inappropriate transfers are always a possibility.  Regardless of whether an individual is admitted as an inpatient, both the admitting/transferring hospital and receiving hospital must comply with the stringent transfer requirements under EMTALA, namely, the requirements contained within 42 USC § 1395dd(c)(1), (2).  These provisions require a treating physician to certify that the medical benefits of the transfer to another medical facility will outweigh the increased risks to the individual.  Further, the receiving hospital must have both available space and qualified personnel for the treatment of the individual, and must have agreed to accept transfer of the individual and to provide the appropriate medical treatment.

As a result of these safeguards, the argument that individuals could suffer greater physical and psychological harm as a result of inappropriate transfers under the proposed rule equally falls flat.  If both hospitals follow the strict transfer requirements already contained within EMTALA, the risk of patient harm should be no greater or less than already present. Contrary to what CMS and industry commenters have stated, CMS has arguably increased the potential for individual physical and psychological harm by failing to adopt the proposed 2008 rule.

The primary concern of physicians within emergency departments should be focused on patient care, and not whether admitting that patient for crucial stabilizing treatment may extinguish the individual’s right under EMTALA to be transferred to an appropriate hospital.  Surely it is not always possible to give a thorough examination and attempt to stabilize a patient in the emergency room setting and thus, a hospital’s attempt to stabilize a patient through admission (even if ultimately futile because the hospital lacks the ability to do so) should not detrimentally extinguish the ability to appropriately transfer that individual under EMTALA.  As the rule currently stands, once a hospital decides to admit a patient for stabilization purposes, it automatically extinguishes its right to transfer that inpatient.  This right is extinguished even if the hospital later learns it is incapable of stabilizing a potentially life threatening emergency medical condition.

Commenters argue that a hospital should know whether or not it has the capacity to stabilize an individual prior to admission.  Theory, however, does not always equal practice.  In the fast paced, hectic setting of emergency rooms across the country, such accurate assessments may not always be possible for obvious reasons.  CMS was wrong to render this crucial transfer provision of EMTALA inoperable simply because of the technicality of inpatient admission.  Patient care and stabilization must be the focal point of this statute, and not a bright line test of patient admission and hospital liability.  CMS should reconsider harmonizing EMTALA’s original transfer provisions with its 2003 Final Rule regarding EMTALA requirements after inpatient admission.

CMS Protects Seniors from Renegade Marketers

By Samantha B. Lansdowne, MSJ, CCMEP

On December 8, 2003, the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) was enacted creating the Medicare Prescription Drug Benefit Program, better known as Part D, while revising the Medicare Advantage (MA) program, or Part C.  Since Medicare’s establishment by the Social Security Act of 1965, the creation of Part D is considered to be the most significant change to Medicare.  With the new regulations also came new rules relating to contracts, applications, bidding processes, and marketing.  The initial set of rules became effective March 22, 2005, and as the Centers for Medicare & Medicaid Services (CMS) gained more experience with the Part D program, a necessary revision was made to some existing marketing policies utilized by plans and their representatives in attracting seniors to their program.  On May 16, 2008, by way of its authority to establish marketing rules through rulemaking, CMS proposed new marketing regulations.

Subsequently, Congress passed the Medicare Improvements for Patients and Providers Act (MIPPA) on July 15, 2008, establishing new statutory marketing regulations for both the MA and Part D plans, which were similar or in some cases identical to the CMS regulations of May 16, 2008.  The MIPPA provisions enacted into statute the provisions that CMS had previously proposed, superseding the CMS regulatory proposals.  The new MIPPA regulations were to begin on January 1, 2009; however, CMS felt that some of the rules provided important protections for Medicare beneficiaries and should instead be in effect before the 2009 plan year marketing campaign began on October 1, 2008.  So in its authority to establish rules, CMS finalized on September 18, 2008 six new marketing provisions, in addition to modifying the disclosure and dissemination of Part D information provisions, and the file and use provision.

At the same time each year, senior citizens are barraged with information on which Medicare program they should enroll in.  They have several options to choose from: 1) the Original Medicare — a fee-for-service plan managed by the Federal Government, 2) Medicare Health Plans — health plan options that are approved by Medicare but run by private companies, 3) Medicare Prescription Drug Plans — plans that add prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service Plans, and Medicare Medical Savings Account Plans, and 4) Medigap (Medicare Supplement Insurance) Policies — health insurance policies sold by private insurance companies to fill “gaps” in Original Medicare coverage.  All of these options are “sold” through representatives of the various Medicare health plans.

During Senate hearings held in February 2008 on the topic “Selling to Seniors: The Need for Accountability and Oversight of Marketing and Sales by Medicare Private Plans,” state and federal regulators, plan sponsors, and consumers testified to “overly-aggressive, inappropriate, and sometimes deceptive practices used to market, sell, and enroll seniors into Medicare private plans.”  Therefore, CMS was concerned that plan representatives were engaging in sales and marketing activities that pressured beneficiaries to make plan selections for reasons other than those that best meet their healthcare needs.

