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.”

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

ACO Symposium: Professor John V. Jacobi to Present: Lessons from ACO Implementation in New Jersey

In conjunction with the Center for Health & Pharmaceutical Law & Policy, this year’s Seton Hall Law Review Symposium on October 28, 2011, will explore recent changes in the structure of health care delivery, in particular the rising popularity of Accountable Care Organizations (ACOs). For more information or to register, click here.

The keynote speaker will be Dr. Jeffrey Brenner, founder of the Camden Coalition of Healthcare Providers, and legal scholars and practitioners from around the country will present panel discussions on structural development, public health implications and lessons learned from state ACO programs. One such distinguished presenter is John V. Jacobi , Faculty Director, Center for Health & Pharmaceutical  Law & Policy,Dorothea Dix Professor of Health Law & Policy, Seton Hall University School of Law. Professor Jacobi, who frequently contributes to HRW,  will take part in the panel on “ACOs in Practice: Research on Current Implementation of ACOs,” and will be presenting Lessons from ACO Implementation in New Jersey.

Professor John Jacobi’s work is primarily in the areas of Health Insurance and Access, Mental Health Law, and Disability Law.

Professor Jacobi received his B.A., summa cum laude, from the State University College of New York at Buffalo and his J.D., magna cum laude, from Harvard Law School. He teaches Health Law, Health Finance, Disability Law, Public Health Law, Mental Health Law, and Torts. Professor Jacobi spent five years working for the New Jersey Department of the Public Advocate as Special Assistant to the Commissioner, where he worked on health, civil rights, and disability issues through litigation and advocacy in legislatures and regulatory agencies. He then became a Gibbons Fellow at the law firm of Gibbons, Del Deo, Dolan, Griffinger & Vecchione, where he pursued health, prisoners’ rights, and disability issues. During 2007-2008 he was on leave from the law school, serving as Senior Associate Counsel to N.J. Governor Jon S. Corzine on Health, Human Services, and Chrildren’s Issues.

Professor Jacobi writes and speaks on issues including disability rights, health access and finance, public health, and mental health. His recent and current scholarly projects include examining the improvement of chronic care in health systems, the funding and structure of Early Intervention Services for children with disabilities, examining the obligations of government to provide services to people with serious mental illness, the clash of disability rights and public health interests, and the prospects and social effects of “consumer-driven” health insurance models on health costs and rights of access for the poor and people with disabilities. He served on the Governor’s Task Force on Mental Health, the Board of Advisors of the New Jersey Office of Child Advocacy, the New Jersey Olmstead Advisory Council on disability rights, and on other government and non-profit boards and committees.

Community Based Medicaid ACOs in New Jersey: A Signature Away

Almost daily, there is a new article or study emphasizing the need for innovative reform to save Medicaid amidst growing threats of deep cuts to the already struggling program.  New Jersey, as one of the states with the highest Medicaid spending per beneficiary in the country, is paying attention.  And help may be on the way in the form of a medical home/safety net.

Showing promise, the medical home model of care is an oft proposed reform.  As Mary Takach explains in the July 2011 edition of Health Affairs, “[a] patient-centered medical home is an enhanced model of primary care in which care teams, led by a primary care provider, attend to the multifaceted needs of patients and provide whole-person, comprehensive, coordinated, and patient-centered care.”  (See “Reinventing Medicaid: State Innovations to Qualify and Pay for Patient-Centered Medical Homes Show Promising results,” Health Affairs, July 2011, 30(7):1325-34.)

According to the National Academy for State Health Policy, thirty-nine states are working to implement medical homes for Medicaid and CHIP participants, and New Jersey is one of them.  In September 2010, Governor Christie signed Assembly Bill 226 into law, which established a three-year Medicaid medical home demonstration project that, at minimum, will include “primary care providers utilizing a multi-disciplinary team that provides patient-centered care coordination through the use of health information technology and chronic disease registries across the patient’s life-span and across all domains of the health care system and the patient’s community.”  The statute requires that the payment system “be structured to reward quality and improved patient outcomes” and that Medicaid “[c]onsider payment methodologies that support care-coordination through multi-disciplinary teams, including payment for care of patients with chronic diseases and the elderly, and that encourage services such as: (a) patient or family education for patients with chronic diseases; (b) home-based services; (c) telephonic communication; (d) group care; (e) oral health examinations, when applicable; and (f) culturally and linguistically appropriate care.”   You can learn about various medical home initiatives in New Jersey at the National Center for Medical Home Implementation web site.

Takach’s report focuses on seventeen states that have aligned “patient-centered medical home standards with incentive payments to support reform in the delivery of primary care” — Colorado, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and West Virginia.

