May 15, 2012
2:30 pm
This month, we’ve seen even more evidence that states enacting medical liability reform are having a significant impact in reducing the number of frivolous lawsuits, thus providing speedier justice to plaintiffs who have suffered legitimate injuries and deserve compensation. Pennsylvania is the latest state spotlighting the value of reform.
Of course, Pennsylvania reforms are not exactly new. The state took action back in 2003 to address a situation in which, according to a Philadelphia Daily News columnist, “courts were clogged with cases and lawyers hit Vegas-level jackpots.” The state began requiring attorneys to produce certificates of merit from medical professionals to prove that a legitimate case existed and it declared that cases must be tried in the same jurisdiction in which the alleged injury took place. That put an end to ‘venue shopping,’ in which attorneys strived to get their cases tried in Philadelphia with its notoriously free-spending juries.
What’s new is the evidence that these reforms have had an effect. The state Supreme Court announced last week that the number of medical malpractice cases filed in the state was down 44 percent in 2011 compared to the years before liability reforms were instituted. With higher standards being required, attorneys are less likely to invest time and resources into questionable litigation.
There are still cases, though, that must have less than impeccable merit. In 2011, seven of every 10 liability cases were won by the defendant health providers.
It should be noted that Pennsylvania physicians and hospitals insist that further reforms are still necessary, that it is difficult to recruit new physicians to a litigation-heavy state and too much defensive medicine is being practiced.
Still, this is significant progress.
May 01, 2012
8:43 am
We need a better understanding of exactly why the medical device tax contained in the Affordable Care Act is so harmful to both the U.S. economy and the future of medical innovation. Advocates of the tax say it’s no big deal for multinational, multibillion dollar corporations to pay a few extra bucks toward health reform implementation (even though those companies are being forced to lay off employees, because of the tax, at a time our economy can least afford it).
But it’s also the smaller companies, those that scrap for capital to fund exciting new innovations, that are taking a beating from this tax. The fact that this tax is applied to revenues, not to profits, is particularly devastating for smaller innovators that are still trying to get to the point of being highly profitable.
Take Spectranetics, a Colorado Springs-based medical laser manufacturer, as a prime example.
At a panel discussion hosted by the Colorado BioScience Association, the CEO of Spectranetics pointed out that his company generally earns about $1.5 to $3 million on approximately $135 million in annual revenues. If the device tax was applied this year on Spectranetics’ income, the company would have to pay the government slightly over $3 million, essentially wiping out the resources that could be invested into product development, clinical research or additional hiring.
And, as the company pointed out, it can’t compensate for the tax by raising prices doctors and hospitals pay for the medical lasers because healthcare providers are also being squeezed with comparatively low Medicare and Medicaid reimbursement rates.
At a time in which our economy needs an infusion of well-paid jobs and our growing healthcare needs require new medical innovation, the Spectranetics case is just one of many examples demonstrating why Congress needs to reconsider the medical device tax.
April 10, 2012
10:10 am
Today, I saw an argument in support of the Independent Payment Advisory Board (IPAB) – the 15-member board of political appointees with unprecedented power to reduce Medicare expenditures – that was so off the mark one would think it came from some sort of fringe website. In fact, it was found on CBS News’s Marketwatch site.
CBS provided webspace for a consulting actuary to argue that there is really no difference between IPAB and private insurers. IPAB will, he said, “assess whether certain procedures will be denied reimbursement, either due to ineffectiveness or excessive costs,” the same as private health insurers. IPAB members may be unelected, but, he argues, private insurance claims adjusters aren’t elected either.
“It’s just a reality that any insurance program, whether commercial or governmental, will deny some claims, states this CBS News-hosted editorial.
We won’t even get into some of the obvious differences between IPAB and private coverage, such as the fact that employers can take their business to different insurers. Or the fact that private insurers have appeals mechanisms, whereas IPAB decisions aren’t even subject to judicial review.
But that’s not even the biggest problem with this pro-IPAB argument. IPAB isn’t structured to cut costs by denied payment for ineffective procedures. It’s not about that at all.
