Health Affairs: Innovations Across the Nation in Health Care Delivery

Health Affairs recently convened a day-long conference entitled “Innovations Across the Nation in Health Care Delivery.” Dr. Richard Gilfillan, the acting director of the Center for Medicare and Medicaid Innovation, keynoted the event as one of a number of stops on his recent “listening tour” across the states in an effort to garner input for the Center’s quest to eliminate waste and to create “a sustainable system” in health care.

The Center’s mandate under the law is “to test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the quality of care furnished.” But as Dr. Gilfillan mentioned, perhaps the most interesting aspect of the law is that if the Center can show that it has found a way to fulfill its mandate– demonstrating such and proving it to the CMS actuaries, then the Secretary can sign into effect new regulations to effectuate  new payment models for CMS.

An underlying guidance, if not a mantra, for Dr. Gilfillan is the notion that, as contained in an Institute of Medicine study, there is 30%  waste in medical services. Much of this, he believes, is attributable to our fragmented health care system; thus, the emphasis going forward should be on implementing “seamless coordinated care.” An interesting example of something that works, is a chronic care “hotline.” Dr. Gilfillan described the innovation–where a chronic disease patient, suffering from both COPD and diabetes, cold call a particular nurse, Mary, to express concerns she might have about some aspect of her health– be it weight gain, increased shortness of breath, or anything else. The patient’s daughter could Mary as well. They did. The patient’s hospitalizations are down– and the patient attributes to the program the fact that she’s still alive.

According to Health Affairs, “The program also featured several panels of CEOs and program leaders from institutions that have innovated at the patient care level; in the creation of more highly coordinated patient care systems; and at the population level, in terms of improving population health.”

It’s an interesting conference. You can find the panel videos, including Dr. Richard Gilfillan’s address  here.

Two Proposals to Reduce Health Care Spending

In the past few weeks, two bipartisan groups have made deficit reduction proposals that address national health care spending.  The nation faces a trillion dollar-plus budget deficit, and health care spending is a large proportion of ongoing spending.

National Commission on Fiscal Responsibility and Reform

On November 10, the chairmen of the bipartisan National Commission on Fiscal Responsibility and Reform released an initial draft proposal to reduce the deficit.  The panel consists of ten Democrats and eight Republicans, “charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run.”

Several commission members have praised the proposal, but will seek changes before endorsing a final version.  The chairmen, Erskine Bowles, former chief-of-staff to then President Clinton, and Alan Simpson, a former GOP senator held a closed-door meeting this past week to discuss modifications before the panel presents its final recommendations on December 1.

Although the drafted proposal addresses a broad array of fiscal problems and objectives, it makes dramatic changes to health care spending.  In the medium term, the chairmen propose the following:

• Pay doctors and other providers less, improve efficiency, and reward quality by speeding up payment reforms and increasing drug rebates. Specifically:
  • Replace cuts required by the Medicare Sustainable Growth Rate (SGR) through 2015 with modest reductions while directing CMS to establish a new payment system, beginning in 2015, to reduce costs and improve quality.
  • Require rebates for brand-name drugs as a condition of participating in Medicare Part D.
• Pay lawyers less and reduce the cost of defensive medicine by adopting comprehensive tort reform.
• Expand cost-sharing in Medicare to promote informed consumer health choices and spending. Specifically:
  • Eliminate first-dollar coverage in Medigap plans.
  • Replace existing cost-sharing rules with universal deductible, single coinsurance rate, and catastrophic cap for Medicare Part A and Part B.
• Expand successful cost containment demonstration.
• Strengthen the Independent Payment Advisory Board (IPAB).
• Identify an additional $200 billion savings in federal health spending, for instance:
  • Expand ACOs, Payment Bundling, and Other Payment Reform
  • Cut Federal Spending on Graduate and Indirect Medical Education
  • Convert The Federal Share Of Medicaid Payments For Long-Term Care Into a Capped Allotment

In the long term, the chairmen propose to set a global target federal health spending after 2020 and limit growth to the gross domestic product (GDP) plus one-percent.

Medicare, Hospitals, Serious Harm and Death

The Inspector General of the Department of Health and Human Services, Daniel R. Levinson, published an Op-ed in USA Today that is well worth considering.  The column, entitled “Medical mistakes plague Medicare patients,” speaks volumes. Levinson writes:

Today’s hospitals are modern-day marvels of healing, and we expect them to be models of patient safety as well. But a just-released report from my office shows that medical care is falling short for too many hospitalized Medicare patients. A decade after an Institute of Medicine study placed preventable medical errors among the leading causes of death in the United States, our latest study found that a disturbing number of hospitalized patients still endure harmful consequences from medical care, 44% of them preventable. These instances, which the report calls “adverse events,” include infections, surgical complications and medication errors

Such occurrences are not always preventable, particularly since many Medicare patients are elderly and have complicated health problems. But enough patient harm is avoidable to make a strong case for action. Hospitals must improve, but they need the help of lawmakers, medical professionals and patients to do so.

