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Teaching Hospital Update - September 7-11, 2009


Email Alert

By Clinton Mikel*

September 11, 2009

Obama Takes His Message to Congress

On Wednesday, September 9, 2009, President Barack Obama made yet another pitch for a public health plan, but left room for various other options as long as they work to keep the insurance industry in check. In a rare speech to a joint session of Congress—and an increasingly skeptical American public—President Obama pressed his case for extending coverage to almost every American.

President Obama also said that lowering healthcare costs remains a key plank to his healthcare reform platform, adding that his plan would not add to the nation's debt load. "I am not the first president to take up this cause, but I am determined to be the last," he said.

Part of what's being touted as the "Obama Plan" includes a provision—set to kick in almost immediately—that protects uninsurable individuals from catastrophic healthcare costs. "It's a plan that asks everyone to take responsibility for meeting this challenge—not just government and insurance companies, but employers and individuals," he said.

Rather than implementing reforms to the medical tort process through any legislation, President Obama plans to implement pilot programs to examine ways to reform the medical tort process.

The speech comes at a critical turn in President Obama's presidency. On a daily basis, opponents of the Democratic-led effort to reshape the nation's healthcare system have landed blow after blow, stealing momentum away from the White House and chipping away at approval ratings at both ends of Pennsylvania Avenue. Not coincidentally, President Obama's speech dovetailed with renewed action from the chairman of the last—and most critical—Senate panel to craft a bill.

On Wednesday, Senator Max Baucus (D-MT), who is the chairman of the Senate Finance Committee and the leader of a small group of bipartisan negotiators, said that he would release a sweeping reform bill next week in an effort to pass legislation by year's end.

Matthew DoBias, Obama Takes His Message to Congress, Modern Healthcare's Daily Dose (Sep. 9, 2009) (note: registration is required to view this content).

Payments to Medicare's Private Plans at Risk in Democrats' Reform Proposals

As part of their effort to find funds for universal health coverage, Democrats have targeted federal subsidies for Medicare's private plans. As the battle over healthcare reform intensifies, Medicare private plans, which cover more than one in five seniors nationwide, are caught in the crosshairs. On one level, the debate is about money—President Barack Obama and House Democrats want to cut $177 billion in federal payments to the private plans over the next decade to help finance coverage for the uninsured. On another level, the fight over private Medicare plans involves difficult questions on the issues of fairness, efficiency, and choice.

Currently, the federal government pays Medicare Advantage (MA) plans—on average—14% more per patient than it pays the traditional fee-for-service program. Those plans include some of the nation's largest insurers, such as UnitedHealthcare, and Humana Inc., and many Blue Cross and Blue Shield affiliates. President Obama and other critics assert that paying more to the MA plans is unfair to seniors in the traditional program and say the funding cuts will not affect seniors' benefits.

Kaiser Daily Health Policy Report, Payments To Medicare's Private Plans At Risk In Democrats' Reform Proposals, Henry J. Kaiser Fam. Fdn.
(Sep. 9, 2009).

Labs Grumble Over Co-Pays, New Fees for Medicare Lab Work

Large laboratories, including ones like Quest Diagnostics, are unhappy with a Senate Finance Committee proposal to increase taxes for labs that perform Medicare services.

The tax would raise $750 million a year to help pay for healthcare reform. Although Finance Chairman Max Baucus did agree to drop a co-payment issue (for beneficiaries), the panel ended up proposing an annual fee, or tax, on the labs, most likely based on each lab's revenue. A similar backlash is also going on against a proposal to levy $4 billion in annual fees on the medical device industry.

Kaiser Daily Health Policy Report, Labs Grumble Over Co-Pays, New Fees For Medicare Lab Work, Henry J. Kaiser Fam. Fdn. (Sep. 10, 2009).

"Never Events" Policy May Save Less than Expected

According to researchers in California, the financial impact of the Centers for Medicare & Medicaid Services (CMS) not paying for certain hospital-acquired conditions is likely to be much lower than the federal agency estimated.

Publishing in the latest Health Affairs, researchers from the University of California, San Francisco, and the Palo Alto Medical Foundation Research Institute developed a model to study the financial impact to California hospitals of the CMS never events policy. Using 2006 data from the state health department's discharge dataset, the researchers simulated the types of payment codes that CMS scrutinizes under its policy as grounds for not paying for care. The hospital-acquired conditions have to shift codes into a higher payment set in order for CMS not to pay.

