Insight, analysis & opinion from Joe Paduda
As much as I and others would like reform to happen fast and smoothly, with broad consensus, it is not going to happen. I’ve been taken to task by folks of all political persuasions for my negativity – guilty as charged.
It now looks like the coalitions are beginning to break apart. As Maggie Mahar reports, Divided We Fail is fraying at the edges. And Bob Laszewski has also been talking this up for several months.
Sorry folks – reality bites.
Last week’s announcement that the FDA is considering requiring physicians’ to obtain additional training in order to prescribe certain Schedule II narcotics is welcome news – for payers and patients. Physicians aren’t so welcoming.
The list of drugs includes several varieties of morphine (e.g. Avinza, MS Contin), fentanyl (including Duragesic patches), methadone, and that old favorite, OxyContin. As a group, the listed drugs accounted for 21 million prescriptions written for 3.7 million patients in 2007.
The rationale behind the FDA’s move is concern over the adverse consequences suffered by many patients on the medications – consequences the FDA – and others – believe could be reduced by more thorough training of prescribing physicians. The FDA’s move came as a result of a law passed in 2007 enabling the agency to selectively address certain medication issues utilizing ‘Risk Evaluation and Mitigation Strategies’. In the past, the FDA’s powers were sort of all-or-nothing; they could either require warnings or pull a drug off the market.
According to the NYTimes, the head of the FDA’s initiative, Dr. John K. Jenkins, said:
“What we’re talking about is putting in place a program to try to ensure that physicians prescribing these products are properly trained in their safe use, and that only those physicians are prescribing those products…”
This is good news for many payers, who have expressed concern over physicians’ apparent willingness to prescribe very powerful drugs for conditions that didn’t appear to merit them. Workers comp payers have long held that prescribing patterns are a major driver of extended disability as well as high costs. I’d cite the use of OxyContin as a major issue for comp payers. Purdue Pharmaceuticals, OxyContin’s manufacturer, has been hammered by the FDA and others for its egregious, and illegal, marketing activities. While Purdue was fined $600 million, reports indicate the manufacturer’s OxyContin revenues totaled almost $3 billion during the time it was illegally marketing the drug.
What does this mean for you?
Unfortunately, it looks like in some instances, crime does pay. The good news is the FDA’s new initiative will likely help reduce not only costs, but more importantly adverse outcomes.
For we policy types, one of the most important provisions in the stimulus bill, aka the American Recovery and Reinvestment Act, addressed comparative effectiveness research.
Alas, the $1.1 billion+ invested in transforming medicine from art to science has been fed through the sausage grinder, and what has come out doesn’t look terribly appetizing. But after you chew on it for a while, it does taste better than it looks.
Merrill Goozner sees the end result as a partial victory noting “The House conferees also insisted on keeping the phrase “comparative effectiveness” throughout the authorizing language, removing the Senate’s insertion of the word “clinical.” However, the report language did note its removal was “without prejudice.”
But he also cites this language from the conference report itself:
The conferees do not intend for the comparative effectiveness research funding included in the conference agreement to be used to mandate coverage, reimbursement, or other policies for any public or private payer [emphasis added]. The funding in the conference agreement shall be used to conduct or support research to evaluate and compare the clinical outcomes, effectiveness, risk, and benefits of two or more medical treatments and services that address a particular medical condition.
A quick read is disheartening as the language seems to make the whole thing rather irrelevant. But parsing the words makes it less concerning. Note the use of the words “do not intend…to mandate coverage, reimbursement or other policies…” The key here is”mandate”, the meaning and intent of which is likely to gladden the hearts of many an attorney.
The definition of the term is “An official or authoritative command; an order or injunction; a commission; a judicial precept.” But there’s a good bit of flexibility left here. It may well be that creative bureaucrats (that term is not used pejoratively) will be able to use the results to encourage certain types of treatment while discouraging others; to require physicians requesting approval for procedures lacking justification provide support for their request to use those procedures, while approving procedures immediately that comply with research recommendations.
The findings of research conducted by the three agencies that will disburse the funding (Agency for Healthcare Quality and Research (AHRQ), the Center for Medicare and Medicaid Services (CMS), and the National Institutes of Health) may be used by payers as part of the criteria set used to select providers that use certain treatment methods and de-select those docs that don’t.
