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.
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 Timesreported, 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.”
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?
Subscribe to TWIHL here!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
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 →
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.
Congress 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. […]
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.
A 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 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
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.
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.
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.”
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. […]
Pharmaceutical companies are making breakthrough drugs to cure diseases, but no one knows how to pay for them. In 2013 and 2014, FDA approved Solvaldi and Harmoni, which can cure hepatitis C in more than 90% of patients. Solvaldi and Harmoni cost $84,000 and $95,000, respectively, for a standard course of treatment. Government payers and health plans, without a good solution for providing Solvaldi and Harmoni to patients who need them, have restricted coverage of the drug to only those patients with advanced hepatitis C. Last year, Germany approved Glybera, a gene therapy that enables patients with lipoprotein lipase deficiency to produce the deficient enzyme. Glybera is expected to cost $1 million, and it is doubtful whether any payer could shoulder such a price.
Last week, MIT professor Andrew Lo proposed a new way of paying for these high-priced therapies: securitized consumer healthcare loans (HCLs). HCLs would function as mortgages for large healthcare expenses. Because the benefits of some therapies occur upfront, HCLs would allow consumers to pay for the value of their therapies over time, instead of in one upfront payment. The paper proposed two frameworks to govern HCLs. The first is a consumer-funded loan, where the patient borrows a loan to pay the upfront costs of the drug, and pays back the loan over time. The second framework operates similarly to the consumer-funded loan, except that private payers and government agencies assume the debt. Under this model, insurance companies could take the debt associated with the patient’s treatment then shift the debt onto the next payer if the patient changes insurance companies. Continue reading →
By Cornelia Hall, Master of Public Policy Candidate, Harvard Kennedy School, Class of 2017
This is the third entry in a three-part series on the AcademyHealth National Health Policy Conference, held in Washington, DC, on February 1-2. Read the first entry here and the second entry here.
The national debt as a percentage of GDP has spiked in the last several years, rising from approximately 35% in 2007 to nearly 74% in 2015. Federal budget projections suggest that this trend will continue, with the debt nearly exceeding the size of the economy by 2040. Discussion about these predictions frequently returns to the topic of health care. Indeed, as the “baby boomer” generation retires and enrolls in Medicare, federal health care spending is expected to rise dramatically. In an NHPC plenary session, federal budget experts explored this topic and discussed possible methods of controlling the growth of health care spending in years to come. Continue reading →
Consolidation in the health care sector, particularly among providers and private insurers, has been rising since the Affordable Care Act passed in 2010. Major movement is currently underway among the “Big Five” private insurance companies: Humana, Cigna, UnitedHealthcare, Aetna, and Anthem. Two proposed “horizontal” mergers, currently under review by the Department of Justice Antitrust Division, would reduce these “Big Five” to the “Big Three.” In this context, NHPC panelists discussed private sector consolidation’s potential impact on the cost, quality, and coverage of health care. Several panelists expressed concern about the effects of consolidation on patients and the costs of services. They also indicated, however, that the health care system’s ongoing transition to more coordinated care could help to offset potentially negative consequences of consolidation.
As the Justice Department analyzes the proposed mergers, industry analysts on the NHPC panel suggested that insurer consolidation could negatively affect patient experiences in the health care system. Sarah Lueck of the Center on Budget and Policy Priorities noted that the Affordable Care Act was designed to improve market competition, but the proposed insurance mergers could increase enrollees’ premiums and harm transparency for consumers. She pointed out that this competition among providers also drives quality of care, which could suffer under consolidation. Continue reading →
At AcademyHealth’s 2016 National Health Policy Conference earlier this month, payment reform was a pervasive theme. Its prominence was not surprising. Indeed, in early 2015, HHS Secretary Sylvia Burwell announced the agency’s goal to have 30% of traditional, fee-for-service Medicare payments tied to quality or value through alternative payment models by the end of 2016, and 50% by the end of 2018. As the current sea change in health care moves the system towards these goals, the conference’s panelists explored various aspects of the transition to value-based payment. Speakers who discussed the issue included leaders in government, clinical practice, and private insurance. They sent an overarching message that payment reform efforts will continue to take a variety of forms — on parallel tracks with cross-cutting themes — rather than a single approach. Representatives from provider organizations particularly stressed the necessary groundwork for these efforts to be effective.
