It is certainly important that health care, and particularly Medicare, be debated thoroughly during the Presidential campaign, as entitlement reform is one of the most pressing issues that Congress and the White House will face next year. Indeed, the latest annual Medicare and Social Security Trustees report projected that the Medicare trust fund will run out in 2024 — five years earlier than previously expected — and the Social Security trust fund will run out by 2036.

The good news is the emerging national consensus, across the ideological spectrum, that we must address the nation’s budget problems and that Medicare reform must be a part of any agreement. It’s essential, though, that changes to the Medicare program be made responsibly, starting with the principle  that reform must protect the elements of the program that are working efficiently now.

One Medicare program that should be kept intact is Part D, the prescription drug benefit program. Part D is the most cost-effective and successful entitlement program the federal government runs. Even Newt Gingrich, presenting himself on the campaign trail as the champion of conservative voters, has spoken up several times  in support of Part D. He has touted the market-based program’s success and effectiveness in saving lives, saving money and offering people more choices.

Thanks to competition among insurers, the prescription drug program costs the government and beneficiaries far less than initially projected. Last year, the Congressional Budget Office (CBO) reduced its baseline 10-year spending projection for all of Medicare by $186 billion, two-thirds of which is accounted for by a reduction in Part D spending.

While Medicare Part D is an example of a Medicare program that works, it is clear that not all Medicare policies and programs are as useful and valuable.

The Independent Payment Advisory Board (IPAB) that was created with the passage of President Obama’s health care law is one such provision that should be eliminated. IPAB would allow an unelected and unaccountable board to make program cuts to meet spending targets.

Proponents of the board have argued that IPAB will improve the quality of care as a result of the cost-cutting measures it enacts. In fact, IPAB is a threat to critical medical treatments and services for all Medicare beneficiaries. The cuts it imposes will only reinforce systemic problems, not fix them, and create unsustainable savings.

Major changes in the Medicare program should not be decided by bureaucratic fiat in a process lacking transparency and oversight. Rather, they should be debated and decided by elected officials who will be held be accountable for their decisions. Everyone knows that tough choices lie ahead. It’s up to our political leaders to explain that reforms are essential to make Medicare secure for future generations of seniors.

There are many possible ways to reduce Medicare spending.  A broad reform debate will enable people to better understand the tradeoffs involved.

To make sure program benefits remain available for those who need them most, lawmakers should consider eligibility requirements and need-based benefits. By raising the eligibility age for Medicare to 67 from 65, for example, $124 billion would be saved.

The bipartisan Simpson-Bowles commission has proposed gradually limiting the Medicare benefits the wealthy receive. Last fall, President Obama proposed higher Medicare premiums for high-income seniors as part of the deficit reduction plan that he submitted to the Congressional “supercommittee.”  Obama’s plan would save about $20 billion over 10 years in Medicare.

Increasing premiums beneficiaries pay for Medicare doctors’ coverage to 35 percent of  program costs from the current 25 percent could save $241 billion. Modernizing Medicare’s benefit package to include copayments, deductibles and an out-of-pocket maximum could save about $14 billion through 2018. A cutback in subsidies for “Medigap” supplemental insurance would save $92 billion.

A still-bolder proposal going beyond Medicare itself would be to remove the distortion in the tax code that keeps health insurance tied to employment. The tax write-off for employer-provided health care benefits is the single largest tax expenditure. It is estimated to cost the government more than $1 trillion over the next five years. Capping the tax exclusion in 2018 and then phasing it out over 10 years would result in massive savings that could be devoted to shoring up Medicare and other programs for seniors.

The American people are ready to accept some difficult choices as part of a comprehensive deficit reduction program. It is time for Congress to begin the debate.

Douglas Schoen is a political strategist and author of Mad as Hell: How the Tea Party Movement is Fundamentally Remaking Our Two-Party System (Harper 2010), co-authored with Scott Rasmussen.

Yet that’s almost exactly what’s happening. The Centers for Medicare and Medicaid Services (CMS) is expanding its new bidding process to an advanced therapy for chronic wound healing. CMS won’t require suppliers to prove competency with the therap. If bidding goes forward as planned, millions of public insurance beneficiaries could have their health jeopardized.

The 2012 auction is for the increasingly popular healthcare therapy, “Negative Pressure Wound Therapy” (NPWT). NPWT uses a vacuum to expedite wound healing, removing contagions and protecting against infection.

NPWT has proven particularly effective for treating complex and chronic wounds and diabetic ulcers. Best of all, with appropriate clinical support, it can be administered at home, saving patients the hassle and cost of hospital visits.

Applying CMS auction models to bulk purchases of NPWT could ensure that competition from different suppliers gets taxpayers the best price. This is critical as CMS is the administrator of the country’s largest insurer — Medicare.  But that’s only if every bidder offers the same medical device and the same necessary level of service support. As presently structured, CMS bidding ignores these realities.

