Health Affairs

On April 3, 2013, the Department of Health and Human Services released proposed regulations establishing standards to govern navigators and non-navigator assisters in the federally facilitated exchange as well as clarifying standards on the role of navigators and on who can serve as a navigator in all exchanges.

On Monday, March 25, the Supreme Court will hear arguments concerning the legality under antitrust laws of “pay for delay” or “reverse payment” settlements, in which a brand-name drug manufacturer pays a patent challenger to keep the generic competitor out of the market until an agreed-upon date. A Health Affairs Blog post written last year, when the Supreme Court decided to take the case, FTC v. Watson Pharmaceuticals, provides a great overview of the issues that will be before the Justices on Monday.

In the post, Bill Sage of the University of Texas and John Golden of Harvard, examine the legal issues surrounding these controversial settlements. They also point out that, in deciding the case, “the Court will influence a much larger debate over innovation in health care markets.

Among its myriad elements, the Affordable Care Act contains a breakthrough provision that, if implemented, could dramatically alter the way that health insurance coverage works for persons with disabilities. [PPACA § 1302(b)(4)(B)] This provision applicable to health insurance products sold in the individual and small group markets and therefore subject to the essential health benefits (EHB) coverage standard, requires the Secretary of Health and Human Services to bar the use of insurance coverage rules that discriminate on the basis of disability. See

However, final EHB rules issued on February 20^th, 2013 effectively leave this ban unimplemented. A draft CMS document made available to the public on February 21 by Inside Health Policy suggests that the agency will monitor qualified health plans (QHPs) for potential discrimination. But the monitoring process suggested in the draft excludes any mechanism for detecting one of the most potent forms of plan discrimination, the use of benefit designs and coverage determination procedures that cause the denial of coverage for children and adults whose disabilities prevent them from “recovering” from their disability. Whether the ACA protections are left unimplemented remains to be seen.

Art Kellermann and David Auerbach’s look at the effects of health care costs on middle class incomes leads the Health Affairs Blog most-read list for January. Next on the list are three posts by Tim Jost looking at the implementation of the Affordable Care Act and the continuing legal battles over the law. Also in the top ten are Katherine Hempstead’s take on what Massachusetts public opinion can teach us about restraining health care spending; Richard Frank and Jack Hoadley’s argument in favor of requiring manufacturers to pay a minimum rebate on drugs covered under Medicare Part D for those beneficiaries who receive the program’s Low-Income Subsidy; and Coretta Mallery and Marilyn Moon’s look at methods for increasing stakeholder involvement in research.

The full list is below.

One of the most contentious, and certainly most litigated, questions that has arisen in the course of the implementation of the Affordable Care Act is the validity of the regulatory requirement that employers cover contraceptive services for their employees as a preventive women’s health service. On February 1, 2013, the Departments of Health and Human Services, Labor, and Treasury issued a joint notice of proposed rulemaking and fact sheet describing how they intend to implement this provision as it affects religious organizations. This post discusses the proposed rule and its context.

As discussed in earlier posts, the ACA requires that insurers and group health plans cover designated preventive services without cost sharing. The provision specifies that the Health Resources and Services Administration must determine the women’s preventive services that must be covered. Based on recommendations from the Institute of Medicine, HRSA designated all FDA-approved contraceptives for required coverage. This requirement was effective for the first plan year following August 1, 2012.

Some religious groups, however, most notably the Catholic Church, believe that the use of contraceptives is sinful. Other religious groups do not object to all contraceptives, but do object to specific contraceptives that they believe to be abortifacients. When HHS issued initial rules adopting the HRSA determination, therefore, it excluded religious employers, defined as churches, religious orders, and similar groups, from the contraceptive coverage requirement.

On January 7, a federal appeals court rejected six Georgia primary care physicians’ (PCPs) challenge to the Centers for Medicare and Medicaid Services’ (CMS) 20-year, sole-source relationship with the secretive, specialist-dominated federal advisory committee that determines the relative value of medical services. The American Medical Association’s (AMA) Relative Value Scale Update Committee (RUC) is, in the court’s view, not subject to the public interest rules that govern other federal advisory groups. Like the district court ruling before it, the decision dismissed the plaintiffs’ claims out of hand and on procedural grounds, with almost no discussion of content or merit.

Thus ends the latest attempt to dislodge what is perhaps the most blatantly corrosive mechanism of US health care finance, a star-chamber of powerful interests that, complicit with federal regulators, spins Medicare reimbursement to the industry’s advantage and facilitates payment levels that are followed by much of health care’s commercial sector. Most important, this new legal opinion affirms that the health industry’s grip on US health care policy and practice is all but unshakable and unaccountable, and it appears to have co-opted the reach of law.

