The US government issued two proposals last week that may seem to be a case of the right and left hands not knowing what the other is doing. In the first instance, the Food and Drug Administration (FDA) issued a proposal to allow bio-pharma and medical device companies to more easily distribute published articles that discuss uses not approved by the FDA. In the FDA’s press release discussing the “Good Reprint Practices” draft guidance, Randall Lutter, FDA deputy commissioner for policy, states that “Articles that discuss unapproved uses of FDA-approved drugs and devices can contribute to the practice of medicine and may even constitute a medically recognized standard of care,” and “This guidance also safeguards against off-label promotion.”

The other government proposal is aimed at controlling Medicare spending. This proposal responds to Medicare consuming an increasing share of general revenues. (See previous post.) The proposal’s major items include:

• Expanding “value-based health care” in the Medicare program by:
  • Increasing the use of health information technology, including electronic medical records
  • Making more pricing and quality information available to patients
  • Authorizing the Department of Health and Human Services to release physician-specific measurements of the quality or efficiency of physician performance, and tying healthcare provider reimbursement amounts to quality measurements, and creating incentives for Medicare patients to see higher quality providers.
• Medical liability reform that limits noneconomic damages to $250,000, and protects deep-pockets entitites from paying more than their “share” of responsibility, by “making each party liable only for the amount of damages directly proportional to such party’s percentage of responsibility.”
• Income-relating the Medicare Part D premium for individuals with incomes greater than $82,000 and married beneficiaries with incomes greater than $164,000. (Note, these amounts would not be automatically increased with inflation.)

So on one hand, it seems that the government is looking to expand the use of innovative medical treatments, and on the other hand it looks like it is seeking to cut back reimbursements and make people with Medicare pay more for their treatments - something that has been shown to reduce use. However, I know that these right and left hands do know what the other is doing, and these two actions are compatible under the principle of individual responsibility and empowerment: Both proposals are advocating that patients, clinicians and companies should have and share more information about treatment options and outcomes, and that they should generally be able to make individual choices about their decisions - as long as they are financial responsible for it.

While this all sounds good in principle, there are real concerns about both sets of proposals. I personally am more comfortable with the FDA proposal since it is really extending practices that have existed since 1997 under a recently expired federal law. And assuming the FDA receives more resources to keep on top of these types of practices, I don’t think physicians will be easily hoodwinked, industry will not wildly abuse this information dissemination option, and patients with uncommon conditions will likely benefit. The Medicare proposal on the other hand is really about saving money. The provisions about increasing “value based health care” all sound good, but are very challenging to actually implement to increase the quality of care. The implementation of such quality improving initiatives is something I’m working on right now in a section of my book project involving cultural problems. Changing the cultural environment in healthcare delivery and financing are important parts of making successful processes changes in healthcare delivery. It is a very complicated area, but crucial to actually increasing the quality and efficiency of our healthcare system.

This post has gone on long enough for now. What are your thoughts?

The end of the 2007 Congressional session included a battle about an automatic 10.1% reduction in Medicare reimbursements to physicians scheduled to start January 1st. The resolution to this battle was a temporary legislative fix with a 0.5% increase. However, that fix was only for 6 months, so on July 1st, reimbursements are scheduled to drop by 10.6% from what they are now - the original 10.1% plus the 0.5% increase.

While that will certainly be a focus for Congress this spring, there is another, bigger Medicare fiscal battle likely to be fought because of a provision of the 2003 Medicare Modernization Act (MMA). Title 8 of the MMA includes a trigger mechanism that requires the President to submit legislation to Congress to reduce Medicare spending, if the Medicare Trustees project in two consecutive years, that - in any of the 7 upcoming years - more than 45% of total Medicare spending will come from “general revenues,” (essentially tax dollars as opposed to funds from the Medicare Trust Funds which come mostly from Part A payroll deductions and Part B premiums).

And since the 2007 Medicare Trustees report was the second in a row to make that projection, it triggered a so-called “Medicare funding warning,” which obligates the President to send cost containment legislation to Congress to eliminate this excess general revenue spending by Medicare. The time frame for this legislation is important too. The President is to submit the legislation within 15 days of submitting his budget proposal (which was on Monday, February 4th), so this gives him a deadline of Tuesday, February 19th. And the Congressional Committees - acting under some expedited rules included in the MMA - are supposed to act on the proposed legislation (or their own version which accomplishes the same reduction in Medicare spending of “general revenues”) by June 30th — the same day that the physicians’ Medicare reimbursement reprieve expires.

Technical Note: The MMA also has a provisions to push/pull the legislation out of the Committees for consideration by the House of Representatives and the Senate if the Committees fail to act by their June 30th deadline.

The February 2nd issue of the National Journal has an interesting article (”Frozen Trigger”) about the MMA provisions and some options for how legislation could be crafted to address Medicare’s “excess” projected general revenue spending, e.g. specific spending/benefit reductions versus across the board cuts of x% However, the article doesn’t address the timing confluence of the expiring physician payment legislation with the required Committee actions under the trigger - or the fact that in a Presidential election year, the entire legislative calendar gets compressed, so what Congress might “normally” do in September, will require action in June if it is to be passed into law.