As the Congressional Budget Office has made quite clear, the law creating IPAB explicitly forbids the board from rationing care, changing Medicare benefits or increasing beneficiary cost-sharing. According to CBO, the board will, for all practical purposes, be limited to cutting healthcare provider payments to meet its cost-cutting targets.
That’s not distinguishing one treatment or therapy from another based on cost and effectiveness. That’s simply paying physicians less to treat Medicare patients. And, in so doing, IPAB threatens to widen the payment level gap between Medicare and, you got it, private insurers. It will result in care for Medicare beneficiaries that is less accessible, not more cost-effective.
There is a legitimate debate to be had over whether IPAB is a wise public policy choice. To have that debate, though, we need to be on the same platform in terms of understanding what this board will actually do.
April 04, 2012
9:37 am
When you examine the rising costs in our healthcare system, an important starting point is the care required by the so-called dual eligibles, those Americans who are eligible for both Medicare and Medicaid. There are nearly 10 million individuals nationwide who fall into this category and they utilize a disproportionate share of healthcare services because of a high propensity for chronic disease and need for acute care.
Dual eligibles account for 27 percent of Medicare’s spending, although they represent only 16 percent of beneficiaries. That gap is even wider in Medicaid. According to a Wall Street Journal article last year, one reason costs are so high for this patient group is imperfect coordination between Medicare and Medicaid which is contributing to “hundreds of thousands of hospitalizations that could be avoided.”
A new report released this week shows that progress can be made in providing better, more cost-effective care to the dual eligible population. Avalere Health, a highly-regarded research and analysis firm specializing in health policy, has studied an integrated care model developed by SCAN Health Plan, a health insurer serving 130,000 Medicare Advantage beneficiaries in California and Arizona. (SCAN is also a member of the Healthcare Leadership Council.)
The Avalere study found that SCAN’s team-oriented case management approach for dual eligible patients, utilizing individually-tailored care plans, has resulted in hospital readmission rates that are 25 percent lower than traditional fee-for-service Medicare. SCAN also outperformed conventional Medicare by 14 percent in prevention indicators, maintaining patient wellness and keeping them out of the hospital.
As Avalere senior vice president Bonnie Washington put it, “Better coordinated care for low-income elderly patients is a critical imperative for federal and state governments. This study shows that well-developed care management models can result in measurable differences in quality, hospitalization and rehospitalization – and cost savings – for a vulnerable population in need of close care coordination.”
March 30, 2012
2:16 pm
While the U.S. Supreme Court was hearing oral arguments this week on the constitutionality of the individual mandate provisions of the Affordable Care Act, another serious concern about the mandate didn’t involve constitutional issues and stayed relatively unnoticed.
Is the individual mandate sufficient to achieve its intended goal, to bring healthy Americans into the health insurance pool? In answering this question, the stakes are high. If millions of currently uninsured Americans choose to remain without coverage, and simply pay the noncompliance penalty instead, serious questions are raised as to whether other insurance reforms can take effect – most importantly, eliminating pre-existing conditions as a barrier to coverage – without destabilizing the marketplace.
This is a legitimate worry. In 2014, a person who chooses to remain uninsured would be penalized $95 or one percent of adjusted taxable income, whichever is greater. And even when the penalty is fully implemented in 2016, the penalty will be the greater amount of $695 or 2.5 percent of adjusted taxable income. These penalties will still be less than the cost of purchasing health coverage.
As University of Illinois law professor Richard L. Kaplan put it, accurately, “(A) person might choose not to buy health insurance, opting to wait until something medically unfortunate happens. Insurance companies will not be able to refuse her at that point, a situation that might imperil the private insurance market.”
Even if the Court upholds the constitutionality of the individual mandate, lawmakers can’t complacently assume that it will be strong enough to move uninsured citizens into the insurance marketplace. It would be worth studying the efficacy of other incentive programs, such as those used by the Medicare Part D prescription drug program. Part D has utilized both limited enrollment windows as well as higher costs for those who delay enrollment.
The goal of incentivizing Americans to acquire health insurance is a good and necessary one. It’s necessary, though, to keep in mind that the constitutionality of the individual mandate may be the most visible issue, but it’s far from the only one.
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