The September 18, 2008 rule (CMS-4131-F) prohibited plans and their representatives from using the following “pressure techniques”: 1) contacting potential enrollees directly without the potential enrollee first initiating contact (examples include door to door solicitation, outbound telemarketing, or approaching an individual in a parking lot); 2) cross-selling of non-healthcare related products during Medicare sales or marketing activities; 3) providing of meals to prospective enrollees at promotional and sales events; 4) conducting sales presentations or distributing and accepting plan applications in provider offices or other places where healthcare is delivered, except in the case where such activities are conducted in common areas such as a conference room or cafeteria, and 5) conducting sales presentations or distributing and accepting plan applications at educational events, such as health information fairs or state or community-sponsored events.

In addition to the above changes in marketing, plans were now to hire and use only state-licensed representatives to conduct marketing activities in accordance with applicable State appointment laws.  This requirement helps to ensure that beneficiaries do not fall prey to under-educated, unscrupulous and or otherwise substandard representatives.  Further, plans are now to disclose certain beneficiary information at the time of enrollment, and fifteen days before the annual coordinated election period.  Disclosure of plan information continues to be an important feature that gives beneficiaries the necessary information in order for them to make an informed decision about their healthcare plan.

Lastly, CMS would no longer allow plans to file and use marketing materials within 5 days of submission (instead of the normally required 45 day period) based on their previous track record of consistently meeting all of the marketing standards set forth by CMS.  Instead, a uniform file and use policy will be applied to marketing materials that either use model language without substantive modification, or materials that are indentified by CMS as not containing substantive content warranting CMS review.  This will allow CMS to focus resources on materials that contain content that warrants further scrutiny.

As part of the rulemaking process, CMS received comments from managed care organizations and other insurance industry representatives, members of Congress, representatives of health care providers, beneficiaries, and many others.  While most comments were supportive, some of the proposed rulemaking was greeted with great opposition.  One concern was the time frame for implementation of certain provisions prior to the 2009 open enrollment period.  Critics wanted the new rules to go into effect after the 2009 period and others even argued for no sooner than 2010.  Another area that drew concern was the new uniform application of the file and use policy.  Opponents asked for additional clarification and even commented that there would be additional burden on CMS.  The new marketing rules attracted the most resistance.  CMS received many comments that the rules were overly restrictive, would prevent beneficiaries from learning about the full range of healthcare options available to them, and that further clarification was needed.  It is clear from reading the final rule though that CMS put a lot of thought into the changes being made.  Plans and their representatives will have no choice but to comply with the new regulations as both Congress and CMS favor the change.

Low Income Benchmark Methodology for Drug Plans Under Medicare

By Jason Halpin

Each year, Prescription Drug Plans (PDPs) and Medicare Advantage Prescription Drug (MA-PD) plans submit bids to the Centers for Medicare and Medicaid Services to determine what their beneficiary premia will be. And each year, Medicare calculates the Part D premium low-income subsidy (LIS or the “benchmark premium”) for low-income beneficiaries based on the new premiums.

The upshot of the annual change in both the beneficiary premium and the LIS is that one year, the subsidy could pay for a low-income beneficiary’s premium in its entirety, but the next year, the premium could increase or the subsidy could decrease, leaving the beneficiary with the possibility they could have to pay a monthly premium equal to the difference between the premium and the subsidy.

Fortunately for low-income beneficiaries, Medicare seeks to avoid this scenario. If full-benefit dual eligible beneficiaries do not actively choose a plan when they first enroll in Medicare, they are enrolled into a PDP plan where they would not pay a premium. If, in the following year, they would have to pay a premium, LIS-eligible beneficiaries may “elect,” by doing nothing, to be reassigned to a PDP with no premium. LIS-eligible beneficiaries can also choose to stay in their plan and pay a premium or pick another plan with or without a premium.

Unfortunately for low-income beneficiaries, those who are subject to reassignment may also be subject to the complexity and hassle of having to change their pharmacy and their medications, and perhaps having to get new prescriptions from their doctors. Congress and CMS, therefore, have adopted a policy of seeking mechanisms to avoid reassignment.

When establishing the guidelines for determining the LIS, Congress mandated, in 42 U.S.C. § 1395w-114(b), that weighted averages should be used, presumably to ensure that the benchmark premium accurately reflects the actual average premium for an individual PDP or MA-PD beneficiary in the region and is not skewed by outliers, such as a comparatively lightly subscribed PDP with abnormally low premiums. Maintaining stability in the benchmark premium helps to promote continuity for beneficiaries and cost predictability for the government.

