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A Year-End Affordable Care Act Litigation Round-Up

December 31st, 2012

Undoubtedly the biggest health reform news of 2012 was the June 28 decision of the United States Supreme Court narrowly upholding the Affordable Care Act’s individual responsibility provision as a constitutional exercise of Congress’ power to tax. The Court also held that Congress lacked authority under the spending clause to require the states to extend Medicaid coverage to all adult citizens with incomes under 138 percent of the federal poverty level, although it upheld the Medicaid expansion as an option.

The Supreme Court decision brought to a close most of the approximately thirty cases that had been filed challenging the individual responsibility provision and other provisions of the ACA. Some of these cases, however, have died a lingering death. On December 19, 2912, a federal court in Arizona dismissed the final remaining claims in Coons v. Geithner, a case brought by, among others, Senator Jeff Flake. The court held that the ACA preempted Arizona’s Health Care Freedom Act and did not violate any rights of the plaintiffs to medical autonomy or informational privacy.

Another case has flickered back to life. As reported earlier, the Supreme Court on November 26, 2012, vacated its earlier order denying review of a challenge brought by Liberty University to the ACA and sent the case back to the Fourth Circuit Court of Appeals for further consideration. The Fourth Circuit’s earlier decision against Liberty University was set aside by the Supreme Court strictly based on that court’s conclusions as to jurisdiction, and the only outstanding issue in the Supreme Court appeal — the constitutionality of the employer responsibility provision — has no chance of succeeding given the well-settled power of Congress to legislate concerning employee benefits. Liberty University is likely, however, to also press religious liberty challenges to the ACA that it raised in its original complaint, and these challenges may require further consideration.

The Legal Fight Over Contraception Coverage

As litigation challenging the ACA’s individual responsibility provision has drawn to a close, however, a new surge of litigation has been building challenging another provision of the ACA — the preventive services mandate.

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Implementing Health Reform: The Employer Mandate

December 29th, 2012

On December 28, 2012, one of the last major regulatory building blocks of the Affordable Care began to fall into place. The Internal Revenue Service of the Department of Treasury issued a notice of proposed rulemaking (NPRM) addressing “Shared Responsibility for Employers Regarding Health Coverage” — the employer mandate. The IRS also released a series of questions and answers, explaining the provisions of the proposed rule in simplified form.

This post analyzes the provisions of the employer mandate NPRM. It will be supplemented shortly by a brief analysis of a guidance released by the Center on Medicare and Medicaid Services on December 28, instructing the states on how to convert their current Medicaid and CHIP net income eligibility thresholds into the modified adjusted gross income (MAGI) standards that will be used for determining eligibility for Medicaid, CHIP, and premium tax credits beginning in 2014.

The IRS NPRM addresses a modest number of seemingly simple but surprisingly complex questions. When does an employer have fifty employees, and thus become a “large employer” subject to the ACA employer mandate? When is an employee a “full time” employee, for whom a large employer must either provide “affordable” and “adequate” coverage or pay a penalty if the employee receives premium tax credits or cost-sharing reduction payments through the exchange? Who are the “dependents” of an employee for whom an employer must also provide coverage? How will the penalties be assessed? How will the now surprisingly short transition to 2014 be handled?

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The Medicare Part D Drug Rebate Proposal: Rebutting An Unpersuasive Critique

December 28th, 2012

A proposal to require manufacturers to pay a minimum rebate on drugs covered under Medicare Part D for those beneficiaries who receive the program’s Low-Income Subsidy (LIS) has received considerable attention during the current debate over the federal budget. Through mandating discounts in the form of rebates, this proposal would ensure lower drug prices than currently negotiated by private Part D drug plans.

A study by the HHS Inspector General in August 2011 found that rebates negotiated by private plans average about one-third the size of those received in the Medicaid program, where most LIS beneficiaries received drug coverage prior to the implementation of Part D. The proposal is scored by the Congressional Budget Office as achieving savings of $137 billion over 10 years (2013-2022) or about $15 billion in the first full year of implementation.

