GPO's receive subpoenas from Dallas' U.S. Attorney.

This is going to be huge.

Novation, one of the largest group purchasing organizations (GPO's) in the country ($20 billion a year in sales), has been served with subpoenas signed by the chief of the criminal division of the U.S. Attorney's office in Dallas, according to an article in Saturday's N.Y. Times. It's part of a much larger investigation into the way medical supplies are purchased, sold to hospitals, and billed to federal health programs like Medicare. Novation is owned by, and sells to, some of the largest and most prestigious nonprofit health care centers in the country, who in turn bill Medicare. Ultimately, the investigation will be looking into the hospitals' billing practices.

Medicare reform hits insurers' opposition.

The biggest reform package to amend Medicare since its inception in 1965 (passed last fall) is famously unpopular with seniors (at least the ones who know the details). It also really hacked off Congressional Democrats and Republicans alike, who have objected to being lied to about the true price of the reforms by the White House (through the DHHS/CMS chief actuary, acting under "orders" (literally a threat) from his boss, CMS chief Tom Scully). Now comes the story in the August 22 N.Y. Times that insurers don't much like it either, because it would require them to insure regionally, rather than locally or on a statewide basis, which most if not all insurers claim is not financially feasible. The insurers, of course, like to insure relatively low-cost insureds, and those are found in greater numbers in the cities. Rural patients cost insurance companies more, and the insurers shun them like the . . . well, you know. Of course, the insurers could raise premiums to cover their increased costs, but that would make them less competitive against other insurance companies who aren't in the Medicare market.

This is one more small example of a nearly universal pattern in American health care. Cream-skimming the insurance market, shifting costs to someone else, jimmying your product or your market so that you avoid high costs and thereby help to ensure hefty operating margins -- all of these techniques, which the federal government applies just as skillfully as the private insurance companies, are designed to get "someone else" to pay for the most expensive health care. The result is patchwork affair that will someday have more holes than fabric. The truth is, there is no free ride in health care. Everything gets paid for by someone, whether it's taxpayers, shareholders, other patients' health plans (and therefore other patients and their employers), consumers whose costs are inflated by the cost of health care, citizens who travel further (and at greater risk) for trauma care because of ER closings, the hospital employees who work longer hours for less pay . . . the costs are covered many different ways, some hidden and some more visible. Many of the ways these costs are covered are bad for everyone's health and drive costs up higher than they otherwise would be.

This is nuts. Who is going to bite the political bullet and propose a realistic plan for covering the actual costs of providing health care to all? Neither Kerry nor Bush has really come up with anything close, though Kerry's health plan would do much more for the uninsured than Bush's (and at a much higher cost). Ironically, the Medicare reform law's requirement of regional insurance plans was probably a step in the right direction, but that isn't the way the insurers, who prefer business as usual, want to compete.

First-ever HIPAA conviction.

I'm not sure we needed HIPAA in order to prosecute the conduct described in this press release, but that's the statute that was used by the US Attorney in Seattle to convict Richard Gibson, who admitted that he "obtained a cancer patient's name, date of birth and social security number while [he] was employed at the Seattle Cancer Care Alliance, and that he disclosed that information to get four credit cards in the patient's name. G[ibson] also admitted that he used several of those cards to rack up more than $9,000 in debt in the patient's name. [He] admitted he used the cards to purchase various items, including video games, home improvement supplies, apparel, jewelry, porcelain figurines, groceries and gasoline for his personal use."

DHHS/Health Information Technology: GAO Briefing

The Government Accountability Office (GAO) has published a good summary of the efforts of the Department of Health and Human Services (DHHS) to promote the development and widespread use of electronic health records and the legal environment in which those efforts are being carried out. The briefing document for the staff of the Senate Committee on Health, Education, Labor, and Pensions is entitled, "HHS’s Efforts to Promote Health Information Technology and Legal Barriers to Its Adoption" [GAO-04-991R, August 13, 2004].

Related Recent GAO Reports:
Health Care: National Strategy Needed to Accelerate the Implementation of Information Technology. GAO-04-947T, July 14, 2004 (12 pages).

Medicaid Waivers: HHS Approvals of Pharmacy Plus Demonstrations Continue to Raise Cost and Oversight Concerns. GAO-04-480, June 30, 2004 (74 pages).

Medicare: CMS Needs Additional Authority to Adequately Oversee Patient Safety in Hospitals. GAO-04-850, July 20, 2004 (50 pages).

Illegal immigrants and emergency care.

As previously mentioned here, CMS has announced its plan to implement a provision of the Medicare reform law that is intended to provide some relief for states hit with high costs for providing emergency medical treatment for undocumented immigrants. As reported today's N.Y. Times, one of the quid's that accompanies the government's quo is a requirement that hospitals inquire into and record the immigration status of their patients. Although Congress claims the inquiry is intended to make sure the money provided to the states (including $48 million to Texas) is paid for care to illegal immigrants, it's not at all clear that this will be the effect of the required inquiry: "Hospital executives and immigrant rights groups said the questioning would deter undocumented immigrants from seeking hospital care when they need it, and some hospitals said compliance might cost them more than they would receive in federal aid."

