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Teaching Hospital Update - November 9-13, 2009


Email Alert

By Leah Voigt*

November 13, 2009

Backers, Opponents React Predictably to House Healthcare Bill

The House passage of the landmark healthcare reform bill Saturday night was met with praise from doctors' groups and President Barack Obama, who urged the Senate to quickly move the legislation closer to a White House signing ceremony. "For years we've been told that this couldn't be done," President Obama said in a Sunday speech delivered from the Rose Garden. "After all, neither chamber of Congress has been able to pass a comprehensive health insurance reform bill for generations. But last night the House proved differently."

The president called the vote "historic" and urged the Senate to "take up the baton and bring this effort to the finish line." The American Medical Association (AMA) also hailed the bill's passage. The group's endorsement was regarded as an important one, given the AMA's opposition to previous attempts to overhaul the healthcare system.

"This bill will significantly expand health insurance coverage to Americans; empower patient and physician decision-making; institute meaningful insurance market reforms; make substantial investments in quality; institute prevention and wellness initiatives; provide incentives to states that adopt certificate of merit and/or early offer liability reforms, and reduce administrative burdens," said James Rohack, MD, the AMA president.

The American College of Physicians (ACP) said that the bill is "consistent with ACP's priorities," including a provision for a 5% increase in Medicare payments for primary care physicians. The president of the American Academy of Family Physicians (AAFP) agreed. "Family physicians appreciate the bill's provisions that would help re-establish primary medical care as the foundation of our healthcare system," said AAFP President Lori J. Heim, MD. "Investment in primary care will yield not only better health for everyone, but also more efficiencies, less waste, and less duplication."

Not all interest groups were pleased with the vote, however. The American Health Insurance Plans (AHIP) immediately sent out a press release expressing major disappointment over the bill's passage. The insurance lobby originally signaled a willingness to support reform efforts but backed away and has since very publicly spoken out against reform efforts in the House and Senate. "The current House legislation fails to bend the healthcare cost curve and breaks the promise that those who like their current coverage can keep it," said Karen Ignagni, AHIP president and CEO. "A new government-run plan will cause millions to lose their existing coverage and draconian Medicare Advantage cuts will force millions of seniors out of the program entirely."

The bill would make $64 billion in cuts to Medicare Advantage programs, which are Medicare insurance plans run by private companies. They are reimbursed at about 14% more than the cost of covering a comparable patient in a traditional Medicare plan.

Another vocal opposition group, the Business Roundtable, expressed disappointment with the passage of the bill. "We are disappointed by the passage of a House bill that we cannot support," said John Castellani, president of the Business Roundtable. "The House legislation contains many provisions that will threaten the coverage that 177 million Americans currently have through the employer-based system." The group, which is comprised of CEOs of large U.S. companies, opposes the House bill in part because it feels the public plan would erode the current employer-based insurance system.

Emily P. Walker, Backers, Opponents React Predictably to House Healthcare Bill, MedPage Today, Nov. 9, 2009.

Healthcare Sector Leaves Small Environmental Footprint

Healthcare, a giant in the U.S. economy, may be a gentle giant when it comes to greenhouse gases. According to the first estimate of the sector's carbon footprint, the healthcare industry emits less than its share of the gases that promote global warming, compared with its size in the economy.

Hospitals are the biggest offenders, a finding that may motivate more of them to audit their energy usage and plant rooftop gardens--as one big Chicago hospital has. Hospitals, nursing homes, drug companies, and the rest of the sector contributed 8% of U.S. emissions, according to an analysis in Wednesday's Journal of the American Medical Association. Healthcare makes up 16% of the U.S. gross domestic product.

The University of Chicago analysis, based on federal data, takes into account emissions from the manufacture of goods used by the industry and the power needed to run hospitals and other health facilities. The primary cause of global warming is the buildup of greenhouse gases from the burning of fossil fuels, such as oil and coal. The analysis used 2007 healthcare spending data and a model that breaks down the supplies used by the sector. The 1997 model was the most current available to the researchers, but was a weakness they acknowledged. Other experts said that the supply chain probably hasn't changed much since then.

"It was important to generate at least a first estimate of emissions," said lead author Jeanette Chung of University of Chicago's Department of Medicine. Hospitals are responsible for more than a third of healthcare's greenhouse gases, the analysis found.

U.S. hospitals are trying to reduce emissions. Chicago's Rush University Medical Center planted rooftop gardens that help insulate the building and reflect heat. The hospital wants to reduce its emissions by 8% by 2012 by scrapping three old mechanical systems and moving to one central energy plant for its twenty-seven-building campus.

Carla K. Johnson, U.S. Healthcare Sector is a Fairly Green Giant, ASSOC. PRESS, Nov. 10, 2009.

St. Jude Medical Quits AdvaMed Over Tax Stance

Cardiac-device maker St. Jude Medical, based in St. Paul, MN, has canceled its membership in the Advanced Medical Technology Association, or AdvaMed, in dispute over the lobby group's position on a devicemaker tax included in both the House and Senate healthcare reform bills.

According to a resignation letter sent to AdvaMed by St. Jude Medical Chairman, President, and CEO Daniel Starks, the devicemaker has taken issue with AdvaMed's decision to lobby for a tiered tax that would make manufacturers of high-tech, high-profit-margin devices such as the ones made by St. Jude responsible for a larger percentage of the tax than low-tech devicemakers.

"The structure of the medical-device fee under discussion by Congress is an area where there is strong dissent and conflicting opinions within the AdvaMed membership," Starks wrote in a letter announcing his resignation from the AdvaMed board and the company's membership withdrawal. "We feel it is inappropriate for AdvaMed to advocate for a specific policy that economically advantages a portion of its membership at the expense of other members."

