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Teaching Hospital Update - April 30-May 4, 2012


Email Alert

May 4, 2012

By C. Elizabeth O'Keeffe*

Medicare Long-Term Financing Prognosis: Not Good

Medicare's fiscal caretakers warn that the already-dismal view they have of the entitlement program's long-term financing is optimistic given that it relies in large part on reduced payments and increased efficiency-of-care assumptions for health professionals that might never become a reality.

In their annual report on the state of the program's finances, Medicare's trustees project that outpatient care spending under Part B will increase by an average of 4.9% annually during the next five years, a full percentage point lower than the 5.9% average seen during the past five years. But the estimate assumes that Medicare pay to physicians will be cut by 30.9% in January 2013 under the sustainable growth rate (SGR) formula. If Congress overrides the SGR cut, the trustees say average annual Part B spending growth going forward will jump to 7.6%.

"It is a virtual certainty that lawmakers, cognizant of the disruptive consequences of such a sudden, sharp reduction in payments, will override this reduction just as they have every year since 2003," the trustees state in the 2012 report.

The Part B projections also are influenced by the Budget Control Act of 2011, a sweeping deficit reduction measure that will reduce total Medicare spending by as much as 2% starting in January 2013, a mandate that could squeeze physician pay even more on top of the SGR cut. So far, lawmakers have failed to agree on more targeted reductions to replace the across-the-board spending cuts to Medicare, defense, and other nondefense programs. If they cannot do so by the end of 2012, the automatic reduction process known as sequestration will begin.

The effect of the Patient Protection and Affordable Care Act of 2010, the landmark 2010 healthcare system reform law, is another wild card in the trustees' overview. The law requires reductions in pay rates to most health professionals based on expected growth in "economy-wide multifactor productivity," and the trustees assume that Congress will allow these reductions to go into effect as mandated by law. But the report warns that this scenario would require health professionals to achieve "unprecedented improvements" in the efficiency of care that they provide to patientsimprovements that will be difficult to achieve.

The American Medical Association (AMA) reiterated its call for a permanent SGR solution in light of the program projections. "Today's Medicare trustees report is clear: without congressional action, physicians who care for Medicare patients will face a devastating cut of 30.9% on January 1, [2013]," said AMA Chair-elect Steven Stack, MD. "Nothing is more critical to the Medicare program than patients' ability to access the physicians they want and need to see."

Many observers focus on the trustees' projections of spending on inpatient services under Part A as a marker of the program's long-term financial health. The Part B trust fund technically cannot become insolvent, because it is replenished with a combination of premium and taxpayer dollars. But when the Part A trust fund is exhausted, Medicare will not have enough revenue to cover all of its promised benefits to seniors.

The newest report sets the Part A trust fund insolvency date at 2024, the same as last year. But this stability also relies on some of the same projected cost savings under current law that might never materialize. In addition, focusing simply on the insolvency date ignores the growing strain of the program on federal budgets that will require significant reforms well before then, the trustees said.

David Glendinning, Dire Medicare Outlook Assumes Deep Physician Pay Cuts, American Medical News (April 30, 2012).

BlackBerry Smart Phone: New Panacea?

At University of Pittsburgh Medical Center (UPMC) Mercy hospital in Pittsburgh, BlackBerry smart phones are being used to improve patient care and facilitate communication between nurses, lab technicians, and the hospital's telemetry team. The project began in 2009, when the hospital gave BlackBerrys to nurses. "Back three years ago that was pretty innovative," Haviland said. At the time, the hospital had no mobile phones, instead using a system of pagers and landlines. What it did have, however, was an 802.11 b/g wireless network that it could use to create a BlackBerry-based communication system using only its Wi-Fi network and a Verizon voice plan, saving money on data and texting costs. Nurses and hospital staff can communicate its custom-created Clinical Handheld Application for Texting (CHAT) app, receive telemetry alerts, and access the staff directory on any of the hospital's 300 BlackBerry Curve 9650 devices. Each nurses' station has about twenty allotted devices that staff can use with their personal log-in information to keep tabs on individual patients and communicate with staff.