More on stem cells.

If you thought I was too tough on Tommy Thompson's political news release on stem cells earlier this week (see below), here are some excerpts from George Q. Daley's upcoming article, "Missed Opportunities in Stem-Cell Research," slated for publication in the August 12 issue of the New England Journal of Medicine, and released early through the journal's web site today (may require paid subscription):

• "The President’s policy has severely curtailed opportunities for U.S. scientists to study the cell lines that have since been established, many of which have unique attributes or represent invaluable models of human disease."


• "Some 128 new human embryonic stem-cell lines have been produced worldwide since the President’s announcement. . . . Though the federal government is the principal patron of peer-reviewed biomedical research, U.S. scientists studying these cell lines cannot obtain grant support through the National Institutes of Health (NIH); they must find funding from private foundations or philanthropic sources that seldom provide predictable, long-term support."


• "Although the pre-2001 lines facilitate . . . basic studies, they have limited potential for use in clinical therapies. All were cultured in contact with mouse cells and bovine serum, which renders them inferior to newer lines, derived under pristine conditions, for potential therapeutic applications. Moreover, given the limited genetic diversity of the lines, transplantation of their products would face the same immune barrier as organ transplantation. More important questions can be addressed only by means of the lines modeling specific diseases, and therapies may best be pursued with lines genetically matched to specific patients through somatic-cell nuclear transfer. Such approaches are precluded by current policy."


• The science of human embryonic stem cells is in its infancy, and the current policies threaten to starve the field at a critical stage. The explosive growth of research that followed the isolation of mouse embryonic stem cells in 1981 ushered in a revolution in developmental biology. It will be discouraging if studies of human embryonic stem cells, which have such profound implications for human health, are unable to keep pace.

Stem cells.

In an apparent attempt to close the "stem cell gap" between Democrats and Republicans, skillfully highlighted by Ron Reagan at the DNC Convention in Boston, Secretary of Health and Human Services Tommy Thompson released a statement on the subject today. It's not on the HHS Press Office's web page yet, so here it is in full, with my commentary:

Date: August 8, 2004
For Release: Immediately
Contact: HHS Press
Office
(202) 690-6343

STATEMENT BY HHS SECRETARY TOMMY G. THOMPSON ON PRESIDENT'S EMBRYONIC STEM CELL POLICY

Quotable political soundbite/opening paragraph: Three years ago, President Bush opened the nation's laboratory doors for the first time to federal taxpayer funding for human embryonic stem cell research. The President remains committed to this groundbreaking policy that is advancing medical research into some of our most debilitating diseases. As we look forward to further progress on stem cell research, both embryonic and adult, it is important to keep in mind several important points.

President Bush provided - for the first time - federal funding of embryonic stem cell research. [Technically true, but only because Clinton's funding policy came late in his second term and Bush suspended it soon after taking office. Bush's own policy, announced in August 2001, was considerably more restrictive than Clinton's would have been.] The President's unprecedented decision [if you don't count Clinton's] allows for federal funding of research using existing stem cell lines that were derived before Aug. 9, 2001, with no limits on private funding of research. [Limits on private funding would probably have required a change in federal law, and Bush probably understood that he couldn't get such a law passed in 2001, any more than he could get it today.] The President believes that federal funds should not be used to encourage or support further destruction of human embryos, a principle that has been part of federal law since 1996. [And it's a policy that make almost no sense in the context of stem cells. With IVF clinics storing 10's of thousands, if not 100's of thousands, of frozen embryos that have already been designated for donation to research, or which could be legally donated by the clinics, or that have not been designated for any use and will eventually (despite staying frozen) break down and be useless for any purpose, does it make any sense at all to deny federal funds for research on stem cells derived from these embryos?] The impact of the President's decision was to open the flow of federal research dollars for embryonic stem cells and help accelerate work in this field.

The policy is working. [Sort of, and not nearly as well as it could be.] Under President Bush, federal funding for embryonic stem cell research has grown from zero under previous administrations to $24.8 million in fiscal year 2003 [a drop in the bucket], with no limits on future federal funding of research on eligible lines. [The limits are inherent in the eligible lines themselves, which this statement conveniently fails to acknowledge constitute a fraction of the number of cell lines the president based his policy on.] This investment has supported more than 500 shipments of stem cell lines to researchers around the world who are in the early stages of finding ways stem cells can be used to treat diseases such as neurological disorders, diabetes and heart disease. Additionally, in fiscal year 2003, the National Institutes of Health provided $190.7 million in adult stem cell research, which continues to show exciting promise.

The administration is working to maximize research opportunities within the federal guidelines. The NIH is taking new steps to create a National Embryonic Stem Cell Bank that will provide a ready source of human embryonic stem cells to scientists, ensure consistent quality of the lines and provide other technical support that will make it easier for scientists to use these lines. The NIH is also creating three new Centers of Excellence for Translational Stem Cell Research with the goal of exploiting new discoveries in basic embryonic and stem cell biology.