Due to the compromised nature of patients with complex or chronic wounds, physicians know patients need competent technical support. Without this support,  the therapy could be used inappropriately, resulting in complications, infections, and re-hospitalization.

The Food and Drug Administration has advised  use be guided by home healthcare professionals with specialized training, the device include safety alarms, and patients have access to 24/7 medical support.

Oddly, CMS isn’t including quality standards in its NPWT auction. Suppliers will be selected on lowest price alone. They won’t be required to include these basic safety controls.

Improperly treated wounds will only get worse.  In the extreme case, a patient could require amputation.

Subpar NPWT equipment would exact a particularly heavy toll on minorities. Latino and African Americans are each about 1.5 times more likely to suffer from diabetes. If diabetic minority patients have to use ineffective versions of the therapy, or have difficulty getting access, they could be at greater risk of loss of limb.

Failure to treat these injuries properly will also lead to bigger hospital bills. And because so many patients are covered by public insurance, the government will be picking up the tab.

CMS hasn’t set standards to ensure suppliers can make good on their NPWT bids. Officials are taking a company’s word that it can deliver the specified number of units at the bid price by a certain date.

That’s no easy task. If inexperienced suppliers are selected because they underbid more experienced suppliers, patients won’t get the needed NPWT units. Again, the health consequences could be severe.

These problems have occurred before.  In 2007 and 2008, the agency took bids for NPWT and awarded 10 of the 17 contracts to companies with no experience.
Some were simply unable to deliver the promised units. Medicare beneficiaries in two major cities got stuck with no access to NPWT for the home.

When the program was cancelled due to beneficiary access problems, 12 of the 17 companies abandoned the NPWT market.

This most recent move by CMS tries to revive the old model. Evidently, officials haven’t learned their lessons and have yet to ensure competency of suppliers.

The solution to this problem is clear: Require all suppliers to meet preset accreditation standards. Doing so will ensure patient access to quality equipment and requisite clinical support, while still deploying competitive market forces to keep prices down.

This approach provides patients with quality product, service and clinical support to facilitate healing while ensuring taxpayer dollars are most cost effectively utilized.

Reginald Nesbitt, MD, MBA, is the Chief Integration Officer of ApolloMD, a privately held physician practice that specializes in providing Emergency Medicine, Anesthesia, and Radiology Services to hospitals nationwide. Additionally, he is currently the Medical Director for Emergency Services for University Health Care System in Augusta, Georgia.

Current medical news and unique business news for anyone who cares about healthcare.

Tavenner discloses possible conflict of interest. Centers for Medicaid and Medicare Services nominee Marilyn Tavenner disclosed that she is receiving $162,000 annually in retirement pay for the rest of her life from her former employer, Hospital Corporation of America, The Washington Times reports.

The country’s largest private hospital chain regularly lobbies for Medicare issues that Tavenner has influence over. Under federal conflict-of-interest rules, she can’t weigh in on any action that directly impacts HCA more than the rest of the industry.

School lunch reform. Public schools will have to serve more fruit and vegetables and less salt and fat under new USDA rules for publicly funded meal programs announced Wednesday. This is the first change to those nutrition standards in 15 years. So far, reactions to the changes have been mostly positive.

Visible progress for diabetes treatment. Better diabetes treatment has led to 50 percent fewer foot and leg amputations since the mid-1990s, according to new CDC data. Researchers also noted visible declines in other diabetes-related complications, including blindness and kidney failure.

A review of the FDA’s 2011 in pharmaceuticals. On the list of drugs cleared by the FDA last year are 30 innovative new drugs, eight of which targeted cancer and more than half of which were granted fast tracks for approval. Biotech Now has put together an analytical breakdown the drugs approved last year.

Lilly ends Jubilant joint venture. Eli Lilly has pulled out of a joint venture it started with India’s Jubilant Life Sciences Ltd. to provide low-cost outsourced early-stage drug development work, but the two companies will continue to work together under a separate drug discovery agreement signed in 2005.

New tool to help overextended physicians cope with changes.

The U.S. health care industry has evolved and changed rapidly over the past several decades. This evolution took place in response to a number of environmental influences including, technological advances, demographic shifts, and economic and political changes.

Many Private Practices Suffer Under HITECH 

These changes have resulted in the emergence of a number of challenges both for physicians and those seeking health care services. The fall out from the Patient Protection and Affordable Care Act (PPACA) will continue to reveal itself bit by bit over a course of the next few years. The health care reform act, broken into [supposedly] easy-to-manage stages, includes considerable changes to Medicare reimbursement policy for both physicians and hospitals.

