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Teaching Hospital Update - September 13-17, 2010


Email Alert

September 17, 2010

By Adam Mingal and Leah Voigt*

HHS Awards $14 Million to Study Treatments for Minority Patients

The U.S. Department of Health and Human Services (HHS) has awarded more than $14 million to nine universities and one research firm to support patient-centered outcomes research for minority populations, HHS Assistant Secretary Howard Koh announced this week. Award recipients will use the funds to conduct research on the effectiveness, benefits, and harms of different treatment options. According to Koh, research studies on drugs, medical devices, tests, and surgeries will be used to inform healthcare decisions and reach "optimal levels of health" in racial and ethnic minority communities.

The funds are a portion of $400 million authorized under the American Recovery and Reinvestment Act of 2009 (ARRA, Pub. L. No. 111-5) to the HHS Secretary for allocation to patient-centered outcomes research and related activities. In total, ARRA appropriated $1.1 billion for patient-centered outcomes research. The National Institutes of Health (NIH), National Institute for Minority Health and Health Disparities (NIMHD) awarded grants ranging from $1 million to $1.4 million to the University of Alabama, Birmingham; University of South Florida; University of Hawaii at Manoa; University of Illinois at Chicago; University of Michigan, Ann Arbor; University of New Mexico; Mount Sinai School of Medicine of NYU; Columbia University Health Sciences, New York; and University of Puerto Rico, Medical Sciences.

The grants were awarded under the NIH's Comparative Effectiveness Research for Eliminating Disparities Program.

HHS said that OMH and NIMHD will use NIH policies and procedures to jointly evaluate the progress of the grant awards recipients.

HHS Awards $14 Million to Universities To Study Treatments for Minority Patients, BNA's Healthcare Daily Report (Sep. 16, 2010)
(note: registration is required to view this content)

For-Profit Hospitals Performing More C-Sections

For-profit hospitals across the state are performing cesarean sections at higher rates than nonprofit hospitals, a California Watch analysis has found. A database compiled from state birthing records revealed that, all factors considered, women are at least 17% more likely to have a cesarean section at a for-profit hospital than at one that operates as a nonprofit. A surgical birth can bring in twice the revenue of a vaginal delivery.

In addition, some hospitals appear to be performing more C-sections for non-medical reasons, including an individual doctor's level of patience and the staffing schedules in maternity wards, according to interviews with health professionals.

Across the state of California, more women are having C-sections for a variety of reasons: a rise in obesity and the number of older mothers, fear of lawsuits among doctors and hospitals, and a growing cultural acceptance of the procedure. Women whose pregnancies were deemed to be low-risk had a 9% chance of giving birth by C-section at the nonprofit Kaiser Permanente Redwood City Medical Center, for example. At the for-profit Los Angeles Community Hospital, women had a 47% chance of undergoing a surgical birth. The numbers provide ammunition to those who have long suspected that unnecessary C-sections are performed to help pad the bottom line.

"This data is compelling and strongly suggests, as many childbirth advocates currently suspect, that there may be a provable connection between profit and the cesarean rate," said the president of the International Cesarean Awareness Network, a nonprofit group that would like to see C-sections only in cases of medical need.

Nathanael Johnson, For-Profit Hospitals Performing More C-Sections, Kaiser Health News (Sep. 13, 2010).

FDA, CMS Consider Establishing Parallel Review Process for Medical Devices

Medical products will be able to be reviewed concurrently by both the Centers for Medicare & Medicaid Services (CMS) and the U.S. Food and Drug Administration (FDA) under a new pilot program proposed by both federal agencies. According to a Federal Register notice published on September 17, FDA and CMS are considering establishing a process for parallel evaluations of premarket, FDA-regulated medical products.

The agencies are establishing a docket to receive information and comments from the public on what products would be appropriate for parallel review by the two agencies, what procedures should be developed, how a parallel review process should be implemented, and other issues related to the effective operation of the process. Comments are due by December 16, 2010. According to the notice, the pilot program will begin after both agencies have reviewed the public comments.

The groundwork for parallel reviews was started in June, when CMS and FDA entered into a memorandum of understanding that would allow the agencies to share information and expertise, while preserving the privacy of individual companies and manufacturers. Currently, medical product development and coverage and payment of new therapies and diagnostics generally occur in a serial manner. First, a new medical product is submitted to FDA, which determines whether it meets applicable safety and effectiveness standards for commercial marketing. Next, the company seeks coverage from the payor who in turn determines the payment rate for the product.

