Reorganization of UMDNJ to be Implemented this Year

On January 25, 2012, after nearly a decade of deliberations and strategic planning, the University of Medicine and Dentistry of New Jersey Advisory Committee issued its Final Report pursuant to a directive from Governor Chris Christie. The Report calls for and explains a proposed reorganization and “complete overhaul” of the University of Medicine and Dentistry, which will most likely be known as the New Jersey Health Sciences University once the Committee’s recommended changes commence. The implementation of these changes are said to be of a high priority for the Christie  administration. UMDNJ is one of the largest public entities in the state, operating at an annual budget of $1.7 billion.

The Committee made the following recommendations, which have been endorsed by Governor  Christie:

• A revamped and recast health sciences university based in Newark, which they suggest be named the New Jersey Health Sciences University (NJHSU). This powerful academic institution, with significantly increased autonomy for three units — University Behavioral Health Care, the School of Osteopathic Medicine and the Public Health Research Institute — will establish the foundation for a new era of medical education and patient care in our State.

• An affirmative and strong endorsement of support for the critical mission and role of University Hospital for the Newark community and for the State. The Committee recognized the hospital’s vital role while also noting that its precarious fiscal position must be addressed. To that end they are recommending a public/private partnership that would provide for the improved operations and long-term sustainability of University Hospital.

• A broader, expanded research university in southern New Jersey comprised of the assets of Rowan University and Rutgers University in Camden and encompassing, as well, the Cooper Medical School of Rowan University.

• Reaffirms Committee’s interim recommendation for institutional realignment of UMDNJ’s Robert Wood Johnson Medical School, the School of Public Health and the Cancer Institute of New Jersey into Rutgers University.

The Report stresses the urgency of the action proposed, emphasizing, “The time is now.”

Medical education and health care delivery are– particularly as they relate to UMDNJ– enormously complicated, but not so complicated that decisive action on behalf of the State and for the State’s benefit should be put off any longer.

Pointedly, as U.S. attorney, Chris Christie “led a two-year federal takeover of the institution in 2005, after Medicaid fraud was discovered.” Governor Christie is reported as saying that mismanagement and the magnitude of  UMDNJ problems that have accumulated over the years have led him to believe that the structure and scope of UMDNJ, as is, can no longer be managed effectively.   As such, under the proposed plan the university will be broken down into component parts. Thinking that time is of the essence, Governor Christie has announced that the reorganization will take place this year.

Governor Christie has said that he recognizes that the University Hospital is indispensable to the well being of the people within the region. The Report proposes to place the management of the hospital under a long-term public-private partnership, with the hope that this will “[enable] continued high quality medical programs, increase efficiency in operations and investment in capital improvements in the future.”

Some Newark residents, however, are said to oppose the plan, citing fears that privatization and the splitting off of UMDNJ units will take away jobs and resources. In contrast, Governor Christie is said to believe that the initiatives will aid the state’s efforts to attract health care and biomedical companies, and avail the University of more funding opportunities. Further rationales for the Commission’s recommendations include the ability to quickly implement the institution’s research at the medical school to benefit patients and that the changes will add substantially to the infrastructure for pharmaceutical and biomedical research.

Newark Mayor Cory Booker, who is still reviewing the reorganization report, stated that he “welcome[s] sensible reform but I would stand shoulder to shoulder with other leaders to ensure our residents don’t suffer a decline in the quality and scope of available healthcare and that we maintain abundant medical education opportunities in North Jersey.”

Navigating the New Field of International Health Law, Featuring Gian Luca Burci, Legal Counsel for WHO

This lecture, “Navigating the New Field of International Health Law,” will explore the intersection of health and international law and the emergence of International Health Law as a practice area. Featuring Gian Luca Burci, Legal Counsel for the World Health Organization, this program will focus on the growing interactions between health policy and various areas of international law, including international business transactions, intellectual property, international security, and human rights law. The program is sponsored by the Seton Hall Law Center for Health & Pharmaceutical Law & Policy and the International Law program at Seton Hall Law.

The event will take place at Seton Hall Law, Newark, NJ, on Wednesday, February 22, 6 to 7 p.m.  There is no charge. 1 New Jersey CLE credit will be available. Click here to make your reservation or for more information, please contact Sara Simon, Director, Healthcare Compliance Certification Program, at sara.simon@shu.edu or call 973-642-8190.

Research, the Avian Flu and Bioterrorism

In their zeal to keep us all alive, it seems fair to say that public health officials love bioterrorism preparedness measures. In fact, the only thing they might love planning for more is pandemics. So last month, when researchers at two different facilities revealed they were able to mutate the virulent H5N1 avian flu strain to pass between mammals simply through the air, the NIH was highly concerned.

The discovery is alarming because avian flu is considered one of the world’s deadliest pathogens, with a 60% mortality rate. But while avian flu viruses have infected humans in the past, those infections have come directly from birds. If the virus can be mutated into an airborne pathogen, the consequences can be catastrophic.

Two research teams (one led by Ron Fouchier of Erasmus Medical Center in the Netherlands, and the other by Yoshihiro Kawaoka of the University of Wisconsin) engineered the new bird flu strains. After growing the H5N1 strain for several generations, the scientists discovered the exact genetic mutations that allowed the virus to be transmitted by air between ferrets. The results could be easily duplicated if the teams publish their studies with full details.

The National Science Advisory Board for Biosecurity (NSABB), a U.S. government advisory panel that is run out of the NIH, asked the journals Science and Nature to delay publication of the research. The NIH released the following details in a press release:

Due to the importance of the findings to the public health and research communities, the NSABB recommended that the general conclusions highlighting the novel outcome be published, but that the manuscripts not include the methodological and other details that could enable replication of the experiments by those who would seek to do harm. The NSABB also recommended that language be added to the manuscripts to explain better the goals and potential public health benefits of the research, and to detail the extensive safety and security measures taken to protect laboratory workers and the public.

The request has sparked a debate about if and when it is appropriate to have oversight of dual-use research. As defined by the NSABB, dual-use research of concern is research that is “reasonably anticipated to provide knowledge, products, or technologies that could be directly misapplied by others to pose a threat to public health and safety, agricultural crops and other plants, animals, the environment or materiel.”   A good synopsis of the bioethical implications of such research is considered by Alan Rozenshtein on lawfareblog.com.

One of the research team leaders, Ron Fouchier, responded that the NSABB’s advice amounted to one-country domination of a discussion with worldwide impact. At the same time, he conceded that the mutant strain is “probably one of the most dangerous viruses you can make.” The professor who oversees biosafety for University of Wisconsin, William Mellon, responded that the research is “society’s best defense against a pathogen that has shown time and time again that, in nature, it can adapt to human hosts with dire consequences for global public health.”

Science and Nature were slower to respond. Last month, Science Editor-in-Chief Bruce Alberts noted the journal’s initial hesitation to acquiesce to the NSABB recommendation-

“We strongly support the work of the NSABB and the importance of its mission for advancing science to serve society…At the same time, however, Science has concerns about withholding potentially important public-health information from responsible influenza researchers. Many scientists within the influenza community have a bona fide need to know the details of this research in order to protect the public, especially if they currently are working with related strains of the virus.”

Nature’s Editor-in-Chief Philip Campbell replied along the same lines:

“We have noted the unprecedented NSABB recommendations that would restrict public access to data and methods and recognise the motivation behind them. It is essential for public health that the full details of any scientific analysis of flu viruses be available to researchers. We are discussing with interested parties how, within the scenario recommended by NSABB, appropriate access to the scientific methods and data could be enabled.”

