Filed under: Health Law, Health Reform, Patient Protection and Affordable Care Act
Cross-Posted at HealthLawProf Blog
Millions – including millions of the “young invincibles” – have been enrolled in the ACA’s private and public insurance programs. And a recent study by Sommers, Long, and Baicker in the Annals of Internal Medicine, suggests that this enrollment will save lives. That’s great news for all interested in progressive health reform. But there is a lot of work to be done to ensure that care follows coverage. In this and subsequent posts, I’ll point to key implementation issues that share two characteristics: First, they go beyond the very important enrollment issues. Second, although federal implementation and advocacy is vital, my issues can be addressed largely through state and local government or private parties.
But before that, let’s call it: 2014 enrollment in ACA-related care is a success. The numbers are quite compelling. Private plan enrollment totals a surprising 13 million. This includes the 8 million signing up through federal or state exchanges, and the additional 5 million signing up outside the exchanges with plans that must meet Qualified Health Plan standards and share a common risk pool with in-exchange plans. About 28% on-exchange, and 45% of off-exchange enrollees are in the important 18-34 age group. More good news? Insurers report that at least 4 out of 5 have already paid their first month’s premium. And an additional 4.8 million are newly enrolled in Medicaid and SCHIP.
Sustaining that success won’t be easy. As Henry Aaron describes in the current issue of the New England Journal of Medicine, the success of the ACA in the short term will be subject to “brutal political war.” Aaron also describes the legacy of the political war that led to crafting of the ACA as an incremental plan, rather than a comprehensive, coherent design. The practical problem, in Aaron’s words, is that:
[R]eform had to be built on the most complex, kludgy, and costly system on planet Earth. Multiple layers of health coverage – as a fringe benefit of private employment, as compensation for military service, as public charity for the poor, as public coverage for the elderly and disabled, and as a private commodity purchased by individuals in a remarkably dysfunctional market – overlap and intersect to pay for care through a bewildering variety of agents in a system that even experts seldom fully comprehend.
“Kludgy” is exactly the word for it (not as cool as Henry Aaron? Here’s a definition). But it is a big step forward from the pre-ACA system – tens of millions newly covered, an end to the worst features of American health insurance underwriting, meaningful financial support for those previously shut out of coverage, and a variety of new delivery design initiatives.
The reforms embodied in the ACA can be sustained and improved, but only through the efforts of those in and out of government dedicated to improving access for those historically shut out of care. The case is not unlike that of Medicare, now a beloved social insurance system with almost 50 million beneficiaries, but in the 1960s a fragile program loved by few and reviled by many. As Ted Marmor, Jonathan Oberlander and others remind us, Medicare was born in a political maelstrom, and has been sustained, changing over time, through the hard work and creative accommodations by many in and out of government.
As with Medicare, there will be tough political fights about the future of the ACA, and grindingly difficult administrative challenges for federal regulators. But the states and private actors are critical to the ACA’s success. The fact is that the ACA’s innovations largely lay over the construct of existing insurance law. In addition, gaps in coverage and ambiguities in the protection of civil rights means that those outside of the federal political and administrative processes will have lots to do. Those tasks include:
- Affordability. Many advocates are concerned that people newly enrolled in QHPs will have trouble affording care notwithstanding the ACA’s subsidy systems. This concern goes beyond premium costs, and runs to patient cost-sharing through deductibles and copayments. States should be considering the adoption of a Basic Health Plan option, and innovative “bridge” and “wrap-around” programs.
- Coverage of immigrants. In perhaps no other area of implementation are the political and the pragmatic so at odds. The fragmented regulation of access to care for different cohorts of immigrants has caused confusion, limitations on access, and bad results – both intended and unintended. States can take the lead here.
- Protection of people with disabilities/chronic conditions. The structure of the ACA’s underwriting reforms are good news for people with disabilities, as are its nondiscrimination mandates, as Sara Rosenbaum has described in detail. But the reforms mix uncertainly with the financial incentives that remain in the insurance system, and state regulatory oversight and advocacy will be essential to fulfill the statute’s goals.
- Denials and network adequacy. The ACA embodies a paradox: it both federalizes the regulation of health insurance, and largely devolves that federal regulation back onto the states for supervision and enforcement. That means that QHPs will continue to employ utilization management tools, including medical necessity review, to limit access to care – properly and improperly. Perhaps more pressing is the problem of narrowing networks of providers in health plans. Properly constructed networks can be a benefit to consumers; improperly constricted networks can deny access in covert and dangerous ways. Vigilance by states and private actors will be crucial here.
The ACA’s goals are noble, and its somewhat clumsy (or kludgy) structure can succeed, but only through a lot of work from a lot of people. I’ll return to these issues in upcoming posts.