As I noted, the use of the term mandate will undoubtedly drive up litigation and associated expense. Although the legislative process is far from perfect, at least we’re heading in the right general direction. As the Gooz said;
“Based on the experience of the past few weeks, it’s clear the U.S. is still many years away from having a rational discussion about limiting access to technologies that have been priced far beyond a societally-agreed upon benchmark for what constitutes affordable care.”
Why would we ever want government to ensure that it spends taxpayer dollars wisely?
The New York Observer has a terrific piece on President Obama’s search for an HHS Secretary. Although Kansas Governor Kathleen Sebelius (D) has been mentioned as a top candidate, the NYO thinks not. The reason? She is so popular in her home state that she could well run for the Senate, thereby a) possibly giving the Dems a cloture-proof majority, and b) help expand the Dems further into the ‘Heartland’, thereby forcing the GOP to play defense on formerly-unassailable terrain. Sebelius leads both potential Republican candidates by double-digit margins.
Could Sebelius take the HHS job and then resign to run for the Senate? No. The HHS job has to be a long-term one; shepherding reform is going to take at least four years and likely many more; Obama can’t afford to have to replace an HHS Secretary two years into the job, especially as that will be just as things are really ramping up. This is a slot for someone who wants to be there over the long term; Sebelius is too much a rising star to take four plus years ‘off’ to take on what is going to be a very tough, highly visible job requiring decisions that will undoubtedly antagonize just about everyone.
Controlling the Senate is far too important to President Obama, and running for the Senate is likely a much better choice for Ms Sebelius than taking on what will likely be a thankless task that will alienate just about every constituency and could well end any hopes she might have of future elected office.
Now that the Daschle era at HHS is over before it began, who should ‘take over’?
Bob Laszewski recommends President Obama consider Oregon Senator Ron Wyden (D) for the post.
I agree.
Bob points out that Sen Wyden is respected on both sides of the aisle, has demonstrated an ability to subordinate his own ego when needed, and thoroughly understands health care. I met with the Senator in his offices early last year, and came away quite impressed with his deep understanding of the payer community, their motivations and limitations. Sen Wyden has taught gerontology and has been a nursing home regulator. He understands the new media (Wyden introduced his Healthy Americans Act to health care bloggers very early in the process) and communicates quite well.
The Healthy Americans Act remains my personal choice as the best solution on the table. It has:
– broad bipartisan support,
– is revenue neutral,
– eliminates most of the problems in the current system, and
– requires universal coverage.
There’s one other factor that may be just as important to the President in the selection process. Wyden is quite the basketball player; he was a scholarship athlete at UC-Santa Barbara.
Politico.com just announced that Tom Daschle withdrew his name from nomination for Secretary of Health and Human Services. The former Senator’s failure to pay taxes on his multi-year use of a car and driver and huge income from his work on behalf of insurers and providers have raised a political wall too high for Daschle to overcome.
Reports indicate Daschle made the decision this morning after reading an editorial in the New York Times. The editorial said, in part,
“Mr. Daschle, who failed to pay $128,000 in taxes, primarily for personal use of a car and driver provided to him by a private equity firm for which he consulted. Although the firm — headed by a major Democratic donor — had not issued a form 1099 for the value of the car service, Mr. Daschle said he became concerned last June that he might owe taxes on it and instructed his accountant to investigate. Neither was concerned enough to actually pay the taxes.
Only after the Obama transition team flagged unrelated tax issues that would require filing amended returns did Mr. Daschle and his accountant address the need to report the personal use value of the car service — more than $255,000 over three years — as income. Only after he had been chosen to be the health secretary did Mr. Daschle tell the transition team about the unpaid taxes. He paid some $140,000 in back taxes and interest on Jan. 2 to settle several tax problems — and he acknowledges owing more.
In both the Geithner and Daschle cases, the failure to pay taxes is attributed to unintentional oversights. But Mr. Daschle is one oversight case too many. The American tax system depends heavily on voluntary compliance. It would send a terrible message to the public if we ignore the failure of yet another high-level nominee to comply with the tax laws.
Mr. Daschle’s financial ties to major players in the health care industry may prove to be even more troublesome as health reform efforts proceed. Like many former power players in Washington, Mr. Daschle cashed in on his political savvy and influence to earn $5 million in recent years, including more than $2 million from Alston & Bird, a law and lobbying firm; more than $2 million from the private equity firm, InterMedia Advisors, which provided the car and driver; and hundreds of thousands of dollars for speeches to interest groups, including those representing health insurance plans, medical equipment distributors and pharmacy boards.