We’ve written about this issue before here on HRW (in the context of various calls for medical malpractice reform as part of health care reform and studies that show hospital staff neither washing their hands regularly nor utilizing the simple but effective surgical checklist). The Institute of Medicine study Inspector General Levinson referred to estimated 98,000 deaths per year. Last year I wrote:

Bloomberg reports that “The U.S. Institute of Medicine found a decade ago that medical errors kill 98,000 Americans a year” according to Les Weisbrod, president of the Washington-based trial lawyers’ group, the American Association of Justice.

According to Medical News Today, the medical error fatality figures above were supported by “Dr. Chunliu Zhan and Dr. Marlene R. Miller in a research study published in the Journal of the American Medical Association (JAMA) in October of 2003. The Zhan and Miller study supported the Institute of Medicine’s (IOM) 1999 report conclusion, which found that medical errors caused up to 98,000 deaths annually and should be considered a national epidemic.

A study by HealthGrades found more than twice that number in “potentially preventable deaths.”

And now this study. Look at the numbers; they aren’t pretty–and they cast some present doubt on the 98,000 number if one considers the rubric, “contributed to their deaths.” Levinson writes:

Errors prolonged hospital stays

This study began in response to a congressional mandate to determine the number of harmful medical events Medicare patients experienced, and the cost to taxpayers. My office arranged for physician reviewers to examine a random sample of 780 Medicare patients discharged from hospitals around the country during the month of October 2008.

Physicians determined that about one in seven patients (13.5%) experienced at least one serious instance of harm from medical care that prolonged their hospital stay, caused permanent harm, required life-sustaining intervention, or contributed to their deaths. Projected to the entire Medicare population, this rate means an estimated 134,000 hospitalized Medicare beneficiaries experienced harm from medical care in one month, with the event contributing to death for 1.5%, or approximately 15,000 patients.

That’s per month. Some quick math will give us the yearly death figure: 15,000 x 12 months = 180,000 per year. And that’s just Medicare patients.

The “seriously harmed” equals 1,608,000 per year. Again, just Medicare.

Levinson continues:

Strikingly, medication errors factored in more than half the patient fatalities in our sample, including use of the wrong drug, giving the wrong dosage, or inadequately treating known side effects. Such events were commonly caused by hospital staff diagnosing patients incorrectly or failing to closely monitor their conditions.

Less serious harm also occurred. An additional one in seven hospitalized Medicare patients experienced temporary problems, such as allergic reactions or injuries from falls. And many experienced multiple events, including an elderly heart patient who had six separate events during a single hospital stay. Obviously, this situation is unacceptable — and expensive, costing taxpayers more than $4 billion a year due to the need for additional treatment or longer hospitalizations (and even more if you add costs for follow-up care).

I’ve said it before and I’ll say it again. “Seemingly, one would define “defensive medicine” as that which a doctor [or hospital] does, which he or she would not do, if solely exercising his or her [or its] discretion without the fear of being sued. Therefore, might I suggest that “defensive medicine” is only excessive if the doctor’s [or hospital's] best estimation of the situation is correct.”

You can read the rest of Inspector General Levinson’s Op-ed here. He offers some direction– much needed direction.

CRS Issues Medicare Reform Summary and Timeline

The Congressional Research Service (”CRS”) released a November 3, 2010 report entitled Medicare Provisions in the Patient Protection and Affordable Care Act (PPACA): Summary and Timeline.  It outlines and summarizes the significant changes made to the Medicare program by the Patient Protection and Affordable Care Act (”PPACA”; P.L. 111-148), as amended by the Health Care and Education Affordability Reconciliation Act of 2010 (”the Reconciliation Act”; P.L. 111-152).

Prior to the enactment of PPACA and the Reconciliation Act (”the Reform Acts”), the Congressional Budget Office predicted that total mandatory annual expenditures would increase “from $501 billion in 2009 to $943 billion in 2019.”  Under these health reform measures, the average annual rate of spending growth will reduce from 8 - 6%, resulting in approximately $390 billion in savings over the next ten years.

Medicare Changes by Provider Type and Program

The Reform Acts will have three primary affects on Medicare Part A coverage.  It will: 1) constrain payment increases, 2) restructure payments, and 3) reduce payments to disproportionate share hospitals by $22.1 billion from FY2015 to FY2019.

The Reform Acts are expected to directly and indirectly change the way Part B Providers organize, practice, and deliver care.  Medicare Physician Quality and Reporting Initiative (PQRI) incentive payments will be extended through 2014 and “an incentive (penalty) for providers who do not report quality measures” will be implemented in 2015.  The Reform Acts create other programs, including the National Pilot Program on Payment Bundling, the shared savings program (including the accountable care organization, or ACO, model), or the value-based payment modifier under the physician fee schedule.  Additionally, the Reform Acts will save approximately $196.3 billion over 10 years by constraining annual payment increases for certain non-physician providers.

The Reform acts will save $135.6 billion over 10 years by changing Medicare Advantage (Medicare Part C) plan payments.  PPACA will decrease many benchmark amounts by tying them to the per capita fee-for-service Medicare spending amounts.  At the same time, PPACA will increase benchmarks for certain high quality plans.  By 2011, coding intensity adjustments will be applied to plan payments.