Filed under: Compliance, Health Law, Seton Hall Law
At Seton Hall Law’s website, Victoria Dorum reports that Seton Hall Law students Lindsey Borgeson, Joyce Crawford, and Phillip DeFedele (pictured above, from left), along with alternate Cynthia Frumanek, recently came in first at the University of Maryland Francis King Carey School of Law’s Health Law Regulatory and Compliance Competition.
Not only did the team members distinguish themselves among other top schools, they also made a profound impression on the judges. Virginia Rowthorn, Managing Director of the Law & Health Care Program at the University of Maryland School of Law, wrote a note to [Seton Hall Law Professor Tara Adams Ragone] to commend the team and their teachers for the team’s excellent presentation. She wrote, “One of the judges who heard them told me they knocked it out of the ballpark with their knowledge, and also with the professional way they presented their ‘case’.”
This has been a great academic year for Seton Hall Law, which also won the National Health Law Moot Court Competition in November. Dorum covered that victory as well, here.
Filed under: Accountable Care Organizations, Health Law, Hospitals
Hospital mergers and other forms of transactions, such as joint ventures and affiliations, have been occurring more frequently in recent years. A report issued by the accounting firm Dixon Hughes Goodman noted the predominant reasons for hospitals to undergo these structural changes are: (1) to achieve economies of scale; (2) to benefit from a partner’s unique clinical or managerial strength; and (3) to expand geographically to better provide for patient and community needs. An economy of scale is the theory by which long-run average total costs decrease as output increases. When hospitals merge or undergo other forms of transactions, the result is increased efficiency, which ultimately reduces average costs. Often, a smaller hospital or a hospital that is not as nationally recognized will strategically merge with a larger hospital to attain the benefits of the larger hospital’s managerial or clinical strengths.
Recently, NYC hospitals have undergone significant organizational changes. Mount Sinai Medical Center has merged with Continuum Health Partners (CHP). Mount Sinai Medical Center is a 1,171-bed hospital nationally-ranked by U.S. News and World Report and internationally recognized for several specialties including: Cardiology & Heart Surgery, Diabetes & Endocrinology, Ear, Nose & Throat, Gastroenterology & GI Surgery, Geriatrics, Nephrology, Neurology & Neurosurgery, and Rehabilitation. While CHP’s hospitals are renowned and recognized in various clinical areas, these hospitals will now have a stronger force in the New York area under the Mount Sinai Health System umbrella. Another significant organizational change is the expansion of Manhattan’s Memorial Sloan-Kettering Cancer Center (MSKCC) to Connecticut. These changes will likely have positive impacts on quality of care and improved access for patients of these hospitals. Further, the proposed closure of Brooklyn’s Long Island College Hospital (LICH) has been postponed, allowing consideration of alternatives to closure, as closure would have a negative impact on area residents that rely on its services for primary care (see discussion here, here, and here). Accordingly, the changing landscape of NYC hospitals will have implications on patient care.
Mount Sinai and Continuum Health Partners: The Love Triangle
Once upon a time, in the late 1990s, Mount Sinai Medical Center and NYU Langone Medical Center wooed one another and eventually merged; the merger proved to be a failure three years later. Read more
The Australian government has announced a new scheme that will compensate living organ donors with cash payments during their recovery period. This is said to be intended not as a payment for the organ, but as a way to minimize the financial burden of donation. The plan should be seen as a step in the right direction for those who favor legalizing payment for organ donation in the United States, and Congress should seriously consider authorizing a similar pilot program.
Australia’s new program has several features, designed to mitigate fears and concerns about paying organ donors. First, the plan reduces the fear that individuals will look to donate their organs out of desperation and economic necessity. This is accomplished by limiting the payments to the currently employed, including self-employed and part-time workers. Additionally the compensation is not extravagant, topping out at $606 a week for up to six weeks. This limited compensation is unlikely to attract financially distressed donors who would otherwise choose not to donate, though it may make it easier for those who are not well-off to commit to a process that will entail significant time off from work. That being the case, most donors would find themselves afterwards in relatively the same financial situation as before they donated.
Second, the money comes from the Australian government, rather than from the recipients themselves. This reduces the appearance of a cash-for-organs system that might be unpopular and ethically problematic. A third party payment system for bone marrow is already developing in the US. The group moremarrowdonors.org has led the effort for such after the 2012 decision of Flynn v. Holder held that payment for donating bone marrow by apheresis is allowed under the current law. If third parties, be they charitable organizations or the US government, make payments to donors a gap is created between the donor and the recipient. This gap will, presumably, allow donors to still feel that they have actually donated and not sold their organ. And, if the altruistic component of donation can be preserved while reducing the financial burden to the donor then it is unlikely that this new scheme will drive away potential donors who do not like the idea of selling their organs.