Although these programs are in their infancy, Takach interprets limited early data from a few states as encouraging. Vermont, for example, documented that inpatient use had decreased twenty-one percent, with a corresponding twenty-two percent decrease in per person per month inpatient costs, and that emergency department use had decreased thirty-one percent, with a corresponding reduction of thirty-six percent in per person per month costs (although its second pilot community had what Takach describes as “mixed results”).  Colorado similarly has seen decreases in its median Medicaid costs per patient for children.

Both Colorado and Oklahoma also have seen increases in participating providers since the medical home model started operating.  In Oklahoma, more than 244 new physicians enrolled in Medicaid.  Ninety-six percent of pediatricians now accept Medicaid in Colorado, up from only twenty percent before the program began.  Increasing the number of Medicaid providers is critical, given national shortages of available primary care Medicaid providers.

As Takach summarizes:

Some of the early findings from Colorado and Oklahoma, which have statewide Medicaid initiatives, demonstrate that modest increases in payment aligned with quality improvement standards have not only resulted in promising trends for costs and quality, but have also greatly improved access to care.  This is an important finding for other states as they consider how to meet the tremendous increase in demand for care that will result from the expansions to Medicaid in the Affordable Care Act of 2010.

But beyond a medical home, there needs to be a safety net for the most vulnerable urban populations who are, in a sense, medically homeless– and are, by EMTALA default,  frequent utilizers of high cost emergency room services.

As this blog and other sources, including The New Yorker, have discussed, New Jersey  is home to the Camden Coalition of Healthcare Providers, which describes itself as “a citywide organization of social workers, nurses, physicians, administrators, hospitals, health services organizations, and clinics that serve the health needs of Camden, New Jersey residents.  [It] work[s] in a variety of settings — from small neighborhood based practices to hospital based offices — with the goal of improving the coordination and capacity of the healthcare system for residents of Camden.” Dr. Jeffrey Brenner has been leading this effort since 2002.  His work offers promising program models for safety-net providers throughout the country to “improve the quality, capacity, and accessibility of the healthcare system for vulnerable populations.” Indeed, even though the budget bill signed by Governor Christie slashed Medicaid funding in New Jersey by $540 million, his Commissioner of Human Services has expressed continuing support for the Coalition’s pilot because it is seen as a smart reform that could save money while improving care.  Newark and Trenton also have established citywide healthcare coalitions to improve medical care for their vulnerable, underserved residents. And we at the Center for Health and Pharmaceutical Law and Policy have worked closely with the Greater Newark Healthcare Coalition.

In a recent post on the Health Affairs blog, Dr. Brenner and Nikki Highsmith note that although the Camden Coalition “has had preliminary successes and offers potential long-term savings, such community-based endeavors are difficult to initiate and sustain without start-up financing, ground-level technical assistance, and buy-in from state and local policymakers, health plans, patients, and community members.”  They thus call on CMS to “jump start investments in safety-net ACOs” by pursuing a national demonstration project to support programs similar to Camden’s pilot.

New Jersey is poised to be ready if CMS heeds this call for a national Safety Net ACO demonstration project because the Coalition and other New Jersey stakeholders, including Seton Hall Law Professor John Jacobi, have been active in advocating for a bill (S2443) authorizing geography-based Medicaid ACOs in New Jersey. As the Coalition’s web site summarizes:

The proposed New Jersey law would authorize a three-year Medicaid ACO demonstration project whereby community-based, non-profit coalitions can apply for recognition by the State of New Jersey as a Medicaid ACO.  The applicants must propose a geographic focus and will need 100% of the [general] hospitals, 75% of the primary care providers, [four] behavioral health providers, and two community [organizations] from that geography on the board of the organization.  The providers in the community will continue to receive their usual Medicaid payments and the ACO, if its providers meet quality benchmarks, would be eligible to receive shared savings payments, that can be distributed to participants based on a proposed gain sharing plan.

The proposed legislation specifically recognizes that patient-centered medical home models are one way, among others, to achieve coordination. On June 27, 2011, the Assembly and Senate passed S2443, and it is awaiting Governor Christie’s signature.

New Jersey’s proposed Medicaid ACOs go beyond Medical Homes. They are built on a foundation of sound primary care, but they offer the promise of reaching vulnerable populations in many settings, and of assuring that the right care is provided at the right location for people who are often left out of health reform efforts. The financing mechanisms provided by the bill awaiting the governor’s signature go some way towards financing these innovating community organizations, although, as Brenner and Highsmith point out, more needs to be done –particularly in the way of providing start-up funding for community providers.