Before implementing the BlackBerry system, Haviland said, each group would generate about a box-and-a-half of paper files each month. Now files are kept digitally. The impact this has had on the staff is significant. Patient care is improved by automatically escalating alerts to senior staff when a response isn't received by the nurse on duty. "We have greatly improved patient safety," he said. The system has sent more than 100,000 alerts since September and saved over 2,000 nurse-hours per year.

UMPC Mercy has also created a Wander Risk Application to help send alerts for patients with conditions like dementia, brain injuries, or mental health concerns that are at risk of wandering off. When patients at risk are admitted, a photo is logged into the system so that it can be sent to the network of BlackBerrys, PCs, and pagers to alert staff that the patient is missing. "This one has a lot of potential, not just at our hospital but at all the hospitals within the UPMC system," Haviland said.

Jennifer Lawinski, BlackBerry World 2012: Smartphones in Healthcare, CIO Insight (May 1, 2012).

Healthcare Reform: For Lawyers?

One healthcare policy expert has a suggestionapply healthcare reform principles . . . to the practice of law:

Well, the future of American healthcare is now controlled by lawyers. That may not be newsdoctors, drug makers, and medical-device makers have long complained about the cost of lawsuits. But this is different: the future of the Patient Protection and Affordable Care Act of 2010 (PPACA) is in the hands of the U.S. Supreme Court. It makes one think: if the lawyers are designing the healthcare system, shouldn't they be forced to operate under regulations similar to those they're imposing? How, for example, do lawyers get paid? Today, they negotiate fees with clients. That hardly seems fair. In healthcare, doctors don't negotiate fees with patients; they get paid according to an opaque schedule determined by health plans. Lawyers should do the same. The solution is "legal insurance." After all, who amongst us knows when we'll need a lawyer? It is often an unpredictable expense, and yet the market seems to have failed to provide such insurance. Government must intervene.
And what about seniors? Can they all afford the legal services they require? Certainly not. So, we need a compulsory, single-payer, legal care program for seniors. The U.S. Department of Justice (DOJ) will oversee all claims. How will fees be determined? That's easy. Let's define a standard "unit" of legal care. For the sake of argument, let's say it is preparing a will for a married couple, each sixty years of age, with a combined household income of $100,000 and wealth of $200,000. Suppose this will takes ten hours to prepare at a cost of one thousand dollars. Thus a standard "unit" of legal care is $100 per hour. Cases that are more complex than this will receive higher hourly reimbursements. A divorce, for example, could be "worth" 1.4 times the standard charge per hour. Fixing a dispute over whether your neighbor's fence is on your property could be "worth" 0.8 times the standard charge. Of course, there would also be geographic adjustments so that lawyers who practiced in high-cost areas earned more. You might think that the DOJ could not possibly manage the overwhelming complexity of this system.
You'd be right, so that's why we would outsource the project to the American Bar Association (ABA), which will maintain the codes and earn licensing revenue from vendors who sell manuals, software, training, et cetera to lawyers across the country who need to master the codes in order to submit claims. This revenue will comprise almost all of the ABA's business in the years to come. Needless to say, any reform to the system will have to be blessed with the ABA's imprimatur, which the government and media will promote as representing the will of all lawyers.
And what about the quality of legal advice? Look again at the ongoing U.S. Supreme Court case. Anyone could submit an amicus brief without any external vetting. Today, the only person a lawyer has to satisfy is her client. Any lawyer who wants to try out a new legal theory is free to do so. This is very confusing, messy, and adds needlessly to legal costs. So, the federal government should establish a fifteen-person "independent legal advisory board" comprised of the best scholars from the nation's top law schools. All legal arguments will have to be approved by this board before being used in court, arbitration, or negotiation, to ensure that clients (and "the system") get value for money.
Well, lawyers, what do you say? Any takers?

John R. Graham, What If We Regulated Legal Services Like Healthcare, The HealthCare Blog (April 27, 2012).

Essential Health Benefits: Otherwise Formerly Known as the Standard of Care?

Under healthcare reform, states will determine the minimum set of benefits to be included in individual and small group insurance plans. The Patient Protection and Affordable Care Act of 2010 (PPACA) requires that health insurance plans sold to individuals and small businesses provide a minimum package of services in ten categories called "essential health benefits." These include hospitalization, maternity and newborn care, ambulatory care, and prescription drugs. But rather than establishing a national standard for these benefits, the U.S. Department of Health and Human Services (HHS) has decided to allow each state to choose from a set of plans to serve as the benchmark plan in their state. Whatever benefits that plan covers in the ten categories will be deemed the essential benefits for plans in the state.