The rebate approach has been part of Medicaid drug pricing for over 20 years and includes three components. The rebate is set as the greater of (1) a minimum rebate, currently set at 23.1 percent of the average manufacturer price (AMP) for most brand-name drugs and (2) the difference between the AMP and the “best price,” defined as the lowest manufacturer price paid for a prescription drug by any private purchaser. In addition, if a brand drug’s AMP rises faster than inflation, the minimum rebate is increased based on the change in AMP compared to the consumer price index.

It has come to our attention that a number of interested parties have signed a letter, sponsored by the Council on Affordable Health Coverage, expressing concerns about this budget proposal. The analysis upon which the concerns are based is that by Douglas Holtz-Eakin and colleagues. They offer two arguments against this policy, which they claim would increase Part D premiums by 20 to 40 percent and shift costs to employers, Medicaid, and non-LIS Medicare beneficiaries. They are:

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Public Opinion About Costs And Transparency: Learning From Massachusetts

December 28th, 2012

Americans tend to blame rising health care costs on various “bad actors” — insurance companies, drugmakers, and others who overcharge their customers. But two polls conducted earlier this year suggest that, if views about health care costs in Massachusetts predict trends in national public opinion, policymakers may find the public increasingly receptive to using price transparency to control health care costs.

Price transparency is increasingly being discussed as an important mechanism to reduce health care costs. The recent Massachusetts cost containment bill had a number of provisions related to transparency, and there have recently been calls for national cost containment measures which would also address price transparency issues.

Massachusetts has long been an outlier in the area of health policy, as the state most notably enacted comprehensive health reform in 2006, and recently passed an ambitious package of cost containment measures. The residents of Massachusetts have had a unique experience with health reform, which has included an expanded role of government in the health care sector as well as a greater level of public discourse about cost containment.

Although Massachusetts differs from the rest of the nation in many ways, these experiences may have shaped public opinion about health costs. (See Oakman TS, Blendon R, & Buhr T, “The Massachusetts health reform law: A case study”, in Blendon R, Brodie M, Benson JM, Altman DE, eds., American Public Opinion and Health Care, Washington DC: CQ Press, 2011, p.128.) Massachusetts residents may well be more knowledgeable about health costs as compared with the rest of the country. To the extent to which Massachusetts is a national leader in the area of health policy, public opinion and party positions in the state may anticipate those of the nation as a whole.

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Advancements In Stakeholder Engagement: Promising Tools And Practices

December 27th, 2012

Federal agencies such as the Agency for Healthcare Research and Quality (AHRQ) work with patients, consumers, caregivers, clinician, researchers, and policymakers to ensure that research is relevant and responsive to stakeholder needs. Involving stakeholders in the process helps to focus the research on meaningful outcomes and increase the likelihood that people will accept and act on the results. AHRQ’s Community Forum** team recently conducted an environmental scan to identify strategies to enhance stakeholder involvement in the Agency’s Effective Health Care Program and other health care research activities.

Our review included peer-reviewed articles (23), grey literature (15), and Web sites (43). (Grey literature is material produced on all levels of government, academics, business, and industry in print and electronic formats, but which is not controlled by commercial publishers, i.e. where publishing is not the primary activity of the producing body.) We also conducted 11 key informant interviews with individuals experienced in stakeholder engagement within and outside of healthcare.

In the review we found a range of methods and recommended practices for stakeholder involvement. We identify five stakeholder engagement methods that have been used relatively little in health care research and that appear to hold promise:

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Why We Are Surveying Older People about Their Experiences with the Health Care System

December 27th, 2012

The author is program director of the John A. Hartford Foundation, a national funder based in New York City. He is editor and contributor for its blog, Health AGEnda. For more than twenty years, the John A. Hartford Foundation has worked to improve the health of older Americans. And over that time, institutionally, we have […]

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Narrative Matters: A Physician Fights To Prevent Medical Errors From Killing His Mother

December 26th, 2012

“Back when I was training to become an emergency physician, I’d worry about the day I’d be involved in a medical error,” Jonathan Welch writes in the December Health Affairs Narrative Mattes essay.

It seemed inevitable. With land mines everywhere—the possibilities of missed diagnoses, delayed treatments, miscommunication—it felt like almost anything could lead to catastrophe. I imagined attending the in-house case review afterward, chastened as my hospital colleagues dissected my decisions. Yet I also thought—and hoped—that something positive would come from the process, that lessons from an error would sharpen my clinical skills and improve care in the hospital.