Figuring out the precise formula for the benchmark premium is in the hands of CMS, pursuant to its authority to administer the Medicare program under 42 U.S.C. § 1395hh. Accordingly, on April 3, 2008, CMS issued a final rule, Modification to the Weighting Methodology Used to Calculate the Low-Income Benchmark Amount.

While 42 U.S.C. § 1395w-114(b) states that Part D premium amounts must be “weighted,” to calculate the benchmark premiums, it says nothing about what that weight should be. Prior to the promulgation of the rule the weight given a particular PDP or MA-PD plan equaled a percentage, with the numerator being the number of Part D eligible beneficiaries enrolled in the plan and the denominator being the number of Part D eligible beneficiaries enrolled in all PDP and MA-PD plans in the PDP region.

The new regulations change the formula such that the weight given a particular PDP or MA-PD plan now equals a percentage, with the numerator being the number of Part D LIS-eligible beneficiaries enrolled in the plan and the denominator being the number of Part D LIS-eligible beneficiaries enrolled in all PDP and MA-PD plans in the PDP region.

By changing the formula to reference only LIS-eligible beneficiaries, the rule gives more weight to the premiums of plans that serve more low-income beneficiaries. Proponents of this formulation argue that it stabilizes and, in general, increases the benchmark premium, thereby reducing the risk of reassignment.

As CMS suggested in its response to comments on the rule, PDPs typically support a greater share of LIS enrollment, thanks to auto and facilitated enrollment. PDPs also typically have higher premiums than MA-PDs because MA-PDs can apply Part A and B rebates to lower their Part D premiums. The rule’s proponents argued that giving more weight to the higher PDP premiums–due to their higher LIS enrollment–would push the benchmark higher, bring more plans under the line, and protect more beneficiaries from reassignment. CMS estimated that if  LIS-enrollment weighting were used in 2008, reassignments would have been reduced by 850,000 from 2.1 million.

Critics still cried foul. Because the rule, and its predecessor regulations, dictated that MA-PD post-rebate premiums (which are about $20 less than PDP premiums on average) be factored into the benchmark formula, MA-PD premiums exerted downward pressure on the benchmark regardless of the weight given PDPs, leaving more PDP plans than necessary above the line and forcing more reassignments than the critics would tolerate.

In 2009, the critics’ views were largely borne out. The predicted benchmark increases were less dramatic than anticipated; though 28 out of 34 regions experienced increases (CMS predicted 27 out of 34), the increases in six of these regions were negligible (50 cents or less). Six regions saw decreased benchmarks. In addition, 1.6 million LIS-eligible beneficiaries were reassigned to new PDPs, and 620,000 were notified they would need to either pick a new plan or start paying a premium; the anticipated reduction was not as large as CMS expected.

To its credit, however, CMS responded appropriately in 2009, establishing a Medicare Demonstration to use pre-rebate MA-PD premiums in the benchmark formula. This greatly reduces the skewing effect of low post-rebate MA-PD premiums. According to the Kaiser Family Foundation, the pre-rebate MA-PD premiums  are actually slightly higher than PDP premiums. The weight of LIS-heavy PDP premiums thus pushed benchmark premiums up in all but one region for 2010, and 1.1 million beneficiaries were reassigned.

While some critics maintain that CMS could do more to reduce reassignments, the methods they suggest have rightly been rejected by CMS. Critics suggest the similar options of either allowing plans to waive the difference between their premiums and the benchmark, or reinstituting CMS’ de minimis policy, whereby an LIS-eligible beneficiary left with a premium that is less than a de minimis amount after recalcuation and application of the subsidy would not have to pay that de minimis amount.

CMS rejected both ideas because both provide a disincentive to plans keeping their bids low. If plans knew they could reduce their premiums for LIS-eligible premiums regardless of the premium their bids produced, they would not even try to keep their bids low. Also, if a plan had to write off a large amount of its premium, the revenue estimates in its bid would be undermined.

While recrafting the benchmark formula has not eliminated all reassignments, it has been very successful in reducing them. The new formula has reduced reassignments by half since 2008 and assured that less than 10 percent of LIS-eligible beneficiaries are reassigned. While CMS must work on reducing this number further, the reformulation of the benchmark premium is a good start.

Who’s the New Guy? – Obama Announces Choice for Next CMS Director

President Obama has announced his choice for the position of director of the Centers for Medicare & Medicaid Services (CMS), Dr. Donald Berwick, a pediatrician, professor, and advocate of improving patient care.  The CMS has been without a permanent administrator since 2006.  Berwick, whose appointment must be approved by the Senate before he may assume the position, certainly has the credentials for the important role the CMS director will surely play in the coming years.  Still, whether Republican Senators will be basing their confirmation decision on credentials or resentment of health care reform’s passage is yet to be seen.