Appropriately cultivated, patient-focused collaborations such as these may  yield synergies in care and cost of a substantial scale.   But another recent Health Affairs article suggests that adoption of the medical home may well develop at a slower pace in states, like New Jersey, where physicians tend to be organized in smaller practices.  New Jersey’s Medicaid ACO pilot could  help to accelerate the development of practice reformation in New Jersey — particularly if CMS provides the support advocated by Jeff Brenner and Nikki Highsmith.

It’s an exciting time for growth and innovation in the Garden State … if we just get that signature.

Center Examines PPACA’s Impact on NJ Health Insurance Law in Study Funded by the Robert Wood Johnson Foundation

In early 2011, the Center for Health & Pharmaceutical Law & Policy began efforts on a seven-month research study, “New Jersey Law Reform in Response to Patient Protection & Affordable Care Act,” in collaboration with the Rutgers Center for State Health Policy. Seton Hall Law’s research will address the interplay between the Patient Protection and Affordable Care Act (ACA) and State health insurance law, regulation, and practice.

Professor John V. Jacobi, Research Fellow & Lecturer in Law Kate Greenwood, and several law students are currently reviewing the legislative and regulatory changes that the ACA requires and permits New Jersey to make. They will develop a “cross-walk” between current law and law that is fully compliant with the ACA. They will also relate the provisions of the ACA to current New Jersey practice, and describe options available to the State of New Jersey as it undertakes the task of implementing the new Act. Seton Hall and Rutgers researchers will produce interim research briefs and a final paper incorporating legal, economic, and public policy analyses. The study is being administered by the Rutgers Center for State Health Policy and is funded by a grant from the Robert Wood Johnson Foundation.

Reason to Hope in NJ as State to Propose Stipend for Families Caring for the Developmentally Disabled

The Star Ledger reports that in the midst of group home waiting lists populated with thousands of developmentally disabled adults, New Jersey is on the verge of proposing help–in the form of at least $10,000 per year, perhaps $15,000, for families to “take care of their disabled children on their own.”

The waiting list for group home admission is said to top 8,000 each year with waits as long as 10 years for entrance.

The Star Ledger reports that in New Jersey

There are 8,840 people with developmental disabilities in 2,200 state-licensed homes, according to the state. About 8,000 more are on a waiting list to get into group homes or receive services designed to meet their needs. Because of budget cuts, in some years 100 people on the list have moved into homes.

According to the state, a group home costs approximately $120,000 per year to operate. With 8,840 in 2,200 homes, that comes out to roughly $30,000 per person.

The proposal will require federal approval, as Medicaid supplies funding for the need of the developmentally disabled. In this case, the federal government would be expected to provide approximately $45 million in matching funds.

The Star Ledger writes

Christie administration officials say the state would still try to build group housing for the developmentally disabled, but the payment would help families acquire services such as part-time aides, pay for summer camp or buy vehicles with wheelchair access. Families could also pool their funds to set up housing arrangements on their own rather than wait for a state-sponsored group home to open.

When only half of those in need are provided with what they need, and waits exceed 10 years to fill that need– the word “crisis” is not hyperbole. Anyone raising children can relate to demands– even, or perhaps more so, after those children have reached the age of majority. But families caring for the developmentally disabled are called upon to meet needs that often border (if not surpass) the heroic. And although money doesn’t solve everything, anyone who has been without knows it can help. Putting the access to services that money can buy into the hands of those struggling to provide for their children is a good step in the right direction.

New Jersey’s Commissioner of Health and Senior Services Discusses Medical Marijuana and Two Other Regulatory “Case Studies” at Seton Hall Law

On Tuesday, March 1, 2011, New Jersey’s Commissioner of Health and Senior Services Dr. Poonam Alaigh gave a lively and illuminating talk to an audience from within and outside the Seton Hall Law School community.  Reflecting her medical training, Dr. Alaigh organized her talk around three “case studies”: (1) the implementation of the New Jersey Compassionate Use Medical Marijuana Act; (2) the rulemaking procedure to amend the hospital licensing standards relating to nurse anesthetists; and (3) the decision by the Department of Health and Senior Services to defer implementation of New Jersey’s menu-labeling law.  Two central themes of Dr. Alaigh’s presentation were the remarkable complexity of the legislative and rulemaking processes and the importance of a patient-centered approach to healthcare regulation.

