ACA Repeal and the End of Heroic Medicine

Last week, I saw Dr Atul Gawande speak at Health Action 2017. Healthcare advocates and activists sat around scribbling notes and clutching at their choice of whole-food, cold-pressed, green and caffeinated morning lifelines. Gawande speaks softly, lyrically and firmly; the perfect bedside manner for healthcare advocates in these early days of the Trump presidency. He calmly announced to the congregation that the age of heroic medicine is over. Fortunately, he continued, that’s a good thing.

Gawande’s remarks echoed a piece he published in the New Yorker. He writes that for thousands of years, humans fought injury, disease and death much like the ant fights the boot. Cures were a heady mixture of quackery, tradition and hope. Survival was largely determined by luck. Medical “emergencies” did not exist; only medical “catastrophes”. However, during the last century, antibiotics and vaccines routed infection, polio and measles. X-rays, MRIs and sophisticated lab tests gave doctors a new depth of understanding. New surgical methods and practices put doctors in a cage match with Death and increasingly, doctors came out with bloody knuckles and a title belt. Gradually, doctors became heroes and miracles became the expectation and the norm. This changed the way we view healthcare. Gawande writes, “it was like discovering that water could put out fire. We built our health-care system, accordingly, to deploy firefighters.”

But the age of heroic medicine is over. Dramatic, emergency interventions are still an important part of the system. However, Gawande insists that the heavy emphasis on flashy, heroic work is misplaced. Much more important is “incremental medicine” and the role of the overworked and underappreciated primary care physician.

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Watching Out for the Rights of the Uninsured

Special Guest Post by Professor Howell E. Jackson, Harvard Law School

As Republicans strive to unwind the Affordable Care Act (ACA), public commentary is quite naturally focusing on the number of Americans who might lose health insurance coverage. The Congressional Budget Office last month estimated that eleven million individuals could drop off of insurance rolls immediately, with millions and millions more to lose coverage within the next few years.  These numbers are indeed troubling, but the fate of the uninsured deserves similar attention.

For those critical of the ACA, uninsured individuals are sometimes characterized as victims of government overreach: penalized with a tax assessment for not complying with the individual mandate, and denied access to the kinds of lower-cost insurance policies that a less regulated insurance market might provide.  And there is some truth to this critique:  Mandatory coverage terms under the ACA do drive up premiums, and of the estimated 27 million Americans now without health insurance coverage, some eight million are paying ACA penalties, totaling on the order of $8 billion a year.  But under the ACA, the uninsured are getting something for those penalties.  In fact, they are getting quite a lot.

As policy analysts often note, the ACA prohibits insurance companies from denying coverage or charging higher premiums based on pre-existing conditions.  This protection is most often discussed in the context of individuals seeking to obtain insurance coverage in the first instance or after losing employer-provided coverage.  A less heralded, but equally important feature of this aspect of the ACA is that it allows healthy Americans the freedom to forgo insurance in the first instance and then purchase reasonably priced coverage when the need arises.  The policies available to uninsured individuals have the full protections of the ACA, including limits on out-of-pocket expenses, as well as prohibitions on annual or lifetime coverage limits and mandated terms of coverage.  In addition, premiums are constrained and, for many individuals and families, premium assistance and cost sharing support are available.   While many despair that a large and possibly growing share of Americans lack insurance coverage, at least the ACA ensures that the uninsured have the right to buy a good health insurance policy at a reasonable price when the need arises. Continue reading

Is Mike Pence’s Medicaid Expansion a Blueprint for Donald Trump’s Health Care Reform?

By David Orentlicher

[cross-posted at orentlicher.tumblr.com]

Donald Trump’s pledge to repeal and replace the Affordable Care Act has looked much more like a plan for repeal than a plan to replace, especially in light of the kinds of reform proposals advanced by leading Republicans in Congress, including Trump’s designee for Secretary of HHS, U.S. Rep. Tom Price.