Independent physicians with private practices will have considerable difficulty meeting the benchmarks and metrics set forth in the act. Well before the Obama administration’s health reform came on the horizon, physicians reported that many factors, including regulatory burdens and Medicare reimbursement changes, have nearly crushed their practices in many instances.

As the pieces of the health reform act begin to fall into place, the expenditures required to keep up with the various requirements will likely add another layer of stress to private sector physicians running independent practices. The new health care act will then bring physicians to an inevitable crossroads – a choice toward which they were headed anyway before reform began. A majority will either move to an intimate, boutique practice model or forego traditional practices altogether, opting for the abundant resources offered by larger entities in exchange for their independence.

It’s not as bleak as it seems at first glance for modern physicians.

Rapid Change Begs a Rapid and Effective Response 

Countless startups, offering EMS, EHR, and adjunct high technology solutions to overextended doctors and newly emerging practice models, have formed all over the U.S. entrepreneurial landscape. From iPad and iPhone apps designed to assist with diagnostic procedures to more sophisticated apps created to help ensure physicians receive the maximum allowable reimbursements for CPT^® code allowables and everything in between – there’s an app for that.

Epocrates jumped to the forefront, offering one of the first Rx and mobile clinical suites to doctors who hoped to get in on the technological revolution occurring in health care from the get-go. Now they’ve come out with a robust EHR solution. Other companies have designed clinical diagnostic tools for nurses, drug reference databases complete with drug interactions, side effects, and other critical data.

Fresh, Innovative First Aid for the Policy Weary Physician 

Healing for the healers. Codetoolz is here.

CodeToolz comes to the aid of anxious, overextended physicians working to come into compliance with the new policy. They’ve designed an application to assist physicians in comparing the difference between their current rates and the maximum allowable reimbursement for any CPT^® code. The AMA reports that health insurers paid doctors the correct, and justified, payment rate only about 67 % of the time. That’s not just a one-off mistake; that’s either theft or incompetence. Physician, protect thyself.

This simple to use, sleek new tool even allows docs to verify that reimbursement amounts match contracted rates. For those wonks, you know who you are, that love to analyze everything in and out of their practice environment, the program will thoroughly analyze any proposed changes in contract payment terms, leaving the guesswork out of this complex aspect of reimbursement.

The company, headed up by Dana R. Bellefountaine, Jr., has garnered considerable media buzz lately, with a featured write-up in the Orlando Medical News with follow-up features scheduled in various health care media publications, such as Modern Health Care Magazine, and others throughout 2012. Read the entire Orlando Medical feature story here.

Says Bellefountaine about the company’s dedication to stand in the gap for doctors, “Early on in my career, I aligned myself and my team with the physician and the unique aspects of running a successful practice. During that time, I gained critical expertise and an intimate knowledge of the idiosyncrasies and challenges faced by these professionals — acting dually — both as healers and as the end game for the business aspects of their practices.”

Truly, someone must stand up for the physician and healer – the giant who is fast becoming a 12-year old, frightened David in the wake of health care reform. But, David had that sling shot. Now, physicians have theirs.

Image: stock photo – fotalia

Current medical news and unique business news for anyone who cares about healthcare.

Boehner says House will pass doc fix. House Speaker John Boehner said Thursday he’d agreed to pass the payroll tax break extension bill that included a two-month delay of a 27 percent cut in Medicare payments to doctors. It was rejected last week by House Republicans because they wanted a longer-term fix; they instead passed a one-year extension bill that didn’t make it in the Democrat-controlled Senate because it included cuts to the Affordable Care Act. Here’s the Washington Post‘s look at what the doc fix is really buying us.

Mead’s newborn formula controversy. Shares of Mead Johnson Nutrition Co. (MJN) fell 10 percent Thursday after Wal-Mart yanked its Enfamil Newborn formula from shelves. Regulators are investigating whether the formula was the source of a bacteria that killed one infant and sickened  another.

VC bloggers. A number of venture capitalists have morphed into bloggers, sharing life lessons, personal stories and how not to screw up your chance with a VC.

And the winner is… Merck came in first in 2011 for its performance in a category that unfortunately has become one of the biggest trends in the drug business: job cuts. In May the company said it would lay off 1,3000 workers. Abbott, Novartis and AstraZeneca also made big cuts this year.

Might Yahoo acquire WebMD? Yahoo’s board appears to be nearing a large transaction that would give two Asian Internet companies to regain the shares of their company that Yahoo currently owns. Business Insider‘s insiders say WebMD is one of the companies that could end up in Yahoo’s hands as a result of the deal.

It’s not just that I disagree with the details, which I do. The underlying principles themselves are also problematic.

To quickly summarize the plan, it is a modification of the earlier Ryan plan that would have switched Medicare over to a voucher system to be used to pay for private plans. The Wyden/Ryan version keeps the voucher element but also leaves fee for service Medicare intact.

