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Teaching Hospital Update - November 2-6, 2009


Email Alert

By Clinton Mikel*

November 6, 2009

Democrats Weigh Impact of Election Results on Healthcare Reform

While some Democrats seem rattled by election results this week, others say the Republicans' victories in two races for governor won't change their approach to healthcare overhaul legislation. Democrats won two House seats Tuesday--one in California that had been traditionally held by a Democrat and the other a New York seat that is traditionally Republican. Democratic moderates also have not let the Republicans victories in Tuesday's elections influence their votes on healthcare reform, since they--particularly those representing conservative states and districts--were already nervous about how their healthcare vote might be received at home.

Some moderate Democrats are wondering whether they can afford to follow President Barack Obama's ambitious legislative agenda on such controversial issues as healthcare and climate change. "There are going to be a lot more tensions between the White House and Congress," predicted Representative Jim Cooper, (D-TN) who is a member of the Blue Dog Coalition of fiscally conservative Democrats. "They've been under the surface so far--and they're going to come out in the open."

Kaiser Daily Health Policy Report, Democrats Weigh Impact of Election Results On Health Reform, Henry J. Kaiser Fam. Fdn. (Nov. 5, 2009).

New Interim Rule from HHS Finalizes Higher Penalties for HIPAA Violations

The U.S. Department of Health and Human Services (HHS) has finalized rules that increase penalties for violations of the Health Insurance Portability and Accountability Act (HIPAA), implementing changes mandated by Congress in the Health Information Technology for Economic and Clinical Health (HITECH) Act.

The interim final rule--published in the October 30, 2009, Federal Register--specifically amends the HIPAA enforcement regulations for civil monetary penalties by significantly increasing potential civil penalties for HIPAA violations and establishing a tiered penalty structure based on categories of violations.

Covered entities could be liable for a broad range of penalties--$100 to $50,000--for HIPAA violations in four categories. The lowest $100-per-violation penalty could be assessed in cases where entities were not aware of or would not have known about a violation even through "the exercise of reasonable diligence," according to the rule. The minimum penalty for each violation where entities did not reasonably know of a violation is $1,000. In cases where violations are due to willful neglect but are corrected, the minimum penalty for each violation is $10,000.

The category for violations that are due to willful neglect but not corrected by a covered entity has a single, per-violation penalty of $50,000. For all categories of violations, the rule sets an annual
$1.5 million penalty limit for multiple violations of an identical provision.

HHS said in the rule that it would not impose the maximum penalty of $50,000 in all cases where a range of penalties was available. Rather, the agency said that penalties would reflect the nature of a violation, the resulting harm, and other factors such as the covered entities' history of prior compliance and financial condition.

The rule becomes effective November 30, 2009, and applies to violations occurring on or after February 18, 2009, when the HITECH Act became effective. Although an interim final rule, HHS will accept comments on the new regulations until
December 29, 2009.

New Interim Rule From HHS Finalizes Higher Penalties for HIPAA Violations, BNA'S HEALTH L. REP. (Nov. 5, 2009) (note: registration is required to view this content).

Thousands Protest Healthcare Bill at Capitol

"Chanting 'Kill the bill,' thousands rallied at the Capitol on Thursday against the Democrats' health care overhaul plan, labeling it a government takeover of the nation's medical system," the Associated Press reported. "This bill is the greatest threat to freedom that I have seen," House Minority leader John Boehner (R-OH) told the crowd gathered on the lawn near the West Front of the Capitol. The protest attracted many of the so-called Tea Party demonstrators angry with increased spending and an expanded government role under the Obama Administration.

The New York Times found that a "series of spot interviews suggest[ed] that the protesters have come to Washington from all across the country--Texas, Ohio, Oregon and the greater Washington area. It's a generally older crowd, many in their 50s and 60s."

Kaiser Daily Health Policy Report, Thousands Protest Healthcare Bill At Capitol, Henry J. Kaiser Fam. Fdn. (Nov. 5, 2009).

AMA Endorses House Healthcare Reform Package

The nation's largest physicians' lobbying group said that it supports a comprehensive healthcare overhaul package in the House, even while committing to try to change major components of it.

In an endorsement that was less than full-throated, American Medical Association (AMA) President J. James Rohack said that the legislation meets a number of reform principles established earlier this year by its House of Delegates, including freedom of medical choice and coverage expansion, but lags behind in other key areas. "We think that there are some things in this bill that need to be there, and we have supported it to make sure we can move this process forward," Rohack said on a conference call with reporters.

Closely linked with its support for the reform package is a standalone bill that would increase the cost of the healthcare bill by approximately
$250 billion by scrapping the Medicare's sustainable growth-rate formula for physician reimbursement. Rohack declined to say if the AMA's support for one was contingent on the other, but he said that "meaningful health system reform will not happen" if the current pay formula stays in place.

It was the second major endorsement House Democrats saw on Thursday. Earlier, AARP lent the bill its support as well. House members are expected to vote Saturday on the ten-year $1.2 trillion package.

Matthew DoBias, AMA Endorses House Healthcare Reform Package, Modern Healthcare's Daily Dose (Nov. 5, 2009) (note: registration is required to view this content).

Study: Public Opinion on Healthcare Reform Has Echoes of 1994

Americans' opinion of the healthcare reform proposals now before Congress is eerily similar to public sentiment about President Clinton's healthcare reform initiatives in 1994, according to an analysis published online in The New England Journal of Medicine: "Americans believe the health care system needs to be fixed and they like many of the ideas Democrats are proposing, the report found, but they believe the specific proposals taking shape would not benefit them personally, and they fear they could result in more expensive and lower-quality care. The study analyzed more than thirty polls conducted this fall and during the spring of 1994, when the Clinton healthcare reform effort was gasping its last breaths."