But Trump’s recent promise of “insurance for everybody,” suggests that he might actually have a serious replacement in mind. While we cannot automatically take Trump at his word, it may be the case that he is following the example of his Vice President-elect Mike Pence, who as Governor of Indiana defied Republican positioning in signing on to the Affordable Care Act’s Medicaid expansion. Continue reading

REGISTER NOW (1/23)! PFC’s 5th Annual Health Law Year in P/Review

The Fifth Annual Health Law Year in P/Review symposium will feature leading experts discussing major developments during 2016 and what to watch out for in 2017. The discussion at this day-long event will cover hot topics in such areas as health policy under the new administration, regulatory issues in clinical research, law at the end-of-life, patient rights and advocacy, pharmaceutical policy, reproductive health, and public health law. Continue reading

LIVE ONLINE TODAY @ NOON: President-Elect Trump’s Health Policy Agenda: Priorities, Strategies, and Predictions

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Webinar: President-Elect Trump’s Health Policy Agenda: Priorities, Strategies, and Predictions

Monday, December 19, 2016, 12:00 – 1:00pm

WATCH LIVE ONLINE!: http://petrieflom.law.harvard.edu/events/details/president-elect-trumps-health-policy-agenda

Submit your questions to the panelists via Twitter @PetrieFlom.

Please join the Petrie-Flom Center for a live webinar to address what health care reform may look like under the new administration. Expert panelists will address the future of the Affordable Care Act under a “repeal and replace” strategy, alternative approaches to insurance coverage and access to care, the problem of high drug prices, innovation policy, support for scientific research, and other topics. The panel will discuss opportunities and obstacles relevant to President-elect Trump’s proposals, as well as hopes and concerns for health policy over the next four years. Webinar participants will have the opportunity to submit questions to the panelists for discussion.

Panelists

  • Joseph R. Antos, Wilson H. Taylor Scholar in Health Care and Retirement Policy, American Enterprise Institute
  • Lanhee J. Chen, David and Diane Steffy Research Fellow, Hoover Institution; Director of Domestic Policy Studies and Lecturer, Public Policy Program; affiliate, Freeman Spogli Institute for International Studies, Stanford University
  • Douglas Holtz-Eakin, President, American Action Forum
  • Moderator:Gregory Curfman, Editor-in-Chief, Harvard Health Publications

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Losing the Arms Race: Health Policy and Anti-Microbial Resistance

By Seán Finan

And scattered about it, some in their overturned war-machines, some in the now rigid handling-machines, and a dozen of them stark and silent and laid in a row, were the Martians–dead!–slain by the putrefactive and disease bacteria against which their systems were unprepared; slain as the red weed was being slain; slain, after all man’s devices had failed…

H.G. WellsThe War of the Worlds  

The WHO World Antibiotic Awareness Week ran from 15-22 November. It coincided with similar European and American initiatives. So, in the interests of raising awareness, I thought I would highlight a few figures.

Photo by Rocky Mountain Laboratories, NIAID, NIHAntimicrobial resistance currently causes an estimated 70,000 deaths annually. If current practices continue, the death toll is expected to hit to ten million per year by 2050. That works out at about one death every three seconds.

The threat isn’t limited to increased mortality. Anti-microbial resistance could cast medical practice back to turn-of-the-century standards. Turn of the 20th century, that is. Without antibiotics, the chance of infection turns chemotherapy and invasive surgeries into mortal gambles. During these procedures, the body’s immune system is subject to massive exposure and needs antibiotic support. Even ordinary nicks and scratches can lead to fatal infections without effective antibiotics.

So what is antimicrobial resistance? How does it come about? What can we do to combat it and prevent the “antibiotic apocalypse”?

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Understanding Financial Toxicity

By Zack Buck

In the ongoing fight to control the cost of health care, new understanding of the phenomenon of financial toxicity could play a vital role.  Seen currently in the long-term cancer context, recent studies (here and here, and discussed here and here) have shown that individuals experiencing financial distress as a result of the cost of their care experience higher rates of mortality than those who do not.