The issue at hand is as one scientist, Peter Palese, opined in Nature: “We need more people to study this potentially dangerous pathogen, but who will want to enter a field in which you can’t publish your most scientifically interesting results?”

Just last week, both teams of researchers announced in an open letter published in Science and Nature that they agreed to pause their work for 60 days. In the meantime, the teams propose to discuss the benefits and safety measures of their work in an international forum for discussion and debate within the scientific community. The researchers stated in the open letter,

“We realize that organizations and governments around the world need time to find the best solutions for opportunities and challenges that stem from the work. To provide time for these discussions, we have agreed on a voluntary pause of 60 days on any research involving highly pathogenic avian influenza H5N1 viruses leading to the generation of viruses that are more transmissible in mammals.”

Where, when and how these discussions will take place on an international level remains to be seen, but the NSABB appears to have made its point.

An unintended effect of the recommendations is that they have called into question the role and purpose of the NSABB. The NSABB was created in 2004, as a response to the 2001 anthrax attacks and the subsequent public outcry for regulation of research with implications for bioterrorism. As past president of the American Society for Microbiology, Ronald Atlas, put it, “[t]here was a sense, whether right or wrong, that if the community did not act to protect the integrity of science, government would overreach and there would be censorship.” Instead of regulating scientific research directly, the NSABB panel of scientists was given the role of offering advisory opinions on sensitive issues.

Since 2004, the NSABB has only been asked to review six papers. Two of those papers, released in 2005, described the reconstruction of the deadly 1918 influenza virus. The NSABB recommended that the papers clearly define the public-health benefits of the research, but no other advice was given. This is partly why the NSABB’s current recommendation is unprecedented.

According to Amy Patterson, director of the NIH, a draft policy for dual-use research should be presented by the U.S. government this spring. The draft should present a comprehensive framework for the oversight of such research, and create a local review component. As she states it,

“Whatever system is put in place needs to have both aspects: some consideration up front when the work is funded, but also a component of local oversight and review. It starts with the investigator — he or she knows best what is emerging out of their work. But we also need a level of institutional review to provide a second set of eyes taking a fresh look. The earlier something is recognized, the more options for management you have.”

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, stated that the draft plan may require scientists to apply online for access to critical information, after explaining their need for details on dual-use research. As of right now, it is unclear who would judge the validity of such requests. It is worth noting that at least one other institution, the University of Maryland’s Center for International and Security Studies, has outlined potential oversight systems already.

The dilemma of dual-use research is already a global problem, and therefore requires a global solution. The World Health Organization commented after the H5N1 mutations, stating a deep concern about the possible misuses of the research. The WHO was quick to note the critical need for such scientific knowledge, but concluded that “such research should be done only after all important public health risks and benefits have been identified and reviewed, and it is certain that the necessary protections to minimize the potential for negative consequences are in place.”

As Laurie Garrett, senior fellow for global health at the Council on Foreign Relations, notes in a thorough review of international mechanisms for oversight of dual-use research, the first problem is that there are “no consistent, internationally agreed-upon regulations governing synthetic biology.” The only review that does currently exist is the “toothless” Biological Weapons Convention(BWC) from 1975, to which 165 states are party.

Last month, U.S. Secretary of State Hillary Clinton attended a BWC summit, and stated-

“The nature of the problem [dual-use research] is evolving. The advances in science and technology make it possible to both prevent and cure more diseases, but also easier for states and nonstate actors to develop biological weapons. A crude, but effective, terrorist weapon can be made by using a small sample of any number of widely available pathogens, inexpensive equipment, and college-level chemistry and biology. Even as it becomes easier to develop these weapons, it remains extremely difficult . . . to detect them, because almost any biological research can serve dual purposes. The same equipment and technical knowledge used for legitimate research to save lives can also be used to manufacture deadly diseases.”

The need for global cooperation on this issue is crucial.

In truth, it seems that pandemics fascinate most of society, and not just public health professionals. Last year saw the release of the movie Contagion, with a plot line appealing enough to enlist the acting talents of Gwyneth Paltrow and Matt Damon (for a great comparison of the movie to real-world issues, see  W. Ian Lipkin’s op-ed for the New York Times). Further, avian flu remains a present threat. Just this month, Chinese health authorities confirmed a bird-flu-related death, Indonesia reported the third death related to bird flu in three months, and there are reports of avian flu among birds in India. Given that H5N1 remains such a threat without the consideration of bioterrorism, the need for regulations on dual-use research is seemingly more apparent than ever.

Bill Requiring Licensure of One-Room Ambulatory Surgery Centers In New Jersey Dies in Gov. Christie’s Pocket

Governor Christie has pocket vetoed a bill that would have required one-room ambulatory surgery centers (ASCs) in New Jersey to be licensed by the State Department of Health and Senior Services (DHSS), as ASCs with more than one operating room already are.

More than One Room

Under current law (e.g., N.J.S.A. 26:2H-1 et seq.; N.J.A.C. 8:43A), ASCs with more than one operating room are subject to a variety of statutes and regulations, including that they must obtain a license that specifies the health care services they are authorized to perform (N.J.S.A. 26:2H-12(a)) and report certain information to DHSS on a quarterly basis (N.J.S.A. 26:25-5.1e).  ASCs providing surgical and related services must “obtain ambulatory care accreditation from an accredited body recognized by [CMS]” as a condition of licensure (N.J.S.A. 26:2H-12(h)).  They also must establish and maintain a uniform system of cost accounting, reports and audits; prepare and annually review a long range plan; and establish and maintain a centralized, coordinated system of discharge planning (N.J.S.A. 26:2H-12(a)).  The statute also assesses various fees, which it caps at $4,000 for applications for licensure or renewal and $2,000 for biennial inspections (N.J.S.A. 26:2H-12(b)).    Since 2004, licensed ASCs with gross receipts greater than $300,000 also must pay an annual assessment based on its gross receipts and the assessment, capped at $200,000 (N.J.S.A. 26:2H-18.57(b); N.J.A.C. 8:31A)), is deposited in the Health Care Subsidy Fund (N.J.S.A. 26:2H-18.58).

DHHS’s implementing regulations cover a broad array of topics, including the qualifications of  persons working at these facilities, housekeeping protocols, emergency equipment, disaster plans, physical plant requirements, and laundry policies and procedures (NJAC 8:43a-1 et seq.).   The regulations impose a biennial inspection fee (N.J.A.C. 8:43A-2.2(m), although DHSS’s web site says that it inspects licensed ASCs every three years.