Here are the main problems:

• The plan would keep everything the same for people 55 and older. According to the first principle, “Seniors should not be forced to reorganize their lives because of the government’s mistakes”
• The program’s provisions don’t kick in until 2022
• The plan relies on competition among health plans to bring down costs
• The plan places caps on spending and introduces rules on minimum benefit levels
• The plan includes a defined contribution option for private employers with under 100 employees

So what’s wrong with all those ideas? Quite a lot, actually.

The Medicare fiscal crisis is here today, it’s not something that can be put off till the next generation. The Medicare tax only pays about half of Medicare’s costs now. And people 55 and over are at least as culpable as those below that age for getting us into this mess. The line about seniors not having to reorganize their lives due to the government’s mistakes is nonsense. Maybe it’s not politically palatable to threaten existing beneficiaries or even anyone who’s remotely close to retirement, but the economics don’t work. As for the 2022 start for the program, that’s about three presidential cycles away. Are we really going to wait that long?

Ryan and Wyden seem to have a mystical belief that bringing private health plans into Medicare is going to control costs. Where is the evidence for this assertion? Private health plans have done a poor job of controlling costs in the private sector and Medicare Advantage plans cost the taxpayer more money than Medicare fee for service. Not to mention the fact that the white paper places all kinds of requirements on the health plans and “will also require the Centers for Medicare and Medicaid Services (CMS) to actively review marketing practices and benefit adequacy… CMS will… weed out junk plans and unqualified insurers.” Sounds nice, but that means we’ll be stuck with mandated benefits and excessive administrative hoops that will thwart innovation. There is a plan to hold down cost growth to just over GDP growth, and somehow (I’ll be curious to see the mechanism) overruns will be dealt with through “reduced support for the sectors most responsible for cost growth, including providers, drug companies, and means-tested premiums.”

The private employer provisions are a little weird and don’t belong in a Medicare plan. They encourage portability (which is fine) but go to great lengths to preserve tax deductibility for employers and employees.

Wyden and Ryan will get a lot of undeserved credit for pushing this plan. Today’s Wall Street Journal editorial refers to it as a “breakthrough.” It’s pretty clear the reason they support it is they think it will weaken Democrats’ argument that Republicans won’t do anything productive on Medicare and will lead to the defeat of President Obama.

Here’s what I would prefer:

• A recognition that Medicare reform has to start with current beneficiaries who are driving expenses today. There’s no excuse to wait 10 plus years, which will just make the problem worse and absolve a huge percentage of the population from responsibility. To me establishing this principle is more important than the details of the cost containment plan
• A focus on reforming the delivery system and payment methodologies, not just tinkering with the financing
• An end to tax deductibility of health insurance in the commercial market, which could be phased in over a five year period. That would reduce the incentive for overspending and help shrink the federal deficit. It would do a lot more than the Ryan/Wyden scheme to make the system more cost sensitive

Current medical news and unique business news for anyone who cares about healthcare.

Berwick out. Friday was CMS Administrator Donald Berwick’s last day on the job. But he didn’t bow out without offering some final thoughts — like that 30 percent of spending on health is wasted. An article in Health Affairs outlines Berwick’s tenure at CMS, and a shorter piece at Kaiser Health News summarizes his top 5 accomplishments, including making CMS less bureaucratic, pushing hospitals to improve safety and promoting innovative healthcare delivery models. Marilyn Tavenner’s appointment is awaiting approval.

Execs think Pfizer’s plan won’t be successful…but they do think it’s groundbreaking. In a survey of 42 healthcare benefit managers, two-thirds of them believe Pfizer’s moves to protect sales of Lipitor following the loss of its patent will not protect the drug’s market shares in the first 180 days that a generic Lipitor is available. But, it was noted, Pfizer’s moves are still important because the company has been aggressive in a never-before-seen way in attempting to preserve its brand.

A proposed solution for pricey journal articles. Stewart Lyman thinks he’s got a solution to the problem of unaffordable science journal articles: a searchable, pay-per-article electronic library that’s a cross between PubMed and iTunes.

MergerTech Capital: A fund for the backend of healthcare. A former partner of Miramar Ventures is leading a new $50 million health IT fund called MergerTech Capital, which will focus on “IT infrastructure associated with healthcare, including cloud services, data security, consumer Internet, mobile applications, and managed IT.”

It’s not quite a Series A crunch… In this video, Duncan Davidson of Bullpen Capital outlines the new, “lean” model of venture capital fundraising, where the company bypasses a A round or raises the bare minimum until it validates its market and then brings in the big bucks.

Current medical news and unique business news for anyone who cares about healthcare.