The bulk of Dr. Alaigh’s presentation addressed the unusually extensive back-and-forth between the Department and the Legislature that has characterized the implementation of New Jersey’s medical marijuana law.  After the New Jersey Senate invalidated the Department’s initial set of draft regulations, on the grounds that they “would not comply with the intent of the law and would make it much too difficult for eligible patients to access relief through marijuana,” the Department promulgated a revised set of draft regulations reflecting the terms of a bi-partisan compromise.  Dr. Alaigh described the massive effort she and her staff — at times, she said, her entire staff — have made to educate themselves about both the science supporting the use of marijuana for medical purposes and the experience of other states with medical marijuana laws.  Dr. Alaigh believes the result of the Department’s hard work is a regulatory regime that serves patients in need while avoiding the fraud and criminal diversion problems experienced in California and Colorado.  She described New Jersey’s medical marijuana program as the “gold standard” and said that the Department has fielded calls from officials in other states interested in adopting something similar.  Among the unique elements of New Jersey’s program is a registry of de-identified patient treatment and outcomes data that will allow researchers to learn more about marijuana’s safety and efficacy.

Dr. Alaigh also spoke about the Department’s rulemaking amending the hospital licensing standards relating to nurse anesthetists.  On the one hand, Dr. Alaigh explained, nurse anesthetists are advanced practice nurses who by statute do not require the supervision of a doctor.  On the other hand, Dr. Alaigh knows from practice how quickly a patient’s condition can turn critical while under anesthesia.  The final regulation provides that nurse anesthetists can administer anesthesia in a hospital setting in accordance with a joint protocol that ensures that an anesthesiologist (1) is available at all times for consultation and (2) is physically present “during induction, emergence and critical change in status.”  Dr. Alaigh noted that this result was not likely to have made either anesthesiologists or nurse anesthetists happy.  A sign of success for a regulator, perhaps?

The third and final case study that Dr. Alaigh discussed was the Department’s decision not to promulgate draft regulations implementing New Jersey’s menu-labeling law and instead to wait for the federal Food & Drug Administration to implement the menu-labeling provisions of the Patient Protection and Affordable Care Act.  As Dr. Alaigh explained in a post on her blog, “[p]ausing to see what the FDA proposes in nine weeks is reasonable.  It avoids unnecessary duplication and costs for restaurant owners who would have to invest in new menus and then redo them when the federal rules supersede the state law.”  That’s right, Dr. Alaigh has a blog, NJ Health Beat.  You can keep up with her here.

Navigating Vaccine Policy in New Jersey

[Ed Note: This article was originally published in print and online by The Record, New Jersey's most awarded newspaper.]

NEW JERSEY’S immunization law attempts to strike a balance between protecting public health and the accommodation of religious observance. Children must be vaccinated as a condition of school attendance, but the requirement is waived if the vaccination “interferes with the free exercise of the pupil’s religious rights.”

Last summer, the Department of Health and Senior Services amended its regulations to simplify the process for obtaining this exemption. Several legislators, pointing to New Jersey’s drop in childhood immunization rates, have filed a resolution to force the withdrawal or amendment of this relaxed standard.

Emotions on this topic run high. New Jersey can, however, craft a policy that protects the public health while accommodating those who feel most passionately about avoiding childhood vaccinations.

Under such a policy, permissible exemptions could fall into three categories: medical exemptions for children with conditions, such as immune disorders, that render vaccinations inappropriate (the department estimates that about 0.2 percent of children fit this category last year); exemptions for those with genuine religious reasons to refuse vaccinations (the department estimates that about 0.8 percent of children fit this category last year), and exemptions for those who categorically oppose vaccines on non-religious principles. The first two categories combined amount to only 1 percent of children.

Fueling fears

It is, then, growth in the size of the final category that fuels fears that childhood immunizations could drop to levels threatening population health. The adoption of two practical steps can allay those fears.

First, some factual background. New Jersey’s immunization rates have been dropping. The department’s figures show that the rate of children under 3 with complete age-appropriate vaccinations has dropped from about 80.5 percent in 2007 to about 67.2 percent in 2009. The drop is significant, and may pose a threat to our “herd immunity” - the level of population vaccination necessary to block outbreaks of infectious diseases.

Public health officials recommend vaccine levels at least in the mid-80 percent to low-90 percent level to protect “herd immunity.” This is important stuff: children who are not immunized because they’re too young or medically compromised are at risk if overall rates drop to unsafe level.

Routine vaccinations are safe

Almost all medical and public health experts believe that routine vaccinations are safe and appropriate for almost all children. Even so, we can reach safe levels of childhood immunizations while respecting the strongly felt contrary views of vaccine deniers. Two steps are necessary.