There is a health crisis in this country (as well as worldwide) that adversely affects one-fifth of the US population. Consequences of this crisis manifest in a wide variety of serious disease conditions. Physically it can exhibit as cancer and/or as any number of equally severe mental illnesses. Socially the disease is, in a word, criminality. Costs are estimated at over $100 billion per year, or similar to the annual expense of the war in Afghanistan. Investment in its prevention is estimated at a nickel on every $100 in research, compared to $2 for cancer. (See Note 1)

Despite considerable attention drawn to this issue this past year — the Surgeon General termed it an “epidemic” well over a decade ago — the crisis was not discussed during the presidential campaign. It remains largely ignored by the Congress (though just prior to adjourning sine die an innocuous bill to evaluate child welfare systems was passed), was unaddressed by the Affordable Care Act, and has been ignored as well to date by the Center for Medicare and Medicaid Innovation. “The leading journal of health policy thought and research,” Health Affairs, has never published on the topic.

The health crisis is child sexual abuse, which adversely affects the health status of 50 million survivors.

Will pay for performance in health care backfire? That was the question addressed through the lens of behavioral economics by Steffie Woolhandler, Dan Ariely, and David Himmelstein in the most-read Health Affairs Blog post for 2012. Next on the most-read list were two posts, one by Diane Archer and the other by Archer and Theodore Marmor, contrasting Medicare and private insurance. They were followed by Rushika Fernandopulle’s rethink of primary care and Ken Kaufman’s post suggesting that the recent slowing in health care cost growth reflects more than just temporary effects from the economic slowdown.

Many thanks to our readers and authors for making 2012 a good year for Health Affairs Blog. We had 369 posts and over 50 million pageviews, more than a 60 percent increase from 2011. Since we had many good posts that were closely grouped in the readership numbers, we’ve expanded this year’s most-read list to a “top 15″ rather than a “top 10.” The full 2012 list is below.

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.

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.

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.

“Are human genes patentable?” On November 30, 2012, the U.S. Supreme Court agreed to answer this single question in Association for Molecular Pathology v. Myriad Genetics. Of course, the petitioners, including health care providers, professional associations, and patients, worded the question to favor the answer they want: “No, human genes are not patentable.” For Myriad Genetics, the patent owner who would like its patent rights upheld, the question is better phrased as whether one can patent “isolated molecules of deoxyribonucleic acid that were identified and defined by human inventors.”

The practical stakes in the Court’s decision, which should come in the first half of 2013, are enormous. The U.S. Patent and Trademark Office (USPTO) has issued tens of thousands of patents on genetic sequences over the past few decades, and the U.S. Court of Appeals for the Federal Circuit, the appellate court entrusted with hearing virtually all U.S. patent appeals, has never declared such sequences to be non-patentable subject matter. For more than a century, patents have issued on isolated versions of naturally occurring substances other than DNA.

Many believe that gene patents are crucial to the modern biotechnology industry. On the other hand, many researchers and clinicians feel that gene patents, particularly human gene patents, are commonly unnecessary to spur innovation and in fact interfere significantly with scientific and technological progress, whether by slowing or diverting research, impeding the provision of diagnostic tests, or generally increasing costs for clinical and scientific work.

The patents at issue in Myriad make such concerns particularly poignant. These patents relate to BRCA1 and BRCA2, genes associated with a predisposition to breast cancer. The obvious public interest in ready access to cancer diagnosis helps account for the fact that petitioners’ lead lawyers are not the normal high-priced advocates for a private company accused of patent infringement. Instead, those lawyers work for the American Civil Liberties Union Foundation, an organization more commonly associated with battles for civil rights than rights in technological innovations.

The Supreme Court created quite a stir on November 26, 2012, by resurrecting from the dead a challenge to the ACA brought by Liberty University. The Court vacated its earlier denial of Liberty’s petition for certiorari, vacated the 2011 judgment of the Fourth Circuit Federal Court of Appeals dismissing Liberty’s case for lack of jurisdiction, and remanded the case to the Fourth Circuit for further consideration in light of the Supreme Court’s June 28 National Federation of Independent Business decision.

It is important, however, not to read too much into this decision, however, which is likely to lead nowhere.

It is not uncommon for the Supreme Court to grant what are known as GVR (grant, vacate, and remand) orders in lower court cases following a major decision that changes the law. The Supreme Court granted nearly 800 of them between 2004 and 2006 following a major decision on criminal sentencing. The usual purpose of a GVR order is to allow the lower court to reconsider an earlier decision in light of a new Supreme Court opinion (or statute) that has changed or clarified the law on which its earlier decision was based.

Editor’s note: Watch Health Affairs Blog for more analysis of what yesterday’s election means for health policy.

When President Obama signed it into law in 2010, the Affordable Care Act’s 2014 final implementation date seemed a far distant goal. It has not always seemed clear that we would get there. In November 2010, when the tide of Obamacare rejectionists swept the congressional and state house elections, in March 2012 when the Republican–appointed majority of the Supreme Court pummeled the Solicitor General with skeptical questions, and for a number of minutes in June 2012 while the media reported that the Court had held the ACA unconstitutional, the future of the ACA seemed gravely in doubt.