One Room

ASCs with only one operating room presently escape this licensure requirement (and its corresponding regulatory demands) because they are defined as physician’s surgical practices, which are excluded from the definition of surgical facilities that must be licensed.   (N.J.S.A. 26:2H-12(g)(5); N.J.A.C. 8:43A-1.3)  While surgical practices do not yet need to obtain a license,  they must register with DHSS, which registration, in turn, carries a variety of conditions.  For one, they must “obtain certification by the Centers for Medicare and Medicaid Services [(CMS)] as [] ambulatory surgery center provider[s] or obtain ambulatory care accreditation from an accrediting body recognized by [CMS]” - similar to larger ASCs.  They also must annually report to DHSS data regarding patients serviced by payment source and staffing levels.   The Commissioner of DHSS has the ability to revoke, suspend, or deny an application for a registration if the surgical practice is not in compliance.   The statute also prohibits ownership, management, or operation of a surgical practice “by any person convicted of a crime relating adversely to the person’s capability of owning, managing, or operating the practice.”  (N.J.S.A. 26:2H-12(j)) One-room ASCs also are regulated by the State Board of Medical Examiners as private physician practices.  The BME has enacted regulations establishing policies, procedures, staffing, and equipment requirements when practitioners perform surgery (other than minor surgery), special procedures, and anesthesia services in an office setting (N.J.A.C. 13:25-4A).  The BME has the authority to investigate and bring a licensing action against any physician who fails to comply with these regulations (N.J.S.A. 45:1-18, 45:1-21).  One-room ASCs serving Medicare or Medicaid patients also must satisfy federal standards and be certified by CMS.   If a one-room ASC is certified by CMS, DHSS conducts inspections on behalf of CMS every four years.  DHSS and the BME (N.J.S.A. 45:1-18(c)) also may conduct inspections to investigate complaints filed about a one-room ASC.  But there is no present state requirement that one-room ASCs be inspected by the BME or DHHS.

One Rooms Cited for ‘Immediate Jeopardy’

A report issued by the New Jersey Health Care Quality Institute (NJHCQI) in April 2011 shined the spotlight on the lack of oversight of one-room ASCs.  NJHCQI reviewed reports of inspections in 2009 and 2010 of 91 ASCs in New Jersey that reportedly were funded by a one-time federal grant.  40 of the 91 inspected facilities were unlicensed one-room ASCs, 17 of which (43%) were cited for “immediate jeopardy,” which is “defined as noncompliance with established rules that has caused, or is likely to cause, serious injury, harm, impairment or death to a patient.”  (In comparison, 8 of the 51 licensed facilities (15%) that were inspected were found in “immediate jeopardy.”)   The cited violations included, among others, a variety of improper sterilization and infection control procedures; inadequate tracking of medications, including controlled substances and expired medications; improper anesthesia administration; and failing to have necessary emergency medications or an agreement to transfer patients requiring emergency care to a hospital.  The report concluded that, “[b]ased on this snapshot,  . . there is evidence that consumers may be at greater risk in unlicensed Surgical Practices than in licensed ASCs” (emphasis in original).  Thus, the NJHCQI urged the State to require regular inspections of one-room ASCs and warned patients, in the mean time, not to use these unlicensed facilities.

What Could have Been

S.2780 looked to close the regulatory gap between one-room and larger ASCs - for the most part.  The version that passed New Jersey’s Assembly and Senate on January 9, 2012 would have amended N.J.S.A. 26:2H-12 to require ASCs with one operating room to be licensed by DHSS within one year of enactment as an “ambulatory care facility licensed to provide surgical and related services.”  This licensure requirement would have replaced the current registration requirements.  DHHS, then, would have had to inspect one room ASCs, just as it inspects larger ASCs.

But S.2780 also included provisions that treated one-room ASCs differently than larger ASCs.  All one-room ASCs would have been exempt from paying the ambulatory care facility assessment required by N.J.S.A. 26:2H-18.57.  Those that are certified by CMS (whether in operation on the day of enactment or not) or accredited by the American Association for Accreditation of Ambulatory Surgery Facilities or other CMS-recognized accrediting body (and in operation on the day of enactment) would not have had to meet the physical plant and structural requirements detailed in N.J.A.C. 8:43A-19.1 et seq.  The rest of the one-room ASCs that fail these exemptions would still have been able to seek a waiver (N.J.A.C. 8:43A-2.9) of the physical plant and structural requirements, which the Commissioner could have granted if it would not have “endanger[ed] the life, safety, or health of patients of the public.”  These concessions seemed to respond to reported warnings from some one-room ASC owners that “a new fee and a potential requirement to remodel their offices might drive [them] out of business.”  The bill also would not have subjected one-room ASCs to the current restrictions on DHSS’s ability to issue new licenses to ASCs with more than one operating room (N.J.S.A. 26:2H-12(i)).

Jeffrey Shanton, chair of Advocacy & Legislative Affairs Committee for the New Jersey Association of Ambulatory Surgery Centers, is quoted as describing S2780 as “one of the most important pieces of legislation concerning the ASC industry in New Jersey in years.”  Reportedly, the New Jersey Hospital Association and the Medical Society of New Jersey joined NJAASC in supporting its passage (in addition to consumer groups, like NJHCQI).

But now, S.2780 is dead.  Governor Christie did not veto it - directly.  Instead, by not taking action on this bill, which was passed on the last day of the legislative session, he has killed it via a “pocket veto.”

Going Forward

Legislators can’t override a pocket veto, but they may re-introduce the bill and try again.  If they do, it seems eminently reasonable to require inspections of one-room ASCs, whether by DHHS or BME, as long as there is adequate funding and staffing to complete these inspections without draining resources from other critical public health programs.    It would be critical to ensure that the $2,000 inspection fee is sufficient to cover DHSS’s costs and that the Department would not be prohibited from hiring necessary staff to fulfill this legislative requirement.

The Legislature also should be sure public safety requires the one-size fits all regulation model that this bill proposed.  If the costs of complying are too high, small offices may not seek licensure as an ASC and cease performing procedures that patients may have appreciated.  Perhaps that’s an acceptable outcome, but the Legislature should study the public safety benefits against the potential costs on physicians and patient access to services.  The standard of care and quality should not vary in different settings, but perhaps there is a way for the level of formality and overhead to be in proportion to the size of the facility without compromising public safety.

It also is notable that S.2780 did nothing to resolve the existing tangle of issues caused when in-network providers refer their patients to out-of-network ambulatory surgery centers that then charge an out-of-network facility fee.    (Senator Vitale’s earlier amendment to S.2780 conditioning waiver of the ambulatory care facility assessment on the one-room ASCs’ agreement “not to charge patients or third party payors a facility fee, room charge, or other similar fee or charge” did not survive legislative negotiations.)  S.2780 also would have amended N.J.S.A. 45:9-22.5 to extend the exception to the Codey Act’s self-referral prohibitions for larger ASCs to one-room ASCs.  As Kate Greenwood has discussed, there are reasons to question the wisdom of this exception (much less to extend it).

While legislators tackle these issues, one-room ASCs still do not have to be licensed in New Jersey.  But the State may investigate complaints, so be sure to speak up, if you have concerns.  There are links here to check if a facility is licensed, get copies of inspection reports, file a complaint, and search for information about providers.

Photo (Pocket) by ArnoldRheinhold
Photo (Jeopardy!) by Justin_Levy via Flickr

Online Graduate Certificate Programs

The next sessions for the Seton Hall Law Online Graduate Certificate Programs will commence in February 2012. These 8-week non-degree programs are designed for individuals who seek a greater understanding of key aspects of the health care field.

The Pharmaceutical & Medical Device Law & Compliance Program will begin on February 12, addressing the legal, regulatory and ethical issues related to the pharmaceutical and medical device industries. Priority application deadline is January 26.

The Health and Hospital Law Program will commence online on February 26 and offers an exploration of the legal, regulatory and ethical issues regarding health care delivery. Priority application deadline is February 2.

Click here to learn more about these programs and apply. For information, please contact Helen Cummings, Assistant Dean for Graduate Programs, at helen.cummings@shu.edu or call 973-642-8380.