1) Primary care focus. The American Academy of Family Physicians has encouraged primary care providers to remind parents of immunization schedules, provide accurate vaccine education and open their scheduling to encourage primary care visits.

Here in New Jersey, Summit Medical Group has reported that such programs raised its patients’ childhood immunization rates from 84 percent to 97 percent from 2008 to 2010. If primary care providers focus on the reminders, education and open scheduling that achieve such dramatic level of improvement, we’re mostly there.

Restricting exemptions

2) Tightened process for non-medical exemptions. This step is more controversial. Let’s be candid and admit that religious exemptions are sometimes employed by those with strong non-religious objections to vaccinations.

Further, let’s admit that it is uncomfortable for the state to pass judgment on the sincerity of claims of sincere religious belief. A 2001 study published in the American Journal of Public Health provides a way out of this conflict.

It found that non-medical vaccine exemptions can be minimized when states take minor steps as requiring parents to file annually, and at that time to receive accurate information on risks and benefits of immunizations. Such processes can tip the balance toward immunization for two groups of parents.

First, parents without strong objections but for whom doctors’ appointments for vaccinations were inconvenient may find that it is now easier on balance to comply with the law. Second, those confused by the controversy may have their fears addressed by public health information provided.

The article found that these simple steps can increase the level of immunization, while respecting the views of those parents with implacable objections to vaccinations. Objecting parents can simply accept the information, and file the annual reports.

These two steps could raise immunizations to safe levels without the need to force the hands of parents with strong religious or other principled objections. If, as the studies suggest, vehement objectors are relatively few, population health and personal beliefs can be accommodated.

Jonathan Blum, CMS Deputy Adminstrator, Speaks on ACOs

We’re waiting for the Department of Health and Human Services to release proposed regulations on Accountable Care Organizations.  This site has previously discussed the potential good and bad of ACOS (see here, here, and here).   I attended a conference last week at which an innovative model of “Medicaid ACO” was discussed.  The Medicaid ACO would be authorized in New Jersey under a bill pending before the NJ Legislature.  It is an exciting idea that will attempt to reach the poor and vulnerable who often lose out in health reform programs.  The godfather of the Medicaid ACO project is Jeff Brenner, about whom Atu Gawande recently wrote in the New Yorker.   (subscription required)    I’ll be blogging about the New Jersey bill in a future post.  The conference was funded by the Nicholson Foundation and presented  by the Health Care Quality Institute.

Speaking at the conference was Jonathan Blum, Deputy Administrator and Director of the Center for Medicare at CMS.  In discussing “Accountable Care Organizations and the Affordable Care Act,” Blum was in the difficult position of speaking about a topic of great interest, while not being able to discuss the contents of draft regulations that are no doubt nearing completion. Nevertheless, he made some interesting points that I’ll pass along.

Blum’s talk focused on policy positions that are driving HHS as it drafts the regulations.  The overriding policy positions he described included:

• The ACO regulations will not be “one size fits all.” He emphasized that CMS will be looking for innovative models, with different payment systems, and with different “on ramps” to formation and approval. He emphasized that CMS is interested in models that serve “safety net populations,” as CMS wants to ensure that the poor and underserved get the same opportunities as “suburban” folks. The primacy (at least in order of presentation) was welcomed by the NJ folks, whose model is directed to Medicaid recipients.
• The orientation, consistent with much of the ACO literature, is “patient first.” He distinguished this orientation from one that would see ACOs as a means for powerful interests to gain market share. That tension is, of course, evident in the ACA’s ACO provisions, as has been pointed out most eloquently by Tim Greaney. Blum described CMS as being focused on care systems’ sensitivity to patient and family concerns, and with payment programs oriented to health care “journeys” and not episodes.
• Clinical quality is key. CMS will focus on outcomes measurements “much more” than in the past. It will be interested in particular in quality measurements and patient experience.
• He spent a fair amount of time emphasizing that CMS does not regard the ACO program as static. CMS will constantly review payment and quality issues, with an eye toward updating oversight and program requirements. It will use payment incentives to drive quality improvements. He indicated that there is some tension between CMS’s interest in having quality be data-driven in ACOs with its insistence on protecting patient confidentiality and privacy issues. CMS is interested in encouraging patient advocacy efforts to support continued emphasis on patient privacy and confidentiality.
• In response to a question, Blum recognized the substantial tension between the ACO model’s emphasis on improving quality and reducing cost through organization of care on one hand, and the ACA’s continued embrace of patient choice of provider on the other. He indicated that this tension might best be addressed by ACOs and their constituent providers creating a sufficiently attractive delivery model that patients will want to be involved — exclusively. (Reaching this goal would clearly require unprecedented patient education efforts.)