Let's take advantage of the great opportunity that exists before arguing that more is needed. The President's policy holds tremendous and yet-untapped potential, and there is much work to do. Before anyone can successfully argue that the existing federal stem cell policy needs to be broadened, we must first exhaust the potential of the stem cell lines made available within the policy, as well as the ability of the private sector to go beyond the policy. [Why? We already know the current policy isn't going to get enough stem cell lines into the hands of enough researchers for us to unlock the potential of stem cells anytime soon. Why not unleash that potential now, with a significant increase in the number of cell lines and an increase in the amount of federal funds devoted to this research project?] Keep in mind: More lines are available in the United States than any other country in the world. And while federal funding has paid for more than 500 shipments to researchers to date, more than 3,500 shipments are still available. Unlike many countries, there are no limits in the United States on private stem cell research. One study estimates that 1,000 scientists at more than 30 firms spent $208 million experimenting on embryonic and adult stem cells in 2002 alone.

Quotable political soundbite/closing paragraph: The future is promising. Years of hard work remains to be done before the basic research of today can become viable treatments and cures tomorrow. There is good reason to be optimistic. And this optimism is made possible by the reasoned policy of President Bush. Fair and reasonable people can disagree on this complex and difficult issue. President Bush made a tough decision that invested in the scientific promise of embryonic stem cell research without compromising an important ethical line. Three years later, it is clear that this balanced approach is working. The future is promising with the new research opportunities provided by President Bush's historic decision.

Nonprofit class actions: 1st settlement announced.

Modern Healthcare is reporting that "[s]ix-hospital North Mississippi Health Services, Tupelo, reached an agreement with a Mississippi law firm to provide an estimated $150 million in refunds, debt forgiveness, discounts and free care to about 48,000 eligible uninsured patients. The $150 million would cover the system's obligations under the agreement for the past three years and into the future. The system is the first to address the issue with a group of plaintiffs' attorneys that has filed class-action lawsuits against 40 not-for-profit hospitals and systems covering more than 300 hospitals in 21 states. The lawsuits allege that the hospitals overcharge uninsured patients and are unfair in pursuit of payment."

There may be less here than meets the eye. This system has not yet been sued; it resides in Richard Scruggs' backyard; and it doesn't appear to cost the hospital system any real money that it wasn't already planning to spend:

North Mississippi had not been named in any of the lawsuits. However, the system reached an agreement with attorney Richard Scruggs and the Scruggs Law Firm of Oxford, Miss., because 'there are several community issues we need to be addressing,' North Mississippi's chief executive officer, John Heer, said in a system news release. A lawsuit would be distracting, and the proposed discounts were similar to North Mississippi's current policy, Heer said.

In a national teleconference, Scruggs said the attorneys group has approached several not-for-profit hospitals that have not yet been sued about reaching an agreement. Scruggs praised North Mississippi and called its agreement with the firm 'a very compelling template for the other hospitals and the American Hospital Association.' Under the agreement, which is awaiting approval by a federal judge, North Mississippi will not charge eligible uninsured patients more than 10% of their annual income. It also will provide free care, prospectively and retrospectively, to uninsured patients earning up to 200% of the federal poverty level and for uninsured patients earning more, it will establish a sliding fee scale based on Medicare rates. Scruggs said the system can ask the federal judge in U.S. District Court, Aberdeen, Miss., to revise the agreement if the terms prove too costly.

The teleconference/news conference can be downloaded here (follow links to main litigation page).

Abortion and deceptive trade practices.

It's a somewhat unusual combination, but a federal judge in New Orleans enjoined a local man from a variety of deceptive trade practices all intended to interfere with the abortion rights of women (see AP newswire story, courtesy of the Boston Globe). According to the news story:

US District Judge Stanwood Duval granted a preliminary injunction against William A. Graham, who was accused of listing the business phone of his Causeway Center for Women under ''Abortion Services" and making misleading statements aimed at delaying women until it was too late to get legal abortions. . . .

The lawsuit accused Graham of pretending to refer women to abortion providers at bargain prices, then telling them their appointments had been postponed. Louisiana law allows abortions only during the first 24 weeks of pregnancy.

One plaintiff said Graham told her that if an abortion were ''performed too early, it could be harmful to her health," according to the lawsuit.

Elizabeth Nette of Metairie, La., said Graham deterred her 19-year-old daughter, Mary Schloegel, from getting an abortion.

Nette contacted Graham in January. Graham told her he would set up appointments at a local hospital, but delayed them for six weeks, Nette said.

Schloegel is now eight months pregnant and will have the baby.

As unconscionable as Graham's conduct is (regardless of one's views of abortion), his comment was, ''I still don't see that we've done anything wrong." Clueless.

Indigent care woes.

The Milwaukee Journal-Sentinel has an article in today's paper about cutbacks by Aurora Sinai, a downtown hospital that serves a mostly poor patient population. Bottom line: Sinai isn't making enough money on Medicare and Medicaid patients to offset losses incurred from treating poor patients whose care is paid for by the county's general assistance medical program ("GAMP"). Following back-to-back losses of $24 million last year and $14 million projected for this year -- "[e]ven with staff cutbacks, clinic and ward closures and tougher restrictions on care in Sinai's emergency department" -- the hospital is encouraging its physicians to see fewer GAMP patients, which it hopes will translate into fewer GAMP admissions. A hospital spokesman said, "We are cutting back generally on the population that hurts us the most."