Berwick is best known for founding the Institute for Health Care Improvement.  The Institute for Health Care Improvement is a non-profit think tank that is dedicated to helping hospitals improve their patient care delivery.  As attested to by the Institute’s co-founder Dr. Paul Batalden, Berwick takes incremental approaches to improving patient care that are cost-effective and do not lead to the rationing of care.  For example, Berwick finds that reducing the prevalence of hospital-acquired infections through something as small as keeping medical equipment sterile can help to bring down the rate of medical errors.

Berwick is also a proponent of utilizing medical information sharing, and is often called blunt in regard to how he finds the American health care system inefficient in delivering patient care.  Additionally, Berwick has advocated for patient rights on numerous levels, using a philosophy of patient-centered medicine.  He wants doctors to be rewarded based on the health care outcomes of their patients instead of how many procedures a doctor has performed. Having a leader interested in implementing infrstructural changes which incentivize outcomes as opposed to procedures as paydays without regard to outcome, is, many think, a step in the right direction. It is also worth noting that Berwick himself will be taking more than a 66% pay cut if he is appointed as the director of the CMS.

While Berwick may not have functioned as the head of a health care system in his career, he is not new to the world of national health policy.  In 1998, he was on President Clinton’s advisory commission that recommended ways to reduce medical mistakes and ensure consumer protection in the American health care system.  And also served at that same time as  Chair of the agency that is now known as the Agency for Healthcare Research and Quality. Berwick has also played a part in improving Britain’s National Health Service, for which he was given an honorary knighthood by Queen Elizabeth II.

Since Obama’s health care overhaul “contemplates key roles for both programs in extending insurance coverage to 32 million people at a cost of $938 billion over 10 years,” if selected to be the CMS’s director, Berwick will certainly need to bring his A-game in helping change the way our current health care system consumes Medicare and Medicaid resources.  Many also hope that good Medicare reforms will start a trend, motivating private insurance companies to also make cost-saving changes.  Before that challenge, Berwick will have to get past a Senate confirmation.  Republican Senators are likely going to make the process a rigorous one, where they will grill Berwick on how exactly he plans to effect the new health care reform legislation.

Given the importance of the CMS and the fact that it currently has no director, it would behoove the Senate to quicken the process of Berwick’s selection, considering his credentials and commitment to the rights and needs of American patients.  As the Washington Post said, “supporters and opponents of the new health-care legislation ought to be able to agree that leaving the agency without a confirmed head is not healthy.”  The job needs to be filled, and instead of using political tactics through rehashing the health care reform debate, the Senate should focus on the many qualities that Berwick has to offer.

While Medicaid Enrollment Rates Increase, States Face Financial Pressure to Decrease State Medicaid Spending

Last week, the Kaiser Family Foundation released a report indicating a large jump in state Medicaid enrollment from June 2008 to June 2009.  The report said that the 7.5 percent increase was the greatest one-year jump in enrollment rates ever, with over 3 million people joining the public health program funded jointly by the federal government and individual state governments.  The reason for the increase  is thought to be that because more people became unemployed due to the economic crash, more individuals turned to Medicaid for health coverage.  However, because the economic downturn meant less revenue entering into state budgets, state Medicaid programs have not been able to keep up with the rise in new enrollees.

During a convening of state governors at the White House this week, state officials will likely raise the issue of Medicaid spending. The issue is pressing in light of the impending funding cut when stimulus money from the American Recovery and Reinvestment Act of 2009 will expire in December of this year.  The governors will likely ask that the stimulus funding be continued until states can somehow make up for their large current budget deficits.  In addition to asking for more money, the governors will also likely discuss the feasibility of health care reform efforts.  With both House and Senate versions of health care reform proposing increases to state Medicaid programs to ensure the coverage of more uninsured individuals, the state governors would, understandably, like to know where the money for such expansion would come from.

The National Association of State Medicaid Directors estimates that states’ budgets will fall  short  $140 billion in the next fiscal year.  This means even less money for the likely further increase in Medicaid enrollment to come this year, as Medicaid enrollment generally lags behind unemployment.  To account for the deficit, many states are planning to reduce their Medicaid programs. USA Today finds that three categories of such reductions exist:

• California, Arizona and Virginia propose reducing who’s eligible. In Arizona, 310,000 people would lose coverage. California also wants to increase premiums.
• Michigan, Tennessee, Massachusetts and others propose eliminating benefits. Masachusetts’ elimination of restorative dental services would save $56 million, says Medicaid director Terry Dougherty.
• Texas, Pennsylvania, Louisiana and others propose cutting payments to hospitals, doctors or nursing homes. Several states are considering new taxes on hospitals as a way to avoid cutting these payments.