PPACA will improve coverage under the Medicare prescription drug program (Medicare Part D) by closing the coverage gap between $2,830 in total covered drug spending and the catastrophic threshold of $6,440 (the “doughnut hole”).  “Enrollees will receive a 50% discount off the price of brand-name drugs during the coverage gap starting in 2011, and the coverage gap will be phased out by 2020.”  Access to and availability of low-income subsidies will be improved through increased funding.

Efficiency and Quality of Health Care Services

To increase the efficiency and quality of Medicare services PPACA requires “the establishment of a national, voluntary pilot program that will bundle payments for physician, hospital, and post-acute care services with the goal of improving patient care and reducing spending.”  This shared savings program is expected to save $4.9 billion over ten years.  Another provision establishing payment adjustment to hospitals for “readmissions related to certain potentially preventable conditions,” will likely save $7.1 billion over the next ten years.  Approximately $1.4 billion should also be saved through the institution of a payment penalty for certain common, high-cost hospital-acquired health conditions.

Finally, the creation of a Center for Medicare and Medicaid Innovation within CMS is expected to save $1.3 billion over the next 10 years.  Its purpose will be “to research, develop, test, and expand innovative payment and delivery arrangements to improve the quality and reduce the cost of care provided to patients.”

Medicare Sustainability

To address financing challenges, the Reform Acts have established several revenue producing mechanisms.  First, a new Hospital Insurance tax of 0.9% on high-wage earners (”over $200,000 for single filers and $250,000 for joint filers effective for taxable years after December 31, 2012″) and a new Medicare tax on net investment income will together raise $210 billion between 2013 and 2019.

Second, Part B and Part D beneficiaries will face increased premiums.  Part D premium increases will save approximately $11 billion over 10 years and adjustments to the high-income threshold for Part B premiums will save $25 billion over 10 years.

Finally, to reduce spending growth, PPACA establishes an Independent Payment Advisory Board empowered to adjust payment rates.  This Board is expected to save $15.5 billion between 2015 and 2019.

Fraud, Waste and Abuse

The amount of money lost to fraud is estimated to be between 3-10% of all health care expenditures.  To combat this problem, the Reform Acts allocate $260 million in increased funding for anti-fraud activities over the next ten years.

In Conclusion

Despite the projected savings resulting from PPACA and the Reconciliation Act, “the rising cost of health care, the impact of the aging baby boomer generation, and declining revenues in a weakened economy” will continue to challenge the quality and sustainability of the Medicare Program.  The report cautions that savings estimates are based on questionable assumptions.  Furthermore, such savings can either be used to defer solvency issues or expand health insurance coverage, not both.  Meanwhile, the practice of medicine is expected to undergo significant changes.

Despite the uncertainty in coming years, the CRS report will serve as a helpful guide and benchmark.  The appendices provide detailed tables of spending adjustments by provider and by year, against which continuing surveillance of spending growth can be monitored.

Two Courts Interpret Regulations to Expand Medicare Coverage

As first reported by the New York Times, two Federal District Courts have rendered decisions within the past six weeks that expand Medicare coverage for skilled nursing care (”SNC”).  According to the rulings, Medicare beneficiaries are entitled to such coverage without, as the government contends, proof that their condition will improve as a result of treatment.

In both cases, Medicare beneficiaries appealed final decisions of the Secretary of the Department of Health and Human Services (”Secretary”) denying Medicare coverage under, individually, Part A and Part C (a Medicare Advantage plan) of the Medicare Program.  Since Medicare Part A and Medicare Advantage plans are required to cover the same medical services under 42 C.F.R. § 422.101, the courts’ frameworks of analysis should be the same.  However, each court relied on various administrative provisions to support of the principle that Medicare beneficiaries are entitled to SNC to maintain stable health and prevent deterioration of capabilities.

Papciak v. Sebelius, 2010 U.S. Dist. LEXIS 102801

In Papciak, the eighty-one-year-old Plaintiff received seventeen days of inpatient SNC shortly after hip replacement surgery.  Medicare denied coverage for the last ten days of care, on the ground that she “had been determined to have met her maximum potential” after the first seven days, and therefore, only qualified for “custodial care” for the rest of her inpatient stay.

The US District Court for the Western District of Pennsylvania agreed with the plaintiff that the administrative decisions had failed to consider whether the plaintiff needed SNC to maintain her level of functioning.  The Medicare Skilled Nursing Facility Manual Chapter 2 §214.3 states that skilled nursing care “must be provided with the expectation that… [1] the condition of the patient will improve materially in a reasonable and generally predictable period of time, or [2] the services must be necessary for the establishment of a safe and effective maintenance program.”  Furthermore,

The Secretary’s regulations state that “[t]he restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.” 42 C.F.R § 409.32(c) (emphasis added).

In light of the foregoing, the Court reversed the Secretary’s decision.  Because the Secretary had failed to consider the alternative reason for rehabilitative SNC, the decision could not be affirmed as a matter of law.

Anderson v. Sebelius, 2010 U.S. Dist. LEXIS 113550

In Anderson, the sixty-year-old Plaintiff required 24-hour supervision to remain safe in her home after a second stroke rendered her incontinent, cognitively impaired, and immobile.  Her physician certified six times that Anderson needed SNC for a 60-day period; however, she was denied coverage after the first of six physician-certified periods.  The US District Court for the District of Vermont held that the ALJ had incorrectly concluded that SNC is “not covered when a patient’s condition is stable and unlikely to change.”