Of 767,995 Medicare discharges, only 828 had codes that corresponded to the terms of the CMS policy, according to the research. Under that model, hospitals in California would have lost between $92,000 and $227,000; if that number was extrapolated to all hospitals, there would be a reduction of between $1.1 million and $2.7 million nationally, the researchers said in their report. "Payment reductions were negligible and are unlikely to encourage providers to improve quality," the researchers wrote.

The agency has estimated saving $22 million over five years of its nonpayment policy.

Jean DerGurahian, 'Never-Events' Policy May Save Less Than Expected, Modern Healthcare's Daily Dose (Sep. 9, 2009) (note: registration is required to view this content).

CDC Predicts "Busy, Long" Flu Season

Get ready for a "busy and long" flu season with a hearty dose of the H1N1 pandemic strain, the Centers for Disease Control and Prevention (CDC) warned on Tuesday, September 8, 2009.

Widespread H1N1 activity has already been reported in four southeastern states—Georgia, Alabama, Mississippi, and Florida—according to Anne Schuchat, MD, director of the agency's National Center for Immunization and Respiratory Diseases. In addition, she said twenty-four schools in four states—Georgia, Indiana, Mississippi, and Tennessee—have been closed, sending 25,000 students home.

The H1N1 pandemic is "still around, it's causing increased disease, and it's time to pay attention," Schuchat said. Schuchat added that the virus does not appear to have changed over the summer, so that vaccines now under development should be a good match, which will increase their effectiveness. H1N1 should still remain susceptible to the antiviral drugs oseltamivir (Tamiflu) and zanamivir (Relenza), she said.

Moreover, the "spectrum of disease" appears unchanged: most people are having mild illness, with some needing hospital care and antiviral drugs, and a few succumbing to complications. Despite that, Schuchat said, the future remains unclear: "We still don't know what the trajectory will be."

So far, the seasonal flu strains expected for this year have not made an appearance, Schuchat said, so that "right now, if a person has an influenza-like illness, the chances are pretty good it's the 2009 H1N1 virus." She said the agency has made some modifications to its guidance for antiviral drugs in treating H1N1, but most recommendations remain unchanged. Although most people will not need antivirals, CDC is now emphasizing the importance of prompt treatment for people who do—those with underlying conditions or who have high-risk presentations, she said.

The CDC's guidance now suggests that when people in high-risk categories are exposed to H1N1, physicians should initiate "watchful waiting" to see if symptoms emerge. Previously, the guidelines had suggested immediate prophylactic treatment. Schuchat said the antivirals remain a "critical" part of the anti-flu strategy, but she repeatedly emphasized that most people will not need the drugs. CDC officials believe the supply is large enough for those who will need it, she said.

Michael Smith, CDC Predicts 'Busy, Long' Flu Season, MedPage Today (Sep. 8, 2009).

California Attorney General Accuses Famous Heart Surgeon of Misusing Donations

California Attorney General Jerry Brown alleges in a lawsuit that renowned University of California, Los Angeles (UCLA) heart surgeon Gerald Buckberg funded his own research and business ventures with donations made to a foundation he controls. Brown's office wants the court to dissolve L.B. Research Foundation. Brown alleges Buckberg was solely in charge of the foundation since its inception in 1997, though he stepped down as chairman in 2000.

A complaint Brown filed in California Superior Court in Los Angeles stems from a $1 million donation that L.B. Research Foundation made to UCLA to endow a chair in cardiothoracic surgery. The foundation sued the university for breach of contract in 2003. During the course of the litigation the university discovered Buckberg concealed that he was the source of the donation and engineered the selection criteria to get himself appointed to the position, UCLA said in a statement. The UCLA regents asked the attorney general's office to sue Buckberg, the foundation, and its directors.

Among other spending that allegedly benefited Buckberg illegally was $120,000 toward the production of an educational DVD called "The Helical Heart" by a for-profit corporation Buckberg owns, according to the attorney general's complaint. The lawsuit also alleges breach of fiduciary duty among the foundation's board because its members were unaware of many of Buckberg's grant-making decisions. Meanwhile, some of the board's members didn't know they were members, and others didn't know they were purported to be officers, according to the complaint.

Buckberg was the 2007 recipient of the American Association for Cardiothoracic Surgery's Scientific Achievement Award. He is regarded as a pioneer in delivering solutions that paralyze and protect the heart during surgery. Brown's office is seeking to recover more than $500,000 in allegedly misappropriated funds and at least $100,000 in civil penalties.

Gregg Blesch, Calif. Attorney General Accuses Famous Heart Surgeon Of Misusing Donations, Modern Healthcare's Daily Dose (Sep. 9, 2009) (note: registration is required to view this content).

*We would like to thank Clinton R. Mikel, 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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