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Teaching Hospital Update - March 12-16, 2012


Email Alert

March 16, 2012

By Amy Kaufman*

U.S. Healthcare Legal Issues at Supreme Court

The U.S. Supreme Court has scheduled three days of historic arguments over President Barack Obama's sweeping healthcare overhaul law. Each day features a different legal issue:

At issue on March 26: whether the legal challenge to the law's centerpiece requirement that Americans obtain health insurance or pay a penalty must wait until after that provision, known as the "individual mandate," has taken effect in 2014.

At the core of the oral argument will be the Anti-Injunction Act, which dates back to 1867, and whether taxpayers must actually begin paying the penalty for not purchasing insurance before objections to the mandate can be raised in court. The Anti-Injunction Act generally bars any challenges to a tax law until it has taken effect because such lawsuits can stop the federal government's Internal Revenue Service from collecting tax revenues.

Before Congress approved the legislation, Obama insisted the penalty for failing to obtain insurance was not a tax. The legislation used the word "penalty" rather than "tax." The law requires that the penalty is due when Americans pay their annual taxes.

However, a U.S. appeals court based in Virginia and a dissenting judge on a U.S. appeals court in Washington, DC, have held it would amount to a tax and the lawsuits therefore were barred until the money was paid, not expected until after 2014. The Obama Administration, which is defending the healthcare law, and the twenty-six states and the independent business group that are challenging the law, have agreed that the challenges to the insurance mandate can be decided now.

On March 27, the Court will hear arguments on whether Congress overstepped its powers under the Constitution in adopting the individual mandate, the issue at the heart of the legal battle over the law that aims to provide health coverage to more than thirty million uninsured Americans. Then, on March 28, oral arguments will be presented on two issues: first, whether the entire law must fall if the insurance mandate was found to be unconstitutional or if other parts can survive; and second, whether Congress had the authority under its power to spend money to require that states expand the number of people eligible for assistance from the states for the Medicaid healthcare program for the poor and disabled.

James Vicini, U.S. Healthcare Legal Issues at Supreme Court, Chicago Tribune (March 15, 2012).

Organized Medicine Seeks More Latitude to Challenge Industry Gift Reports

Proposed rules requiring transparency reports on what physicians receive from drugmakers and medical device manufacturers would impose costly burdens on practices and could lead to the publication of misleading information to the public, according to physicians and health industry organizations.

The American Medical Association and more than ninety specialty and state medical societies urged the Centers for Medicare & Medicaid Services (CMS) to make several changes to its proposed rule implementing the Sunshine Act, a provision included in the 2010 health system reform law. In a February 17 letter to CMS, the organizations stated that they supported the underlying goal of enhancing transparency but said the rule needs numerous revisions.

The Sunshine Act requires drug and device manufacturers to track gifts and payments to physicians and teaching hospitals starting in 2012. Any transfers of value of more than $10as well as any smaller individual payments to doctors whose total transfers exceed $100would be made available on a searchable website beginning in 2013.

The reform law gives physicians the right to challenge reports after their publication. However, organized medicine said Congress did not intend for those disputes to be resolved only during a forty-five-day period once a year, as proposed by CMS.

"We oppose limiting a physician's ability to challenge the accuracy of reports to the 'current' and prior reporting year within a compressed 45-day window each year," the letter states. "There is no statutory support for this provision, and it is inconsistent with the Congress' intent to ensure such reports are accurate."

Charles Fiegl, Organized Medicine Seeks More Latitude to Challenge Industry Gift Reports, Am. Med News (March 12, 2012).

FDA and Industry Not Waiting for Congress on Drug Shortages

Pending legislation in Congress and efforts by the private sector aimed at reducing national drug shortages largely aim to improve communication among manufacturers, distributors, federal regulators, hospitals, and physicians to prevent supply problems from arising in the first place.

Reducing drug shortages remains a high priority for congressional leaders. Lawmakers have released three drug shortage bills, and at least one more is in the draft stage. Congressional committees continue to hold regular hearings on the issue. Language on shortages is expected to be included in a reauthorization of the Prescription Drug User Fee Act, which is set to expire at the end of September.

But few expect Congress to produce a quick solution to the problem of shortages, which remain an immediate threat to patient care. An estimated 217 drugs were in shortage as of early March, according to the American Society of Health-System Pharmacists. Most were generic sterile injectables, including anesthesia and chemotherapy drugs. The number of drug shortages has nearly quadrupled since 2005.

In light of the problem's scope, efforts to reduce shortages are underway away from Capitol Hill as well. The U.S. Food and Drug Administration (FDA) on February 21 announced that it will allow the temporary importation of Lipodox as a replacement for Doxil, a drug in critical shortage that is used to treat ovarian cancer and other illnesses. FDA also approved a new manufacturer for methotrexate, a cancer-fighting drug in a near-shortage status.

Health industry leaders praised these and other administrative actions to alleviate shortages. "Patients and families waiting for these drugs will soon be able to get the medication they need thanks to the collaborative work of FDA, industry, and other stakeholders," said Generic Pharmaceutical Association president and Chief Executive Officer Ralph Neas.

Doug Trapp, FDA and Industry Not Waiting for Congress on Drug Shortages, Am. Med. News (March 12, 2012).

House to Vote on Health Board Repeal

House Republicans have set up a vote next week to repeal a board created by the 2010 healthcare law that the GOP has criticized as a rationing board that could force Medicare cuts without congressional approval.

Republicans plan to move HR 5, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act, as early as next week. The legislation was originally a medical tort-reform bill, but a version of the bill that appeared Tuesday on the House Rules Committee website included new language to repeal the Independent Payment Advisory Board (IPAB).

The Rules Committee has set an amendment deadline for March 19, a sign that it could approve a rule for the bill early next week and send it to the House floor soon afterward.

The tort-reform title of the bill would cap punitive damages in medical lawsuits at $250,000, limit contingency fees and other payments to lawyers, and install other reforms aimed at reining in limitless legal actions against doctors. Republicans have said these reforms would reduce government healthcare spending by about $50 billion over a decade.

Republicans appear to see the tort reform bill as a way to pay for IPAB repeal. Last week, the Congressional Budget Office said repealing the IPAB would cost about $3 billion.

Pete Kasperowicz, House to Vote on Health Board Repeal, The Hill (March 13, 2012).

ACA Poll: Public Short on Facts, Long on Opinions

Four in ten Americans think the healthcare reform law has already been overturned by the Supreme Court, or they are unsure. The new figures come from a Kaiser Family Foundation poll released Wednesday, which confirmed what many had believedthe public has strong opinions but little knowledge about the Affordable Care Act (ACA).

Although the U.S. Supreme Court is still two weeks away from hearing arguments challenging some sections of the law, 14% of those surveyed by the foundation said flat-out, "Yes, the ACA has been overturned by the Supreme Court and it is no longer law." More than a quarter of respondents said they didn't know the current status of the law (or else they refused to answer the question). Of those surveyed, 63% said they haven't been following news of the Supreme Court case closely.

Those with a favorable view of the law were more likely to follow news of it than those with a negative view of the law.

Mollyann Brodie, a Kaiser Family Foundation pollster who spoke Wednesday at a briefing on the upcoming Supreme Court case, offered a guess as to why Americans remain clueless about the law: most of them have not been affected by it. Most of the law's major provisionssuch as the individual mandate that will require nearly everyone to have health insurancedon't go into effect until 2014.

Emily P. Walker, ACA Poll: Public Short on Facts, Long on Opinions, MedPage Today (March 14, 2012).

*We would like to thank Amy Kaufman, Esquire (In-House Counsel, Nashville, TN), 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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