But this morning, with the President reelected and the Democrats strengthening their control of the Senate, it seems possible—indeed likely—that less than a year from now millions of Americans will begin enrolling in qualified health plans expecting that premium tax credits will finally become available on January 1, 2014. Health status underwriting will disappear and pre-existing condition exclusions will be banned. In most states, Medicaid will become a program that covers all Americans with household incomes below 138 percent of poverty, not just favored categories of the poor. Medicare benefits will continue to improve as the doughnut hole is closed, while Medicare costs will be kept in check.

The election is at least in part a referendum on the ACA. Exit polls show that a slim majority of voters support the ACA, and a distinct minority favor full repeal. President Obama did not run away from the ACA in his reelection campaign, and the Republicans continued to attack it, with Governor Romney promising to work toward repeal beginning with his first day in office. The President’s reelection must be seen as a green light to move forward toward 2014.

A federal judge in Vermont may soon act to approve a proposed settlement in a national class action suit, Jimmo v. Sebelius. In the case, the plaintiffs argue that Medicare contractors and administrative officials have been denying nursing and therapy services for patients who were not expected to show long-term improvements in their medical conditions. Patients with chronic conditions like multiple sclerosis, Parkinson’s disease, paralysis, cerebral palsy, skilled nursing visits for insulin injections for diabetics, and Alzheimer’s were denied Medicare and Medicare Advantage benefits under this so-called “Improvement Standard,” the lawsuit alleged.

The “Improvement Standard” refers to a standard that Plaintiffs have alleged, but that Defendant denies, exists under which Medicare coverage of skilled services is denied on the basis that a Medicare beneficiary is not improving, without regard to an individualized assessment of the beneficiary’s medical condition and the reasonableness and necessity of the treatment, care or services in question.

The agreed-upon changes would alter the Medicare manual to say that eligibility for skilled-nursing, home healthcare and outpatient physical therapy services coverage “does not turn on the presence or absence of beneficiary’s potential for improvement from the therapy, but rather on the beneficiary’s need for skilled care,” the settlement says. The proposed settlement would result in changes from the Centers for Medicare and Medicaid Services to its subregulatory guidance contained in the Medicare Benefits Policy Manual to clarify that therapy services in home health, skilled nursing facilities, and outpatient physical therapy are covered so long as the patient is eligible for the services regardless of their clinical prospects for improvement.

The rising cost of America’s health care system – already 18 percent of GDP – is driving the country toward the fiscal brink, and nowhere is the need for a new paradigm to control costs more evident than in the area of medical liability. Doctors’ justified distrust of medical justice (which has an error rate of 25 percent) leads them to prescribe and perform treatments for no other reason than to prevent lawsuits. This “defensive medicine” is estimated to cost anywhere from $45 billion to more than $200 billion a year. Fortunately, a growing bipartisan consensus is pointing the way to a solution.

There is widespread public support for the creation of special health courts. And, despite the highly polarized nature of American politics today, there is consistent support across political parties. A nationwide poll, conducted in April by the Clarus Research Group for Common Good, the nonpartisan organization I chair, revealed that 66 percent of voters support the idea of creating health courts to decide medical claims. Only 25 percent said that those claims should be decided as they are now, and there was virtually no difference between Democrats and Republicans on the issue: 68 percent of Republicans, 67 percent of Democrats, and 61 percent of independents support health courts.

On Thursday, October 11, Health Affairs will hold a briefing to unveil its October 2012 issue, “Current Challenges In Comparative Effectiveness Research.” The volume examines how findings from comparative effectiveness research will be communicated, particularly if they pertain to prescription drugs and if the findings could be useful for promotional purposes yet fall short of the standard of “substantial evidence” required by the Food and Drug Administration (FDA) under federal law.

The cluster of articles includes a hypothetical case study of comparative effectiveness research involving a fictional migraine drug and a symposium of analyses and responses follows from various stakeholders. The issue received funding support from the National Pharmaceutical Council.

Please join us for a briefing at the Washington Marriott at Metro Center on Thursday, October 11, 8:30 a.m. – 12:30 p.m., as we unveil the issue. Register by clicking here or by going to https://events.r20.constantcontact.com/register/eventReg?llr=tcmi8ydab&oeidk=a07e6fg62xrf0a8dd14

On November 6, 2012, Americans will go to the polls to elect a president.  One of the many issues that will be on their minds is the future of the Affordable Care Act.  Governor Mitt Romney’s website states: On his first day in office, Mitt Romney will issue an executive order that paves the way... Read the rest of this entry »

At the heart of the case for medical coverage for all isn’t the public’s health; it’s private tragedy.  Serious illness plunges people into a realm of Dickensian choice.  Some forgo life-prolonging treatment to preserve life savings for loved ones.  Others lose their homes or go bankrupt.  Insurance shields families against these scenarios.  From a population-wide... Read the rest of this entry »

Although National Federation of Independent Business v. Sebelius finally decided the most contested constitutional questions raised by the Affordable Care Act—the constitutionality of the individual responsibility requirement and of the Medicaid expansions—it by no means put an end to ACA litigation.  In the wake of the June 28, 2012 decision, the courts continue to decide... Read the rest of this entry »