States that accepted stimulus money to expand their Medicaid programs in 2009 are restricted from any such cuts that would affect low-income enrollment.  However, if the stimulus funding is not extended, some states are planning on heightening eligibility requirements.  For other states, while decreasing hospital and doctor reimbursement seems like the worst possible option– given that many doctors have already stopped accepting  Medicaid patients due to what they deem to be an insufficient rate of reimbursement– many states’ officials find that the only other viable option they have is raising taxes.  Many state leaders refuse to increase taxes in fear of the political backlash come November.

Realizing the need for health care reform to help manage the burden of paying for health care, state governors have stated a desire to be part of the health care reform conversation.  Many have already expressed their dislike for individual mandates, which they believe will drive more individuals to state Medicaid programs.  For the most part, however, the governors want reform and they want it now, finding that they simply can’t afford to wait another year.

It is also worth noting that an underlying issue from these new numbers is whether the Medicaid program is actually a good prototype for expanding health care coverage.  Drew Altman, President and CEO of Kaiser, put in perspective Kaiser’s report as well as the concerns of public spending that were sparked by the Centers for Medicare and Medicaid Services’ projections for 2009-2019– which forecast that public spending on health care will surpass private spending.  He noted that while spending in public health insurance programs would increase, the cost-benefit would be better, since per capita costs on health care were lower in government-run programs than in private insurance programs.  According to Altman, such numbers did not undermine health reform efforts, but instead denoted “the need to control health care costs in the public and the private sectors alike.”

Mental Health Parity and Health Reform

The Interim Final Rules on mental health parity were issued last Friday by the various agencies responsible for the administration of the  Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).  The rules provide interim permanent answers to some of the interpretive questions raised by the MHPAEA.  I’ll provide a couple of early reactions to the rules, and briefly describe why the parity rules in no way lessen the need for broader reform for the benefit of people with serious mental illness.

MHPAEA, effective for large (over 50) public and private health coverage for plan years beginning after October 3, 2009, adds substantial protections for mental health and substance abuse (MH/SA) coverage.  For example, it:

• Prohibits covered plans from imposing deductibles, copayments, and out-of-pocket limits on MH/SA coverage higher than those imposed for medical/surgical coverage;
• Prohibits restrictions on days of hospital coverage and duration/scope of MH/SA treatment beyond limits imposed for medical/surgical coverage; and
• Prohibits exclusion of out-of-network coverage for MH/SA treatment if such exclusions do not apply to medical/surgical coverage.

Advocates have been looking to the rules for clarification of a number of ambiguities in MPAEA.  Two clarifications in the published rules are encouraging.

• Should insurers be permitted to set deductible amounts separately for MH/SA? Some insurers require their members to meet two different deductibles — one for MH/SA, and one for other treatments. The effect is to permit members without behavioral health needs to experience, say, a $500 deductible, while people with behavioral and other health needs experience two such deductibles, for a total of $1,000. These rules forbid this double hit. The agencies acknowledged the lack of guidance in MHPAEA on this question, and the power of arguments on both sides, but explain their determination to enforce a unitary deductible:

Given that the statutory language does not preclude either interpretation, the Departments’ view is that prohibiting separately accumulating financial restrictions and quantitative treatment limitations is more consistent with the policy goals that led to the enactment of MHPAEA.

Translation: the act did not dictate a result, but unitary deductibles advance parity, and dual deductibles continue inequitable treatment.

• How will plans be prevented from continuing disparate treatment through less obvious means such as medical management decisions? Advocates have long been concerned that coverage inequities between behavioral and other health care could persist if aggressively restrictive utilization review systematically restricted MH/SA services under the guise of “medical necessity” or “medical management.” It is relatively easy to prohibit differential copayments and deductibles. It is harder — and more controversial — to attempt to monitor the relative equity of medical management techniques. The agencies have spoken pretty clearly on this issue in requiring equitable use of “nonquantitative” management strategies:

Any processes, strategies, evidentiary standards, or other factors used in applying the nonquantitative treatment limitation to mental health or substance use disorder benefits in a classification must be comparable to, and applied no more stringently than [those] used . . . with respect to medical/surgical benefits in the classification.

The tools must be comparable both facially and in application:

Thus, for example, assume a claims administrator has discretion to approve benefits for treatment based on medical necessity.  If that discretion is routinely used to approve medical/surgical benefits while denying mental health or substance use disorder benefits and recognized clinically appropriate standards of care do not permit such a difference, the processes used in applying the medical necessity standard are considered to be applied more stringently. . ..  The use of discretion in this manner violates the parity requirements for nonquantitative limitations.

Translation: the parity requirement for medical management is not one merely of form, but also of substance.  While the enforcement of this substantive even-handedness may be messy, it furthers the principle of parity in a powerful way.

