As scheduled CMS yesterday started providing “Medicare payment and volume information is now available for common elective procedures and other common admissions for all hospitals. Information includes the volume and typical ranges of Medicare payments, by county, for 30 diagnostic related groups (DRGs), including heart operations and implanting cardiac defibrillators, hip and knee replacements, kidney and urinary tract operations, gallbladder operations, back and neck operations, and common non-surgical admissions. CMS expects that these and future data will be used to help consumers compare price, and with other available tools, quality, of common medical treatments.”

This is not like pulling a rabbit out of a hat because Medicare pricing is established by law, but it may be helpful to you and your members with primary Medicare coverage. As you can see, the current information is presented in a user-friendly format, but CMS has plans for a decision making tool.

The Galen Institute provides these interesting tidbits about the CMS data:

“The spreadsheet offers information for each state, each county in every state, and each hospital in every county for a variety of treatments they provided in 2005, including heart operations, hip and knee replacements, kidney and urinary tract operations, gallbladder surgery, and back and neck operations.

“One of the first things you notice is the huge discrepancy between the national averages of what the hospitals charge and what Medicare actually pays. [See yesterday’s post about spiraling health care costs.] Medicare’s payment is generally a third or less of the hospital charges. For example, Medicare’s average payment, nationally, for a heart valve operation is $38,538, but the average hospital list price is $115,221.

“There also are big price differentials when you drill down into the data. CMS lists the ranges of Medicare payments by county, but hospital-specific pricing data is not yet available. You see that the valve replacement could cost as little as $26,600 in Schenectady, NY, but more than $68,000 in Hardin County, KY.

“CMS does list the number of procedures for each hospital – which is a good indicator of the hospital’s expertise and consequently of more successful outcomes. From the data Medicare has published, you may be better off at Florida Hospital in Orange County with 177 heart valve replacements last year rather than Salina Regional Health Center in Kansas, with only 11.”

Finally, I have read that White House health care advisor Roy Ramthun is resigning his office today. Mr. Ramthun lead the HSA implementation charge at IRS, and he spoke at the FEHBP Carrier Conference in 2004. More recently, he has been working at the White House on health care policy.

Of course, the problem of spiraling health care costs in the U.S. has several sources, including aging demographics, obese population, etc. Yet I have argued that you can date the problem from 1982 when Medicare imposed price controls on inpatient hospital bills through its prospective payment / DRG system. The New York Times reports today that “Employers and consumers are paying billions of dollars more a year for medical care to compensate for imbalances in the nation’s health care system resulting from tight Medicare and Medicaid budgets, according to Blue Cross officials and independent actuaries.”

I am encouraged by the fact that

“Business leaders, health plans and groups representing hospitals and doctors plan to meet in July to review the report and make policy recommendations. “Although many state budgets are overwhelmed by rising Medicaid costs, health care reforms intended to reduce the ranks of the uninsured that were recently enacted in Massachusetts and Vermont include more state money for Medicaid. Blue Cross Blue Shield of Massachusetts and Partners Healthcare, the largest hospital group in Boston, jointly supported the Medicaid increases. “‘That was a real-world example of hospitals and insurers seeing that the had common interests,’ said Paul Ginsberg, a health economist who is president of the Center for Studying Health Systems Change, a nonprofit research group in Washington.”I hope that the medical professionals arguing for a single payer system take note of this study. There is no magic potion to cure this problem, but I have confidence that the provider and payer communities can tackle the problem if they work cooperatively. As the Health Data Management article (mentioned two posts below) points out, there are helpful elements in the payer’s consumer driven health care strategy that tie in with the medical community’s concern about chronic care expressed in the NEJM editorial mentioned one post below.

This week’s issue of the New England Journal of Medicine includes several articles on the new Medicare Part D prescription drug program, a point – counterpoint by the CMS Director Mark McClellan and Rep. Louise Slaughter (D NY) and a special study concluding that the Medicare Part D coverage donut hole kills (a bit of an exaggeration but all of these articles are freely available).