The Q & A following Blum’s presentation was predictably frustrating on both sides, as could be anticipated in connection with a talk about not-yet-finalized regulations.  He recognized several outstanding issues that he was not at liberty to discuss, but which had been occupying those drafting the regulations, including:

• Will physicians be able to join more than one ACO? CMS is apparently considering different rules for primary care physicians and specialists, although Blum acknowledged that such overlapping provider networks will make the computation of “gain” difficult when gainsharing is implemented.
• Blum, although asked, would not bite on the question of “who will lead” (physicians or hospitals). He anticipates a variety of models, but stressed that no ACO would flourish without physician buy-in.
• The question of geographic exclusivity for ACOs engendered a similarly noncommittal response. Blum acknowledged the conceptual difficulties presented by such overlap, but also pointed to the negative implications of exclusivity on the robustness of competition.

So, it was an interesting discussion of general principles, whetting our appetites to see how HHS will “square the circle” — or circles — in the upcoming regulations.

New Jersey’s Long-Awaited (and Controversial) Proposed Medicinal Marijuana Program Rules

Last week, New Jersey’s Department of Health and Senior Services released long-awaited proposed regulations implementing The Compassionate Use Medicinal Marijuana Act and they have already proved controversial.  Generating the most debate is the Department’s determination that the entities authorized to grow marijuana will not be authorized to dispense it to patients and vice versa.  As the Department explained in a press release, “[s]ix Alternative Treatment Centers (ATCs) will be selected through a competitive process.  Two of the ATCs will be cultivators and four will be dispensaries. … The ATCs selected for dispensing medicinal marijuana will also have the ability to apply to the Department for satellite locations in their region.”

According to the New Jersey Law Journal, Assemblyman Reed Gusciora (D-Mercer), one of the Act’s primary sponsors, called the regulations “a departure from the legislative intent” to authorize six ATCs — two each in northern, central, and southern New Jersey — all of which would both grow and dispense medical marijuana.  Senator Nicholas Scutari (D-Union), another primary sponsor, agrees, arguing that: “the regulations are a problem.  I’m not happy because they do not comport with the statute.  It’s insulting and agitating.”  The Law Journal reports that “Scutari and Gusciora say they will try to persuade [DHSS Commissioner Poonam] Alaigh to change the regulations to conform to the statute.  ‘You can’t change a statute through the regulatory process,’ says Scutari, adding that he will pursue changes through litigation if the rules are not amended to the Legislature’s satisfaction.”

A careful reading of the Act reveals that the provision addressing the function of ATCs is less than crystal clear, however:

“An alternative treatment center shall be authorized to acquire a reasonable initial and ongoing inventory, as determined by the department, of marijuana seeds or seedlings and paraphernalia, possess, cultivate, grow, harvest, process, display, manufacture, deliver, transfer, transport, distribute, supply, sell, or dispense marijuana, or related supplies to qualifying patients or their primary caregivers[.]”

The Department obviously reads this in the disjunctive, to mean that ATCs shall be authorized to do (at least) one of the things listed, but need not be authorized to do all of them.  This reading is supported by the “or” between “sell” and “dispense.”  On the other hand, reading the sentence in the disjunctive allows for absurd results that clearly would thwart the Legislature’s intent.   (For example, under this reading, the Department would be within its rights to authorize six ATCs to grow marijuana but none to dispense it.)

Leaving further statutory analysis to others, I will say that I do not think that the Department’s decision to separate growing and dispensing will necessarily thwart the Legislature’s directive that there be “a sufficient number of alternative treatment centers throughout the State, pursuant to need, including at least two each in the northern, central, and southern regions of the State,” particularly given that the regulations provide for both home delivery and the possibility of satellite ATC locations.  More likely to limit access is the expense to patients, both of participating in the program ($200 for the patient, unless they qualify for Medicaid or other assistance programs, and another $200 if the patient needs a caregiver to assist with their marijuana use) and of paying for medical marijuana, which of course is not covered by any insurance plan.  The proposed regulations provide that prospective ATCs will be judged based on a number of criteria, including “ability to meet overall health needs of qualified patients”; within that rubric, the selection committee should consider prospective ATCs’ plans to make medical marijuana affordable to those who need it.

Preliminary New Jersey Hospital Charity Care Budget Announced for FY 2011

New Jersey’s Department of Health and Senior Services released its preliminary data on charity care dollars for hospitals for Fiscal Year 2011: $665 million. Fiscal Year 2010’s total budget for such was $660 million, but $25 million of that was cut as part of mid-year budget reductions. If one counts the restoration of the $25 million cut prior, the increase amounts to $85 million.