The Center for Medicare and Medicaid Innovation (CMMI) under the federal Centers for Medicare & Medicaid Services (CMS) is operating dozens of payment- and quality-focused models and demonstrations across the country. The breadth of payment models and their varying degrees of success represent different approaches to health care reform, such as population- and episode-based payment. On his panel, CMMI Deputy Director Dr. Rahul Rajkumar noted that this breadth is designed to appeal to diverse providers that differ in type and readiness for payment reform. Indeed, a health care system that has operated for decades with multiple payers, little care coordination, fragmented use of technology, and inconsistent definitions of quality care is undergoing monumental transformation. The transition from fee-for-service to value-based payment thus involves some experimentation to identify the most effective approach. Continue reading →
There has been an update to a story I recently blogged about here.
As announced by the Department of Justice (DOJ) on Wednesday, another 51 hospitals have settled allegations that the hospitals placed implantable cardioverter defibrillators (ICDs) in the chests of patients without complying with Medicare’s mandatory waiting periods. These 51 settlements amount to $23 million, meaning that the DOJ’s ICD review has now has resulted in settlements with more than 500 hospitals totaling more than $280 million.
According to the DOJ, this is the final stage of the investigation, concluding an initiative that has highlighted the tension that exists between fraud enforcement, medical necessity, and reimbursement standards (recent articles here, here, and here).
Addressing the high cost of drugs was at the top of President Obama’s list in his fiscal year 2017 budget, released last week. Many of his proposals were familiar. The President hoped to increase manufacturer contributions to prescription drug coverage under Medicare Part D and wanted to shorten the length of biologic market exclusivity from twelve to seven years. These proposals were also in the President’s fiscal year 2016 budget but were not put into place.
However, the budget also included a number of surprising, new proposals that underscore how post-market evidence might play an increasing role in controlling drug prices in coming years. Rachel Sachs has written about the role that the Centers for Medicare and Medicaid Services (CMS) can play in keeping down drug prices, and it seems like some of these ideas are gaining traction:
Modify reimbursement of Part B drugs. The White House estimates that changes to Medicare Part B payments could save the country $7.75 billion over ten years. Medicare Part B covers drugs and services dispensed in an outpatient setting. Many of the most expensive biologic drugs are currently covered under Medicare Part B. The budget proposal did not elaborate on how the White House hopes to change Part B payments, but the proposal likely refers to recommendations released by the Medicare Payment Advisory Commission (MedPAC) last June. MedPAC’s 2015 report recommended that Congress link Part B payments to clinical effectiveness evidence. For example, the government could group drugs with similar health effects and pay all drugs in each group the rate of least costly product in the group. This approach relies on having reliable clinical effectiveness data so that researchers can easily compare the relative effectiveness of two or more drugs. Continue reading →
The penalty for Bostonian jaywalkers can take dollars out of repeat offenders wallets. The $1 fine for jaywalking in the Massachusetts metropolis may be a ridiculous example of statutory dollar figures losing their significance, but the statutory dollar figures associated with Medicaid eligibility are anything but a laughing matter for millions of families.
The eligibility requirements around Medicaid expansion have ended the decades old practice of limiting assets for Medicaid coverage for children and parents. However, in order to qualify for many existing Medicaid programs, the elderly and people with disabilities in many states must still verify that their assets fall below a certain dollar figure. Oftentimes, this dollar figure is statutory and requires state legislatures to act in order to have the figure rise with inflation.
Asset tests were first incorporated into Medicaid law under the original legislation because welfare benefits required strict means and asset tests. These levels were determined at the state level. As eligibility was separated from welfare eligibility, specific dollar figures on assets were added to eligibility criteria and were meant to curb enrollment by “welfare queens” or people that qualify for social assistance fraudulently or with significant assets. President Reagan first campaigned on the concept of “welfare queens” in his failed 1976 bid for the presidency. But these fraudulent cases that the policy is meant to restrict are limited and more often the imposed asset tests prevent working-age adults from reducing dependency on social welfare programs.