This, of course, is going down like chopped hay in local circles. First, there is the criticism that a tax-exempt hospital darned well ought to be able to provide charity care, which resonates with lawmakers on Capitol Hill, who are holding hearings in the House and the Senate on this topic, and is part and parcel of the 31 class-action lawsuits filed this summer against tax-exempt hospitals all over the country. Logically, however, there is nothing about tax-exempt status that precludes crippling financial losses. Put otherwise, is there any reason to believe that a hospital's tax savings are necessarily sufficient to pay for all the uncompensated care some hospitals are geographically and demographically situated to provide?

Then there's the criticism that at the same time Sinai is cutting back on services to GAMP patients it is seeking governmental approvals to build an $85 million 88-bed suburban hospital 3 miles from an existing facility. Of course, excess net operating revenues from the new hospital could offset operating losses at the downtown hospital and allow Sinai to see more GAMP patients, but critics of tax-exempt hospitals often miss the point that you sometimes have to spend money to make money, even in the nonprofit health sector.

For Dallas County residents, this all sounds dizzyingly familiar, right down to the County Commissioners' criticism of Parkland Hospital's plan to building an out-patient surgery center at the corner of Harry Hines and Motor Street. Aurora Sinai's statement that it want "to reinvent itself as a downtown destination hospital. We want a healthy mix of commercial and neighborhood patients" could have been taken from a page out of Parkland's playbook.

The article concludes with some insightful comments:

"[T]he even bigger issue here is that our health care system is broken, and relying on charity care is a weak patch to put on the system. We need political leadership in Milwaukee County and in this state to overhaul our health care system," said [Darcy Haber, health care campaign director of Wisconsin Citizen Action, a consumer advocacy group].

Aurora Sinai's downtown location is the reason it serves so many poor people, said John Whitcomb, director of Sinai's ER department.

"We are the last ones standing downtown. Someone please help us," he said. "The real villain here is an inadequate health care system."

Many hospital admissions are the result of poor patients not receiving primary care, said Bevan Baker, Milwaukee health commissioner. As they get sicker with conditions that could be managed in a primary care setting, they require expensive hospitalization, he said.

"The solutions are not wrapped around Aurora but around an understanding that care should be assessed through the primary care route," Baker said.

Reproductive rights update.

There are two items of note in today's news roundup:

• The Department of Justice has appealed their trial-court loss in San Francisco in which the district court declared the 2003 federal ban on late-term abortions unconstitutional; you can read the San Francisco Chronicle story here. Considering the unbroken string of losses they have suffered on this statute, which blatantly and baldly fails to include an exception to protect the health of the mother (as required by the Supreme Court in Stenberg), you have to wonder: Is this issue about anything other than staying in touch with the Republicans' conservative base and giving the president a debating point between now and November?
• Planned Parenthood (which is a plaintiff in the San Francisco litigation) has joined with the ACLU in a suit to take a parental-notification provision off the November 2 ballot; you can read the Tallahassee Democrat article here. The plaintiffs claim that the wording of the ballot item deceptively claims that it increases privacy protections: "'What it fails to tell voters is that it will reverse Florida Supreme Court decisions and take away the privacy rights guaranteed by the Florida constitution,' said ACLU attorney Randall Marshall." The ACLU's press release on the suit is here.

Uncompensated care and undocumented immigrants.

Two developments in the past couple of weeks provide enduring lessons in the politics of health care for undocumented immigrants.

On July 22 the Texas Attorney General issued Opinion No. GA-0219 to answer the question whether section 285.201 of the Health and Safety Code requires a hospital district to provide nonemergency public health services to undocumented persons who are otherwise ineligible for those benefits under federal law.

Background: In 2001, the Texas Attorney General told the Harris County Hospital District that federal law prohibited the district from providing free or discounted nonemergency health care to undocumented persons. Tex. Att'y Gen. Op. No. JC-0394 (2001). The Attorney General relied on the Federal Personal Responsibility and Work Opportunity Reconciliation Act ("PRWORA"), 8 U.S.C. §§ 1601-41 (2002), which provided that "undocumented or illegal aliens are ineligible for state and local public assistance, subject to specific exceptions." The Attorney General further observed that federal statute "preempts contrary state laws and renders illegal the state and local programs that provide public benefits to aliens contrary to its terms." The opinion concluded that, under the present state of Texas law, the federal statute prohibited the Harris County Hospital District. The opinion also noted, however, that the PRWORA contains an exception authorizing states to provide additional public benefits to undocumented persons. 8 U.S.C. § 1621(d) (2002).

That is precisely what the 78th Legislature did in 2003 when it added Tex. Health & Safety Code Ann. § 285.201 (Vernon Supp. 2004):

As authorized by 8 U.S.C. Section 1621(d), this chapter affirmatively establishes eligibility for a person who would otherwise be ineligible under 8 U.S.C. Section 1621(a), provided that only local funds are utilized for the provision of nonemergency public health benefits. A person is not considered a resident of a governmental entity or hospital district if the person attempted to establish residence solely to obtain health care assistance.