The deficit reduction committee’s failure’s impact on healthcare. The bipartisan “super committee” tasked with cutting the deficit by $1.2 trillion before Thanksgiving admitted failure Monday, triggering a 2 percent cut in Medicare payments beginning in 2013.

While there’s plenty of time to come up with a solution for that, a more immediate concern for healthcare is the 30 percent cut in doctor’s payments set to kick in at the end of the year as the current “doc fix” on the Medicare payment formula, known as sustainable growth rate, expires. With no time to consider a bill proposed by Rep. Allyson Schwartz (D-Pa.) to repeal SGR and replace it with another system, another short-term patch is a likely target.

Pharmasset’s $11B hep C drugs. Gilead Sciences is acquiring Pharmasset, and its hepatitis C drugs, for nearly $11 billion. One of the drugs it’s developing is PSI-7977, which could become part of the first all-oral treatment for the virus, potentially being approved by 2014, according to the WSJ.

Cigna acquisition of HealthSpring cleared. The $3.8 billion Cigna-HealthSpring acquisition has cleared review by the Federal Trade Commission and is expected to close at the beginning of next year.

VC investing: A man’s game. Only 11 percent of investors at VC firms are women, according to a new National Venture Capital Association report, about the same percentage reported in 2008.

Regeneron riding on approval of Eylea. Regeneron Pharmaceuticals Inc.’s shares were boosted 13.8 percent Monday by the approval of Eylea for wet AMD, which will compete for market share with Roche’s Lucentis and Avastin.

OSMA President Charles J. Hickey, MD

Four years later, Congress created a completely flawed formula surrounding the funding of the Medicare program. Since that time, the nation’s seniors, military families and the physicians who care for them have been living their own version of “Groundhog Day.” Funding for the Medicare program has faced catastrophic cuts year after year, only to have Congress continue to fail to get it right. Instead, they continue to apply a short-term intervention to temporarily prevent these cuts. This continued failure by Congress has forced those who rely on Medicare and the physicians who care for them to live the same painful scenario over and over again.

Unlike the movie, this real-world scenario is more of a tragedy than a comedy as Congress has continued to apply short-term patches to this issue rather than fix it once and for all. Congress has stepped in 12 times in eight years to temporarily prevent large Medicare physician payment cuts mandated by the broken government formula created in 1997.

Repeated short-term interventions failed to repeal the broken formula, compounding the cost for taxpayers and mandating steeper cuts in physician payments every year. On January 1, the prospect of the largest Medicare fee cut ever scheduled looms. The drastic cut of more than 27 percent would threaten access to care for our nation’s Medicare and TRICARE patients.

While preserving access to care for seniors and military families should be more than enough reason to repeal the Medicare Sustainable Growth Rate (SGR) formula responsible for this pending cut, continued failure to act by Congress has increased the cost of fixing this mistake. As recently as 2005, the cost of permanently repealing the broken payment formula would have been $48 billion. If Congress continues its temporary interventions, the cost will escalate to $600 billion in only five years.

As we know all too well here in Ohio, our nation is in the midst of challenging economic times, which are compounded by strained budgets at every level of government. Another temporary patch is fiscally irresponsible. There is no question that the formula needs to be repealed and the cost of repeal will never be less than it is today. Acting now to repeal the formula is the only prudent option for preserving the security and stability of health care for Medicare and TRICARE patients.

The Ohio State Medical Association (OSMA), along with the American Medical Association (AMA), believes that the Joint Congressional Committee on Deficit Reduction has a unique opportunity to finally permanently fix this flawed Medicare SGR. The OSMA and the AMA are strongly urging the congressional deficit committee to repeal the broken Medicare payment formula once and for all.

Sen. Rob Portman (R-OH) is one of twelve members of this deficit committee. The OSMA has communicated to Sen. Portman and his staff about the opportunity to include a permanent fix to the SGR in the committee’s recommendations due Nov. 23.

However, we need your help. If you believe that Ohio’s seniors, baby boomers, veterans and military families should be able to continue to have access to medical care, please click here to send a letter to Sen. Portman and your member of Congress calling for a repeal of the flawed Medicare payment formula.

The movie “Groundhog Day” had a happy ending. With your help, we can make the real-life version have one as well.

Charles J. Hickey, MD
President
Ohio State Medical Association

Medicare is financed in a regressive manner. Everyone pays a fixed percentage of wages toward Medicare. That includes many working poor who can’t afford health insurance themselves, yet subsidize health coverage for Medicare recipients of various income levels. High income people pay the same percentage of their wages into the system as low earners –so this is essentially a flat tax. However, Medicare tax is not collected on capital gains, which comprise a significant portion of the incomes of high income people. In practice this means low income earners pay a higher percentage of their incomes into Medicare than those who make the most.