To the contrary, “a patient’s chronic or stable condition does not provide a basis for automatically denying coverage for skilled services.”  The court cited the Medicare Benefit Policy Manual, which states:

The determination of whether a patient needs skilled nursing care should be based solely upon the patient’s unique condition and individual needs, without regard to whether the illness or injury is acute, chronic, terminal, or expected to extend over a long period of time. In addition, skilled care may, depending on the unique condition of the patient, continue to be necessary for patients whose condition is stable. § 40.1.1 (emphasis added).

Furthermore, a physician’s decision as to whether SNC was reasonable and necessary is to “be viewed from the perspective of the condition of the patient when the services were ordered and what was, at that time, reasonably expected to be appropriate treatment for the illness or injury throughout the certification period.”  § 40.1.2.1.  The Court held that the ALJ’s hindsight determination that the patient remained stable and did not improve during the certification period was inappropriate.  “The fact that skilled care has stabilized a claimant’s health does not render that level of care unnecessary. An elderly claimant need not risk a deterioration of her fragile health to validate the continuing requirement for skilled care.” (quoting Folland ex rel. Smith v. Sullivan).

Looking Ahead…

These rulings will likely benefit those with chronic conditions and disabilities.  Representative Joe Courtney, Democrat of Connecticut, led a group of seventeen House Democrats in objecting to the administration’s interpretation of the law.  According to their letter:

Beneficiaries are frequently told that Medicare will not cover skilled services if their underlying condition will not improve. For example, as people with multiple sclerosis are often not likely to improve, skilled services such as physical, occupational and speech therapies that are necessary to slow the progression of the disease, or maintain current function, are denied. As a result, these individuals’ conditions deteriorate — frequently leading to more intense, more expensive services, hospital or nursing home care.

The government has not announced whether it will challenge the decision.

OIG Issues Guidance on Individual Permissive Exclusions

On October 20, the Department of Health & Human Services Office of the Inspector General, (”OIG”) released, Guidance for Implementing Permissive Exclusion Authority Under Section 1128(b)(15) of the Social Security Act (”Guidance”).  The Guidance provides owners, officers, and managing employees an opportunity to better evaluate their exposure and limit any liability resulting from their control over an entity subject to OIG enforcement action.

Section 1128(b)(15) of the Social Security Act provides the Secretary of HHS the authority to exclude owners, officers, and managing employees “of an entity that has been excluded or has been convicted of certain offenses.”  OIG, having been delegated this authority by the Secretary, has published this internal advisory document setting out nonbinding factors to be considered in deciding whether to impose an individual permissive exclusion, under § 1128(b)(15).

Historically, OIG has not often exercised its permissive authority to exclude individuals from participation in federal health programs.  According to OIG’s “List of Excluded Individuals,” 28 individuals controlling an excluded or convicted entity have themselves been excluded pursuant to § 1128(b)(15), including 16 owners or operators, 7 officers and 5 practitioners.  The Guidance may indicate a new enforcement direction for OIG.

According to DLA Piper, the Guidance “is further evidence that OIG is serious about its recent focus on individual accountability and that it intends to exclude officers and managing employees, even without evidence that those individuals knew or should have known about the conduct giving rise to the entity’s criminal liability or exclusion.”  Skadden takes a similar position, stating:

This guidance finds OIG asserting the breadth of its authority by creating a presumption in favor of exclusion in certain cases and endorsing a new strict liability exclusion standard in other cases.  These enforcement positions appear likely to accelerate the government’s recent efforts to hold individuals accountable for corporate wrongdoing.

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CPI Says CMS Got RUC-rolled

Earlier this month, Ian Ayres questioned Medicare’s procurement auction rules. The Center for Public Integrity recently released an article that suggests Medicare’s process for deciding physician payments may also need a second look. Just as critics have charged that HHS relied excessively on a physician-allied group (the Council on Graduate Medical Education) in determining future health care work force needs, the CPI report makes a case that too much responsibility has been devolved from governmental decisionmakers to a private sector group, the American Medical Association/Specialty Society Relative Value Scale Update Committee (RUC). RUC’s dominant role in suggesting payment levels raises hard questions about price-setting in the health care sector.

Administered pricing can be a important tool of health care cost containment. However, the process of setting prices for various health care services is always at risk of capture by those who would profit from overpayments. By way of background, here is an excerpt on the resource-based relative-value scale [RB-RVS] that gave rise to committees like the RUC:
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An “Unknowable” Number of Bureaucrats

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

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

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

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

“The alternate approach to medical marijuana distribution,” an op-ed by Kate Greenwood featured in The Record

[Ed. Note: This op-ed piece was featured in The Record's Sunday Editorial Page and on North Jersey.com. It was written by Center for Health & Pharmaceutical Law & Policy Research Fellow and regular Health Reform Watch blogger, Kate Greenwood]

WE FEEL there is no question about it: The careful, legal distribution of medicinal marijuana to those in need is a good thing. The New Jersey Legislature agreed and passed legislation permitting distribution last January. Then-Gov. Jon Corzine signed the measure before leaving office.