The parity rule, then, takes some strides toward the enforcement of true parity in health insurance for people with behavioral health needs.   But people with such needs are desperately in need of further health reform for many reasons, a few of which are outlined below:

• Most obviously, people with serious mental illness are often unemployed or underemployed, and therefore are less likely to have employment-based health coverage. If they do not qualify for Medicaid or Medicare, they are often uninsured. Health reform extending coverage to the uninsured is therefore a pressing need for people with MH/SA needs.
• People with severe mental illness also suffer disproportionately from the effects of physical illness. As I’ve previously described, a 2006 National Association of State Mental Health Program Directors report titled Morbidity and Mortality in People with Serious Mental Illness revealed that people with serious mental illness die 25 years earlier than peers without mental illness, and suffer from a great deal of excess illness while alive. Most of the excess mortality and morbidity is due to preventable physical illness, and their poor medical condition is often traceable to poor coordination of their mental and physical care. The care coordination provisions in pending reform bills would go some distance in addressing these coordination and coverage concerns.
• The reform bills, in addition to mandating and facilitating the expansion of insurance, would channel at least much of the expansion through insurance exchanges. Although the proposals vary, exchanges could, as Tim Jost has described be a force for regularizing health plan design, and for promoting transparency in plan offerings for the benefit of all consumers, including those with MH/SA needs.

Our current health insurance system serves people with behavioral health needs rather poorly.  The MHPAEA took beneficial steps for insured people with MH/SA needs, and the interim rules in at least some sections interpret the act rather robustly.  This good news should not blind us to the fact that more comprehensive health reform is absolutely necessary to provide for the broad range of health needs of people with mental illness or substance use disorders.

Taking the Fraud Out of Medicare Expansion

One of the ways the Obama administration hopes to pay for health care reform is through policing Medicare fraud.  It is estimated that the Centers for Medicaid and Medicare Services (CMS) spends $60 billion a year on fraudulent claims.  According to Senator Grassley of Iowa, the federal agency received warnings of fraud by watchdog organizations, but did not respond to most of them; these warnings fell upon the CMS’s shoulders under the Bush Administration.

A report by the Department of Health and Human Services finds that much of the fraud in the Medicare Prescription Benefit program could have been avoided through better management of the companies that were hired by the federal government in 2006 to investigate and monitor the fraud.  Grassley notes that the companies, called Medicare drug integrity contractors or Medics, were essentially a waste of money because they were never given the proper information to perform the audits.  The New York Times reports that the Bush Administration did not allow for the audits by Medics to proceed until its final few months in office.

Under the current model, scams to get Medicare reimbursement for non-existent services are easier than one might think.  Just this past July, a couple who owned a medical business was indicted for submitting false reimbursement bills to the CMS for power wheelchairs that they claimed had been lost or destroyed during Hurricane Katrina.  Other scams include medical suppliers billing Medicare for equipment that was never given to patients, creation of fake medical supply companies, and acceptance of illegal kickbacks for referring Medicare patients to unneeded services.

Solutions to fraud, however, are not as clear-cut as one might wish.  For example, there is a worry that over-policing the CMS will lead to valid claims being denied at greater rates. Also, enforcement and punishment are issues.  Some health care companies have been able to escape criminal prosecution by paying restitution amounts for the fraudulent claims.  Finding restitution to be an insufficient deterrent to would-be fraudsters,  Senator Arlen Specter of Pennsylvania wants to see scammers put behind bars. But there is also something to be said for the realization that the “Arthur Anderson solution” is really no solution at all.

Another interesting aspect to consider here is that the CMS finds that provisions of the House bill intended to reduce Medicare fraud will not save all that much money.  In spite of this (or perhaps because of it) many of our leaders have demanded that some action be taken to reduce Medicare fraud– even Sarah Palin says fraud is an issue.  One hopes that the Obama administration will learn from its predecessor’s mistakes (if in fact they be such) when it comes to creating watchdogs such as Medics, but then muzzling and not feeding them.

Physician Shortage in Relation to Compensation

The New York Times has run an article regarding physician shortages and physician compensation that is well worth a read. The Times reports that Obama administration officials

said they were particularly concerned about shortages of primary care providers who are the main source of health care for most Americans.

One proposal - to increase Medicare payments to general practitioners, at the expense of high-paid specialists - has touched off a lobbying fight.

But as the Times article does not give particulars as to physician compensation, it may be of some help to actually look at the numbers.  To do so, I’ve re-posted this blog from a few months back. If, after you’ve looked at the numbers, you would like some explanation as to why they are the way they are, Professor Frank Pasquale’s post, Will Specialist Pay Be a Target of Health Care Reform?, will also serve you well. For an even further look at physician compensation, click here, and for a look at physician shortage matters click here.