Why is it that people seem willing to raise revenue from high-income Medicare beneficiaries when there is a reluctance to impose higher taxes on high-income people in general? Here are a few thoughts:

• Although raising Medicare premiums is essentially a tax increase, it can be presented as a reduction in subsidies, which is more palatable
• The working age population is very familiar with the concept of rising employee financial responsibility for health care at all income levels, so it seems natural to extend that concept to retirees
• There is (finally!) an understanding that Medicare is bankrupting the country and that we need to do something to keep costs down
• The Ryan plan, which calls for providing subsidies to Medicare beneficiaries to purchase insurance, has given people a sense that this kind of change is coming
• While people may generally buy into the vague (and in my view, false) notion that taxing high earners will reduce entrepreneurship and investment, they don’t think it applies to retired people

The Kaiser Health News article includes a couple of disingenuous arguments from the National Committee to Preserve Social Security and Medicare:

• “When you’re talking about seniors, the definition of wealthy seems to be a whole lot lower than when you’re talking about younger people”
• “Unlike Social Security, there is no cap on the annual income that is subject to the Medicare portion of payroll taxes paid by working Americans”

The problems with those arguments are as follows:

• The proposals are based on income levels, not wealth, which makes sense because it’s much easier for the government to measure individuals’ incomes. A retired person with an income of $150,000 is likely to have much higher wealth than someone who’s 40 years old making the same amount. I have no problem asking such folks to dip into their savings to contribute to Medicare
• It’s true there’s no cap on annual income subject to the Medicare tax. But that’s only been true since 1994. Most Medicare beneficiaries spent the bulk of their working lives under an annual Medicare wage cap

Current medical news and unique business news for anyone who cares about healthcare.

The debt-reduction plan and healthcare. President Obama’s proposal to reduce the federal deficit, released Monday, includes cutting $320 billion from prescription drug and nursing home spending and upping users’ payments for Medicare coverage.

Pharmaceutical companies would take a hit under the plan: brand-name and generic drugmakers would be asked to give a discount to low-income Medicare beneficiaries, and the window of exclusivity for biotech drugmakers would be cut from 12 years to seven years, according to a Reuters report.

Pharma companies and hospitals are already firing back.

Star entrepreneurs. The Entrepreneur Walk of Fame was unveiled Friday at Kendall Square in Cambridge, Massachusetts. Thomas Edison, Bill Gates, Steve Jobs and the co-founders and namesakes of Hewlitt-Packard were a few members of the inaugural class of honorees.

Gamers to the rescue. Scientists recruited online players of the game Foldit to help solve a mystery about a key protein structure in their work on a drug that could help keep viruses like HIV at bay. The gamers, most of them without a scientific background, solved the problem in three weeks.

Mixed feelings for Express Scripts-Medco. The idea of Express Scripts Inc. acquiring Medco Health Solutions has garnered many headlines and lots of discussion over the past several weeks. So what’s the general consensus about the proposed merger? Well, there appears not to be one.

New flu shot. A new form of the flu shot for adults is now being shipped all over the U.S.. This one has a tiny needle that delivers the vaccine just under the skin — perfect for the needles-make-me-queasy type.

Now here’s the best of what YOU had to say:

Forget Social Security, Medicare Part D is what we should be worried about. “What about the Medicare Part D drug benefit? Unlike Social Security, there is no dedicated funding stream at all for this $62 billion per year program. And when it was passed there was no provision to make it revenue neutral; the cost went straight to the deficit. Today 83 percent of Part D is funded through ‘general revenues,’ 11 percent through beneficiary premiums and six percent through state payments.”

Million Hearts initiative: Good in thought, but lacking in scope. “It’s not the role of public health agencies like CDC and CMS to end unemployment, poverty and inequality in America. But any public health campaign to reduce heart disease that is worth its salt should start with public recognition of one of its primary economic causes, and call for a reduction in those risk factors.”

Anti-vaccine movement endangers entire populations, not just individuals. “Vaccines work in two ways: they help to protect the vaccinated individual from infection, and they reduce the likelihood that the disease in question can spread through a population by helping to produce herd immunity.”

Reflecting on 9/11′s anniversary and the need to honor emergency workers. “So I just want to ask – as our hearts and thoughts go out to all the families who’ve suffered, can’t we please, also, for the next 24 hours, call it a N.E.W. day? A National Emergency Workers’ Day?”

Where have all the PHRs gone? “The arrival of the CMS EHR Incentive Programs delivered a blow to PHRs. Stage 1 incentives did nothing to promote the use of PHRs and overnight they became the stepchild of HIT.”

I know what you’re thinking. “Did he fire six shots or only five?” Well, to tell you the truth, in all this excitement I kind of lost track myself. But being as this is a .44 Magnum, the most powerful handgun in the world, and would blow your head clean off, you’ve got to ask yourself one question: Do I feel lucky?