(emphasis added)

The question posed to the AG focused on the word "eligibility" and asked whether this provision requires a hospital district to furnish nonemergency public health benefits to undocumented persons, or, on the other hand, whether it merely permits a hospital district to do so.

Based upon the AG's reading of various dictionary definitions of "eligibility," as well as Texas caselaw, see Foreman v. Security Insurance Co. of Hartford, 15 S.W.3d 214 (Tex. App.-Texarkana 2000, no pet.) (requires WestLaw subscription), and legislative history, the AG concluded that "eligible," as used in this statute, means something less than "entitled," and therefore hospital districts are permitted but not required to provide nonemergency public health benefits to undocumented persons. This is bad news for undocumented immigrants, who can be turned away from hospitals with impunity unless they have an emergency condition, and it's bad news for the hospitals, which are faced with the Hobson's choice of admitting patients for treatment before their condition becomes life-threatening or waiting until the patients come to the hospitals' emergency departments hours, days, or weeks later with emergency medical conditions and the legal right to receive (more expensive) medical treatment. Of course, Texas (like most states) has never suggested how the care for these patients should be paid for.

Also on July 22, CMS announced a plan to implement a plan for hospitals and other providers to recoup $250 million a year for the next 4 years against the cost of providing unreimbursed health care services to undocument immigrants in emergency rooms. The plan can be read here. The plan would implement a provision in the Medicare reform act sets aside $1 billion over 4 years and requires CMS to have a plan in place by September 1. Comment: The amount that's been appropriated is a drop in the bucket, and it ignores the even more substantial costs of in-patient care for those emergency-department patients who have to be admitted in order to be stabilized as required by the Emergency Medical Treatment and Labor Act (EMTALA). But it's a start, and more of a start than we are seeing from the Lone Star State.

Maternal-fetal conflict, Texas style.

As reported in an article by Mary Alice Robbins in the Aug. 2 issue of Texas Lawyer, the Potter County DA is prosecuting a woman whose newborn tested positive for cocaine. The woman is charges with a violation of the Controlled Substances Act, Health & Safety Code § 481.122, which provides:

(a) A person commits an offense if the person knowingly delivers a controlled substance listed in Penalty Group 1, 1-A, 2, or 3 or knowingly delivers marihuana and the person delivers the controlled substance or marihuana to a person:
(1) who is a child . . . .
(c) An offense under this section is a felony of the second degree.
(d) In this section, "child" means a person younger than 18 years of age. . . .

It would be a stretch to apply this section to a pregnant woman who ingests cocaine and thereby "delivers" the controlled substance to her fetus, except for the fact that the 78th Texas Legislature passed S.B. 319 in 2003, which amended the definition of "person" in the Texas wrongful death statute and the Penal Code to include "an unborn child at every stage of gestation from fertilization until birth." The Legislature was careful, in amending both statutes, to make it clear that the new definition does not apply if the harm to the fetus is the result of conduct by the mother.

What am I missing here? First, the Legislature did not amend the Controlled Substances Act's definition of "child" to include an unborn child. So the amendments to the Wrongful Death Statute and Penal Code should be beside the point.

Second, with respect to the only Penal Code provisions that could conceivably apply to the alleged conduct (in addition to the Controlled Substances Act in the Health & Safety Code) -- which would include assault, endangering a child, and deadly conduct -- the Legislature made it clear that the new definition does not apply when the dangerous or harmful conduct is the mother's.

So if the 2003 change to the definition of "individual" doesn't apply, and the Legislature did nothing that would expand upon the class of protected persons in H&S Code § 481.122, this prosecution comes down to the now widely rejected theory that a woman can unlawfully "deliver" a controlled substance to a fetus prenatally. As terrible as it is for a woman to take cocaine while pregnant, there are plenty of good policy arguments against prosecuting a woman who does.

For health care providers, however, the Potter County DA's interpretation of the Controlled Substances Act is an ominous one. Reportable child abuse under chapter 261 of the Texas Family Code includes the following:

(I) the current use by a person of a controlled substance as defined by Chapter 481, Health and Safety Code, in a manner or to the extent that the use results in physical, mental, or emotional injury to a child; [or]
(J) causing, expressly permitting, or encouraging a child to use a controlled substance as defined by Chapter 481, Health and Safety Code.

It also includes

(B) causing or permitting the child to be in a situation in which the child sustains a mental or emotional injury that results in an observable and material impairment in the child's growth, development, or psychological functioning; [or]
(C) physical injury that results in substantial harm to the child, or the genuine threat of substantial harm from physical injury to the child, including an injury that is at variance with the history or explanation given and excluding an accident or reasonable discipline by a parent, guardian, or managing or possessory conservator that does not expose the child to a substantial risk of harm.

If any of these forms of abuse can be directed at an "unborn child," then physicians, nurses, and others who know the child tested positive for cocaine at birth have an obligation to inform Child Protective Services or local or state law enforcement authorities (Family Code § 103). This is a drastic expansion of current legal duties and would appear to fly in the face of the Supreme Court's 2001 decision in Ferguson v. City of Charleston.