Although Mr. Daschle was not a registered lobbyist, he offered policy advice to the UnitedHealth Group, a huge insurance conglomerate. He was also a trustee of the Mayo Clinic in Minnesota, on whose behalf he voiced opposition to a federal loan for a freight rail line near the clinic’s headquarters in Rochester, Minn. The loan was subsequently denied by the Federal Railroad Administration.”
Horrors! Those big-government Democrats are at it already, actually trying to get taxpayers to fund medical effectiveness research!
How dare the government actually fund research. The nerve! The gall! The (sputter sputter) utter brazenosity! (I know it’s not a word but it fits)
Why, doctors would actually know what works and what doesn’t! Care would improve, costs would drop, people would be healthier, there would be fewer medical errors; oh, the horror of it all!
And worst of all, taxpayers would get better results for their tax dollars!
Everyone knows there is just nothing more to learn about medicine, disease, physiology. We have learned all there is to know, and any money spent on effectiveness research would be wasted.
That, and the government might actually use that information to decide what types of care to pay for, and what types will not be reimbursed. Wow, what a concept. Why would the government ever contemplate basing reimbursement on effectiveness?
We would never want the government to be careful how they spend our tax dollars. Why, we never want to use taxpayer dollars to study the effectiveness of, say, military equipment. Or air traffic control. Or emergency preparedness. Or flood control. No, we should just pay vendors for any services they provide, regardless of whether or not those services actually work.
OK, forgive me for the over-the-top sarcastic rant. I’m completely disgusted with the hypocrisy of the libertarian right; those who have screamed for years about the ineffectiveness of government, ranting nonstop about how government can’t do anything right, yet are now screaming even louder as government attempts to make sure they are responsible stewards of the public’s funds.
Here’s an example from the health care experts at the National Review. “The [stimulus] bill provides $1.1 billion for a new program of comparative effectiveness research. The idea is to study medical practice patterns, new products, and new technology to determine what is “cost effective.” In the UK, a similar program run by the National Institute for Clinical Evidence (NICE) is used to deny payment by the government for certain drugs and procedures that are said to be “cost ineffective.”
Democratic lawmakers will deny that rationing is their intent, but that is not credible. Why create a government program to study what’s cost effective if not to use the information to inform payment and coverage decisions?”
Notice the use of the scary word ‘rationing’ to define appropriate coverage and payment. Using the author’s (James Capretta) reasoning, Medicare should pay for voodoo, cancer treatment with peach pits, snake oil, rhino horn, and universal cancer vaccines.
Why, not paying for these ‘treatments’ would be ‘rationing’…at least according to Capretta.
Capretta has zero experience in the real world of health insurance. Insurance companies make decisions every day to not pay for treatments that have been proven ineffective. If Mr Capretta had ever worked in the insurance or health care industries, he would know that. But he hasn’t.
That’s not ‘rationing’, it’s good business. Would you not want your government to only pay for services that work?
What does this mean for you?
Everyone knows government is the problem; how dare they try to be part of the solution?
South Carolina* is a great example of what happens when hospitals are financially incentivized to treat workers comp claimants. Costs go up dramatically, and – surprise! premiums quickly follow.
That hasn’t stopped Florida from merrily marching off the cliff.
But suicidal behavior isn’t limited to those who listen only to southern rock. No, even folks in the frozen north can succumb. The latest victims are in Minnesota, where hospitals and insurance companies are haggling over a hospital inpatient payment standard that would pay smaller Minnesota hospitals about 90% of their billed charges; larger hospitals would get about 85% of their billed charges on higher-dollar inpatient bills.
Are they nuts? Has the cold frozen their brains solid? Too much time in the ice-fishing shack?
Whatever the reason, the result will be the same. Hospitals, which have been absolutely hammered by the recession and accompanying decline in reimbursement, drop in elective surgeries, and increase in the uninsured, are going to be relying on comp to offset their losses and shortfalls, and with fees based on a reduction below billed charges, what’s to stop hospitals from just raising their billings as high as they want?