In a press release announcing the preliminary data, Health and Senior Services Commissioner Dr. Poonam Alaigh said, “This funding increase clearly demonstrates Gov. Chris Christie’s commitment to maintain and strengthen the health care safety net for New Jersey’s most vulnerable residents when they need it most. Despite the state’s current fiscal crisis, the Governor has made charity care a priority.”

Some of the gains were wrought through the leveraging of increased assessments against hospitals for increased federal matching funds. According to the Daily Record:

To get the extra cash, Christie proposes to lift a cap that had limited a tax paid by hospitals; doing so increases the amount of federal matching funds the state receives.

In other words: To get the extra funds into the hospital system, hospitals have to pay $38.7 million in extra assessments. That puts hospitals as a whole $21.3 million ahead of the game — although extra dollars don’t necessarily flow back to the hospitals paying more.

Also according to the Daily Record, the reconfiguration and redistribution will leave 41 hospitals with more money, and 32 with less. The chart below lays out those details.

An Autism Diagnosis: Key to Unlocking Needed Services?

Michael Poreda’s excellent post yesterday called attention to what looks to be a fascinating panel discussion — “Serving Urban Students With Autism: Newark, New Jersey” — to be held here at Seton Hall Law on April 5th.  Michael interviewed Leslie Long and Michele Adubato — Adubato will be speaking on the panel — of Newark’s North Ward Center which plans a 2011 launch of a new initiative to better serve individuals living with autism in Newark.

In his post, Michael writes that he “wanted to know if students with autism in Newark were getting the same services as students elsewhere in the New Jersey, and if not, whether law or policy played a role in the disparity.”  He goes on to highlight a number of areas of potential disparity between Newark and New Jersey’s suburbs and towns, all disturbing.

I was particularly troubled by Michael’s report that the Newark schools’ wait-and-see approach to diagnosing children with autism leads to children from birth to age three being denied (or simply not accessing) early intervention services.  There is nothing wrong in theory with waiting and seeing with regard to diagnosing an infant or toddler with autism.  I believe the choice to wait-and-see is one that parents should be free to make in consultation with their baby or child’s healthcare providers.  That choice is in no way free if advocating for and/or accepting an autism diagnosis is the key to accessing needed services.  (My previous post on the pressure parents can face to accept the diagnosis is here.)

In my opinion, early intervention services should never be linked to a diagnosis; they should always be based on the demonstrated needs of the individual child.  A key takeway from the dispute over the inclusion of Asperger’s Disease in the DSM-V is that while diagnoses of mental disorders can no doubt be useful in certain contexts, they are also mutable and political, describing and potentially shaping a complicated reality.  They seem a shaky basis for divvying up scarce educational resources amongst very young children.

In New Jersey children do not, legally, need to be diagnosed with autism — or any other   -ism — to access early intervention services.  A child with an autism diagnosis is presumptively eligible for early intervention services, but that same child could also qualify without the diagnosis, based only on his or her individual developmental delays.  After a child turns 3 and is no longer eligible for early intervention, a diagnosis is still not (supposed) to be the key to services.  In New Jersey, a child between the ages of 3 and 5 with developmental delays can qualify for special education as a “preschooler with a disability.”  N.J.A.C. 6A:14-3.5(c)(10).  I wonder whether the use of these avenues to accessing services is more common in the New Jersey suburbs than in Newark– and whether this is yet another disparity.

Kidney Sales, a Free-Market Approach

Recent events in New Jersey have served to highlight deficiencies in the Kidney Market.

The impoverished of the world, at present, freely considering their options in a market economy, have taken to selling their kidneys, valued at roughly $160,000 on the less than open market, to kidney brokers for the approximate sum of, give or take, $10,000.

At present one may sell a body part legally only in Iran. Thus, as anyone steeped in the strict virtues of Chicago School economics would tell you, the Market in Kidneys suffers at present from “distortions.” The problem, of course, is two fold: the almost universal illegality has added risk to the cost; and limited access to the market has allowed the brokers, through government interference and lack of open competition, to exclude others from their fair share of the profit.

The Kidney Exchange

Patterned after the stock exchange (or perhaps the commodity exchange is a more apt analog), I propose we create, as part of a market driven health reform initiative, a Kidney Exchange. Value maximization will ensure the free flow of kidneys into the most appropriate markets and the most appropriate recipients.