But Governor Christie has requested a delay in its implementation, and a proposal to modify the system of distribution is cause for concern.

More than a year ago, Seton Hall Law’s Center for Health and Pharmaceutical Law and Policy distributed a position paper to New Jersey lawmakers urging passage of the marijuana measure, called the “New Jersey Compassionate Use Medical Marijuana Act.” The center did so citing the inclusion of “multiple measures designed to reduce the risk of abuse or diversion” and noting that “the medical literature supports the conclusion that smoked marijuana can provide relief to patients suffering from debilitating medical conditions for whom conventional treatments have failed.”

Implementation delayed

The act was to have taken effect this month, but, in response to a request from Christie, the Legislature pushed back the effective date to October.

As passed, the act provides that medical marijuana be grown and distributed by six not-for-profit “alternative treatment centers.”

But now, the New Jersey Council of Teaching Hospitals has proposed that the act be amended — before it is even implemented to provide that medical marijuana instead be grown by Rutgers University and distributed by the state’s teaching hospitals.

While hospitals are, as the Council of Teaching Hospitals points out, experienced dispensers of medicine, the act should not be rewritten to require them to dispense medical marijuana.

The passage of the act affects the rights and responsibilities of patients and providers of medical marijuana under New Jersey law; it does not change the fact that distribution and use of marijuana are illegal under federal law.

Although Attorney General Eric Holder has pledged not to prosecute patients and providers who comply with applicable state laws, and hospitals could thus dispense medical marijuana without fear of criminal prosecution, they would still be violating federal law.

Condition of participation

This is a problem because compliance with federal law is a condition of participation in the Medicaid and Medicare programs. Hospitals depend heavily on Medicaid and Medicare funding; the Compassionate Use Act’s alternative treatment centers would not.

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Better Hospital Discharges = Lower Healthcare Costs?

[Ed. Note: We are pleased to welcome Jae W. Joo to HRW. Jae is a third year student at Seton Hall Law.  He graduated from Rutgers College in 2006 with a B.A. in Psychology and a minor in Philosophy.  In 2009, he interned for the Honorable Denise A. Cobham in the Superior Court of New Jersey. Currently, he is a summer intern at the New Jersey Attorney General's Tobacco and Securities Litigation Section, and also a research assistant for the Healthcare Compliance Certification Program at Seton Hall Law.]

With healthcare reform fresh out of the congressional oven, many changes are taking place in the field of healthcare and a myriad of new challenges will undoubtedly arise.  However, one of the perpetual challenges in the midst of all these changes has been the substantial amount of money needed to fund Medicare.  The Patient Protection Affordable Care Act is laden with economically efficient methods and plans to reduce costs.  However, as Lesley Alderman suggests in her NY Times article, a drastic cost saving measure may be implemented with a simple change in hospital procedure.

According to the article,

[In] a study published last year in The New England Journal of Medicine, one in five Medicare patients returns to the hospital within 30 days of being discharged. The problem is an expensive one: in 2004 these readmissions cost Medicare $17.4 billion dollars, the researchers also found.

As the study shows, readmission within 30 days of discharge has been costly and remains a substantial contributing source to the Medicare deficit.  However, discharge procedures rarely get the same level of attention as admission procedures to a hospital.

At discharge, the assumption is that the patient is better and all will be fine, said Dr. Eric A. Coleman, a geriatrician and professor of medicine at the University of Colorado Denver. But many patients, especially older ones, leave the hospital with a host of issues to manage. They may have additional medications to take, new symptoms to monitor and follow up appointments to keep, all of which require focused attention at a time when patients may not be at their sharpest.

What’s more, while insurers will pay for limited hospital stays, there’s no financial incentive for hospitals to insure that patients get and stay out. ‘A hospital may actually be financially rewarded for mishandled discharge,’ said Dr. Williams, chief of hospital medicine at Northwestern University. ‘If the patient is readmitted, they get paid again.’

While there may be a general lack of concern or awareness to improve conditions of patient discharge, Alderman’s article mentions some initiatives that have been taken to improve the discharge process.  Care Transition Intervention is a hospital-based program that helps reduce readmissions by coaching older adults on how to manage their health and take better care.  Project Boost provides hospitals guidelines to help standardize and enhance the discharge process.  Federal Centers for Medicare and Medicaid has a program to improve hospital hand-offs for high risk patients and has also been developing a program to incentivize hospitals to lower their readmission rates.

Whether or not hospitals decide to implement new discharge protocols and procedures, individual patients can help alleviate the financial burdens placed on the system by taking an active role in managing their health.  Alderman’s article points out a few tips to follow if a hospital does not have an up to date discharge procedure in place.  Following these simple tips can, it seems, make a big difference.

