May 27, 2011
By Sarah Kitchell and Devin Cohen
Two Senators Seek Answers From FDA on Conflicts of Interest in Petition Process
This week, the chairman of the Senate Finance Committee asked the U.S. Food and Drug Administration (FDA) to consider requiring new disclosures for citizen petitions that are filed at the agency. Chairman Max Baucus (D-MT) and Sen. Chuck Grassley (R-IA) also issued a report about the lobbying by physician groups that had financial ties to a drug company that filed such a petition.
The senators sent a letter and a new committee report to FDA on the financial relationship between a drug company, Sanofi-aventis, and doctors who lobbied FDA against approving generic drugs that would compete with Sanofi's drugs.
According to a press release from the committee, the panel's investigation found that Sanofi "planned a coordinated strategy to delay generic alternatives to its blockbuster blood-thinner drug Lovenox. The strategy took advantage of FDA's citizen petition process, which allows individuals and experts to raise concerns about the alternatives."
Access the letter from Baucus and Grassley. Brian Broderick, Two Senators Seek Answers From FDA on Conflicts of Interest in Petition Process, BNA's Healthcare Daily Report (May 26, 2011) (note: registration is required to view this content).
More Primary Care Tied to Lower Death Rates
Seniors living in areas with more primary care have slightly lower death rates and are less likely to end up in the hospital with a preventable disease, U.S. researchers have found. In contrast to some earlier studies, which have yielded mixed results, the new work looked at how much primary care was actually delivered to patients—not just how many primary care physicians were in a certain area.
Experts say primary care physicians—general internists and family doctors—are irreplaceable parts of the healthcare system because they are easily available and can coordinate a broad range of health services. The number of medical students who go into primary care has been dropping in recent years, fueling concerns over how this will impact the aging nation's health.
The new report, published in the Journal of the American Medical Association, tapped into Medicare data, which includes patients ages sixty-five years and older. The authors included a sample of more than five million seniors.
Chiang-Hua Chang et al., Primary Care Physician Workforce and Medicare Beneficiaries' Health Outcomes, 305 J. AM. MED. ASS'N 2096 (May 25, 2011).
Frederik Joelving, More Primary Care Tied to Lower Death Rates, Reuters Health (May 24, 2011).
Healthcare Workers Delaying Retirement
The uncertainties around a sputtering economy have prompted the nation's healthcare workforce to delay retirement, a new study shows. Research by The Conference Board shows that the healthcare industry experienced the largest decline in retirement rates among all workforce sectors in the U.S. economy.
In 2009-2010, only 1.55% of full-time workers ages fifty-five to sixty-four retired within twelve months, compared with almost 4% in 2004-2007. The study—U.S. Workers Delaying Retirement: What Businesses Can Learn from the Trends of Who, Where, and Why—found that healthcare workers are part of a larger trend among U.S. workers, who have retiring later since the mid 1990s, a trend that has been exacerbated by the recession and uneven recovery.
Access the report online.
John Commins, Healthcare Workers Delaying Retirement, Healthleaders Media (May 25, 2011).
Residency Program Properly Excluded From Medicare Reimbursement, Court Rules
The U.S. Department of Health and Human Services (HHS) properly excluded from a hospital's Medicare reimbursement calculation the costs of a medical residency program operated as a joint venture because the parties did not have a written agreement, the U.S. Court of Appeals for the Sixth Circuit ruled May 20, 2011 (Covenant Medical Center Inc. v. Sebelius, 6th Cir., No. 09-2443, 5/20/11).
The appeals court ruled that the HHS Secretary did not abuse her discretion in denying reimbursement based on the lack of a written agreement between parties to a joint venture to train medical residents. The ruling, which affirmed a federal district court decision, is likely one of "last impression," the court explained, because the regulation requiring a written agreement is no longer in force.
Nevertheless, the regulation, 42 C.F.R. §§ 413.86(f)(3), (f)(4)(ii), was in force during fiscal years 1999- 2001, the years for which Covenant Medical Center Inc. of Saginaw, MI, requested reimbursement, the court said.
The Secretary could have reasonably determined that the written agreement requirement would improve the administration of Medicare reimbursement, the Sixth Circuit said. Such an agreement, the appeals court said, could help the Secretary determine how much the hospital actually spent on resident training. All told, the court said that the regulation was a reasonable exercise of HHS' authority.
Access the ruling.
Residency Program Properly Excluded from Medicare Reimbursement, Court Rules, BNA'S Healthcare Daily Report (May 25, 2011) (note: registration is required to view this content).
Study Finds Dominant Hospital Systems Competing Despite Economic Conditions
Dominant hospital systems continued to aggressively compete for well-insured patients during 2010 despite a sluggish economy, according to a study released May 26, 2011.
The study by the Center for Studying Health System Change (HSC) found that hospitals with a significant market share weathered the economic downturn and, in many communities, "continued to command high payment rate increases from private insurers," HSC's study, Key Findings from HSC's 2010 Site Visits: Health Care Markets Weather Economic Downturn, Brace for Health Reform, also found that surveyed hospitals, physicians, and insurers generally supported healthcare reform coverage expansions, but were concerned with the new requirements' impact on revenues and the supply of primary care physicians.
Among the other trends seen by HSC is an acceleration of the employment of physicians by hospitals. That relationship has grown in many communities since 2007, the group said.
For hospitals, according to HSC, employing physicians is seen as a means to capture more specialty referrals and hospital admissions in a fee-for-service system. Hiring physicians also is considered important for competing through new payment models that involve risk-sharing and reward quality and efficiency, such as accountable care organizations. According to HSC, physicians generally were more actively seeking the stability and security of employment offered by physician- or hospital-owned groups.
Andrew M. Ballard, Study Finds Dominant Hospital Systems Competing Despite Economic Conditions, BNA's Healthcare Daily Report (May 27, 2011) (note: registration is required to view this content).
Many On-the-Job Clinics Offer Primary Care
"That's where the money is," Willie Sutton famously quipped when asked why he robbed banks. There's a similar rationale for employers who hope to improve workers' health and contain costs with workplace health clinics: that's where the people are.
Day in and day out, workers troop into the office, spending the better part of their waking hours there. What better place to have medical staff on hand, not only to treat sore throats and cut fingers but also to help employees stay healthy by offering on-site preventive tests and screenings, and coaching to encourage healthful habits?
Until the 1980s, workplace health clinics generally existed to treat people who were injured on the job. Although that is still a key function, many employers are expanding the clinics' role to include primary healthcare services. In 2010, 15% of employers with 500 or more employees had clinics providing primary-care services, according to the consulting firm Mercer. An additional 10% said they were considering doing so this year or next.
Although some workplace clinics aim to function as their employees' primary care provider, most clinics supplement rather than replace their workers' doctors. Some companies operate their own clinics, while others contract with others to do so. Services vary widely, from preventive screenings and nutrition and exercise counseling, to routine physicals and disease-management services for workers with chronic conditions. Prices for clinic services are usually lower than those at a community-based clinic; sometimes they're free.
Michelle Andrews, Many On-The-Job Clinics Offer Primary Care, Kaiser Health News (May 24, 2011).
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 Sarah Kitchell, Esquire (McDermott Will & Emery LLP, Boston, MA), and Devin Cohen, JD Candidate (Summer Associate, McDermott Will & Emery LLP, Boston, MA), for providing this week's update.
Member benefit educational opportunity:
Participate in the three-part webinar series, a primer on the Foreign Corrupt Practices Act and anti-corruption issues for healthcare and life science companies (part II of III continues on June 1, 2011).