But when I was entangled in my first medical error, I played an unexpected role: I was a thirty-three-year-old son trying to save my mom’s life.

Welch describes what happened after his mother received poor hospital care for an infection. He also discusses his efforts to ensure that something positive comes of his mother’s experience, and he explains what hospitals can do to prevent cases like his mother’s from happening again.

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Responding To Newtown

December 21st, 2012

The horrific massacre of 27 children and adults in Newtown, Connecticut ranks second only to Virginia Tech among U.S. mass shootings. These tragedies are part of a lengthening list of mass killings in such varied places as a shopping mall, a movie theater, a Sikh Temple, a high school, a congressional constituent meeting, and a military base. But this one was different. Not only were the death toll particularly high and the killings particularly savage; the killer’s victims were first-grade students, teachers and school staff.

Millions are deeply touched by this tragedy, but few of us can fathom the shock and grief felt by the survivors, parents, family members and friends of those who died. Our first concern must be to comfort them and support what will likely be a long and difficult recovery. But few people are prepared to stop with that. This event, unlike its predecessors, has sparked a movement to challenge the inevitability of mass shootings, not to mention the thousands of individual gun homicides that occur each year in the United States.

In response, President Obama has signaled his intention to submit legislation to the Congress by end of January. To prepare for this action, he is convening an Administrative task force, led by Vice President Biden, to craft a package of proposals. What this panel recommends, and how the public reacts over the next few weeks, could be decisive in determining what will come from this terrible tragedy.

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FTC v. Watson Pharmaceuticals: Another Piece Of The Puzzling Marketplace For Health Care Innovation

December 21st, 2012

It is too soon to tell whether deciding the fate of national health reform last year in National Federation of Independent Business v. Sebelius has generally emboldened the U.S. Supreme Court to resolve legal uncertainties affecting the health care system. Nonetheless, 2012-2013 will be a busy year on this front for the Justices, who have already heard or agreed to hear seven relevant cases, including three involving the pharmaceutical industry. The first six cases are FTC v. Phoebe Putney Health System, Inc. (hospitals and the “state action” exemption from antitrust liability); Sebelius v. Auburn Regional Medical Center (Medicare reimbursement for hospitals); Association for Molecular Pathology v. Myriad Genetics, Inc. (patenting of human genes), on which we wrote earlier at Health Affairs Blog; Mutual Pharmaceutical Co. v. Bartlett (state tort liability for drug injury), Sebelius v. Cloer (the National Vaccine Injury Compensation Program), and U.S. Airways, Inc. v. McCutchen (ERISA and insurance companies’ rights to recover tort settlements).

On December 7, the Supreme Court announced its decision to review the seventh and latest addition to the list, FTC v. Watson Pharmaceuticals. The Court will look to resolve a disagreement between federal appeals courts over the legality of so-called “pay for delay” or “reverse payment” settlements, in which a settlement payment flows from a patent holder to an accused infringer rather than, as might normally be expected, the other way around. Specifically, the Supreme Court will receive briefs and hear arguments regarding “[w]hether reverse-payment agreements are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud (as the court below held), or instead are presumptively anticompetitive and unlawful (as the Third Circuit has held).”

In answering this question, the Court will influence a much larger debate over innovation in health care markets. Watson Pharmaceuticals’ piece of that puzzle will lie at the intersection of patent law, antitrust law, food and drug law, and civil procedure. We hope that the Court’s review and judgment will improve our collective capacity to apply these legal tools, but we also think it very unlikely that the Court will rule definitively on any of them.

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Money & Medicine: Lessons for Fixing the Fiscal Cliff?

December 20th, 2012

The author previously led national quality and patient safety initiatives at the Robert Wood Johnson Foundation, including its twelve-year program to bring palliative care into the nation’s hospitals. She is the principal author of The Treatment Trap, The Battle Over Health Care: What Obama’s Reform Means for America’s Future, and the forthcoming book, Medicare Meltdown […]

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A Holiday Health Wonk Review

December 20th, 2012

If you are looking for a late Chanukah or early Christmas present for yourself, check out Julie Ferguson’s holiday Health Wonk Review at Workers Comp Insider. Julie provides a nice selection of health policy treats in her Wonk Review.

