June 4, 2010
By Allison Cohen and Leah Voigt*
U.S. Supreme Court to Consider Tax Rule on Medical Residents
The U.S. Supreme Court agreed Tuesday to hear a challenge by medical colleges and teaching hospitals of a U.S. Treasury Department regulation requiring payment of Social Security taxes on behalf of medical residents. Under a 2005 Treasury Department rule, medical residents and other "full-time employees" do not qualify for the general student exemption from Social Security taxes. At stake is the tax treatment of medical residents nationwide, of which there are currently about 100,000, and $700 million in annual revenue to the federal government, according to court papers.
The Mayo Clinic and the University of Minnesota challenged the Treasury ruling and have also sought refunds for Social Security taxes that they already paid on behalf of medical residents. The St. Louis-based Eighth U.S. Circuit Court of Appeals sided with the Internal Revenue Service in a ruling last June.
In their petition to the Supreme Court, the Mayo Clinic and University of Minnesota said that four other federal appeals courts have sided with hospitals against the government on the issue. That leaves medical residents in the eigth Circuit—which covers Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota—subject to taxes that their peers elsewhere in the United States do not have to pay, they argued.
The Social Security tax represents 12.4% of wages. Half of the tax is paid by the employer and half by the employee. For a medical resident earning a $50,000 stipend, that represents $3,100 paid by the resident and $3,100 paid by the hospital. The government argues that the Treasury regulation offers a "bright-line test" of forty or more hours worked for an employee to be considered full time. Medical residents, who work anywhere from fifty to ninety hours a week, clearly meet that test, the government argued. Oral arguments in the case are likely to take place in the fall.
Martin Vaughan, US Supreme Court To Consider Tax Rule On Medical Residents, WALL ST. J. (June 1, 2010).
Vermont to Enact Country's First Law Requiring Reports on Free Rx Samples
Last week, Vermont Governor Jim Douglas (R) said that he would allow a bill (S. 88) requiring pharmaceutical companies to report annually on free samples that they give to healthcare providers to become law without his signature.
The reporting requirement is a key provision in an omnibus healthcare measure passed overwhelmingly on May 11, 2010. It amends an existing drug company gift and disclosure law to require companies to report to the state attorney general (AG) annually by April 1, beginning in 2012, "all free samples of prescribed products provided to health care providers during the preceding calendar year, identifying for each sample, the product, number of units, and dosage." Vermont is the first state in the country to require reporting of free drug samples, according to supporters of the law.
Douglas said that he allowed the measure to become law because it contains important language on the state's efforts to improve health quality and reduce costs, but he warned that the reporting requirement could have a "chilling effect" on "the ability of low-income Vermonters to receive free samples of vital prescription drugs." He said that the provision also imposes "burdensome new regulations." Public reporting of free-sample distribution will not include information that allows for identification of individual recipients of the samples or the monetary value of the products received.
The new statute authorizes the state AG to contract with academic researchers to analyze the data, subject to confidentiality provisions and without identifying names or licenses of individual recipients. Requirements of the law could be preempted by the reporting requirements of the federal Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-148), if the AG determines by January 1, 2011, that federal officials will collect and report state-specific information on the distribution of free samples.
Rick Valliere, Vermont to Enact Country's First Law Requiring Reports on Free Rx Samples, BNA's Health Care Daily Report (June 1, 2010)
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Longer Chemo for Breast Cancer More Effective
A sequential form of adjuvant chemotherapy for early-stage breast cancer outperformed two shorter regimens in some—but not all—outcomes in a major clinical trial, researchers said
In a randomized trial of 5,351 women with operable, node-positive breast cancers, the so-called sequential-ACT regimen yielded improved disease-free survival after eight years of follow-up compared with patients on two other regimens. It also improved overall survival compared with doxorubicin-docetaxel but not concurrent ACT, according to researchers at the Washington Hospital Center in the District of Columbia.
But regardless of regimen, women who developed at least six months of amenorrhea during the chemotherapy had better overall survival, the researchers said in the June 3 issue of the New England Journal of Medicine. The findings come from the National Surgical Adjuvant Breast and Bowel Project B-30 trial.
While the results in the B-30 study appear clear-cut, the researchers noted, a similar European study—by the Breast Cancer International Research Group—found little difference between the sequential and concurrent regimens. Taken together, the researchers said, the two studies suggest that the key factor is the cumulative dose of docetaxel. In the U.S. study, the cumulative dose of the drug was 400 milligrams per square meter in the sequential arm—higher than that used in either of the other arms but similar to the amount in both arms of the European trial.