Professor Frank Pasquale featured in The Record on ‘A Constitutional Right to Health Care’

Professor Frank Pasquale wrote a featured Op-ed in The Record, New Jersey’s most awarded newspaper, regarding a constitutional right to health care. Professor Pasquale, who is Associate Director of the Center for Health & Pharmaceutical Law & Policy and Editor in Chief of HRW, writes:

SHOULD the Supreme Court weigh in on America’s great health care debate? Yes. It should declare a constitutional right to health care.

This right is already enjoyed by prisoners. Law-abiding citizens deserve it, too.

The United Nations’ Universal Declaration of Human Rights states, “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including… medical care.”

Many advanced countries have adopted - and lived up to - similar commitments.

Of course, that’s not on the Supreme Court’s agenda. Instead, it will decide whether to cripple last year’s health reform, known as the Affordable Care Act, by declaring the individual mandate unconstitutional.

I understand objections to the mandate. Cash-strapped Americans don’t deserve one more drain on their resources. I’m also not a fan of making people buy health insurance from private insurers. They waste a lot of money, and are one reason why U.S. doctors’ administrative costs are a whopping 400 percent higher than those in Canada.

If I designed the ACA, I’d have given everyone a public option, modeled on Medicare.

But I didn’t write the bill, Congress did. In precedents going all the way back to the 1819 case of McCulloch v. Maryland (and affirmed as recently as 2010), the Supreme Court has deferred to Congress’s constitutional powers to solve national problems.

Politics

The court risks looking political if it abandons that approach now. It has already jettisoned once-venerable holdings on campaign finance, equal protection and antitrust.

Read the full Op-ed here.

New Evidence on Smoking Marijuana and Lung Function; Update on New Jersey’s Nascent Medical Marijuana Program

This week’s JAMA includes an article reporting on new evidence that smoking marijuana does not negatively affect lung function. Smoking tobacco has long been known to harm the lungs and to increase the risk of developing chronic obstructive pulmonary disease and lung cancer, both leading causes of death. The risks posed by smoking marijuana, on the other hand, have largely been assumed, based on the fact that “[m]arijuana smoke contains many of the same constituents as tobacco smoke[.]”

The authors of the JAMA article analyzed data from a 20-year longitudinal study of 5,115 people in 4 American cities who “comprise a broad cross-section of typical tobacco and marijuana use patterns” and found that “[w]ith up to 7 joint-years of lifetime exposure (e.g., 1 joint [a day] for 7 years or 1 joint [a week] for 49 years)” there was no evidence of an adverse effect on the lungs. Very heavy marijuana use in excess of 7 joint-years of lifetime exposure could prove harmful, but there were not enough heavy users in the study to demonstrate this.

High-quality epidemiological evidence like this latest JAMA study will be key to filling in the gaps in our knowledge about marijuana’s safety profile. While double-blinded randomized controlled trials are considered the gold standard for evaluating the safety and efficacy of drugs, they are not always an option, particularly where the goal is to gather data over many years. Marijuana’s classification as a Schedule 1 controlled substance adds to the difficulty of mounting clinical trials. Given this, it is (or will be) a very good thing that New Jersey’s still-nascent medical marijuana program will include a registry of de-identified patient treatment and outcomes data that will allow researchers to learn more about the drug’s safety and efficacy.

The statute authorizing New Jersey’s medical marijuana program was passed two full years ago, in January 2010, but the road to implantation has been a long and rocky one. (My previous posts on the subject are here, here, here, and here.) While the Christie Administration is now on board, local towns have proved resistant to efforts to site alternative treatment centers that would grow and/or dispense marijuana there. In the Associated Press earlier this week, Geoff Mulvihill writes that “[s]o far, only one [of the six groups authorized by the state to operate alternative treatment centers] has announced that it has secured local approvals. … Three others have been shut out of their chosen locations by local government bodies, despite assurances that security at the dispensaries would be tight and that pot would be given only to patients who are truly sick.”

The state may be fighting back. Nina Rizzo reports in the Asbury Park Press that Assemblyman Declan O’Scanlon has announced “that he will introduce legislation next week that would prohibit counties and municipalities from interfering with the development of medical marijuana cultivation and distribution centers by extending their protections under the Right to Farm Act.”

Such a heavy-handed approach may be necessary in the short term, to ensure that all six authorized alternative treatment centers can get off the ground. If the New Jersey Compassionate Use Medical Marijuana Act and its regulations work as they are intended to, however, public confidence in the program should grow.

The Good News is that Health Care Spending is Down

The bad news is that the country’s too broke to be sick. The New York Times reports that health care spending rose just 3.9% in 2010, totaling $2.6 trillion or 17.9% of the Gross Domestic Product. The information was derived from the latest report from the government’s National Health Expenditure Accounts (NHEA), which are, according to the Center for Medicare & Medicaid Services, “the official estimates of total health care spending in the United States. Dating back to 1960, the NHEA measures annual U.S. expenditures for health care goods and services, public health activities, government administration, the net cost of health insurance, and investment related to health care. The data are presented by type of service, sources of funding, and by type of sponsor.”

The Times notes:

Health spending normally grows much faster than the economy. But in 2010 growth rates were similar, so that health care accounted for the same share of total economic output in 2009 and 2010.

“U.S. health spending grew more slowly in 2009 and 2010″ than at any other time in the 51 years the government has been collecting such data, said Anne B. Martin, an economist in the office of the actuary at the Department of Health and Human Services.

How bad is it? The data is, well, record-breaking.

The Times:

In 2010, the study said, hospitals reported a decline in admissions and slower growth in emergency room visits and outpatient visits. Likewise, it said, doctor’s office visits declined, and spending for doctors’ services grew just 1.8 percent, to $416 billion in 2010. Total health spending averaged $8,402 a person, up 3.1 percent from 2009, the report said.

Doctors often prescribe drugs during office visits, and the decline in visits helped slow the growth of drug spending, as did the use of lower-cost generic medications. The number of prescriptions filled rose just 1.2 percent in 2010, and total retail spending on prescription drugs also grew 1.2 percent, to $259 billion, the slowest rate of growth in a half-century, the report said.

Those numbers of slowed growth are even more incredible given the context of a slowed generation of aging baby boomers.

But in the inimitable words of R. Hunter and J. Garcia,

Talk about your plenty, talk about your ills
One man gathers what another man spills

The Times notes:

For the first time in seven years, total private health insurance premiums grew faster than insurers’ spending on health care benefits, the administration said. Premiums totaled $849 billion in 2010, while spending on benefits totaled $746 billion. The difference includes administrative costs and profits.

There are a number of other interesting points to be found in the New York Times article, not the least of which is the growth in federal expenditures. It’s well worth a read.

Medicare Payment, a System in Need of Fixing

[Ed. Note: We are pleased to welcome Andy Braver, Esq. back to Health Reform Watch. Andy is a health care attorney who recently completed an LL.M in Health Law at Seton Hall Law. Prior to entering the LL.M. program, Andy spent five years as a healthcare provider, running a state of the art medical diagnostic imaging center.  During that time, he dealt with many important health law issues faces by providers today, including Fraud and Abuse, Medicare and Medicaid licensing and reimbursement, state and private accreditation organizations, private payers, electronic health records, and HIPAA and other privacy issues, to name just a few.]

Medicare’s fee for service payment system has many problems that need fixing.  While recent studies have predicted that Accountable Care Organizations (ACOs) may very well achieve better care and lower costs, any savings generated as a result of these new groups of providers will be just a drop in the bucket solution to a vast problem.