Harry Callihan, from the movie Dirty Harry

It was a small article in the Wall Street Journal on 8 August 2011: “Zoll Medical Falls As LifeVest May Face Reimbursement Revisions.” No doubt most doctors missed this, but the implications of this article for our patients discovered to have weak heart muscles and considered at high risk for sudden cardiac death could be profound.

That’s because Medicare (CMS) is considering the requirement for the same waiting period after diagnosis of a cardiomyopathy or myocardial infarction as that for permanent implantable cardiac defibrillators (ICDs). To this end, they issued a draft document that contains the new proposal for their use.

By way of background, Zoll Medical makes the only wearable external cardiac defibrillator on the market, marketed as “LifeVest.” The device is fairly simple: it consists of (1) a vest-like wearable garment that contains EKG electrodes to sense a person’s heart rhythm, and front and back electrode pads to deliver shock therapy and (2) a monitoring computer that can respond to the development of potentially left-threatening rhythm problems by automatically rupturing hidden gel-packs under the electrode pads before delivering a defibrillation shock to the patient to restore normal rhythm. Clinically, heart rhythm specialists have used these devices to assure our patients are protected from the development of life-threatening heart rhythm disorders as they begin medical therapy for their condition. After three months of medical therapy (according to our guidelines) if a person’s heart muscle does not improve sufficiently, they are candidates for surgical implantation of a permanent (internal) cardiac defibrillator to protect against sudden cardiac arrest. For Medicare-eligible patients in need of these devices, they must pay a $200/month co-pay for their rental and the company receives approximately $2641 per month from Medicare. Certainly the use of these devices is not cheap, but they are much less expensive than the cost of an implantable defibrillator.

CMS justifies their need to “reconsider” their prior approval of wearable defibrillators on the basis of five documents that do not pertain to wearable cardiac defibrillators at all:

1.Epstein AE, et.al. ACC/AHA/HRS 2008 Guidelines for Device-based Therapy of Cardiac Rhythm Abnormalities: A Report of the American College of Cardiology/American Heart Association Task Force on Practice Guidelines. J. Am. Coll. Cardiol. 2008;51(21);e-1-62

2.Hohnloser, SH, et.al. Prophylactic Use of an Implantable Cardioverter-Defibrillator after Acute Myocardial Infarction (DINAMIT-Defibrillator in Acute Myocardial Infarction Trial). N. Engl. J. Med. 2004;351:2481-88

3.Bigger JT, et.al. Prophylactic Use of Implanted Cardiac Defibrillators in Patients at High Risk for Ventricular Arrythmias after Coronary-Artery Bypass Graft Surgery. N. Engl. J. Med. 1997;337:1569-75

4.Bardy GH, et.al. Home Use of Automated External Defibrillators for Sudden Cardiac Arrest. N. Engl. J. Med. 2008;358 (online publication only at www.nejm.org)

5.Steinbeck G, et.al. Defibrillator Implantation Early after Myocardial Infarction. N. Engl. J. Med. 2009;361:1427-36

The use of the wearable cardiac defibrillator has dramatically increased after Department of Justice investigations surfaced regarding the appropriateness of defibrillator implantations being performed. Doctors looked to these devices as an acceptable compromise to the governmental and evidenced-based studies that suggested no signficant early mortality benefit with devices early after MI.

But clinically, doctors remained concerned about their patients after a severe heart attack or when a very weak heart muscle is discovered. When making prospective decisions about their patient’s care, theydoctors do not have the benefit of retrospectively reviewing a patient’s outcome in such a precarious situation. They only see the pleading eyes, the young physique, the patient’s children and the desire to live to see another day.

And not unexpectedly, wearable cardiac defibrillators have been effective at saving lives in these high risk patient populations. If these wearable cardiac defibrillators aren’t approved for early protection, what will doctors be forced to do? There are three possibilities: (1) treat them medically and wish them the best of luck for the next several months, (2) require they remain admitted for as long as three months to assure their safety, or (3) tell the patient they’ll have to pay if they want the protection.

So how are these payement decisions made by our government officials? Who makes them? I realized while writing this post that I was not familiar how Medicare decides how and if they should pay for such a life-saving therapy.

The answer lies with the insurers contracted by Medicare called “Durable Medical Equipment (DME) Medicare Administrative Contractor (MAC)” or “DME MAC” for short. These are the same folks who decide if wheelchairs or home oxygen therapy is paid for. In the interest of transparency, I thought it would be interesting to expose exactly how, and by whom, the decision for wearable defibrillators will be made by currently. (It never hurts to keep the public informed who is deciding their fate clinically.)