I repeat: What am I missing?

Medical error: does it kill 195,000 annually?

When the IOM study, To Err Is Human (report brief), came out in 1999, it caused an uproar with its estimate that as many as 95,000 Americans a year die as the result of preventable medical error. According to HealthGrades, that estimate would have been twice as large if the IOM had included (1) failure to diagnose and treat a serious medical problem in time and (2) unexpected death in a low-risk hospitalization. HealthGrades bases its estimate on a review of 37 million Medicare records. Their report is HealthGrades Quality Study: Patient Safety in American Hospitals (July 2004).

Health care reform redux.

Tonight's Democratic National Convention kick-off will be punctuated by a lot of applause lines.  One of the biggest will be for health care reform.  The Clintons proved in 1993 just how volatile this issue can be, but the National Coalition on Health Care -- which claims to represent nearly 100 of the nation's largest businesses, unions, provider groups, insurers, pension funds, and other groups -- may have demonstrated last week that the country is at last ready to focus on access to care, as well as cost and quality.  From The Commonwealth Fund's "HealthBeat" for July 26:

A broad coalition of insurers, consumers, providers, labor unions, and other groups warned today that absent a dramatic overhaul of the health system in the near future, premiums will soar and the number of uninsured will rise sharply. Soaring health costs are reducing economic growth and new jobs, corporate profits, the competitiveness of corporations, and the viability of pensions, said the National Coalition on Health Care. . . .

The coalition said that if policymakers fail to act, premiums for family coverage will top $14,500 in 2006, and the number of uninsured will reach 51 million that year. In addition, the deficit will rise by trillions of dollars in coming decades, it added. The coalition calls for legislation covering all Americans within two or three years of enactment. Health cost increases should be brought in line with cost increases in other parts of the economy within five years. "Today's report is politically significant because it shows that there is broad support across most sectors of the economy and society, and across party lines for tough, system-wide reform," said coalition co-chair Paul Rogers, former Democratic House member from Florida. The coalition's honorary co-chairs are former Presidents Clinton, Bush, and Carter.

The NCHC's report, "Building A Better Health System," is worth a read.  As the Executive Summary makes clear, the Coalition has done a good job of identifying the most glaring needs of the health care system.  What remains to be seen is whether they -- or anyone else -- have a plan to implement the group's five specifications:

1. Health Care Coverage for All
• to be achieved within two to three years after the passage of legislation
• defined core benefit package
• employers and individuals able to purchase supplemental coverage beyond core package
• options for insuring all Americans include
     - employer mandates (supplemented with individual mandates as necessary)
     - expansion of existing public programs that cover subsets of the uninsured
     - creation of new programs targeted at subsets of the uninsured
     - establishment of a universal publicly financed program
• mandatory participation
• subsidies for less affluent

2. Cost Management
• within five years, bring increases in the costs and premiums associated with the core benefit package into alignment with increases in per capita gross domestic product
• increase the value for patients that is generated by any given level of health care spending
• measures include:
     - providing more and better information for patients, providers, and purchasers
     - improving quality and outcomes of care and reducing amount of unnecessary and injurious care
     - building national information technology infrastructure for health care
     - modernizing and simplifying administration
• urgent need for cost relief requires short-term constraints:
     - rates for reimbursing providers for care encompassed by core benefit package and
     - only after those rates take effect, limits on increases in insurance premiums for coverage defined by that package
• to facilitate comparisons, insurers required to set premiums separately for core benefit package and supplemental coverage

3. Improvement of Health Care Quality and Safety
• accelerated development of an integrated national information technology infrastructure for health care, including:
     - protocols for electronic patient records, prescription ordering, and billing
     - standards to protect privacy
     - mechanisms to incentivize and provide capital for the upfront investments necessary to build the infrastructure
• measures of process and outcomes quality to improve accountability and help payers and patients make better choices
• independent national board, with members drawn equally from public and private sectors, to coordinate public and private efforts to improve quality of care
• board also responsible for coordinating development of national practice guidelines
     - guidelines to be based on reviews, by panels of leading health care professionals, of research on impacts of technologies and procedures
- guidelines could be cited in malpractice cases as evidence of best medical practice
• board to update core benefit package to reflect changes in practice guidelines

4. Equitable Financing
• measures to reduce or eliminate cost-shifting across categories of insurance programs and payers
• mechanisms or sources that could be used, individually or in combination, to fund program costs include:
     - general revenues
     - earmarked taxes and/or fees
     - contributions required from employers
     - contributions required from individuals and families
• financial obligations to be adjusted, or subsidies provided, based on relative ability to pay for less affluent individuals, families, and employers

5. Simplified Administration
• assurance of coverage for all Americans and establishment of core benefit package to create consistent set of ground rules and reduce variations that now draw time and resources away from protection and advancement of health
• creation of an integrated national information technology infrastructure – including electronic patient records, prescription ordering, and billing – to reduce administrative complexity, costs, and medical errors
• national practice guidelines to reduce variability of care and billing and improve quality of care

The Coalition can't be faulted for failing to think big.  Specifically, its report sets out three premises that underlay their detailed specifications:

Health care reform must be a national priority.
Comprehensive health care reform is long overdue. Every year that reform is delayed, tens of millions of Americans live in peril, without health insurance; millions are harmed, and hundreds of thousands die needlessly, because of sub-standard care; and health care costs continue to spiral ever upwards.