Medicare was projected to spend over $500 billion on patient care in 2010.  Notwithstanding the fact that the White House Office of Management and Budget believes $36 billion of the Medicare and Medicare Advantage payments made in 2009 were improper.

The problem is, there is no distinction made for the provision of quality medical care.  Conversely, there is no check in the system to make sure that the care provided is inadequate.  If you provide the service, you get paid.

I realize that in many areas of medicine, it is difficult or even impossible to create a system to accurately and impartially judge the adequacy of care provided.  How in fact do you measure the ‘quality’ of healthcare?  Do you look at the structure of an entity, its organization and ability to provide what is generally regarded as good care?  Or do you look at the actual process or provision care, measuring relative malpractice claims among other objective factors?  Many believe that better outcomes suggest better care.  While I do not believe that outcome or evidence based medicine is the answer to every problem, it certainly can be a solution to some of these challenges.

There are differences in the Medicare program based on geography, and local coverage determinations and reimbursement rates, whether using the PPS or RVU systems (Part A & B), vary greatly across the country.  That part of the system makes sense by taking into account cost of living, cost of employment, property costs, and local tax rates.

In my mind, however, these processes fail because they do not further take into account advances in technology, or reward investment in the future.  For example, Medicare pays the same amount of money for an MRI exam regardless of the type of machine that was used to take the picture, and without a thought given to the type of storage system employed by the medical provider.  Imagine a facility with a two decade old system, state licensed and able to take pictures, with a machine equivalent to the first generation digital camera I owned 15 years ago, and printed pictures that are stored in a file room.  Then imagine a state of the art facility with an HD camera taking high resolution digital pictures, stored in an electronic file system, in a format that is able to be sent electronically to specialists all around the country (or world), and accessed by the patient quickly and securely on the internet.  Are those two pictures worth the same to Medicare?  There certainly is increased value to the patient in the ‘new’ system.  Better picture quality undoubtedly leads to better diagnostic capability (better medicine), and fewer picture redos over time; long-term storage and record portability is certainly going to lower future treatment costs if the issue is a chronic one.  HITECH and the new EHR incentive programs recognize the importance of electronic medical records, but it remains to be seen how those requirements will affect licensing and reimbursement rates.  Will there be a license ranking and a tiered payment system based on perceived quality or outcome?

I certainly hope that payments are tiered when advanced technology is used, but not according to self-assessment rankings and quality benchmarks.  I would argue that medicine is the one area where any kind of ranking and result (or outcome) based assessment is virtually impossible.   People are not cars, and JD Power cannot provide meaningful answers when it comes to medicine; there is no way to objectively determine a specific course of treatment for a particular patient is better at one hospital versus another.  No two patients are the same, though it is entirely possible they might both drive the same car.  Determining quality in healthcare is exceedingly difficult.  Patient bases are different, whether because of socio-economic reasons, or geography.  So do you then look to the education of the physician to determine quality?  We don’t do the same for lawyers?  Or do we?  Do you look at healthcare structure (how an entity is organized, its equipment, etc…) to determine quality?  Or process (the # of lawsuits against it, for example)?  Better outcomes alone do not mean better healthcare, and none of these items taken alone should affect licensing of healthcare providers.  In the end, this highlights the fact that designing a system that is fair and without major flaws may never be possible with so much money in the system and with so many parties having opposed interests. But that doesn’t mean we shouldn’t try to fix the expensive and broken (the status quo is unsustainable), it just means that attainable reform could very well mean significantly less unfairness and less major flaws. Because ultimately, in this context, the perfect may be the enemy of the good.

The Needle (Exchange) and the Damage Done

As those nationwide prepared for their holiday gift exchange, American lawmakers inexplicably put an end to a different type of exchange:  a life-saving and successful public health tool called needle exchange.

House Republicans fought for, and won, a ban on federal funding for needle exchange programs in a massive spending bill passed in December that will fund the federal government until the fall of 2012.  The ban prevents the federal government from spending money funding needle exchange programs not only in the United States, but also restricts the State Department from funding syringe programs internationally.  Providing federal funding to such programs had been banned from 1988 to 2009, until finally the ban was ended after the election of Barack Obama.  Now it’s back.

These programs focus on high drug-use neighborhoods, providing free clean needles to intravenous drug users in an effort to prevent the spread of blood-borne diseases, including HIV/AIDS.  They are often accompanied by HIV counseling and testing, and typically also provide referrals to drug users for treatment.  After much debate about their effectiveness, data have shown that the programs drastically reduce infection rates and do not increase illegal drug use.  Further, the programs, which currently exist in 33 states, are widely supported by the scientific and public health community, from the CDC to the AMA to the National Academy of Sciences.  When the Washington, D.C. Department of Health looked at the efficaciousness of its needle exchange programs, 800,000 needles had been exchanged, 5000 HIV tests had been offered, and 900 people had been referred to drug treatment.  Unsurprisingly, the number of new HIV/AIDS infections dropped 60 percent in Washington, a city devastated by the HIV/AIDS epidemic.  In New York, the numbers of intravenous drug users with HIV have dropped from 50 percent in the 1980s to 16 percent today, following the implementation of a needle exchange program.

Not only do they make scientific sense, but they also make fiscal sense:  needle exchange programs reduce health spending in the long run.  According to a 2002 report by the Institute of Medicine, needle exchange programs save between $3,000 and $50,000 for each infection prevented.

But the news was not all baffling over the holidays.  In New Jersey, state lawmakers approved a bill allowing pharmacists to sell needles and syringes without a prescription, and it now awaits Governor Chris Christie’s signature.  Although previously against needle exchanges, Christie has said he has an open mind and will carefully review the bill.  And unsurprisingly, according to the New Jersey State Health Department, more than 40 percent of the state’s HIV or AIDS cases were a result of intravenous drug users’ use of contaminated needles.

When it comes to such common sense policy that is effective in reducing new infections, provides support and outreach to those struggling with addiction, is supported by data and the scientific community, and provides smart savings on health care costs in the long run, the ban on such a policy is not only confounding and irresponsible, but dangerous to us all.

Sources:

Clean Needles in New Jersey, N.Y. Times Editorial, Dec. 14, 2011, available at http://www.nytimes.com/2011/12/15/opinion/clean-needles-in-new-jersey.html?_r=1 (last accessed Jan. 3, 2012).

Emily Badger, Feds Poke Hole in Needle Exchange Funding, Miller-McCune, Dec. 20, 2011, available at http://www.miller-mccune.com/health/feds-poke-hole-in-needle-exchange-funding-38518/ (last accessed Jan. 3, 2012).

Kristen Gwynne, Risking Lives:  In 2012 Spending Deal, House GOP Slaps Ban on Federally Funded Syringe Exchange Programs, AlterNet, Dec. 16, 2011, available at http://www.alternet.org/newsandviews/article/749233/risking_lives%3A_in_2012_spending_deal,_house_gop_slaps_ban_on_federally_funded_syringe_exchange_programs/ (last accessed Jan. 3, 2012).

N.J. Lawmakers Approve Sales of Needles, Action News, Dec. 5, 2011, available at http://abclocal.go.com/wpvi/story?section=news/local&id=8455789 (last accessed Jan. 3, 2012).

Sarah Barr, Needle-Exchange Programs Face New Federal Funding Ban, Kaiser Health News, Dec. 21, 2011, available at http://www.kaiserhealthnews.org/Stories/2011/December/21/needle-exchange-federal-funding.aspx (last accessed Jan. 3, 2012).