The Journal editorializes about this study in pertinent part as follows:
“The use of increased copayments or limitations on benefits in an attempt to control spending represents a misdiagnosis of what accounts for, and what is needed to address, the high and rising costs of health care. Any approach to creating better outcomes in health care must address the appropriate clinical treatment of chronically ill patients. Interventions to contain costs also need to address the rise in the prevalence of treated disease. A large component of the rise in health care spending is the increase in the rates of diabetes, back problems, and mental disorders associated with the persistent rise in obesity across virtually all age groups. Thus, controlling health care spending will require a strategy for the more effective treatment of chronically ill patients and for the slowing or halting of the increase in the prevalence of diseases such as diabetes. “Instead of an approach driven by the redesign of insurance and benefits, control of spending will require the early identification of patients at risk and the appropriate payment of physicians to manage a patient’s multiple chronic diseases according to evidence-based protocols. Providing better care for chronically ill patients under the Medicare program will require changes in policy. One approach would accelerate the use of the models of payment and delivery of care for chronic diseases that are under way in Medicare. A key unresolved issue concerning such an approach is how to get physicians to apply integrated models of chronic-disease care and how to get their patients to participate actively. “The results of the study by Hsu et al. should encourage movement toward other approaches to the management of spending in Medicare and other health insurance programs. One such approach would involve a monthly payment to physicians so that they would take the time needed to work with patients and manage their multiple chronic illnesses. Simultaneously, cost sharing for clinically recommended care (e.g., annual eye examinations or measurement of glycated hemoglobin for patients with diabetes) should be waived to ensure higher rates of compliance. Indeed, a condition-specific cost-sharing structure should be in place for clinically recommended services for chronically ill patients. We should be reducing the barriers to treatment and encouraging patients to take appropriate medications for the recommended duration, rather than increasing these barriers by limiting benefits. As the findings of Hsu et al. highlight, the use of cost sharing and limits on prescription-drug benefits to control spending is counterproductive both medically and in the immediate attempt to limit spending. “Effective strategies for reducing the level and growth of spending will need to rely on tools other than high-deductible plans and limits on benefits. With respect to the rise in spending, we need to address the rise in obesity head-on. Doing so will be neither easy nor likely to produce immediate results. However, the failure to include primary prevention and population-based approaches in the cost-containment tool kit will come at a price: a continued increase in obesity and in the prevalence of associated disease. “

I enjoyed reading this Health Care Data Management article which discusses various steps that health plans across the country are taking to improve consumer driven health care. I was impressed by Regence’s twist on the very popular myspace.com web site. Also Theresa Defino called to my attention this consumer survey on personal health records.

Check out this spoof on big law firm web sites developed by blogger Jeremy Blachman who has authored a book Anonymous Lawyer that will be published next month.

Govexec.com (dated 5/30) and the Federal Times in this week’s issue (p. 6) report that on May 23, OPM Director Linda Springer submitted to the House and Senate leadership a proposal to amend the FEHB Act to permit the Service Benefit Plan to offer a third option that pairs a high deductible health plan with a health savings account. NARFE has expressed its strong, unalterable opposition to this proposal. As far as I can tell, no bill implementing OPM’s proposal has been introduced in the House or Senate yet.

On May 2, the U.S. Court of Appeals for the District of Columbia issued a split opinion in Abigail Alliance for Better Access to Developmental Drugs v. von Eschenbach, — F.3d — , No. 04-5350 (PDF copy). In this case, the Alliance, supported by the Washington Legal Foundation, sought access to post phase I trial investigational new drugs on behalf of mentally competent, terminally ill adults with no alternative government approved treatment options. Under the Food Drug and Cosmetic Act, drugs cannot be sold in interstate commerce without Food and Drug Administration (FDA) approval for marketing. 21 U.S.C. § 321(p)(1). The FDA approval process involves three phases of human testing — phase I which is a safety test on 20-80 patients; phase II which is an efficacy test on up to several hundred patients, and phase III which is an expanded trial. These trials can take seven years, according to the opinion.

The Court in a majority opinion written by Judge Rogers and joined by Chief Judge Ginsburg held in reliance on Washington v. Glucksberg, 521 U.S. 702 (1997) that the due process clause of the Fifth Amendment to U.S. Constitution protects the right of terminally ill people to access investigational new drugs that have cleared initial safety testing at phase I of the trials when the patient’s doctor holds the opinion that the drug is potentially life saving, even though its efficacy has not yet been proven. The Court found that the government has not blocked access to investigational new drugs for the greater part of our Nation’s history. Analogizing to the Supreme Court’s opinions in Cruzan v. Director, Missouri Department of Health, 497 U.S. 261 (1990)(holding than an individual has a due process right to refuse life sustaining treatment), as well as Roe v. Wade and Griswold v. Connecticut, the Court decided that “the key is the patient’s right to make the decision about her life free from government interference.” (Slip op., at 3).