Physician Compensation II

Yesterday’s post displayed recent Bureau of Labor Statistic figures concerning physician compensation, and offered a link to recent median physician compensation data approved for use by Centers for Medicare and Medicaid Services (CMS) for calculations regarding direct graduate medical education under 42 CFR 413.78(f). The producer of this data, AMGA, also offers an interactive physician compensation survey which shows “average” and “starting” compensation for various specialties. A click on the arrow underneath “average” will sort from lowest to highest.

Here below is a list of a few of the CMS approved median physician compensation figures for a number of different specialties. The numbers are taken from the 2008 report.

The median compensation for a practitioner:

• Pediatric & Adolescent, Internal 161,444
• Pediatric & Adolescent, Infect. Disease 174,154
• Family Medicine, w/out Obstetrics 176,280
• Family Med., w/out Obst., Branch* 190,182
• Geriatrics 179,344
• Podiatry: 180,080
• Transplant Surgery, Kidney 368,750
• Dermatology, Branch* 301,111
• Dermatology, Mohs 423,848
• Not neural, Non-Interventionist, Radiology 420,858
• Mammography 540,028
• Orthopedic Surgery, Spine 611,670

*Branch is defined by AMGA as: These specialties have the same basic definition as the main specialty. These physicians located in small satellite or branch offices at least five miles from the main campus. The branch office practices primarily as its own separate entity, and often has different compensation and/or performance expectations than its main campus colleagues, there would be no teaching responsibilities at these locations.

With these numbers, over the course of ten career years, if calculated at a constant rate without regard to future increases in compensation, the median paid “Family Doctor, Branch” will have earned $1,900,182. During those same static ten years, a “Mammographer” will have earned $5,400,280. If the Family Doctor were to consult with the Mammographer at the end of those ten years, she would be doing so with someone who had made $3,500,098 more than she-nearly 3 times as much. If that same Family Doctor were to then consult with someone from the lowest paid of the three categories of Radiologist, Not neural, Non-Interventionist, she would be doing so with someone who had made $4,208,580 during that time-which would be $2,308,398 more than she-or more than twice as much.

Perhaps by way of consolation for the PCP, the Geriatrics specialist and the Pediatric Infectious Disease specialist would have fared worse, and even the Kidney transplant specialist who consults with the radiologist would be speaking with someone who had made a half of a million dollars more than he did.

But perhaps it is not consolation enough; the AMA has reported that the nation faces a shortage of 35,000 to 40,000 Primary Care Physicians.

Home Health Area Especially Vulnerable To Medicare Fraud And Abuse

American Health Lawyers Association reports that the increased amount of federal spending on home health benefits has led to the rise of fraud and abuse issues.  AHLA reports that federal “spending on home health grew approximately 44% from 2002 through 2006 ….”

AHLA states:

Gaps in the Centers for Medicare and Medicaid Services’ (CMS’) administration of the $12.9 billion Medicare home health benefit have left the program vulnerable to improper payments, including payments for claims resulting from fraudulent and abusive practices, the Government Accountability Office (GAO) found in a recent report.

The opportunities for fraud and abuse issues concerning home health care are manifold.  AHLA states that  the “common types of upcoding and billing for unnecessary care in home health were: billing for outlier cases when that level of care was not required, billing for beneficiaries who were not homebound, and billing for therapy visits that may have been medically unnecessary. ”

The Department of Justice defines upcoding as “the practice of improperly assigning a diagnosis code to a patient discharge that is not supported by the medical record for the purpose of obtaining a higher level of reimbursement for that hospital discharge than the hospital would otherwise receive.”

AHLA also reports that Home Health Agencies (HHAs) “are not routinely subject to revalidation and that CMS generally does not include physicians, who are in a position to detect certain types of improper billing, in the agency’s efforts to detect improper payments.”

AHLA reports that CMS is considering adopting two of the four actions recommended by GAO:

CMS stated that it would consider two of GAO’s four recommendations–to amend regulations to expand the types of improper billing practices that are grounds for revocation of billing privileges and to provide physicians who certify or recertify plans of care with a statement of services received by beneficiaries. The agency “neither agreed nor disagreed with our other two recommendations,” GAO explained.

AHLA reports that the four recommendations for CMS are:

• Assess the feasibility of verifying the criminal history of all key officials named on an HHA enrollment application.
• Provide physicians whose identification number was used to certify or recertify a plan of care with a statement of services the HHA provided to that beneficiary based on the physician’s certification.
• Direct CMS contractors to conduct post-payment medical reviews on claims submitted by HHAs with high rates of improper billing identified through prepayment review.
• Amend current regulations to expand the types of improper billing practices that are grounds for revocation of billing privileges.

Read more

Pilot Program Seeks to Educate Patients, Prevent Illness, and Save Billions

A pilot program aimed at reducing Medicare costs by “stopping the revolving door of hospital admissions by some chronically ill elderly” is taking shape in Baton Rouge, Louisiana.  According to the Baton Rouge Advocate, the program, called the Care Transitions Project, could be a model for U.S. health care reform if it is successful in Baton Rouge and 13 other participating communities.