This approach has drawn criticism from healthcare providers, consumer groups, and patient advocates, who would prefer a national standard. But it has been more welcomed by states and the business community, who appreciate the flexibility the arrangement will afford states to tailor benefits to local circumstances. This policy brief explores the background of the debate and the policy implications surrounding essential health benefits.

Beginning in 2014, health plans sold in the individual and small group markets, both within and outside the new state-based exchanges, must include essential health benefits. The requirements also apply to benefits provided to the population that will be newly eligible for Medicaid coverage. These requirements do not apply to self-insured health plans, those in the large group market (generally companies with more than 100 employees), or grandfathered health plans (those in existence at the time PPACA was signed into law).

The law specifies that benefits must include services in at least ten categories and equal the scope of benefits covered in "a typical employer plan." In addition, the law requires HHS to take into account the healthcare needs of diverse populations in defining essential benefits. If a state requires coverage of a specific benefit that is not included in the federal package, the state must cover the cost for enrollees in plans subject to the requirement.

Prior to issuing guidance on the essential health benefits package, HHS held listening sessions with consumers, providers, insurers, and employers. It also commissioned a report from the Institute of Medicine (IOM) on the process it should use for devising the package. In its report released in October 2011, the committee convened by IOM emphasized the importance of keeping the essential health benefits package affordable for small employers, consumers, and taxpayers, and it recommended a framework for selecting benefits and covered services that would focus on medical effectiveness. The IOM committee explicitly stated that state-mandated benefits should not automatically be covered but should instead be subject to the same medical effectiveness review process and criteria as other benefits.

In December 2011, HHS issued a bulletin describing the approach it will use to determine essential health benefits. In a departure from the approach set out by the IOM committee, which anticipated that HHS would define a national benefits package, HHS announced that each state must set its own definition of essential benefits for 2014 and 2015 by choosing a benchmark plan. States could choose from among the following: one of the three largest small group plans in the state by enrollment, one of the three largest state employee health plans by enrollment, one of the three largest federal employee health plan options by enrollment, or the largest health maintenance organization plan offered in the state's commercial market by enrollment.

In each state, the same benchmark plan will apply to both the individual and small group markets. States may choose the same or a different plan for the Medicaid population. Insurers are not required to replicate the benefits in the benchmark plan; rather, the benefits offered must be "actuarially equivalent" to those in the benchmark plan, meaning that the benefits are of approximately the same value in each of the ten required categories. If a state does not select a plan, the default benchmark plan will be the plan with the largest enrollment in the state's small group market. HHS has indicated that this overall approach may be changed in 2016 and in future years based on evaluation and feedback.

According to HHS, most of the potential benchmark plans that it has identified cover similar services in nearly all of the ten required categories. The categories least likely to be covered in potential benchmark plans are pediatric oral services; pediatric vision services; and "habilitative" services to assist people with disabilities to learn new skills and functions, such as helping autistic children improve language skills. If a state chooses a benchmark plan that does not cover services in a required category, the state must supplement the essential benefits package by adopting benefits from any other possible benchmark plan.

Observers now expect most states to select a small group plan as the benchmark, because such plans are already approved by state insurance commissioners and are therefore most familiar to regulators.

Some have complained that HHS' approach will now not address the fact that many health plans have inadequate benefits. Another criticism was that HHS did not follow its normal processes in issuing its essential health benefits "guidance," or policy interpretation. Normally, HHS would have issued a proposed rule and solicited public comment; it then would have taken that comment into account in crafting a final regulation. In this case, HHS released a "bulletin" and not a proposed rule for comment, and, in turn, did not make the comments it received publicly available. Although HHS says it acted legally, its atypical approach has been widely criticized.

States now face the need to move forward quickly, as the first open enrollment period for coverage sold through new health insurance exchanges will begin in October 2013.

Many observers expect that the policy focus will shift now to the states, as insurers, providers, and advocates attempt to influence selection of benchmark plans. However, some important procedural and policy questions remain unanswered at the federal level, including what process HHS will use to evaluate whether the state benchmarks meet all requirements and how the states must value the cost of benefit mandates that exceed the essential benefits package.