The Court remanded the case to the district court for its decision on whether the FDA’s
policy restricting access to investigational new drugs with certain compassionate exceptions is narrowly tailored to serve a compelling governmental interest.” I learned in law school many years ago now that it is very difficult for the goverment to satisfy the compelling interest test (as opposed to the rational basis test which is applied when there is no fundamental substantive due process right at stake.)

I found Judge Griffith’s dissenting opinion quite convincing. Judge Griffith believes that the Alliance should have taken its argument to Congress rather than the courts. He disagrees that there is a fundamental right to access investigational new drugs citing a long history of state and federal regulation of drugs. “Contrary to the tradition asserted by the majority, there is a tradition of courts rejected arguments that the Constitution provides an affirmative right of access to particular medical treatments prohibited by the Government” (Dissent at 19). The dissent raises a number of important health law questions presented by the majority opinion, e.g, “If a terminally ill patient has such a right, are patients with serious medical conditions [similarly entitled]; can a patient access any drug if she believe in consultation with a physician that it is potentially life saving?” (do you remember Laetrile) and here’s a question from me — if these investigational new drugs become widely available after phase I — why would anyone participate in a phase II or III trial where some participants receive the drug and others receive a placebo? (Trials are ethical because there is no evidence that the investigational new drug is more effective than existing treatments or the placebo.)

The D.C. Circuit, in my view, has opened a real Pandora’s box, and I trust that the FDA and the Justice Department are evaluating their rehearing/appeal options.

On Memorial Day, we pay tribute to the soldiers, sailors, and airmen who have fallen in defense of the United States, our country, as well as those who now are in service. At 3 pm on May 29, I hope that everyone will observe the National Moment of Remembrance. In particular, I will remember my cousin Army Capt. Eric T. Paliwoda (left), 4th Infantry Division, West Point Class of 1997, who was killed in combat in Iraq on January 2, 2004. We will never forget.

The latest salvos in the ongoing feud between the medical profession and health insurers were competing prompt payment studies published by Athena Health and the America’s Health Insurance Plans (AHIP). The New York Times, reporting on the Athena Health study, trumpeted that “late payment of medical claims adds to the cost of health care.” The article begins “Few things rankle a doctor more than an insurance company’s saying it cannot find a claim for medical services. Particularly when there is even a signed return receipt to document delivery of the bill.” The article then quotes a Pittsburg medical group CEO who, in 20th century fashion, has the green USPS return receipt for a large dollar claim.

Why didn’t this group send the claim electronically (and why didn’t the Times reporter ask that obvious questions)? As the AHIP study points out, health plans process electronic claims much more efficiently than paper claims, and all health plans have prepared to receive standard electronic claims as a result of the federal government’s HIPAA mandates. This CEO only has herself to blame for any delay here. As Dr. David Kibbe remarked to the American Academy of Family Physicians, “If there’s a silver lining to the HIPAA regulations, it’s here. These standards can save your practice time and money.” Now there’s a valuable message for medical practices to apply. The Hatfield-McCoy feud eventually ended; maybe this one will too.

On Friday, the Post reported that this employee routinely took home such demographic data. Today’s article provides more details on the nature of the theft and the reporting timeline. The Post reports that “the employee ‘assumed full responsibility, acknowledging he knew he should not have taken the data out of the office.” The Post explores the disturbing reporting timeline — the employee promptly reported the theft to his superiors and the Montgomery County Police, but the VA Secretary did not learn of the theft until May 16 and the public was not informed until May 22. Even the FBI was not brought in until late last week.

According to the Post, Sen. Susan Collins described the situation as baffling. I agree. While the employee has accepted responsibility, I cannot understand how the VA computer system evidently permitted that employee to download and externally store unencrypted personal data. At a May 25 hearing before the Senate Veterans Affairs Committee, the VA Inspector General reported security vulnerabilities related to the operating system, passwords, a lack of strong detection alerts and a need for better access controls — all of which have existed at least since 2001. I trust that in view of this nightmare all IT security officials are now double checking their own systems’ internal controls.