Physician Payment Sunshine Act Proposed Regulations Out

CMS has published proposed rules for its implementation of the Physician Payment Sunshine Act (SUNSHINE ACT or Act), which was enacted by Congress as part of the 2010 Patient Protection and Affordable Care Act.  In short, the SUNSHINE ACT requires life science companies to report annually to CMS their conferral of anything of value, whether it be payment for services or a dinner, in connection with a particular product of the paying company.  By requiring CMS to post the information on its website, the Act seeks to ensure that interested patients become aware of physicians’ conflicts of interest that could affect their prescription of a branded drug or choice of a specific medical device.

The SUNSHINE ACT represents another example of the transparency movement, which has had varying degrees of success in either changing the behavior of the parties subject to disclosure, and/or enabling consumers to make better decisions based upon their access to the disclosed information.  It is likely that the SUNSHINE ACT will impact physicians and manufacturers’ behavior more than it will enlighten consumers about conflicts of interest.  Some physicians will simply conclude that accepting certain gifts or benefits from pharmaceutical or medical device companies isn’t worth having their names on the CMS website.  Some companies have already discovered that they haven’t necessarily reaped the value of the costs of gifting many physicians, or that the cost of recording certain activities simply isn’t worth the return on investment.  Unquestionably, certain transactions will continue to be valuable to both physician and company, and will continue.

It is unlikely that most patients will access the information either before or after a physician visit, or know what to do with the information even if they discover that their physician has an equity interest in the knee she plans to use in next week’s surgery - does such a close relationship with the knee manufacturer signal that the physician is great, or that something nefarious is going on?  The information is likely to be used by consumer watchdog groups, as well as hospital formulary committees and medical school deans interested in knowing the sources and amounts of outside income being earned by faculty.  Divorce attorneys are likely to find the information useful if their client’s soon-to-be ex-spouse hasn’t reported significant pharma consulting fees as income.

CMS rulemaking is behind schedule, thereby delaying the SUNSHINE ACT’s implementation.  It is likely, however, that the ultimate rules will still require that 2012 data be submitted, even if not by the deadline originally contemplated by Congress.

The statute requires manufacturers of drugs, devices, biological or medical supplies covered by Medicare, Medicaid or the Children’s Health Insurance Program (CHIP) (”applicable manufacturers”) to report annually to HHS payments or transfers of value to physicians and teaching hospitals (”covered recipients”).  Failure to comply will result in Civil Monetary Penalties.  HHS, in turn, must publish this information on a public web site which is searchable, downloadable and able to be aggregated.  Compliance with the SUNSHINE ACT’s reporting requirements does not exempt applicable manufacturers from application of fraud, waste and abuse laws.

Applicable Manufacturer

The proposed rule merges the SUNSHINE ACT definition of “manufacturer of a covered drug, device, biological, or medical supply”[1] with the statutory section clarifying that the entity covered by the SUNSHINE ACT must be “operating in the United States, or in a territory, possession, or commonwealth of the United States”[2] to define applicable manufacturer as one

(1)    Engaged in the production, preparation, propagation, compounding, or conversion of a covered drug, device, biological, or medical supply for sale or distribution in the United States, or in a territory, possession, or commonwealth of the United States; or

(2)    Under common ownership with an entity in paragraph (1) of this definition, which provides assistance or support to such entity with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale, or distribution of a covered drug, device, biological, or medical supply for the sale or distribution in the United States, or in a territory, possession, or commonwealth of the United States.

The operative activity that invokes statutory coverage, then, is sale of a product in the United States, as opposed to where the product is produced, or where the entity is located or incorporated. Pursuant to the rationale that risks inhere in conflicts of interest irrespective of where the manufacturer is located if the product is sold in the United States, any entity under common ownership with the manufacturer that is involved in the production, distribution or sale of at least one covered product in the United States must report all payments and conferral of value upon covered recipients. Further, as proposed, the product sponsor (i.e., the entity that obtained FDA approval) is subject to the reporting requirement, even if the sponsor is not involved in the manufacture of the covered product.  CMS is considering alternative interpretations of the common ownership concept.

Covered Drug, Device, Biological, or Medical Supply (”covered product”)

The SUNSHINE ACT focuses upon those products for which Medicare, Medicaid and CHIP pay.  This is relatively straightforward in many contexts, but CMS seeks to ensure that it captures situations where such products are part of a composite rate payment, such as the inpatient or outpatient hospital reimbursement, or the end-stage renal disease prospective payment system.  As such, CMS proposes to define “covered drug, device, biological, or medical supply” as:

Any drug, device, biological, or medical supply for which payment is available under Title XVIII of the Act or under a State plan under title XIX or XXI (or a waiver of such plan), either separately, as part of a fee schedule payment, or as part of a composite payment rate (for example, the hospital inpatient prospective payment system or the hospital outpatient prospective payment system).  With respect to a drug or biological, this definition is limited to those drug and biological products that, by law, require a prescription to be dispensed.  With respect to a device or medical supply, this definition is limited to those devices (including medical supplies) that, by law, require premarket approval by or premarket notification to the Food and Drug Administration.

CMS seeks comments on its plan to exclude from the scope of regulation those manufacturers who produce and sell only over the counter (OTC) products.  More specifically, this exemption would not extend to a manufacturer who sells even one prescription product who is otherwise subject to the reporting requirements of the SUNSHINE ACT.  Similarly, CMS seeks to interpret the SUNSHINE ACT to cover only those medical devices that require premarket approval, on the theory that this is the segment of the market most likely to have extensive provider relationships.  If a device manufacturer produces a single product that requires pre-market approval, it would have to report all payments and conferrals of value to covered recipients.

Covered Recipients

The SUNSHINE ACT defines “covered recipients” as (1) a physician, other than a physician who is an employee of an applicable manufacturer; or (2) a teaching hospital.   The term physician includes both doctors of medicine and osteopathy as well as podiatrists, optometrists and licensed chiropractors. CMS interprets the statute to include within its scope those who act on behalf of covered recipients.  Teaching hospital is not defined by the statute; CMS seeks comments on its proposal to identify such entities by virtue of their receipt of Medicare graduate medical education funds. CMS will publish this list annually on its website for manufacturers’ reference.

CMS plans to utilize the National Plan & Provider Enumeration System, which it maintains on its website, to collect the data regarding covered recipients required by the SUNSHINE ACT: covered recipient’s name and business address, and, for physicians, the National Provider Identifier and specialty.

Payments or Other Transfers of Value

The report must also include the date, form (i.e., cash, stock, ownership interest), nature (i.e., education, research, consulting fees, food) and amount of payment, and the market name of the product associated with the payment.  CMS continues to consider how to handle payments made to a single covered recipient related to multiple products.  CMS seeks to generate data in a form most easily understood by consumers.

The statutory definition requires such conferrals to be reported irrespective of whether they were requested by the physician or hospital and includes those made by third parties as long as the applicable manufacturer knows the identity of the covered recipient. CMS proposes that payments made through a group practice be reported under the specific recipient physician’s name.  If a physician requests the conferral to be directed to another physician or entity, the manufacturer should report the conferral under the requesting physician’s name as well as the name of the actual recipient.

Charitable contributions by an applicable manufacturer to, at the request of, or on behalf of a covered recipient are reportable.