The Coalition’s specifications are meant not just to encourage and help to frame a national debate about health care reform, but to create momentum for the passage of legislation. These specifications are an expression of operational intent: Our member organizations are determined to work with other organizations and with policymakers in both parties to secure the reforms described here.  Yes, we need a vigorous debate about health care policy — but what we really need is action, and soon.

Health care reform must be systemic.
The Coalition’s specifications were developed not as a shopping list of potential stand-alone initiatives, but as a linked series of targets, criteria, and options — meant to be adopted concurrently and to work together.  The vast American health care sector is exquisitely and elaborately interconnected. Partial or piecemeal reforms, even those conceived and implemented with the best of intentions, can produce unanticipated adverse consequences far from the focus or locus of those targeted reforms.

For example, a dramatic expansion of access, implemented without accompanying measures to improve quality and manage costs, could produce an overloaded health care system that delivers worse care (albeit to more people) at higher costs.  Similarly, constraints on costs (and reimbursements for care), pursued in isolation,
could compromise both access and quality.

A system is a set of institutions and processes that function together to achieve defined objectives. The Coalition’s specifications were designed to serve multiple goals simultaneously. We began our development of recommendations by agreeing on five core principles for reform (which appear below as section headings for our specifications).  Then, as our deliberations proceeded, we continuously revisited and recalibrated our recommendations to make sure that the individual components fused together into a sensible systemic strategy.

We believe that a systemic approach can increase not only the substantive
coherence of reform, but also its political feasibility. Thus, if constraints on health care cost increases were proposed in isolation, providers might understandably anticipate that their revenues going forward would be diminished. By contrast, if those same constraints were conjoined in a systemic strategy with an assurance of
coverage for all Americans and financing for their care, providers would receive payment for care that they now provide, with little or no compensation, to uninsured patients.

Health care reform must be system-wide.
The Coalition is calling for system-wide reforms, not for changes that would apply to only some payers, patients, or providers.  Unless reform is system-wide, gains in some sectors or for some groups are likely to be offset by losses elsewhere.  There is, in addition to this practical consideration, another compelling argument for making certain that reform is system-wide.  America is already a nation of health care haves and have-nots.  Reform should aim to assure that all Americans receive excellent
health care and are able to enjoy the quality of life and peace of mind for which such care is essential. Piecemeal reform that helps some categories of people to the detriment of others would not take us closer to an optimal health care system and could actually make it harder to attain.

Patient safety, quality bill heads to conference

Thanks to AHLA's Health Law Highlights for this summary of last week's events on the long-delayed patient safety and quality bill:

The Senate approved July 22 legislation intended to improve patient safety by promoting medical error reporting (Congressional Record). The "Patient Safety and Quality Improvement Act" would encourage voluntary error reporting by protecting patient safety data from disclosure so that healthcare providers could report medical errors without fear of being sued. The Senate Committee on Health, Education, Labor and Pensions unanimously approved S. 720 last year, while the House passed a similar bill in March 2003 (H.R. 663). [In parliamentary terms, the Senate incorporated S.720 in H.R. 663, as an amendment and then passed H.R. 663. So now the two versions of H.R. 663 go to conference to be reconciled.] The legislation was prompted by a 1999 Institute of Medicine Report [To Err Is Human] that found as many as 98,000 people die each year as a result of preventable medical errors.

FDA, preemption, & tort reform.

Preemption is one of those issues -- along with issue and claim preclusion, exhaustion of remedies, and justiciability -- that only a lawyer can love. It's technical, messy, and a one-way ticket to Palookaville for plaintiffs unlucky enough to bump up against it in their state-law-based tort suits.

Preemption starts off easy: Under the Supremacy Clause, federal laws take precedence over state laws. When a state law is inconsistent with federal law (whether in statutes, treaties, court decisions, or the Constitution), the state law gives way to the federal.

That may be the only easy thing about the doctrine. Figuring out what counts as a federal/state conflict, and then determining how broadly preemptive the federal law should be, can be very tricky.

Case in point: the federal laws that regulate drug and medical devices. Should the fact that a manufacturer has jumped through the hurdles of the federal Food, Drug and Cosmetic Act ("FDCA") to prove the safety and efficacy of its drug or device mean that an injured plaintiff cannot sue the manufacturer under state tort law, on the theory that "regulation" of these manufacturers by state tort law should be deemed preempted by the federal statutory regulation of drugs and devices that is already in place? With devices, it's particularly tricky, because medical devices are assisgned to "classes" based upon their potential harm to the user. Class I devices present the least potential harm and are subject to the least regulatory control. Class III devices, on the other hand, go through the most exacting level of agency regulation. When it comes to preemption of state tort law, different levels of regulation might very well be viewed in a different light and produce different results.