In a forthcoming article in the Boston College Law Review (draft here), I make the argument that, following these groundbreaking studies, a new understanding of financial toxicity could transform clinical decision-making.  Indeed, a doctor’s examination of the impact of cost on the patient before deciding to rely on an expensive drug (particularly where a cheaper clinical equivalent exists) could serve as an important tool in limiting the worst effects of expensive care.  And treating cost as a negative side effect (like any other negative side effect) may allow for an explicit awareness and consideration of cost—something too often missing from health care decision-making today.

Religious Hospitals Should Fully Fund Their Employees’ Pensions

By Shailin Thomas

In July, the Ninth Circuit held that Dignity Health, a faith-based hospital system in the southwest United States, was not exempt from the employee pension requirements of the Employee Retirement Income Security Act (ERISA). The hospital system decided in 1992 that it would consider itself a church for the purposes of ERISA, and therefore would qualify for ERISA’s church exemption and not have to provide fully funded or insured pensions for its employees. As a result of this decision, it underfunded its employees’ pensions to the tune of $1.2 billion.

The Ninth Circuit was the second to make such a ruling after the Seventh Circuit issued a similar decision against Advocate Health Care in March. Many thought these rulings would lead the Supreme Court to leave the issue alone, but that may not be what SCOTUS has in mind. Associate Justice Anthony Kennedy recently granted Dignity reprieve from complying with the Ninth Circuit decision while he and the other justices decide whether to hear the case. Hopefully, this signals that the Court is planning to extend the Ninth Circuit’s decision, ensuring that hospital systems with religious affiliations across the country fulfill their responsibilities to their employees and provide them with the pensions they deserve.

Dignity Health is not a church. While it did have an official relationship with the Catholic Church until 2012, at the end of the day Dignity Health is a medical services juggernaut. It is the fifth-largest hospital system in the country, with 39 acute care hospitals and over 250 ancillary facilities spread across Arizona, Nevada, and California. Its annual revenue is approximately $10.5 billion. It’s so big that in 2012 it was included in an antitrust investigation by the California Attorney General’s Office to assess the impact of hospital consolidation on health care pricing in California.

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CMS Prohibits Arbitration Clauses in Long-Term Care Facility Contracts

By Wendy S. Salkin

On Wednesday, the Centers for Medicare and Medicaid (CMS)—an agency within the Department of Health and Human Services (HHS)—released a final rule that “will revise the requirements that Long-Term Care facilities [LTCs] must meet to participate in the Medicare and Medicaid programs” (1). (Almost all LTCs receive funds from Medicare or Medicaid.) This is the first time that these requirements have been “comprehensively reviewed and updated since 1991” (6)—that is, in the past 25 years. One of the most striking changes to the regulation is found in §483.65, where CMS “require[es] that facilities must not enter into an agreement for binding arbitration with a resident or their representative until after a dispute arises between the parties” (12) which means that CMS is “prohibiting the use of pre-dispute binding arbitration agreements” (12). Among the reasons provided by CMS for this change is a recognition of the notable power differential between LTCs and their residents:

There is a significant differential in bargaining power between LTC facility residents and LTC facilities. LTC agreements are often made when the would-be resident is physically and possibly mentally impaired, and is encountering such a facility for the first time. In many cases, geographic and financial restrictions severely limit the choices available to a LTC resident and his/her family. LTC facilities are also, in many cases, the resident’s residence. These facilities not only provide skilled nursing care, but also everything else a resident needs. Many of these residents may reside there for a prolonged period of time, some for the rest of their lives. Because of the wide array of services provided and the length of time the resident and his/her family may have interactions with the LTC facility, disputes over medical treatment, personal safety, treatment of residents, and quality of services provided are likely to occur. Given the unique circumstances of LTC facilities, we have concluded that it is unconscionable for LTC facilities to demand, as a condition of admission, that residents or their representatives sign a pre-dispute agreement for binding arbitration that covers any type of disputes between the parties for the duration of the resident’s entire stay, which could be for many years. (402-403)

As The New York Times reported, when the rule was first proposed in July 2015, it was “aimed at improving disclosure.” But, this final version of the rule “went a step further than the draft, cutting off funding to facilities that require arbitration clauses as a condition of admission.”