If this seems like a complex situation, it is. And the other set of wrinkles in this process is that while the trigger requires actions by the President and the Congress, they can find ways to not act. For example, the President could choose to submit bare-bones legislation (or ignore the requirement completely - or claim that it is already contained within his January 4th budget proposal). Similarly, there is no penalty if Congress does not pass anything to eliminate Medicare’s projected “excess” general revenue spending. So they could propose and debate legislation, and pass nothing.  Or act on legislation that falls short of bringing Medicare’s projected general revenue spending down to 45%

This year is already setting political precedents and causing political pundits to double back on their best guesses. What do you think will happen with these Medicare fiscal issues?

I have been helping the Medicare Rights Center (MRC) with some appeals of Medicare Part D plans denying coverage for off-label uses of FDA approved medicines. These denials are based on a very detailed provision in the 2003 Medicare Modernization Act that the Centers for Medicare and Medicaid Services (CMS) interprets to mean that Part D can only cover FDA approved medicines for off-labeled uses that are listed in at least one of three specific compendia.

I became involved with the MRC’s work on this issue because as a Congressional staff person I had helped write a 1993 law that expanded coverage for cancer treatments under Medicare Part B (that’s “B” as in ball) to specifically include off-label uses listed in the compendia OR supported by articles published in peer reviewed literature. (The Department of Health and Human Services developed a list of acceptable peer reviewed journals.) This process has worked well, but what it means now is that off-label uses of medicines to treat cancer supported by peer reviewed literature are covered under Medicare Part B, but NOT under Part D (that’s “D” as in drag).

For those interested in more details: The general difference between prescription drug coverage under Medicare Parts B and D is that Part B pays for medicines that patients cannot give to themselves, (so-called not “self-administerable” forms of medicines), while Part D pays for pills (and other forms of medicines that are self-administerable). However, the 1993 law required Part B to cover pills-type medicines to treat cancer if they are the same chemical medicine that Part B would otherwise pay for in an infusion form. Therefore, almost all oral medicines are covered under Part D.

Without getting into too many details of federal law, the issue for the MRC’s appeals comes down to how the Medicare Part D law references Medicaid’s definition of “medically approved indication” in directing what medicines are covered in what situations. The problem arises because Medicaid’s “medically approved indication” definition does not include coverage based upon peer reviewed literature - even though State Medicaid plans can include that coverage - and over 40 states do!

While this is a narrow situation, its impact on an individual can be huge - potentially representing of thousands of dollars per year per person. Medicare Part D says these costs are not their responsibility. State Medicaid programs (many of which would pay for these medicines for patients if Medicaid was their primary insurer) say these costs are not their responsibility since Medicare should be paying for them. So individuals are left to pay for these medicines themselves. And since Medicare doesn’t even “count” this spending towards the patient’s “drug spending,” it doesn’t move them through the Medicare Part D donut hole into the catastrophic coverage zone, where Medicare Part D would at least pay most of the costs of all their other medicines.

The Medicare Rights Center is handling a number of appeals on this issue, and is also involved with other groups trying to clarify the underlying law. If you have any other situations like this, I’d like to hear about it. You can also contact the MRC, although I understand that because of resource limitations, they are not taking any more specific Part D off-label appeal cases. However, they do have an appeals handbook and other Part D resources for physicians and patients [See halfway down the page under “Using Your Drug Plan.”]

What do you think about all this?

The January 26th issue of The Economist had a short article about growing healthcare costs in the US. It pointed out (referencing CMS as a source), that healthcare costs had increased 6.7% from 2005-2006, but that Medicare spending had increased 18.7% What these numbers reflect, (but the Economist article only implies), is that because Medicare Part D started in 2006, spending growth shifted from private spending (and Medicaid) to Medicare. Looking at the actual data shows this to be the case:

• Public sector healthcare spending increased 8.2% in 2006 compared to 2005; Greater than the 7.1% the previous year
• Private sector healthcare spending o increased 5.4% in 2006 compared to 2005; Less than the 6.1% the previous year

Looking closer at the data is even more interesting. For 2006 compared to 2005:

• Medicare spending increased 18.7% compared to the prior year’s 9.3%
• Medicaid spending declined by 0.9% (the first decline in the history of the program) compared to a 7.3% increase the prior year
• Spending on private health insurance increased 5.5% (the slowest rate of growth since 1997) compared to 6.2% the prior year
• Out-of-pocket payments increased 3.8% compared to 5.2% the prior year

However, although total Medicare spending has increased, Part D spending has been tens of billions of dollars per year lower than originally projected.

What do you think this all mean for:

• Longer term spending within the US healthcare system?
• The political fighting over Part D?
• Changes to Part D’s structure (e.g. donut hole), and financing?
• Medicare’s contracting with managed care plans in Medicare Advantage (formerly Medicare+Choice)?