In 1996, the Supreme Court had an opportunity to consider the preemptive effect of federal law in a Class III device case. In Medtronic v. Lohr, the Court had to figure out the preemptive effect of language added to the FDCA by the Medical Device Amendments of 1976:

Except as provided in subsection (b) of this section, no State or political subdivision of a State may establish or continue in effect with respect to a device intended for human use any requirement (1) which is different from, or in addition to, any requirement applicable under this chapter to the device, and (2) which relates to the safety or effectiveness of the device or to any other matter included in a requirement applicable to the device under this chapter.

The Court concluded that -- despite the relative rigor with which Class III devices are regulated -- the federal statutory language did not preempt state-law claims for negligent design, negligent manufacture, and failure to warn. Primary among the the Court's reasons was the absence of any federal cause of action for injured consumers, so that acceptance of the manufacturers' argument that state law claims are preempted would have left plaintiffs with no remedy whatsoever. It was also important to the Court that with respect to the device involved in this case, Medtronic did not actually go through the high hurdles of Class III regulation, because it successfully claimed that its device was "substantially equivalent" to other peviously approved devices.

Since 1996, the FDA has taken the position that federal law is not broadly preemptive when it comes to state laws that would hold manufacturers to a higher standard than the federal one -- in effect arguing that federal law sets a floor when it comes to design, manufacturing practices, and labeling, but not a ceiling. Starting in 2002, however, the Bush Administration has taken the position that federal law is broadly preemptive and sets both a floor and a ceiling. The result of this shift can be seen in opinions like the Third Circuit's last Tuesday in Horn v. Thoratec Corp. (No. 02-4597), in which the court -- relying heavily on a brief filed by the Bush Administration as friend of the court -- concluded that Medtronic was not controlling precedent and the plaintiff's state tort claims were preempted by the federal law. The principal reason for dissing Medtronic was the fact that the device in the Horn case had in fact gone through the rigorous pre-market approval process for Class III devices rather than rely on the generic requirements that apply to devices that seek marketing approval under the "substantial equivalence" test.

Although this distinction appears to have been on the Supreme Court's mind in Medtronic and has much to recommend itself as a matter of statutory text and regulatory policy, its broad application to claims such as Mrs. Horn's (and numerous other plaintiffs who have been bounced out of court by the Bush Administration's zealous advocacy on behalf of manufacturers) represents a new chapter in the Bush Administration's pursuit of "tort reform," a chapter that leaves many injured patients and their survivors with no relief at all. "Compassionate conservatism"? Hah! Meanwhile, you can read about the shift and its political implications in a good article by Robert Pear in today's New York Times.

Death penalty & psychotropic drugs.

On July 21st, U.S. District Judge Royal Fergeson (U.S. District Court for the Western District, Pecos Division) granted a Texas death-row inmate's petition for habeas corpus relief in an 80-page opinion that (1) blows the state's case out of the water; (2) includes harrowing accounts of prosecutorial misconduct and ineffective assistance of counsel; (3) depicts the Texas Court of Criminal Appeals (our highest state court for the review of criminal convictions) as incompetent, uncaring, or both; and (4) declares unconstitutional the administration of antipsychotic drugs to the defendant without his knowledge or consent during the pre-trial and trial despite the fact that the defendant showed no symptoms of psychosis. The result of that last item was that during the guilt and punishment phase of the trial, the defendant was noticeably without facial expression or other affect, making him appear to be supremely indifferent to the charges, the evidence, the trial, or much of anything else.

I have two questions: (1) What do you suppose the U.S. Court of Appeals for the Fifth Circuit will do with this on appeal? (2) What did the physicians who ordered the daily doses of Haldol and Perphenazine think they were doing?

Drug reimportation: video conference.

The Alliance for Health Reform and Kaiser Family Foundation put on a 1.5 hour conference on reimportation yesterday. The video plus PowerPoint slides are available here. Of especial note are the slides from Donna Vogt and Susan Thaul (both of the Congressional Research Service) comparing and contrasting the competing bills, which are:

• HR 2427 (not yet available; try here) (Gutnecht)
• S 2307 (Grassley)
• S 2328 (Dorgan)
• s 2493 (Gregg)

Unfortunately, the slides presented by Tom McGinnis, Director of Pharmacy Affairs, FDA, aren't included on the Kaiser web site (above) or the Alliance's web site (though the Alliance site has a wealth of supplemental materials). The slides may eventually show up on the FDA web site, but until then, there's the July 14 testimony of William K. Hubbard, Associate Commissioner for Policy and Planning, FDA, before the Senate Judiciary Committee.

FTC/DOJ: Abolish CON laws.

It had to happen sooner or later: One of the mainstays of federal health care policy for 20 years -- state Certificate of Need (CON) laws -- are now being vilified by the joint FTC/DOJ task force on competition in health care. The group also counseled states not to pass laws that authorize collective bargaining by physicians (too late, in the case of Texas, but our law is so cumbersome and intrusive that it has been virtually a dead letter since its enactment) and was critical of state regulation of pharmacy benefit managers and state-mandated health insurance benefits.

The DOJ/FTC report was issued today and can be found here.