The SUNSHINE ACT excludes from its reporting requirement the following payments:

• Transfers of value less than $10, unless the aggregated amount exceeds $100 in a calendar year
• Product samples not intended to be sold that are intended for patient use
• Educational materials that directly benefit patients or are intended for patient use
• The loan of a covered device for a period not to exceed 90 days, to permit evaluation
• Items or services provided under a contractual warranty
• A transfer of value or payment to a covered recipient when that person is receiving the conferral in his/her capacity as a patient
• Discounts, including rebates
• In-kind items used for the provision of charity care
• A dividend or profit distribution from ownership or investment interest in a publicly traded security or mutual fund
• Self-insurance payments to covered employees by an applicable manufacturer
• Non-medical services
• Transfers of value made by third parties where the applicable manufacturer is unaware of the identity of the covered individual

CMS will be moving rapidly to respond to comments and finalize these rules, which will likely involve changes from the discussion here.  State laws that pre-date the Act are pre-empted to the extent that they require reporting of the same information, which leaves them the discretion to retain those reporting requirements that are not redundant.  States seeking to impose as much of a burden on manufacturers as possible are likely to retain their individualized reporting requirements, others may find the costs not worth the benefits now that the feds have finally stepped in.

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[1] Section 1128G(e)(9).

[2] Subsection (e)(2) further clarifies that the entity covered by the SUNSHINE ACT must be “operating in the United States, or in a territory, possession, or commonwealth of the United States.”

Of provident kidney stones, health insurance and a CT Scan that may have saved my life

As we bid farewell to 2011 while ushering in the new year, some thoughts about health care — my own — emerge. I underwent major surgery this last year, having had roughly 15% of one kidney–or, more precisely, the cancerous portion of one kidney– removed. I chose to blog about the experience, chronicling the process from the onset, back when the tumor was initially thought to be a kidney stone or a cyst. But found early, it was small, they say they got it all and that it had not spread. I was lucky. A relatively rare form of the disease (roughly 50,000 cases per year), the survival rate for kidney cancer is not great because it is largely asymptomatic and is not generally tested without a family history for such.  Often, by the time someone wanders into a doctor’s office with complaints of an aching lower back or bloody urine, the tumor has grown to the size of a baseball, the cancer has spread, and the prognosis is not optimum. My tumor was found, as is so often the case, “incidentally” as they were looking at something else.

And that something else has me thinking; without it I’d be walking around with a ticking time bomb firmly ensconced and concealed in my kidney.  Which brings me to July of this past year when I awoke torn by excruciating pain from what I was to later discover were two kidney stones. Wave after wave of fortunate pain brought me to the emergency room. A CT scan discovered the stones–and something else– that ultimately turned out to be that cancerous tumor approximately 2.2 cm, lying in wait.

And there’s the rub. I had health insurance. Without health insurance I might have still gone to the hospital–the pain was immense– but I would have refused the CT scan.  I know of what I speak. A lack of health insurance is a state of affairs and a mindset that is distinctly different from that of having health insurance: as one deprives Peter to pay Paul “home medicine” takes on new meaning. And if forced to see a doctor, one minds the bottom line always ready to refuse treatment, especially avoiding diagnostic tests such as x-rays, CT scans and MRIs as they are the well traveled road to poverty if not bankruptcy.

And there it is. Without health insurance I would have refused the CT scan which may well have saved my life.

Instead, I ultimately had one of the nation’s top surgeons (the brilliant Dr. Paul Russo, most recently described by Maureen Dowd in the NY Times as “exuberantly blunt”) at Sloan-Kettering pluck the ticking time bomb from my body, while saving the affected kidney and me.

In the hands of a less skilled surgeon, my entire kidney may have been removed (it’s easier), and even if alive I’d have spent the rest of my life at a  increased risk for hospitalizing events from chronic  kidney disease, heart disease, and even hip fractures. The bill for my stay and surgery was roughly $27,000; my co-pay merely double digits (thank you Cigna).

And as I sit here reflecting on my good fortune and the providence of kidney stones timely sent, I cannot help but think of all those men and women across America without health insurance (or with junk insurance) who are left to face this coming year with health issues and hard economic choices each day–choices which will lead many to practice “home medicine” when faced with excruciating pain and the hidden harbingers of disease. Choices which will leave prescriptions unfilled. Choices which will lead many to refuse that costly x-ray, CT scan or MRI which might have saved their lives.

There but for the Grace of God–and a job with good health insurance.

And that’s not hyperbole: it’s a new year; it’s estimated that 45,000 people in America will die in it due to lack of health insurance.

Defining Essential Health Benefits

As many of us just finished scurrying to fulfill our children’s increasingly unrealistic holiday wish lists (my six year-old wanted a laptop and a phone — hah!), it’s a fitting time to step back and think about what is essential.

Section 2707 of the Affordable Care Act (ACA) requires all non-grandfathered health insurance coverage offered in the individual or small group markets beginning in 2014 to include essential health benefits (EHB).  Section 1302 then largely leaves the task of defining this term to the Secretary of HHS, as long as EHB include these ten statutorily itemized general categories:

(A) Ambulatory patient services.
(B) Emergency services.
(C) Hospitalization.
(D) Maternity and newborn care.
(E) Mental health and substance use disorder services, including behavioral health treatment.
(F) Prescription drugs.
(G) Rehabilitative and habilitative services and devices.
(H) Laboratory services.
(I) Preventive and wellness services and chronic disease management.
(J) Pediatric services, including oral and vision care.

The statute also directed that the scope of EHB must be “equal to the scope of benefits provided under a typical employer plan.”  (For more background on EHB, see Timothy Jost’s recent blog post on Health Affairs.)

Given the complexity of establishing a national floor for coverage, it is not surprising that the statute was short on specifics, and stakeholders have been waiting for HHS to provide detailed guidance as 2014 gets closer and closer.

On December 16, 2011, the Center for Consumer Information and Insurance Oversight in HHS released a bulletin outlining HHS’s intended regulatory approach to defining EHB.  After balancing “comprehensiveness, affordability, and State flexibility” along with input from various camps, HHS’s “intended regulatory approach utilizes a reference plan based on employer-sponsored coverage in the marketplace today, supplemented as necessary to ensure that plans cover each of the 10 statutory categories of EHB.”  Specifically, HHS

intends to propose that EHB be defined by a benchmark plan selected by each State.  The selected benchmark plan would serve as a reference plan, reflecting both the scope of services and any limits offered by a “typical employer plan” in that State . . . .

The bulletin identifies four benchmark plan types for 2014 and 2015 (HHS will assess the benchmark process for later years based on experience and feedback): (1) “the largest plan by enrollment in any of the three largest small group insurance products in the State’s small group market; (2) any of the largest three State employee health benefit plans by enrollment; (3) any of the largest three national FEHBP plan options by enrollment; or (4) the largest insured commercial non-Medicaid Health Maintenance Organization (HMO) operating in the State.”  It also indicated HHS’ intent to propose a default benchmark plan if a State does not exercise its discretion to select its benchmark.

Under HHS’s intended regulatory framework, insurance providers could adopt the balance achieved by the State benchmark, but it must supplement the benchmark it if it does not include all ten ACA-required categories.  HHS solicited comments regarding “options for supplementing missing categories.”  HHS also intends to require plans to offer “benefits that are ’substantially equal’ to the benefits of the benchmark plan selected by the State and modified as necessary to reflect the 10 coverage categories.”  It wants to provide flexibility to adjust benefits as long as there is coverage in all ten categories, and the flexibility will be “subject to a baseline set of relevant benefits.”