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Medical Malpractice in Pennsylvania: What is MCARE and how does it work?

By Matthew Young

Medical malpractice in Pennsylvania revolves around the MCARE statute. MCARE stands for “Medical Care Availability and Reduction of Error” — an Act passed and signed into law in 2002.

MCARE requires that participating providers and hospitals carry a minimum of $500k in coverage per occurrence or claim. (We will get back to what exactly counts as an “occurrence.”) MCARE also refers to a special fund within the State Treasury that aims to “ensure reasonable compensation for persons injured due to medical negligence.” The MCARE fund pays claims in excess of the $500k in coverage that participating health care providers and hospitals are already required to buy themselves to insure against medical professional liability actions.

How does an injured patient get compensated? Here’s how it works: first, a provider has to tender their $500k. Only after they tender does the MCARE fund offer excess coverage. The excess coverage offered is an additional $500k. So if you sue a provider and a hospital, each self-insured with $500k, you can recover $1 million from the self-insurance, and on top of that, once both the provider and hospital tender, the MCARE fund can layer on an additional $500k for the provider and an additional $500k for the hospital. $500k from the provider + $500k from MCARE for the provider + $500k from the hospital + $500k from MCARE for the hospital = $2 million recovery. Simple enough, right?

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J. B. Silvers on ‘The Week in Health Law’ Podcast

By Nicolas Terry and Frank Pasquale

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We welcomed J. B. Silvers to the podcast this week. J. B. is the John R. Mannix Medical Mutual of Ohio Professor of Health Care Finance, and Professor of Banking and Finance, at the Weatherhead School of Management, with a joint appointment in the Case Western Reserve University School of Medicine.

We asked J. B. many questions about the state of the ACA, hospitals’ adaptation to the rapidly changing policy environment, and ongoing worries about a death spiral on the exchanges. He offered refreshing and insightful perspectives on a range of live controversies in health care finance.

J. B. has served on committees at the National Academies and several national and state commissions. Until recently, he was a board member (12 years) and treasurer of the Joint Committee on Accreditation of Healthcare Organizations (TJC/JCAHO) and a board member of SummaCare Insurance Company (14 years). For seven years Silvers was a commissioner on the Prospective Payment Assessment Commission (now MedPAC) advising Congress on Medicare payment. From 1997 to 2000, while on leave, he served as President and CEO of QualChoice Health Plan and Insurance Company. He currently is vice chair of the board at MetroHealth Medical Center.

The Week in Health Law Podcast from Frank Pasquale and Nicolas Terry is a commuting-length discussion about some of the more thorny issues in Health Law & Policy. Subscribe at iTunes, listen at Stitcher Radio, Tunein and Podbean, or search for The Week in Health Law in your favorite podcast app. Show notes and more are at TWIHL.com. If you have comments, an idea for a show or a topic to discuss you can find us on twitter @nicolasterry @FrankPasquale @WeekInHealthLaw

Medical Malpractice Under a National Health System and the ACA

By Matthew H. H. Young

What will happen to the current medical malpractice system under a single-payer system?

To answer this question, I started by looking at the information provided by Physicians for a National Health Program, whose mission is to replace the ACA (Affordable Care Act) with single-payer. On their website under Single-Payer FAQs, it says:

What will happen to malpractice costs under national health insurance?