Community Health Law Project to Assist New Jersey’s Elderly and Disabled Save Money on Their Healthcare Costs

The Community Health Law Project (CHLP) has been awarded a grant to help seniors and individuals with disabilities save money on their healthcare costs. Founded in 1976, the Community Health Law Project (CHLP) is a non-profit advocacy and legal services organization with 10 offices located throughout New Jersey. CHLP President/ Executive Director, Harold Garwin said, “We are pleased to spearhead this initiative. It augments the Law Project’s mission to provide services to the elderly and disabled throughout the State of NJ, where so many people are eligible for benefits, but so few apply.”

The grant, made possible by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), will be used to conduct community outreach activities and help eligible individuals apply for programs that can help them save money on their Medicare premiums, deductibles, coinsurance and/or co-pay costs.

Seton Hall Law Professor and CHLP Chairperson of the Board, Paula Franzese said “Like so many government programs, the eligibility and paperwork can be a little confusing. Fortunately this grant will allow us to get seniors and the disabled the help they need and are entitled to. The benefits can literally add up to hundreds of dollars per month.”

The programs promoted by the grant include the Medicare Savings Programs known as QMB, SLMB and QI-1; the Medicare prescription drug program’s Low Income Subsidy(LIS) (also known as Extra Help), and the state’s Pharmaceutical Assistance to the Aged and Disabled Program (PAAD).

It is estimated that only 33% of individuals eligible for QMB and 13% of those eligible for SLMB or QI-1 have actually signed up for benefits. Likewise only 53% of those eligible for LIS who are not automatically enrolled through their participation in Medicaid or SSI are believed to receive the subsidy.

Seniors and people with disabilities, especially those who now receive Medicare are encouraged to call the CHLP Hotline at 1-888-838-3180 to see if they might be eligible. Advocates are available 5 days each week from 9-5 to answer questions and provide assistance in applying. Staff is also available to make presentations to community groups and organizations who are interested in learning more about these cost saving benefit programs.

First Step in the Expansion of Medicare? Feds Assist Employer Health Plans for Retirees Age 55 +

During the Health Care reform debate, one of the many plans promulgated was to expand Medicare availability to persons aged 55 and up who are not otherwise insured. The argument on behalf of the initiative was simply that Medicare works, people like it, and it would not require the reinvention of the wheel. The system is already in place, we would just need to expand what is already there. In addition, even people who rail against “socialized medicine” seem to have an ideological (if not personal) soft spot for Medicare.

The initiative did not gain sufficient traction. There is, however, more than one way to skin a cat. The White House announced the other day that it would commence in helping to pay the medical bills for early retirees (55 and up) who have medical insurance through their former employers and are not yet eligible for Medicare.

The New York Times reports:

Under the program, the federal government can reimburse employers for 80 percent of the cost of claims from $15,000 to $90,000 a year for a retired worker who is 55 or older and not eligible for Medicare.

The primary goal it seems is to incentivize private employers to continue insuring retirees.  The Times quotes Valerie Jarrett, a senior advisor to President Obama:

“In 1988,” Ms. Jarrett said, “66 percent of large firms provided health care coverage to their retirees. Twenty years later, in 2008, the percent of firms offering coverage to retirees plummeted to 31 percent.”

Obviously, if one can indirectly continue private coverage for those over 55, one need not expand Medicare coverage to do so. But of course there remains those over 55 who are not fortunate enough, at present, to be covered by an employer retiree plan.

80 per cent of up to $90,000 is a large subsidy–by anyone’s standards. But the money will go to business which, for some reason, attenuates the subsidy sufficiently for the largesse to not be “socialism.” And businesses which benefit from such subsidies are not likely to complain–having now cultivated a personal, and thus ideological, soft spot for the program. Like Medicare.

State Long-Term Care Partnership Programs

By Brian Seguin

Long-term care refers to end of life care where a person can no longer take care of themselves. These people require either the assistance of a trained professional, such as a home health aide, to help them care for themselves in their home, or they need to be housed in a nursing home and cared for there. Since Medicare does not cover long-term care, people who require it need to either pay for it themselves, or if they have almost no savings and get a low enough monthly income that they qualify, they can apply for Medicaid which does cover it. If someone pays for it themselves and winds up spending all of their savings and still needs care, they can then apply for Medicaid to cover it if their monthly income is under the threshold set by their state in order to qualify for the program.

In the early 1980’s, states began to worry that as the baby boomer generation got closer to retirement age and might start requiring long-term care, it could cause increases in their Medicaid expenditures and thus budget deficits. One possible solution forwarded for this impending problem, and eventually implemented by four states in 1993, was the idea of state long-term care partnership programs. Under these programs states would incentivize their citizens to purchase private health insurance to cover at least part of the long-term care they may eventually require and thus spare Medicaid from covering some of the costs. Insurance companies who participated in the programs had to meet certain regulations of what type of care was provided and had to report certain data back to the states so they could effectively monitor the impact the programs were having.