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Millions Of Young Americans Have Gained Health Insurance Since The ACA’s Enactment

December 20th, 2012

A new Health Affairs Web First study finds that the provision of the Affordable Care Act (ACA) permitting young adults to remain on their parents’ health insurance plans up to the age of 26 has led to significant increases in coverage for people ages 19–25. Although historically, Americans in their early 20s had the lowest rate of insurance coverage of any age group (68.1 percent in the five years before the ACA), the study reports that by the third quarter of 2011, a year after this provision was enacted, an additional 7.6 percent gained coverage.

According to the study, released yesterday, the increases in coverage were apparent across all racial and ethnic groups and for both working and nonworking adults. However, men, unmarried adults, nonstudents, and those with worse health statuses were most likely to have gained coverage. This increase in coverage made it easier for young adults to afford needed medical care, with a significant reduction in the number of 19–25 year olds who delayed or did not get care because of cost.

This study, which will also appear in the January issue of Health Affairs, is believed to be the first to demonstrate that the provision has resulted in increased access to care among young adults. Study authors include Benjamin Sommers, Thomas Buchmueller, Sandra Decker, Colleen Carey, and Richard Kronick. Sommers and Kronick are in the Office of the Assistant Secretary for Planning and Evaluation at the US Department of Health and Human Services; Buchmueller teaches at the University of Michigan’s school of business; Decker is affiliated with the National Center for Health Statistics; and Carey is a doctoral candidate in economics at the Johns Hopkins University. You can read others discussions of the study here and here.

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The Administration’s Decision On Partial Medicaid Implementation: True To The Law

December 19th, 2012

Ever since the United States Supreme Court decided NFIB v Sebelius in June 2012, all eyes have focused on the question of how the Obama Administration would interpret the Court’s blockbuster ruling on the constitutionality of the Affordable Care Act’s Medicaid expansion. On December 10, 2012, the Administration answered the question as part of a lengthy series of “Frequently Asked Questions (FAQs)” published by the Centers for Medicare and Medicaid Services (CMS). Buried near the end was the following:

26. Can a state expand to less than 133% of FPL and still receive 100% federal matching funds?

A. No.

Of course, the Administration’s answer is hardly so abrupt, although it is quite brief, taking only two paragraphs. But it is thorough, well reasoned, and consistent both with the text and structure of the Affordable Care Act (ACA) and with HHS’ other interpretations of the ACA and the underlying Medicaid statute.

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On GrantWatch Blog, Paul Gionfriddo Addresses The Tragic Events At Sandy Hook Elementary

December 18th, 2012

“Because early identification is a key to every prevention activity, every child in America should be screened for mental illness as a part of well-child examinations,” former Connecticut state legislator Paul Gionfriddo writes in “What Funders Can Do in the Aftermath of the Tragedy in Sandy Hook, Connecticut.” Gionfriddo’s post was published yesterday on GrantWatch Blog, the sister site of Health Affairs Blog.

Gionfriddo also stresses that most violence is committed by those who are not mentally ill, and is often directed at those who are. “Now more than ever, we need anti-stigma campaigns to disassociate mental illness from violence in the minds of so many people,” he states.

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What Funders Can Do in the Aftermath of the Tragedy in Sandy Hook, Connecticut

December 17th, 2012

The author is a former Connecticut state legislator and the former president of a foundation in South Florida. In the aftermath of the unspeakable tragedy at Sandy Hook Elementary School, what we all seek most are the answers to two questions—why did this happen, and what could have been done to prevent it? As a […]

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Why Capacity Management Is Critical To Hospitals’ ACA-Era Success

December 17th, 2012

If you ask any hospital executive to talk about their top five priorities, he or she will likely reply that reducing expenses and increasing efficiency is one of them. Interestingly, though, a large percentage of these executives consider effective capacity management to be a lesser priority, when in fact it is one of the bigger levers that can be pulled to get cost out, while also having positive impact on physician relations, the patient experience, and quality of care. And with an estimated 32 million new patients entering the system under the Affordable Care Act, the organizations that get their operations in order now will be positioned not only to handle any undesirable consequences, but also to capitalize on strategic growth, versus being a victim of what comes in the door.