They will fall dramatically, for several reasons. First, about one-fourth of all malpractice awards go to pay present and future medical costs (e.g. for infants born with serious disabilities). Single payer national health insurance will eliminate the need for these awards. Second, many claims arise from a lack of communication between doctor and patient (e.g. in the Emergency Department). Miscommunication/mistakes are heightened under the present system because physicians don’t have continuity with their patients (to know their prior medical history, establish therapeutic trust, etc) and patients aren’t allowed to choose and keep the doctors and other caregivers they know and trust (due to insurance arrangements). Single payer improves quality in many ways, but in particular by facilitating long-term, continuous relationships with caregivers. For details on how single payer can improve the quality of health care, see “A Better Quality Alternative: Single Payer National Health Insurance.” For these and other reasons, malpractice costs in three nations with single payer are much lower than in the United States, and we would expect them to fall dramatically here. For details, see “Medical Liability in Three Single-Payer Countries” paper by Clara Felice and Litsa Lambkros.

Let me address the most salient part of the above argument, which states that the significant burden of malpractice recoveries composed of future medical costs will be alleviated because all individuals will be insured. Continue reading

Income-Scaling of Cost-Sharing Gains Traction

With 148,000 members, the American College of Physicians (ACP) is the largest medical-speciality organization.  This summer, its board released a new report on the growing financial burdens faced by patients who enjoy health insurance but are nonetheless exposed to unbearably large costs for healthcare.  At the end of the day, cost-sharing is just the absence of insurance for those costs.

ACP calls for a range of reforms, including “income-adjusted cost-sharing approaches that reduce or directly subsidize the expected out-of-pocket contribution of lower-income workers to avoid creating a barrier to their obtaining needed care.”  As I have argued, the Affordable Care Act includes income-based subsidies for cost-sharing in the Marketplaces, but these are currently being challenged in court, and do not apply to the employer-based system or Medicare, which together cover the vast majority of patients.

Hillary Clinton has also advanced a plan to create progressive refundable tax credits for people who spend more than 5% of their income out-of-pocket.   The advantage of such a tax-based approach is that it reaches patients regardless of where they get their insurance (except for Medicare, which is excluded).  The disadvantage is that it leaves people in a state of financial insecurity until they get their refunds.  A better approach would scale cost-sharing exposure in the first place, a power that I have suggested is already available under Federal law and which is self-funding.

Zika May Place Burden On Medicaid

Emma Sandoe, 2015-2016 Petrie-Flom Student Fellow

Full post at Health Affairs Blog.

Aedes_Mosquito_300x300Congress is currently debating the level of federal funding that should be made available to fight to reduce the spread of Zika. Administration officials working with local public health agencies on the ground have recently expressed fear that the funding levels are insufficient to prevent the disease from spreading. What is one overlooked concern? State budgets.

Medicaid is jointly funded by states and the federal government and serves as a key financer of health care services if Zika spreads across the country this summer. The Centers for Medicare and Medicaid Services (CMS) recently released a bulletin to state Medicaid Directors outlining how Medicaid funds can be used to both prevent the spread of Zika and treat people infected by the disease and infants born with microcephaly. With Medicaid covering roughly half of the births in America today, the program will finance many pregnancies potentially affected by Zika. […]

Read the full post at the Health Affairs Blog!

Monthly Round-Up of What to Read on Pharma Law and Policy

By Ameet Sarpatwari and Aaron S. Kesselheim

Each month, members of the Program On Regulation, Therapeutics, And Law (PORTAL) review the peer-reviewed medical literature to identify interesting empirical studies, in-depth analyses, and thoughtful editorials on pharmaceutical law and policy.

Below are the papers identified from the month of May. The selections feature topics ranging from a review of progress in the fight against multidrug-resistant bacteria, to the role regulators can play in increasing the affordability of drugs, to an assessment of the strength of the surrogate-survival relationship for cancer drugs approved on the basis of surrogate endpoints. A full posting of abstracts/summaries of these articles may be found on our website.