Proponents hoped these plans would cause people to buy their own long-term care insurance coverage and hopefully never need to turn to Medicaid to pay for it. They also hoped this would stop the perceived threat of people transferring their assets (savings) to family members early in order to appear qualified for Medicaid. Of the four original states, California and Connecticut incentivized their citizens by allowing them to disregard assets they had above the threshold allowed to qualify for Medicaid in the amount that the partnership plan had paid towards their long-term care. In other words if a person purchased a partnership plan and it paid out $200,000 towards their long-term care, that person would still qualify for Medicaid even if they had up to $200,000 in assets over the amount usually allowed to qualify. This was called the “dollar for dollar approach.” New York required citizens to purchase more comprehensive plans that had higher lifetime benefits, and if they did they could disregard all of their assets in determining if they qualified for Medicaid, known as the “total assets approach.” Indiana allowed a “dollar for dollar” disregard if the person purchased a plan covering less than four years of care and a “total asset” disregard if they purchased a plan covering more than four years.

Opponents of this idea worried that these public partnerships would inappropriately promote private plans with limited values, and that they could lead to increases in Medicaid expenditures by allowing wealthier people who would purchase private long-term care plans anyway keep their assets and now have access to Medicaid that they wouldn’t have otherwise had. As a result of these fears part of the Omnibus Budget Reconciliation Act of 1993 (OBRA) required any state that started a partnership program after 1993 to recover any disregarded assets of a deceased Medicaid recipient from their estate. Although this Federal law did not apply to the four states already operating partnership programs and did not ban other states from starting their own programs, it effectively eliminated any other states from trying to start their own programs by removing the incentives for citizens to join. This is because although a person could keep some of their assets while still alive, and still qualify for Medicaid, the state would now have to take those assets from their estate. So there was no longer any incentive for a person to purchase a partnership plan which they may never need, and thus shift some of the potential costs of long-term care on private insurers rather than Medicaid.

The Federal government finally decided to give long-term care partnership programs another chance in 2005 with the passage of the Deficit Reduction Act (DRA). Parts of that bill removed the estate recovery requirement of OBRA and allowed states (other than the original four who have continued their programs and are again not subject to this bill) to start their own partnership programs provided they use the “dollar for dollar” approach. Insurance companies participating in these new programs will have to be certified by the state, using new federal guidelines, and will have specific data reporting requirements. The “dollar for dollar” approach is mandated to avoid the grant of Medicaid benefits to those who do not need or deserve them. This approach only allows beneficiaries to keep the amount of assets they would have presumably spent for long-term care themselves and then qualified for Medicaid anyway, had their partnership plans not paid that amount. The federal government has finalized its rule of what data needs to be submitted by partnership insurers after consulting with the National Association of Insurance Companies, insurance companies who issue long-term care plans, the four original states with programs, and consumers who purchase long-term care plans. The data collected is meant to cost insurers as little as possible while still allowing the federal government to accurately track the effectiveness of these programs. While no states or private insurers are required to participate in these partnership programs, as of August 2008, 13 states (in addition to the original four) are now offering partnership plans and 12 more are in the process of implementing them.

Comment on Medicare Advantage and Prescription Drug Benefit Programs: Final Marketing Provisions (Parts III & IV)

[Ed. Note: This post is a continuation of a post we published the other day regarding "modifications and additions to initial marketing regulations implementing The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ("MMA"), which "established the Medicare Prescription Drug Benefit Program (Part D) and made revisions to [] provisions” of the Medicare Advantage Program.” The initial post, detailing the modifications, can be found here.]

By Michael Rabasca

PART III

The strongest argument against these final regulations is that they prevent eligible enrollees “from learning about their full range of healthcare options” and, thus, unduly hinder the market for Part C and Part D plans. (Federal Register, Volume 73, No. 182 at p. 54214). In order for consumers to make informed healthcare decisions, they need to have ready access to information. Marketing is all about the strategic distribution of information, and placing restrictions on plan marketing activities limits the information available to potential enrollees. Thus, regulating the marketing activities of Part C and Part D plans could lead to consumer ignorance and severely limit the choices of Medicare eligible individuals.

These new rules significantly hinder the ability of potential Part C and Part D plan participants to both obtain plan information and enroll in plans. Many individuals who are eligible for Medicare are hospitalized or living in nursing homes where healthcare is delivered. Under these rules, Part C and Part D plans would be unable to make marketing presentations, distribute enrollments applications, or collect completed applications from these individuals. Unfortunately, these potential enrollees are often the people who would benefit the most from enrolling in these plans and these regulations severely limit their ability to do so.

PART IV

I think that government oversight of Part C and Part D plans’ marketing activities provides vital protection to the individuals who are eligible to participate in these plans. I feel that Medicare participants are particularly vulnerable to questionable marketing practices, and these final regulations provide important modifications and additions and to CMS’s marketing regulatory scheme. Nevertheless, I am not convinced that these rules do enough to deter Part C and Part D plans from engaging in impermissible marketing activities. Although CMS may impose civil monetary penalties or marketing/ enrollment sanctions on plans that violate its marketing regulations, these penalties are merely discretionary. I agree with one commenter who suggested that CMS should mandate civil monetary penalties for plans that violate the marketing rules in order to ensure that violators are punished. (Federal Register, Volume 73, No. 182 at p. 54211). Additionally, I feel that CMS should provide some sort of financial incentive for both individuals and competing plans who report marketing violations in order to increase the likelihood that violations are discovered and reported. These additional enforcement tools would help to ensure that the new final marketing regulations serve their purpose by effectively protecting individuals who are eligible to participate in Part C and Part D plans from inappropriate marketing tactics.