Recent survey data shows 54 percent of hospital executives report that existing patient flow feels congested and that they expect their organizations to grow over the next five years. Yet, nearly the same percentage (48 percent) say they are comfortable with their current number and mix of beds. One problem is that many organizations aren’t in the habit of understanding the root causes of bottlenecks that occur in daily operations: surgical schedules blocked but not utilized; delays in appointment times that equate to loss in market share; and clinicians swamped one day and standing around the next. Understanding these questions are a logical first step in building a foundation to both accommodate and ultimately seek out the right kind of future growth.

About 70 percent of U.S. hospitals don’t make the best use of existing resources, including physical space, infrastructure, staff, and equipment, according to a GE Healthcare Performance Solutions analysis using the Institute for Healthcare Improvement’s Flow Diagnostic tool. This essentially means that hospitals “feel full” when they aren’t — symptoms of congestion that potentially lead to costly mistakes like building new facilities or opening expanded treatment space that may not be necessary. Most experts estimate individual hospitals are missing out on between $2 million and $20 million in cost opportunity, and a significant percentage of this can be achieved through efficient capacity management.

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Health Policy Brief: Reducing Waste In Health Care

December 14th, 2012

A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation examines waste in US health care. Estimates are that more than a third of annual US health spending may be wasteful. A September 2012 Institute of Medicine report estimated that $765 billion a year was wasted through provision of unnecessary services, inefficiently delivered services, excessive prices and administrative costs, and missed prevention opportunities and fraud and abuse.

This policy brief discusses these and other types of waste in health care, ideas for eliminating waste, and the considerable hurdles that must be overcome to do so. It is the companion to a July 2012 Health Policy Brief, “Eliminating Fraud and Abuse.”

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Reforming How We Pay For Health Care: The Role Of Bundled Payments

December 13th, 2012

Structural reforms to the Medicare and Medicaid programs will be on the table as the debate over entitlement reform intensifies. There are three areas of opportunity for changing our entitlement programs: adding prevention initiatives that truly slow or reduce the growth in chronic disease prevalence; introducing care coordination into the original Medicare program; and reforming how we pay health care providers.

On November 30th, the Centers for Medicare and Medicaid Services (CMS) provided additional information regarding the implementation of the Bundled Payment for Care Improvement (BPCI) initiative. The CMS released a preliminary list of 48 “episodes of care” where providers would be paid a targeted rate lower than actual fee for service payments. The extent of the episodes is notable since they would cover approximately 70 percent of all Medicare expenditures if applied to all providers and to all 48 episodes. Under the initiative, participating providers could identify which of the 48 conditions they were interested in testing.

These reforms could replace the clearly flawed sustainable growth rate formula and provide strong financial incentives to integrate inpatient and post-acute health care services. Over 75 percent of spending in the Medicare program is associated with patients under treatment for 5 or more medical conditions and virtually all the growth in Medicare spending since 1987 has come from patients with multiple chronic health care conditions. Despite these fiscal facts, original Medicare does not provide coordinated care for chronically ill patients. Such care requires “team-based care” that includes transitional care, comprehensive medication management, health coaching, and a care coordinator among other elements.

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ACA, HIV/AIDS, Oral Health, Patient Activation, & More: Foundation Blogs Round-Up

December 12th, 2012

It has been a long time since I have done a round-up of posts on other philanthropy blogs that have caught my eye, so today is the day! Other topics covered below include social determinants of health (specifically, housing), “tasksharing” in global health, and charities’ use of data. I love having the opportunity to peruse the […]

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Patients with After-Hours Access To Their Providers Show Lower Emergency Room Use

December 12th, 2012

The first study to use a nationally representative sample to describe after-hours care in the US, released today as a Web First by Health Affairs, demonstrates that emergency room usage is significantly lower when patients have access to after-hours services with their primary care provider.

According to the study by Ann O’Malley of the Center for Studying Health System Change, 30.4 percent of patients with after-hours access to their primary care providers reported emergency room use, compared to 37.7 percent of those lacking after-hours access. Another key finding: patients with access to after-hours care reported a significantly lower rate of unmet medical need: 6.1 percent versus 13.7 percent of those lacking after-hours access.

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