The agencies in the notice said they envision parallel review as a collaborative effort in which CMS will begin its national coverage determination-related review process to determine whether the product is reasonable and necessary for the Medicare population while FDA is completing its premarket review. The agencies said the notice provides the first opportunity for the public to comment on the issues surrounding parallel review. The public will have a second opportunity to provide input should the agencies subsequently issue, as they currently intend, a joint draft guidance or "other appropriate documents," describing the proposed process.

The agencies said they envision that the decision to undertake the parallel review process with respect to a specific product "will be at the request of the manufacturer and with the agreement of both agencies, thus making the process voluntary for all parties involved." FDA would make its approval or clearance determination first, because CMS would not ordinarily provide coverage to a product not approved or cleared by FDA for marketing in the United States. In addition, CMS has statutory requirements (for example, CMS must issue a proposed coverage decision memorandum for comment) that make it impossible for the issuance of an NCD simultaneous with an FDA approval or clearance.

Nathaniel Weixel, FDA, CMS Consider Establishing Parallel Review Process for Medical Devices, BNA's Health Care Health News (Sep. 17, 2010) (note: registration is required to view this content).

Cost of Health Insurance Claims Expected to Climb 10% Over Next Year

The cost of health insurance claims is expected to rise, according to a new report, but insurers say they are getting tougher when negotiating prices with hospitals. "The costs that dictate employer-provided health insurance plans will climb more than ten percent within the next twelve months, and financially pressured companies may pass more of this increase along to their workers through next year's benefits plans, according to an Aon Consulting report . . . ," The Associated Press reports.

According to The Wall Street Journal, "some of the nation's largest health insurers say they're getting tougher in price negotiations with hospitals and are using their clients as leverage, as health plans and employers try to restrain medical costs. Employers are warming to the idea of narrow provider networks as a way to save money, which is helping in contract talks with hospitals, health insurers say. In some cases, managed-care clients want to become directly involved in hospital negotiations . . . Over the past decade, clients were happy to let the health insurer do the bargaining, [Aetna Inc. Chief Financial Officer Joseph Zubretsky] said at a Morgan Stanley health-care conference, 'but now it's getting so intense that the CFOs of our client companies want to sit at the table as we negotiate rates (with) hospitals, and they are willing to use the steerage threat as a way to get better pricing.'"

Bakersfield Californian reports on other tactics businesses are using to reduce health insurance costs, including offering additional plan options or raising co-payments. "There's every reason for employers to consider their options. Across the country commercial insurers are raising their rates, which is nothing new except that it's happening at a time when businesses and workers can least afford it . . . Renewed emphasis on employees' health has also become more widespread. When companies are able to show their workers are improving their fitness, insurers are more likely to see them as less of a financial risk, and may pass along some of the perceived savings. Another approach has been to shop around in hopes that a different insurance carrier will offer a better deal."

"Despite spending substantial time personally explaining the procedure to the patients . . . our cardiologists were not successful in dispelling patients' erroneous beliefs," the researchers wrote. They also found that only half of the patients had received written materials explaining the risks of PCI but not the benefits.

Cost of Health Insurance Claims Expected to Climb Ten Percent Over Next Year, Kaiser Health News (Sep. 15, 2010).

Doctors' Tech Adoption Influenced by Social Circle

To figure out why physicians and hospitals are slow to adopt electronic medical records, researchers are looking at institutional and social networks to see if they can discover the key to overcoming resistance.

A study in the August Management Science posited that smaller and newer hospitals, and those that have some tech "celebrity" status, are the most likely to influence other hospitals to adopt electronic medical records (EMRs). An earlier report published in the May Journal of the American Informatics Association concluded that the most likely indicator of doctors' interest and use in EMRs is whether their friends use them—not merely peers, but doctors they consider close on a personal or social level.

Both studies referred to something researchers call "social contagion"— how peer networks influence someone to act, particularly when that action is done without someone perceiving any sort of influence being exerted. One person is the "carrier," who can spread the contagion to many. Both studies looked at social contagion theory as critical to understanding EMR adoption, because the technology represents an expensive, radical change to how physicians and hospitals operate. The influence of others is necessary and important to the spread of information technology, the studies said. "If you are an administrator, it's hard for you to tell the physician, 'Do it.' Physicians are like free agents. So our message is that adoption of anything new or innovative is likely to happen from one physician to another," said a co-author of the Management Science study.

Pamela Lewis Dolan, Doctors' Tech Adoption Influenced by Social Circle, Am. Med. News (Sep. 13, 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 Adam Mingal, JD (Washington, DC), and Leah Voigt, Esquire (Squire Sanders & Dempsey LLP, Washington, DC), for providing this week's update.

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