If this scheme were adopted by the United States it has the potential to drastically increase the supply of kidneys, especially in minority communities. There is currently a huge gap between the supply and demand for kidneys. For racial minorities this gap is even wider. Modest payment for missed work time, coupled with an awareness campaign, would allow low-income individuals to donate their organs without placing themselves in financial jeopardy from missed work. If the amount of money paid to the donor was kept modest, like the Australian scheme, claims of exploitation would be less persuasive.
The US government should closely monitor the Australian pilot program to see if it is effective. If so, it should be rapidly adopted by the US. If not, then consideration should be given to other means of increasing organ donation, including larger cash payments to donors. A US program similar to the new Australian scheme would go a long way to closing the gap between the need for kidneys and the supply of living donors.
Filed under: Drug Pricing, Drugs & Devices, Health Law, Seton Hall Law
Here at Seton Hall Law, the halls are filled with the sounds of students again, which means our summer-long blog hiatus has come to an end. We’re excited to get back to blogging at Health Reform Watch!
As always, the blog will feature analysis and commentary from Seton Hall’s health law faculty and Recommended Reading posts highlighting the health law scholarship we’ve been reading and enjoying. It will also include contributions from the students in our health law program as well as announcements of program activities.
Guest posts on health and pharmaceutical law and policy topics are welcome, so please contact me, Kate Greenwood, at email@example.com if there’s something you’d like to share.
. . .
From the beginning, the content of Health Reform Watch has been driven by the diverse interests and expertise of Seton Hall’s health law faculty. In my case, that’s maternal and child health, drug and device law and policy, and, most especially, the intersection of the two. In recent months, I have focused on the regulation of orphan drugs (a video of me opining about the same can be found here), and so yesterday’s news that the Australian government has decided to pay the $110,000 per-course-of-treatment price for Bristol-Myers Squibb’s melanoma drug Yervoy caught my attention. What’s newsworthy is not Australia’s decision to pay – other countries are, too – but rather its plan for making sure it is getting its money’s worth. As reporter Wendy Carlisle explains, Australia’s Pharmaceutical Benefits Advisory Committee will for the first time be conducting its own epidemiological study.
As is the case with many orphan drugs, Yervoy was approved on the basis of clinical trials that were relatively small. A 2011 review conducted by Aaron Kesselheim, Jessica Meyers, and Jerry Avorn of all new oncology drug approvals from 2004 through 2010 in oncology revealed that “the FDA ha[d] approved alternative trial designs that allowed most orphan cancer drugs to be approved on the basis of single-group, nonrandomized trials that enrolled comparatively small numbers of patients.” EvaluatePharma recently estimated that regulators require a median phase III trial size of 528 patients, at an estimated average cost of $85 million, for orphan drugs, as compared to 2,234 patients, at an estimated average cost of $186 million, for non-orphan drugs.
When it comes to clinical trials, smaller is not better. As the chair of Australia’s Pharmaceutical Benefits Advisory Committee, Dr. Suzanne Hill, explains, “[i]f we are going to look at new products and try to judge them on the basis of smaller clinical trials – which is what is happening – then we are going to be less confident about the clinical trial data when we see them for making recommendations[.]“ To shore up the Committee’s confidence in Yervoy, it will be tracking “who gets prescribed it, what happens to them, how long do they get treatment for, how is the treatment … put in the context of other treatments that they have and what happens to the outcome?” The Committee’s ultimate goal is to determine whether “we get the survival benefit in the community that we saw in the trials[.]”
The number of orphan drugs, many of which cost in excess of $100,000, is climbing and is expected to continue to do so. EvaluatePharma estimates that “the worldwide orphan drug market is set to grow to $127 [billion], a compound annual growth rate of +7.4% per year between 2012 and 2018[,]” which “is double that of the overall prescription drug market, excluding generics, which is set to grow at +3.7% per year.” Given these expected trends, there is no doubt that regulators and payers will increasingly look to post-marketing studies to supplement the available clinical trial data about orphan drugs, whether they conduct the studies themselves, as Australia is doing, or require manufacturers to shoulder the burden. Care must be taken to ensure that manufacturers remain incentivized to develop treatments for rare diseases, but there is evidence to suggest that regulators have room to maneuver. EvaluatePharma reports that “[t]he current stock of Phase III/Filed orphan products is expected to yield a return on investment of x10.3,” while the current stock of non-orphan products is only expected to yield a return on investment of x6.0.