In a statement, AdvaMed officials called St. Jude's membership resignation regrettable, and said that its board overwhelmingly approved the tiered-tax recommendation. "St. Jude disagreed with one element of those principles and resigned its membership."

Shawn Rhea, St. Jude Medical Quits AdvaMed Over Tax Stance, Modern Healthcare's Daily Dose (Nov. 10, 2009) (note: registration is required to view this content).

Study Finds Hospitals Keep Patients in Dark on Adverse Events

According to a study reported in the November 9, 2009, issue of the Archives of Internal Medicine, when hospital patients suffer adverse effects from treatments, medical personnel seldom provide them explanations, even though the disclosure may improve patients' ratings of care, researchers said.

Researchers at Massachusetts General Hospital in Boston found that more than 60% of the time there was no explanation for adverse events, according to patients surveyed in 2003 after hospital discharge. Yet patients who were told about adverse events were twice as likely as others to rate the quality of care highly, the researchers reported.

Not all disclosures were associated with favorable patient attitudes, though. Patients told about preventable events, those that caused discomfort, and those that still affected patients at the time of the survey were less likely to rate their care highly.

The researchers used data from a survey conducted among a random sample of 2,582 patients discharged from Massachusetts hospitals in 2003. The survey asked patients to describe "negative effects" or "complications" occurring during their stays. Those reporting such events were asked if anyone from the hospital explained why they occurred.

L. Lopez et al., Disclosure of Hospital Adverse Events and its Association with Patients' Ratings of the Quality of Care, 169 Arch. Intern. Med. 1888 (2009).

John Geyer, Hospitals Keep Patients in Dark on Adverse Events, MedPage Today, Nov. 9, 2009.

IRS Nixes Insurer Data Exchange Application, Cites Concern Over Amount of Private Benefit

A group of insurers and large employers who sought exemption for a health information data exchange they claimed was designed to improve healthcare quality and efficiency are not entitled to an exemption under Internal Revenue Code Section 501(c)(3), the Internal Revenue Service (IRS) said in a recently released adverse determination letter
(No. 200942068).

The organization formed to utilize standardized quality and efficiency performance measures to inform the members and the public about provider performance is not entitled to an exemption because its benefits flow primarily to the member employers and health plans and do not benefit the public at large, the letter said. While the organization is organized to improve healthcare quality and efficiency, and while promotion of health is a recognized exempt purpose that can support an application to be recognized as a charitable organization, to be entitled to treatment as an exempt organization under Section 501(c)(3), the organization also must provide substantial benefits to the public or community and may not confer more than an insubstantial amount of private benefit, the letter said.

IRS also concluded that: (1) the organization did not qualify as an entity that furthers either education or scientific research; (2) its activities resembled largely commercial endeavors; and (3) more than an insubstantial amount of its activities appeared to further nonexempt purposes.

The ruling comes at a time when the IRS has, after many years of consideration and based on congressional urging, signaled a willingness to approve exemptions for health information exchanges (HIEs) and regional health information organizations (RHIOs) that fulfill charitable missions and confer no more than an incidental amount of private benefit.

In this case, IRS said that the organization's benefits flow primarily to the organizations members and that the activities "are not inherently charitable but are more like activities carried on by for-profit businesses" that provides "healthcare data analysis and data distribution service" to the organization's members. "Your activities consist of gathering healthcare data from your funding Members, analyzing this data, and making the results of your analysis, healthcare provider performance data, available to your Members," IRS said. "In essence, you are providing information to your Employer Members and to your Health Plan Members, so that the Employer Members can reduce their costs of providing employee health benefits to their employees, and your Health Plan Members can improve their health insurance products for their clients with the expectation of helping them to reduce their costs."

"To the extent the community may realize benefits from these data, in the form of reduced healthcare costs, this would be similar to the benefits a community derives when healthcare providers use more effective and efficient medical supplies, equipment, and current health information to diagnose illnesses and diseases and treat their patients. The provision of such tools to healthcare providers generally does not serve exclusively tax-exempt purposes," it said.

IRS Nixes Insurer Data Exchange Application, Cites Concern Over Amount of Private Benefit, BNA'S HEALTH L. REP. (Nov. 12, 2009) (note: registration is required to view this content).

FDA Asks Caregivers to Report Vaccine Problems

The Food and Drug Administration (FDA) is urging healthcare professionals to report to the agency's Vaccine Event Reporting System any adverse effects that they believe might be linked to the H1N1 influenza vaccine.

"We are not cutting any corners," FDA Commissioner Margaret Hamburg wrote in a nearly four-page letter about the manufacturing and distribution process for the vaccine. "Just as for seasonal influenza vaccine, no lot of the 2009 H1N1 vaccine can be used until it has been carefully evaluated and released as sterile and potent by both the manufacturer and the FDA. In addition, the FDA and other agencies are looking for any unexpected, rare, serious adverse events and are quickly investigating concerns," she continued. "We are also collaborating with our global counterparts to share information and experience. Should any safety concerns arise, we will evaluate them thoroughly and bring them to the nation's public attention quickly."

Both the National Institutes of Health (NIH) and vaccine manufacturers conducted clinical trials in the summer, and no serious adverse events emerged from those trials, which have so far included about 3,600 patients at NIH-supported institutions, according to Hamburg, who also said there are about forty-one million doses of the vaccine available, with more available each day.

Jessica Zigmond, FDA Asks Caregivers to Report Vaccine Problems, Modern Healthcare's Daily Dose (Nov. 10, 2009) (note: registration is required to view this content).

*We would like to thank Leah Voigt, 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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