HHS has not specified a timetable for releasing additional guidance.

Amanda Cassidy, Health Policy Brief: Essential Health Benefits, Health Affairs (April 25, 2012).

Death With Dignity: Massachusetts Next?

People in Massachusetts are pushing a ballot initiative to legalize the practice they call "Death with Dignity," more commonly known as physician-assisted suicide. Voters will decide at the polls this November (2012) whether it should be allowed there, as in Oregon and Washington, the only two states where voters have explicitly authorized it.

Under the Massachusetts proposal, which is virtually identical to the laws in Oregon and Washington, terminally ill, mentally competent adults deemed to have six months or less to live would have the freedom to obtain a fatal prescription. They could qualify only after going through a process designed to ensure that they are not being coerced and that they fully understand what they're doing. They would administer the drugs themselves. Any doctor opposed to the practice could opt out of writing the prescription.

Massachusetts has had its share of contentious ballot questions, but few, if any, have played to the conscience the way this one promises to. It is sure to generate vigorous discussion even in an election cycle dominated by a presidential contest and a competitive U.S. Senate race. For proponents of assisted suicide, Massachusetts, as a socially progressive, prominent East Coast state, represents the next frontier. It poses a major test for a movement that has had difficulty gaining traction beyond the Pacific Northwest. Supporters face a challenge in part because Massachusetts is among the most Catholic states in the country, and the Church has long opposed the practice.

Indeed, the ballot initiative would also test the Catholic Church's influence. Church leaders in Massachusetts have already begun a campaign to defeat it.

Opposition extends well beyond the Church with some self-described liberals, doctors, and specialists in end-of-life care mobilizing against it. A number of them object on moral grounds, believing suicide is wrong and doctors should never abet it; others fear that the sick will be misdiagnosed and end their lives prematurely. "Assisted suicide sounds good in a world where we have perfect knowledge," says John Kelly, a long-time disability rights advocate in the state who's helping organize opposition. "It's impossible to forecast accurately how long someone has to live."

National Gallup polls have indicated that Americans, over the past half century, have grown more accepting of doctors helping patients end their lives. Fifty-six percent of respondents in a May 2007 poll said that when a person has an incurable disease and is living in severe pain, a doctor "should be allowed by law to assist the patient to commit suicide if the patient requests it." But the topic remains highly contentious. A Gallup Poll a year ago suggested that Americans were nearly evenly split over whether assisted suicide was "morally acceptable." Backers of the Massachusetts ballot initiative say they are heartened by their own polling here, and a plurality of respondents in a recent public survey indicated support. The Massachusetts legislature, under the ballot-initiative process, has until this week to act on the proposal; if the House and Senate don't approve itand no one expects them tosupporters need only collect 11,485 signatures by June 21 to put it to voters in November.

Opponents of the Massachusetts ballot initiative point to a handful of cases where they say the safeguards haven't worked. One is the story of Kate Cheney, an eighty-five-year-old Portland, OR, woman suffering from stomach cancer whose request for a fatal prescription was initially denied after a psychiatrist questioned her mental capacity. Cheney then got a second opinion, ultimately won approval to obtain the prescription, and ingested it in August 1999. To opponents, her case raises troubling questions about whether her family and her health maintenance organization, both of which backed her decision, exerted undue influence.

And then there's Jeanette Hall of King City, OR, who voted for the Death with Dignity Act at the polls. In 2000, Hall was diagnosed with cancer and inquired about assisted suicide. She thought about refusing treatment. Her doctor encouraged her not to give up. So she didn't. Twelve years later, she is still alive. Her experience informs her belief that Massachusetts ought not to follow Oregon's lead. Indeed, if there's one overriding concern shared by opponents of the ballot initiative, Hall's story illuminates it: a fear that doctors will make errant prognoses, leading patients to end their lives when they may have many months, or years, left.

Scott Helman, Dying Wishes Expected to be Decided on November Ballot, The Boston Globe Magazine (April 29, 2012).

*We would like to thank C. Elizabeth O'Keeffe, Esquire (Dana-Farber Cancer Institute, Boston, MA), 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.

Follow the Teaching Hospitals and Academic Medical Centers Practice Group on Twitter @AHLA_TH_AMCs.

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