Robert Blendon, a health policy professor at Harvard and co-author of the study, "said the reason support for health care overhaul deteriorates when the questions focus on specific legislation is that people rarely consider that fixing problems requires trade-offs." Blendon "suggests that proponents of the health care overhaul should more clearly articulate how their legislation would benefit middle-class Americans."

Kaiser Daily Health Policy Report, Study: Public Opinion on Healthcare Reform Has Echoes Of 1994, Henry J. Kaiser Fam. Fdn. (Nov. 5, 2009).

Cooling Baby May Mitigate Effects of Oxygen Deprivation

Babies who were chilled had significantly fewer grey and white matter abnormalities on magnetic resonance images (MRI), Denis Azzopardi, MD, of Hammersmith Hospital in London, and colleagues reported in the November 6, 2009, issue of The Lancet. More of the chilled infants had normal MRI scans, compared with those who didn't get the hypothermia therapy.

According to the authors, hypoxic-ischemic encephalopathy after perinatal asphyxia accounts for about 20% of occurrences of cerebral palsy in childhood. MRI can be used to detect perinatally acquired cerebral lesions, since certain lesions are predictive of abnormal motor outcomes--but this has not been previously studied, the researchers said.

So they conducted the Total Body Hypothermia for Neonatal Encephalopathy (TOBY) trial of 325 infants with hypoxic-ischemic encephalopathy who, from 2002-2006, were randomly assigned to intensive care with or without cooling. The TOBY trial used whole-body cooling, whereas some previous trials had only cooled the head. Overall, image data were available for a subset of 131 infants: sixty-four in the cooling group and sixty-seven in the non-cooling group.

Among these, therapeutic hypothermia was associated with about a 65% reduction in lesions in the basal ganglia or thalamus, the researchers said. The same result was seen for white matter and abnormal posterior limb of the internal capsule. Fewer cortical abnormalities were also observed in cooled infants, but the results weren't statistically significant.

Infants who had been chilled had almost 60% fewer scans that were predictive of later neuromotor abnormalities and were nearly three times more likely to have normal scans. The researchers noted that in the main TOBY trial of 325 infants, rates of death were similar, while rates for severe disability in survivors were lower in the cooled group--although these were not significantly different.

In an accompanying editorial, Jeff Neil, MD, of Washington University in St. Louis, said the effects of cooling on MRI findings had not yet been assessed, but this study shows that "the ability of MRI to predict subsequent neurological impairment is unaltered by therapeutic hypothermia. This is reassuring news for clinicians."

Neil said the findings "emphasize the important role of MRI in neuroprotection studies" and establish "conventional MRI as a useful biomarker and potential surrogate endpoint for future cooling studies."

Kristina Fiore, Cooling Baby May Mitigate Effects of Oxygen Deprivation, MedPage Today (Nov. 5, 2009).

Healthcare Bills Don't Go Far Enough in Cutting Costs, Experts Say

Democrats in Congress are embracing the spirit of President Obama's call to slow the runaway rise of healthcare costs but are shying away from some of the most aggressive techniques for achieving that; The Washington Post reported that "instead of revolutionizing how care is delivered and paid for, experts say, the legislation being shaped takes a cautious approach to reining in costs."

"The Obama administration has advocated . . . moving away from fee-for-service payments, which reward providers for doing more procedures, to a coordinated system that pays doctors and hospitals for doing better." But many are concerned "that the president's ambitious hopes to constrain costs could result in tepid half-measures on Capitol Hill."

For example, taxing high-priced insurance plans would save less money "and is less likely to change medical consumption" than "eliminating the tax exemption for employer-sponsored coverage" altogether. "Proposals on comparative-effectiveness research and a new Medicare cost-cutting commission have been watered down," and "an array of Medicare pilot projects aimed at paying doctors and hospitals for quality rather than quantity would take years to be implemented nationally--if they ever were."

Kaiser Daily Health Policy Report, Healthcare Bills Don't Go Far Enough in Cutting Costs, Experts Say, Henry J. Kaiser Fam. Fdn. (Nov. 4, 2009).

Investment Funds to Buy IMS Health for $4 Billion

Investment funds TPG Capital and CPP Investment Board are buying healthcare data company IMS Health for $4 billion, IMS announced.

The company, based in Norwalk, CT, said that the deal is valued at
$5.2 billion, including the assumption of debt. IMS expects the deal to close by the end of the first quarter of 2010. The company tracks pharmaceutical prescriptions and sales, and counts some of the largest drug developers as its clients. The data is often used by Wall Street to gauge how well a specific product is selling. IMS also provides auditing services for the healthcare industry along with analysis tools.

The announcement comes after weeks of speculation following media reports in October that the company was on the auction block. On October 20, 2009, the company said it is exploring a variety of strategic alternatives but did not mention the possibility of a sale. A day prior to that, media reports prompted speculation that the company could be sold to a private equity firm, potentially garnering a 30% premium.

IMS said the deal has fully committed financing, and its board of directors unanimously approved the buyout.

Investment Funds to Buy IMS Health for $4 Billion, Modern Healthcare's Daily Dose (Nov. 5, 2009) (note: registration is required to view this content).

*We would like to thank Clinton R. Mikel, Esquire (Hall Render Killian Heath & Lyman PLLC, Troy, MI), for providing this week's update.

AHLA Teaching Hospital Updates are intended to provide quick summaries of cutting-edge issues of interest to teaching hospitals and their counsel. Additional information and more in-depth coverage on these topics may be available from AHLA Health Lawyers Weekly and appropriate AHLA Practice Groups.

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