(the real answer is there are some very tenuous and weak controls, but they will have little effect – hospitals are pretty much free to bill what they wish)
And that’s not all: Minnesota hospitals’ billed charges are rising far faster than hospitals’ costs. Ignored is the fact that, as WCRI’s analyses have shown, it is those states (such as Maryland, Massachusetts & Connecticut) that have made WC a reasonable but not generous payer for hospitals where the WC system is most cost-effective for employers.
And injured workers have better outcomes, too.
*South Carolina put in a Medicare+40% hospital fee schedule on 10/01/06. Now, per NCCI, there is a 23.7% WC rate increase filed and pending.
What does this mean for you?
Higher hospital costs in Minnesota. A lot higher.
There’s a little more clarity about who’s handling health reform on Capital Hill and which proposals are currently in the lead.
In the Senate, sources indicate the Wyden-Bennett bill is currently off the table, set aside in deference to the proposal advanced by Sen Kennedy. I’m not particularly happy about this, as the Wyden-Bennett bill already has bipartisan support (a half-dozen Republicans and six Democrats are co-sponsors) and may actually reduce costs. But, no one is going to stand in the way of Sen Kennedy; he’s the chair of the Health, Education, Labor and Pensions (HELP) Committee and his current situation along with relationships built up over three decades further strengthen his hand. Word on the Hill is Sen Barbara Mikulski of Maryland has been tasked with shepherding the health reform initiative thru the Senate. She takes over this responsibility from former Sen Hillary Clinton, who has moved on to better if not bigger things. (Mikulski is getting her feet wet on the HIT part of the stimulus package.)
In the House, reform is the province of Rep Henry Waxman’s Energy and Commerce Committee. Political junkies will recall Waxman won his chairmanship in a bit of an upset over John Dingell of Michigan, much to the rejoicing of greens and health care reformers. Those close to the Representative from California are looking pretty good right now.
Timing is a bit murky right now, as all attention is on the stimulus bill. It is also worth noting the recent passage of the S-CHIP expansion in committee came about because a single Republican Senator voted for the expansion. This may well indicate the Democrats are going to woo Republicans very selectively, adding just enough to pending legislation to get a couple sure GOP votes. If this tactic works, the Dems will essentially isolate the more conservative wing of the GOP, thus rendering them largely ineffective.
So far, oppositon to major reform is somewhat amorphous. Expect that to crystalize very quickly when the details start coming.
I watched President-Elect Obama’s speech from the concert on the steps of the Lincoln Memorial. Boy, what a downer. All that talk about crisis and lost jobs and war, about enormous tasks, long roads and steep climbs and hard work, and pulling together, about going beyond oneself to improve the entire country – and this after what looked to be a pretty fun, upbeat, enjoyable albeit chilly cavalcade of stars in one of the most scenic spots in the District (that’s what we former residents call Washington DC).
In fact, it sounded more like a speech setting the stage for national health reform than one following Mary J Bligh (although ‘Lean on Me’ does lend itself to the topic…).
Perhaps that’s because I watched Mr Obama after reading Bob Laszewski’s latest post, wherein he continues his effort to inject a healthy – and all too necessary – counterpoint to the “we’re gonna get health care fixed before the Cherry blossoms bloom” position.
As much as I’d like to believe the battle for health reform will commence soon and while tough and unpleasant, end soon thereafter, experience teaches otherwise. I’d suggest that anyone who thinks this will get done quickly recall DC pundits’ statements about the Civil War (lets watch the fun at Bull Run, win the war, then ride home for dinner), the First World War (trench, what’s a trench?), or for those more current on their history, the Iraqi conflict (they’ll welcome us with open arms).
Health care reform will require all of us give up things we hold dear; income, stock options, long-held beliefs, positions of influence and importance, status, profits. It is going to be brutally difficult.
Darn that Obama; he certainly harshed my mellow.
But he also revealed the depth of his understanding. For a guy who’s a few years younger than me, he has wisdom beyond his years.
Don’t take this as bad. Rather, realize that we are fortunate to have as President a person who is walking into this with his eyes wide open. He knows what a tough uphill slog it is going to be, with big pharma, the AMA, the AHA, insurance companies and device manufacturers, pundits and bloggers, Republicans and Democrats, all working as hard as they can to make sure their side wins. And the heck with the rest.
What does this mean for you?
Until and unless there is broad consensus about health reform, it isn’t going to happen.
Until. And Unless.