In the interest of fairness and transparency, full reports on each putative “donor” will be submitted to the exchange by medical clinicians who (as is the current practice among medical device researchers) will be paid in stock options in the subjects of their examinations. This stake in the endeavor will ensure commitment to the process. These reports will function as the basis for prospectus and, in the case of those not yet ready for immediate harvest, ongoing quarterly reports.

We would not, of course, limit the purchase of kidneys to those who “need” the actual kidneys, as that too would tend to skew the market. “Need” must be determined through the time-tested criteria of the market: availability of, and a willingness to use, investment capital.

Because, however, even with the most thorough information that money can buy, things can on occasion go awry, we will need a market instrument to ensure protection in the event of failure. Kidney Default Swaps (KDS), an insurance of sorts keyed to whether or not the putative “donor” ultimately tenders a viable kidney. Further, KDS could be patterned after the Credit Default Swap–in that we can allow investors with no connection or insurable interest in the transaction to wager freely on the ultimate outcome–thus creating another lucrative market.

Of course, to combat inefficiencies, a wholesale market will ultimately develop, procurement and development syndicates will be set up, and branded groups of similar subjects will be packaged together for large investors like collateralized mortgage securities.

This investor/market driven approach will further ensure the development of a “Pipeline” to enhance quality and dismiss with the vagaries of procurement.

And lest we forget the benefit to the “donor,” the market too will provide for it. Obviously, anyone who has invested a handsome sum in 4 year old boys from Pakistan (”Pak-Neph B4, b. type O+, trading at…”) will have great interest in safeguarding his investment–nourishing well those kidneys until they are ready for harvest upon demand.

Considering the environmental risks involved for the “free range” donor in many prime but impoverished areas, “harvest banks” to house homegrown investments will, of course, be built. Within the sterile confines of such banks, subjects will grow, watered and fed and exercised to ensure sufficient blood flow and proper kidney function. Subjects kept thus would of course demand a premium on the open market.

Furthermore, upon harvest and release into world, such harvest bank subjects can also readily be expected to breed. Uneducated and untrained in any vocation (market contraindicated) one can reasonably expect them to turn over for modest profit the products of their breeding to the market for eventual harvesting–thus ensuring a steady supply of prime kidneys for generations to come. Naturally, the best genetic lines of kidneys will be identified–arrangements can be made (”Pak-Neph B14/Braz-NephG16, b. type AB+, trading at…), profits in accord.

The addition to one’s portfolio of such financial instruments as “Kidney Futures” or “Kidney Options,” will, I believe, prove a handsome reward to savvy holders. And a thriving business in Kidneys could well be just the market innovation that this economy needs to pull it out of its current doldrums. A Kidney Exchange will provide a swift feast of employment and real wealth.  And of course, we need not be limited to kidneys, there are many other organs that the poor do not, and cannot, use to best advantage.

Conclusion

280 years have passed since Jonathan Swift offered his “Modest Proposal” for solving the pangs of poverty in Catholic Ireland through the sale and eating of Irish babies.[1] Consider this an update of sorts.

There is, however, one distinction between the Swift model that is worth noting: considering the high market value of Irish babies, Swift proposes a preference in procurement for ravenous English Landlords:

I grant this food will be somewhat dear, and therefore very proper for landlords, who as they have already devoured most of the parents, seem to have best title to the children.

A Kidney Exchange, less sentimental but more modern, would, of course, put the preference where the invisible hand of the market deems it best (though under Swift’s criteria the  IMF, and World Bank would seem to be the  sentimental favorites). In this way it would allow, as we do now with private health insurance, that most efficient of instruments, the market, to decide who lives or dies.

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[1] Swift notes that before the age of 12, Irish children were  not particularly saleable or employable, and that “They can very seldom pick up a livelihood by stealing till they arrive at six years old.” His solution stems from the following:  “I have been assured by a very knowing American of my aquaintance in London that a young healthy child well nursed is at a year old a most delicious, nourishing, and wholesome food, whether stewed, roasted, baked, or boiled; and I make no doubt that it will equally serve in a fricassee or a ragout.” His modest proposal: “I do therefore humbly offer it to public consideration that of the hundred and twenty thousand children, already computed, twenty thousand may be reserved for breed…. That the remaining hundred thousand may at a year old be offered in sale to persons of quality and fortune through the kingdom, always advising the mother to let them suck plentifully in the last month, so as to render them plump and fat for a good table.”

The full title of the piece is “A Modest Proposal For Preventing The Children of Poor People In Ireland From Being A Burden To Their Parents Or Country, And For Making Them Beneficial To The Public.” Though most noted for his relatively benign Gulliver’s Travels, Swift’s Modest Proposal helped make him a hero among the Irish.