This bulletin raises more questions than it answers.  HHS itself seeks comment on a variety of issues, including the definition of habilitative services, what to require when a benchmark plan does not cover one of the ten statutory categories, or whether to permit substitutions between (and not only within) categories, subject to “a higher level of scrutiny.”   What do terms like “substantially equal” or “higher level of scrutiny” mean in practice?

On a more macro level, the bulletin raises the classic tension between centralized, prescriptive programs and those that permit states flexibility.  On the one hand, permitting state flexibility may ease states’ objections to federal interference with insurance regulation, and permit experimentation to reflect  local circumstances.  As the bulletin recognizes, all states have their own benefit mandates, so the less prescriptive the federal EHB definition, the lower the risk it will conflict with state-specific mandate requirements.

Yet with devolution comes the possibility that state decisions will frustrate the achievement of the ACA’s policy goals.  It remains to be seen how HHS effectively will police the various state and local decision makers who will exercise this discretion to protect consumers from discriminatory behavior.   How powerful will HHS’s oversight be?  For example, HHS’s review of the scope of existing coverage of mental health and substance use disorder services revealed great variations in coverage.  How much variation is acceptable?  What is the substance of the “baseline set of relevant benefits” that is supposed to limit state  discretion?  What role will politics have in this state-by-state process?

These questions just scratch the surface and remind us how critical it is to engage in this debate.  Jason Millman, writing for Politico, noted that consumer groups have not yet taken “the sky-is-falling position” in protest of HHS’s intended regulatory approach even though they have advocated for specific, federal requirements.  The sky may not be falling, but there are important policy issues in play that will benefit from careful and deliberate airing.  Comments on the bulletin must be submitted by January 31, 2012 to EssentialHealthBenefits@cms.hhs.gov.

Here’s to a new year in which more of us realize the essentials we all  shouldn’t have to live without.  Happy and safe holidays!

The Nirvana Fallacy Among Health Care Cost Cutters

One of my fun little Christmas presents was the Gruber/Newquist/Schreiber comic book guide Health Care Reform: What It Is, Why It’s Necessary, How It Works.   It’s wonderfully illustrated and has a lot of good information.  It offers a very hopeful vision of what health reform can do.  It patiently explains the politics and policy that led to the ACA, portraying it as a compromise that both “left and right” should be able to support.

Unfortunately, the authors have chosen to portray virtually anyone who opposes the ACA, on both left and right, as either angry, exasperated, selfish, or unreasonable.  (This animated penguin reminds me of several of the characters in the book.) There are also some questionable implications in various parts of the book.  For example, on p. 21, it’s suggested that if employers didn’t have to pay so much for health care, they’d just pay that in higher wages to employees.  But in an economy where corporate profits are capturing “88% of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1% of the growth in real national income,” why should we assume that will happen? Workers’ share of national income is declining; they have little bargaining power.  We can’t extrapolate the economic projections of the “Great Moderation” era to today’s Great Recession, where employers are exploiting the desperation caused by high unemployment to hold the line on wages and benefits.

One other objection: check out this graphic (my apologies for the poor camera-work), which suggests the deep problem in the US economy is that we’re spending too little on military or homeland security expenditures, and too much on health care:

Read more

Money Out of Politics?

Christmas has just passed and Hannukah now draws to its candled conclusion as Kwaanza begins, heralding the start of a brand new year. These times naturally encourage reflection, and with my twenty-year old prodigal daughter, Lexi, about to return to Occupy D.C. after a holiday respite, I find myself considering the positions of her compatriots who think, foremost, that the influence of big money should be removed from politics–they are championing a constitutional amendment to do so, and there are close to 300,000 signatures petitioning as a prelude to such change. It’s an ambitious and interesting thought this– what would the political landscape look like if legislators and executives voted their conscience without having to calculate the impact upon scores of their largest benefactors? What would health reform look like?

Occupy is also courting statutory change. The Brian Lehrer Show of NPR’s WNYC Radio tells us that Occupy Albany “is actually looking to follow the example set by Maine and its clean elections law.”

Of the Maine Clean Election Act, Matthew Edge of the Occupy Albany Political Strategy Working Group told Lehrer that “It allows for everyone running for office to essentially have the same amount of money to run. So they can win based on their ideas, and not based on just how much money they can raise. And once they’re elected, since agreeing to opt into the public funding system, the clean elections system requires them to agree not to accept any private contributions. So that seems to be — while it’s not the end all, be all — the first step.”

The Maine Clean Election Act? This is how the Act is described by the State of Maine at http://www.maine.gov/ethics/mcea/index.htm

The Maine Clean Election Act (MCEA) established a voluntary program of full public financing of political campaigns for candidates running for Governor, State Senator, and State Representative. Maine voters passed the MCEA as a citizen initiative in 1996. Candidates who choose to participate may accept very limited private contributions at the beginning of their campaigns (seed money contributions). To become eligible, candidates must demonstrate community support through collecting a minimum number of checks or money orders of $5 more made payable to the Maine Clean Election Fund (qualifying contributions). After a candidate begins to receive MCEA funds from the State, he or she cannot accept private contributions, and almost all goods and services received must be paid for with MCEA funds.

It is, notably, a voluntary program–though participation has markedly increased since the Act’s inception: legislative candidates in the year 2000 totaled 33% (116 of 350); in 2006 & 2008 that number rose to 81% (313 of 386 and 303 of 373 respectively); and in 2010 the number leveled out to 77% (295 of 385). Participation by state senate candidates is even higher, and interestingly, the participation rate of incumbents is high as well–even for those who had won in close races the previous cycle.

Equal money? Consider this from OpenSecrets.org about the 2008 elections:

In 93 percent of House of Representatives races and 94 percent of Senate races that had been decided by mid-day Nov. 5, the candidate who spent the most money ended up winning, according to a post-election analysis by the nonpartisan Center for Responsive Politics. The findings are based on candidates’ spending through Oct. 15, as reported to the Federal Election Commission.

Continuing a trend seen election cycle after election cycle, the biggest spender was victorious in 397 of 426 decided House races and 30 of 32 settled Senate races. On Election Day 2006, top spenders won 94 percent of House races and 73 percent of Senate races. In 2004, 98 percent of House seats went to the biggest spender, as did 88 percent of Senate seats.

But of course, as the Maine Ethics Commission responsible for overseeing the MCEA has recently noted,

In June 2011, the U.S. Supreme Court ruled in Arizona Free Enterprise Club’s Freedom Club PAC v. Bennett that the way Arizona awarded matching funds to candidates was unconstitutional.  The Court’s decision upheld the constitutionality of publically funded campaigns but ruled that the “triggering” of matching funds based on the spending by other candidates or independent spenders was a violation of the First Amendment. Maine, like Arizona, has a full public funding program for candidates; therefore, the Supreme Court’s decision had an impact on Maine’s MCEA program.

A retooling is said to be underway for the MCEA. As it stands, matching funds have been jettisoned. According to the Maine Commission: “The loss of matching funds presents a challenge for the program. In the last four election cycles, 40% - 50% of legislative MCEA candidates received some matching funds. However, the core function of the program remains unchanged.”

Given the reality of an electorate system in which money seems to almost guarantee office, coupled with the strictures of  Arizona Free Enterprise Club’s Freedom Club and Citizens United– is calling for a constitutional amendment outlandish?

Godspeed Lex.

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