  1. Deak D, Outterson K, Powers JH, Kesselheim AS. Progress in the Fight Against Multidrug-Resistant Bacteria? A Review of U.S. Food and Drug Administration-Approved Antibiotics, 2010-2015. Ann Intern Med. 2016 May 31. [Epub ahead of print]
  2. Eichler HG, Hurts H, Broich K, Rasi G. Drug Regulation and Pricing–Can Regulators Influence Affordability? New Engl J Med. 2016 May 12;374(19):1807-9.
  3. Hey SP, Weijer C. What questions can a placebo answer? Monash Bioeth Rev. 2016 May 17. [Epub ahead of print]
  4. Kapczynski A, Kesselheim AS. ‘Government Patent Use’: A Legal Approach To Reducing Drug Spending. Health Aff. 2016 May 1;35(5):791-7.
  5. Kim C, Prasad V. Strength of Validation for Surrogate End Points Used in the US Food and Drug Administration’s Approval of Oncology Drugs. Mayo Clin Proc. 2016 May 10. [Epub ahead of print]
  6. Outterson K, McDonnell A. Funding Antibiotic Innovation With Vouchers: Recommendations On How To Strengthen A Flawed Incentive Policy. Health Aff. 2016 May 1;35(5):784-90.
  7. Patel MS, Day SC, Halpern SD, Hanson CW, Martinez JR, Honeywell S Jr, Volpp KG. Generic Medication Prescription Rates After Health System-Wide Redesign of Default Options Within the Electronic Health Record. JAMA Intern Med. 2016 May 9. [Epub ahead of print]
  8. Yeh JS, Franklin JM, Avorn J, Landon J, Kesselheim AS. Association of Industry Payments to Physicians With the Prescribing of Brand-name Statins in Massachusetts. JAMA Intern Med. 2016 May 9. [Epub ahead of print]

TWIHL Special: Wendy Mariner Analyzes the New Wellness Regulations

By Nicolas Terry and Frank Pasquale

twihl 5x5A special TWIHL episode with analysis of the new EEOC regulations under the ADA and GINA on Employer Wellness Plans. Nic is joined by Professor Wendy Mariner. Professor Mariner is the Edward R. Utley Professor of Health Law at Boston University School of Public Health, Professor of Law at Boston University School of Law, Professor at Boston University School of Medicine, and Co-Director of the J.D.-M.P.H. joint degree program, and a member of the faculty of the Center for Health Law, Ethics and Human Rights at BUSPH. Professor Mariner’s research focuses on laws governing health risks, including social and personal responsibility for risk creation, health insurance systems, implementation of the Affordable Care Act, ERISA, health information privacy, and population health policy.

Our discussion concentrated on the ADA regulation and examined how the agency responded to comments (including ours), the concept of voluntariness, the status of EEOC v. Flambeau, Inc., data protection (including issues raised when  employers research the health of their employees), and the policy flaws in the wellness space.The Week in Health Law Podcast from Frank Pasquale and Nicolas Terry is a commuting-length discussion about some of the more thorny issues in Health Law & Policy.

Subscribe at iTunes, listen at Stitcher RadioTunein and Podbean, or search for The Week in Health Law in your favorite podcast app. Show notes and more are at TWIHL.com. If you have comments, an idea for a show or a topic to discuss you can find us on twitter @nicolasterry @FrankPasquale @WeekInHealthLaw

How Not to Debate Health Care Reform

Editor’s Note: This post was originally published on May 12 with portions of the essay missing. The corrected text is below.

By Ted Marmor

Presidential campaigns in the United States are not typically fought over competing manifestos, with policy details set out in reasonably clear language. Rather they are disputes among candidates about the state of the country and what values—or aspirational visions—they endorse.  And, for at least a century, most American debates about health care reform have been dominated by ideological slogans, misleading claims about financing, and mystifying labels. Republicans have exemplified the mystification this year, repeatedly mislabeling Obamacare as socialized medicine and falsely claiming it a “takeover of American medicine.”