The program seeks to provide patients and caregivers with information before they leave the hospital in order to prevent problems that could lead to readmission.  Fundamental to the program is the use of a “transition coach” who helps the patient put together a list of questions for their primary care physician, discusses questions about medications, and puts together a plan for “self-care.”  This allows the patient to be mindful of preventive measures and symptoms to be on the lookout for.

The patient signs a consent form in which they agree to meet with the transition coach before leaving the hospital and again within 48 hours of leaving. There is an additional follow-up at a week, two weeks, and a month.

Gary Curtis, head of Louisiana Health Care Review, says that:

In Louisiana, two out of every 10 chronically ill elderly patients are back in the hospital within 30 days of their release.

However, the problem is not confined to Louisiana.  According to statistics from the Centers for Medicare and Medicaid Services,

Nationally, the readmissions and subsequent treatment contribute to a $12 billion annual increase in Medicare costs.

Other communities engaging in the pilot program include Denver, Colorado and Miami, Florida.  Click here for more information about the Care Transitions Program.

Two New Reports Look at Increases in Health Care Spending

The Wall Street Journal reports that CMS estimates overall U.S. health care spending will reach $4.35 trillion in 2018, accounting for one-fifth of GDP. The findings by CMS were published Tuesday in the journal Health Affairs. In 2009, U.S. health care spending is expected to reach $2.5 trillion, a 5.5% increase from 2008.

The CMS study expects government health care spending to increase by 7.4% to $1.19 trillion this year. However, the study forecasts that, by 2016, the government will pay for more than 50% of total health care spending. The increase in government health care spending is expected to come from baby boomers enrolling in Medicare and increased enrollment in Medicaid.

Meanwhile, The New York Times reports that Medicare spending continues to vary widely across the U.S., according to a report to be published today in The New England Journal of Medicine.

According to The Times, Dartmouth researchers found that:

The regional differences in the growth of Medicare spending suggest doctors are helping to drive up costs when they more frequently order tests or admit patients to the hospitals. In areas where there are plenty of hospital beds and sophisticated imaging equipment available, doctors generally spend more on their patients.

Dr. Elliott S. Fisher, the director of the Center of Health Policy Research at the Dartmouth Institute for Health Policy and Clinical Practice and one of the work’s authors, told The Times that:

[A]ny attempt to rein in health care costs . . . needs to address how doctors and hospitals are paid, where they are rewarded on the basis of the volume of services they perform.

Read more

HHS OIG Report Finds Part D Private Insurers Overcharged for Billions, Lack of CMS Oversight

According to a recent report by the Department of Health & Human Services, Office of Inspector General, private insurance companies that operate plans under the Medicare prescription drug benefit have overcharged Medicare beneficiaries and the program by several billion dollars since the program began in 2006.

According to the report, 80% of health insurers that operate plans under the Medicare prescription drug benefit overcharged the program by about $4.4 billion in 2006 alone. In addition, The McClatchy/Raleigh News & Observer reports that the Centers for Medicare & Medicaid Services (CMS) remains unaware of the total impact of the practice because of its failure to perform required audits.

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New Bill to Create Prescription Drug Benefit Through Original Medicare as CMS Expansion of Off-Label Drugs for Cancer Treatment Draws Criticism

Yesterday, Congressional Democrats introduced legislation (HR 684, S 330) that would allow Original Medicare to establish one or more plans to compete with private plans under the Part D prescription drug benefit, according to CQ HealthBeat. The legislation would also require the Secretary of Health and Human Services to negotiate directly with pharmaceutical companies for the prices of medications under Part D.

Additionally, it would strengthen the ability of Medicare beneficiaries to appeal denials of coverage for medically necessary medications under all Medicare Part D plans.

The bill was sponsored by Senate Majority Whip Richard Durbin (D-Ill.) and Reps. Marion Berry (D-Ark.) and Jan Schakowsky (D-Ill.). According to Berry, the plans established by Medicare would have the ability to obtain discounts on medications that private plans could not match.

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CMS Ruling May Pose Serious Problems for New York Seniors

Federal law protects married couples from having to choose between divorcing and becoming impoverished when one spouse needs expensive nursing home care. For 20 years, this law allowed the healthier spouse to retain income and assets while the sicker spouse is covered by Medicaid.

In New York State, the same benefit has been extended to people with illnesses like Alzheimer’s disease or cancer who receive care at home, which is both less expensive and less disruptive to relationships.

That benefit may no longer be available to the spouses of those patients receiving care at home, according to The New York Times. Last fall, the Centers for Medicare and Medicaid Services sent a letter to New York health officials outlining a legal ruling declaring that couples in which both partners live at home are not entitled to the same protection as those couples where one spouse is in a nursing home.

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