Comment on Medicare Advantage and Prescription Drug Benefit Programs: Final Marketing Provisions (Parts I & II)

By Michael Rabasca

Part I

These rules represent modifications and additions to initial marketing regulations implementing The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (”MMA”), which “established the Medicare Prescription Drug Benefit Program (Part D) and made revisions to [] provisions” of the Medicare Advantage Program (Part C). (Federal Register, Volume 73, No. 182 at p. 54208). The Centers for Medicare and Medicaid Services’ (”CMS”) enacted these final regulations pursuant to §§ 1851(h) and 1860D-1(b)(1)(B)(vi) of the Social Security Act, which empower the CMS to “implement standards consistent with ‘fair marketing.’” (Federal Register, Volume 73, No. 182 at p. 54210).

The most significant aspect of these final regulations is the new restrictions they place on Part C and Part D plans’ marketing activities. Specifically, these rules prohibit the following:

(1) unsolicited direct contact with potential enrollees, including telemarketing (42 C.F.R. §§ 422.2268(d), 423.2268(d));

(2) selling non-healthcare related products during a plan marketing event or presentation (42 C.F.R. §§ 422.2268(f), 423.2268(f));

(3) conducting marketing presentations or distributing and/or collecting enrollment applications “in provider offices or other areas where healthcare is delivered to individuals, except . . . where such activities are conducted in common areas in healthcare settings” (42 C.F.R. §§ 422.2268(k), 423.2268(k));

(4) conducting marketing presentations or distributing and/or collecting enrollment applications at “educational events”  (42 C.F.R. §§ 422.2268(l), 423.2268(l)); and

(5) offering meals to potential plan enrollees at marketing events (42 C.F.R. §§ 422.2268(p), 423.2268(p)).

These regulations also implement new rules regarding CMS’s procedure for reviewing Part C and Part D plan marketing materials. Generally, Part C and Part D plans must submit all marketing materials to CMS at least forty-five days before distribution. (42 C.F.R. §§ 422.2262(a), 423.2262(a)). However, the regulations provide for an abbreviated “file and use” procedure, under which CMS deems certain materials approved five days after submission. (Federal Register, Volume 73, No. 182 at p. 5410). Previously, Part C plans could use the “file and use” procedure to obtain approval of marketing materials if: 1) the plan had a record of continued exemplary performance in CMS reviews of its marketing materials; or 2) the plan certified that the marketing materials in question did not contain “substantive content” or, alternatively, only used “model language already reviewed and approved by CMS.” (Federal Register, Volume 73, No. 182 at p. 54210).  Part D plans, on the other hand, could only obtain “file and use” approval through plan certification. (Federal Register, Volume 73, No. 182 at p. 54210). However, these final regulations “eliminate file and use status based on an organization’s track record” for Part C plans, and implement “a uniform policy of applying the file an use policy to marketing materials that either use model language without substantive modification, or materials identified by CMS as not containing substantive content warranting CMS review” for both Part C and Part D plans. (Federal Register, Volume 73, No. 182 at p. 54210-54211).

Additionally, these final regulations implement licensure requirements for plan marketing representatives. Specifically, the rules require Part C and Part D plans to exclusively use State licensed marketing representatives to conduct direct marketing activities targeted at potential plan enrollees. (42 C.F.R. §§ 422.2272(c), 423.2272(c)). Plans must also notify states that they are using licensed representatives in a manner that is “consistent with the appointment process provided for under State law.” (42 C.F.R. §§ 422.2272(c), 423.2272(c)).

Finally, these rules mandate that Part C and Part D plans make certain disclosures to plan participants. Under these final regualtions, plans must now disclose the information specified in §§ 422.111(b) and 423.128(b) to all plan participants both “[a]t the time of enrollment and at least annually thereafter, 15 days before the annual coordinated election period.” (42 C.F.R. §§ 422.111(a)(3), 423.128(a)(3)).

PART II

The best argument in support of these final regulations is that they provide necessary consumer protections. Generally, individuals age sixty-five and older, and people with disabilities are eligible for Medicare programs. This group of potential enrollees is particularly vulnerable to dubious marketing tactics. Allowing insurers to market their Part C and Part D plans unchecked could be harmful potential participants. Indeed, permitting plans to distribute information and solicit enrollment applications at any place and in any manner they chose has the potential to confuse potential enrollees and, in some cases, could result in plans coercing individuals into participating. Thus, a free market philosophy as to plan marketing practices is inappropriate in the Part C and Part D setting, and strict regulation is required.

These new rules protect consumers by: 1) prohibiting certain problematic marketing activities; and 2) limiting the places where plans may conduct marketing activities. Indeed, prohibiting Part C and Part D plans from offering meals or selling non-healthcare related products to potential participants prevents hurried “enrollments without personal attention to the appropriateness of the plan.” (Federal Register, Volume 73, No. 182 at p. 54215). Additionally, prohibiting plans from conducting marketing activities and soliciting enrollments at educational events and anywhere healthcare is delivered prevents plans from targeting individuals for enrollment when they are vulnerable to suggestion, and avoids the appearance that individual providers and facilities recommend or support specific plans.

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