Michael Smith, Longer Chemo for Breast Cancer More Effective, MedPage Today (June 2, 2010).
Public Wants Residents to Work Fewer Hours
A majority of the American public does not approve of doctors working twenty-four hours straight and supports tougher work-hour regulation for resident physicians, according to a new public opinion survey. The survey, published in the online journal BMC Medicine, is the first to assess the public's perceptions about the controversial issue of medical residents' work hours.
The survey found that 90% of Americans believe that the maximum shift duration should be sixteen hours. Current standards allow for thirty-hour shifts up to twice a week.
A landmark report by the Institute of Medicine (IOM) in 2008 concluded that residents should work no more than sixteen hours straight. The recommendations have not been enforced because the Accreditation Council for Graduate Medical Education has yet to respond to the report, but it is expected to do so at the end of the month.
While the issue of resident work hours has been hotly debated in the past couple years—with one side pointing to the dangers that fatigued residents pose, such as medical errors, and the other side highlighting the high costs of slashing work hours—the public's perception on the issue is largely unknown, the study authors say. In order to gauge public opinion on the issue, researchers from an independent research firm performed eighteen-minute telephone interviews with 1,200 representative members of the public by randomly dialing landline telephone numbers in November 2009 and January 2010. The participants were asked questions about demographics, medical service use, their views on resident physician work hours, and on the IOM recommendations.
Most individuals surveyed 85% said that they felt residents should work no more than twelve consecutive hours, and 86% responded that physicians should work fewer than eighty hours per week.
More than four in five survey respondents believed that patients should be informed if the doctor treating them has been working for more than twenty-four hours, and a similar number of people said that they would request care from another physician if they knew that their doctor had been working for so long without sleep.
Emily P. Walker, Public Wants Residents to Work Fewer Hours, MedPage Today (June 2, 2010).
The Revolving Door at the Hospital
To save costs, hospitals for years have been discharging patients after shorter stays. But at the same time, more people are having to return to the hospital for additional care within a month of their initial treatment, according to a major new study of Medicare heart failure patients.
The findings raise the possibility that the drive to reduce the length of time patients spend in hospitals—a key cost-containment strategy for both government and private insurers—may have backfired when it comes to reducing overall health expenditures related to heart failure admissions. "From a societal point of view, dollars spent on healthcare likely increased," said a senior author of the study, which was published Wednesday in the Journal of the American Medical Association. "We got them out faster and we capped initial hospital costs, but the downstream costs may have increased."
The study did not look at actual expenditures so it did not document that shorter stays actually led to higher costs. Heart failure is a progressive inability of the heart to pump effectively. The study also found that over the two decades, death rates during hospitalization fell for heart-failure patients, but then rose in the period following discharge. Overall, death rates within thirty days of patients being admitted for heart failure fell slightly to 10.8% in 2005-2006, from 12.6% in 1993-1994—the years covered by the study.
"The message for patients is to really be sure they are ready to go home," the study's lead author said. He stressed that he doesn't think the study calls for patients to stay longer in the hospital. Rather, he said, hospitals need to invest more effort and resources to make sure "the transition to outpatient status goes smoothly."
A representative of the American Hospital Association (AHA) said that the study's finding of a reduction in thirty-day overall death rates showed that hospitals are "doing better" caring for heart failure patients. She noted that the lower death rate came despite the fact that more patients admitted with heart failure in recent years also had such problems as diabetes, high blood pressure, kidney failure, and pneumonia than in the earlier years of the study. The AHA representative said that for most of the study period, many Medicare patients did not have drug coverage and may have been unable to afford medicines that may have helped to keep them alive. Now that Medicare has a drug benefit, she suggested that death rates may be improving further.
Other studies have shown that as many as one in four heart failure patients are readmitted to the hospital within thirty days of discharge. A fragmented delivery system and conflicting reimbursement incentives are among factors experts have cited to explain the problem. Reducing frequent readmissions for heart failure and other conditions is the focus of new initiatives by Medicare and by medical groups such as the American College of Cardiology and the American Heart Association. The healthcare overhaul legislation calls for financial penalties to hospitals with excessive readmissions.
Ron Winslow, The Revolving Door at the Hospital, WALL ST. J. (June 2, 2010).
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.
*We would like to thank Allison Cohen, Esquire (Health Law and Policy LLM Candidate at American University Washington College of Law, Washington, DC), and Leah Voigt, Esquire (Squire Sanders & Dempsey LLP, Washington, DC), for providing this week's update.