In fairness, the Democratic primaries have generated their own version of mystification. The two candidates do agree on the goals of universal health insurance. But clarity ends there. The Clinton campaign has emphasized incremental reform possibilities and criticized Senator Sanders’ proposal of Medicare for All as unrealistic. Sanders, by contrast, has offered a compelling conception of a fairer and less expensive version of what Americans want, but no incremental steps to get to it.

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CPC+: Opportunities and Challenges for Primary Care Transformation

In recent days there has been a lot of action around CMS’ Comprehensive Primary Care Initiative (CPCI). First, the next phase of the program was announced, expanding the program in size and scope. Several days later, an evaluation of the first two years of the initiative was published in the New England Journal of Medicine.

The original CPCI demonstration began in October 2012 and included 502 practices in seven regions (states or smaller areas within states). The regions were determined largely by payer interest, as commercial and state health insurance plans are essential partners in this multi-payer model. The CPCI involves risk-stratified care management fees for participating practices and the possibility of sharing in net savings to Medicare (if any). In turn, the practices must invest in practice redesign around: access and continuity, chronic disease management, risk-stratified care management, patient and caregiver engagement, and care coordination across a patient’s providers, e.g., managing care transitions and ensuring close communication and collaboration.

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Medicare’s Coming Battle Over Drug Reimbursement

By Zack Buck

Following months of news coverage highlighting how American drug prices are “out of control,” the Centers for Medicare and Medicaid Services (CMS) seems to have been spurred into action. Last week, CMS proposed a new reimbursement regime for drugs paid for by Medicare Part B (drugs administered on an outpatient basis).

Addressing the concerns that the existing reimbursement formula may encourage physicians to rely on more expensive drugs, the proposal calls for testing new payment models designed to save money. The most striking of these changes calls for altering the “average sales price plus 6 percent” reimbursement formula (the amount Medicare pays doctors to reimburse them for drugs) to a formula which would pay doctors the average sales price plus 2.5 percent, plus a fee of $16.80 per drug per day. Further, the proposal also calls for testing indications-based and reference pricing. If implemented, all of these tools would be likely to produce cost savings for Medicare Part B, which spends $20 billion annually on drugs.

According to the New York Times, the proposal “touched off a tempest,” as physicians, politicians, and drug manufacturers criticized  the proposed changes. The American Society of Clinical Oncologists decried the “heavy-handed” government intervention that would adversely affect seniors’ quality of care. Senator Orrin G. Hatch (R-UT) implied that the change would allow “unelected bureaucrats” to usurp medical judgment, with negative effects on access to care. And a statement from the Pharmaceutical Research and Manufacturers of America (PhRMA) noted that the proposal “puts Medicare patients who rely on these medicines at risk.”

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The Economics Of Paying For Value

This new post by Nancy Beaulieu, Michael Chernew, Soren Kristensen, and Meredith Rosenthal appears on the Health Affairs Blog as part of a series stemming from the Fourth Annual Health Law Year in P/Review event held at Harvard Law School on Friday, January 29, 2016.

The notion that the American health care system should transition from paying for volume to paying for value has become nearly ubiquitous. There is a broad consensus that health care providers should be paid more if they deliver higher value care (i.e. care that results in substantial health gains per dollar spent).

These beliefs have led to a proliferation of value-based payment programs in both public and private sectors. For example, at the beginning of 2015, Sylvia Burwell announced the federal government’s commitment to tie 90 percent of fee-for-service Medicare payments to quality or value measures by 2018. In January of 2015, a newly formed alliance of health care providers, insurers, and employers called the Health Care Transformation Task Force committed to shifting 75 percent of their business to contracts that provide incentives for quality and efficiency by 2020.

The details of existing value or quality-based payment programs vary enormously and without regard to any conceptual framework. For example, they vary in the size of incentives and the measures used. They also vary in whether quality payments are contingent on financial savings and whether the value-based payment model is budget neutral. Even the term value is inconsistently defined. […]

Read the full post here.