First, it seems Medicare has contracted with four really important insurers which each manages a separate “region” of states called “jurisdictions:”

• Jurisdiction A – http://www.medicarenhic.com
• Jurisdiction B – http://www.ngsmedicare.com
• Jurisdiction C – http://www.cgsmedicare.com/jc
• Jurisdiction D – http://www.noridianmedicare.com/dme

Next, each of these jurisdictions has its own medical administrator with the insurance Medicare Administration Contractor. They are:

• Jurisdiction A: Paul Hughes, MD – FAMILY PRACTICE, with the National Heritage Insurance Co., Hingham, MA
• Jusrisdiction B: Stacey Brennan, MD – FAMILY PRACTICE with National Government Services, Indianapolis, IN

Jurisdiction C: Robert Hoover, Jr, MD, MPH, FACP – INTERNAL MEDICINE with CIGNA Government Services, Nashville TN

• Jusdiction D: Richard Whitten, MD, MBA, FACP – INTERNAL MEDICINE, CRITICAL CARE with Noridian Administrative Services, LLC, Fargo, ND

Now even though this “reconsideration” request has submitted to all four jurisdictions, only one jurisdiction typically reviews a particular issue and the others usually follow the first reviewer’s lead.

As part of this “reconsideration,” a public hearing occurs. In the case of wearable defibrillators (which will be reviewed with suction pumps and pneumatic compression devices), the meeting will occur at the Sheraton Baltimore North Hotel in Baltimore, MD. Then, after the public hearing, a three week “open comment period occurs” where the public can offer their agreement or disagreement (and why) to the proposed draft recommendation by submitting comments to a specific e-mail. Comments must be recieved by 23 Sep 2011. After that time, a decision is rendered regarding the appropriate circumstances (if any) these “durable medical goods” will be paid for.

Doctors interested in contributing their thoughts are welcome to. Just be respectful and link to data or studies, if possible. Realize that the lucky individuals are not cardiologists nor cardiac electrophysiologists. They are physicians working for insurers. The draft proposal for wearable defibrillators is not a final document and is subject to change.

It is interesting to ponder why non-cardiologists from the insurance industry have proposed this restriction with little data to prove their harm to patients while significant data suggesting benefit exists to this therapy. I suspect that doctors who use sophisticated medical devices are more likely to see these “reconsiderations” for payment by CMS in the years ahead even though, by policy, cost is not supposed to be a consideration for approvals.

Staying aware of the payment system in place and who makes these decisions going forward might become our best way to effectively advocate for our patients in the coming years.

-Wes

PS: Reponsible corrections to my understanding of this process are welcomed. After all, I’m just a doctor.

Most of the discharge initiatives are your very basic blocking and tackling: making sure all the relevant information is organized, having a nurse go over it with the patient, and having someone call a day or two after discharge to make sure things are well understood. When you think about it, reimbursement really is a factor in why discharge communications have been so poor in the past. It takes a lot of time and patience to do it right and isn’t a revenue generator. Meanwhile it diverts resources from money making inpatient activities. That calculus changes somewhat when prevention of readmission becomes a factor in hospital profitability.

The Wall Street Journal has a good summary of the situation in Don’t Come Back, Hospitals Say. Among the programs featured:

• An animated “virtual discharge advocate” named Louise who helps explain home care to departing patients
• Transition coaches who call patients 2 or 3 days after discharge
• Project RED (for Re-Engineered Discharge), which provides individualized instruction starting well before the patient leaves the hospital

Early results suggest these approaches can reduce readmissions by 20 to 30 percent, which is a shockingly high figure considering how basic such steps are.

The author, David E. Williams, is the co-founder of MedPharma Partners who writes regularly on the Health Business Blog.

Dr. Johnathan Ross

Close observers of the U.S. health reform debate in recent years know that the proceedings have illustrated why Barack Obama can hardly be called a liberal or a progressive.

That’s because the president showed no willingness to advocate for most liberals’ top choice for reorganizing the U.S. health system — a Medicare-for-all, single-payer plan in which a single government agency handles healthcare financing while doctors largely remain private-sector workers.

So that’s why single-payer advocates are lucky to have Physicians for a National Health Plan (PNHP), a 17,000-member organization that advocates for single-payer. “Under a single-payer system, all Americans would be covered for all medically necessary services … [and] patients would regain free choice of doctor and hospital,” the group states.

In Ohio, PNHP’s top official is Dr. Johnathan Ross, a Toledo internist who practices and teaches at Mercy St. Vincent Medical Center. Ross, who holds a medical degree from Cornell University and a master’s in health policy from the University of Michigan, is a past president of PNHP, having served a one-year term in 2000.

The Paul Krugman look-alike is also somewhat Krugman-like in his writing: He’s penned several editorials for the Toledo Blade and Cleveland’s The Plain Dealer.

PNHP cites a litany of statistics (apparently from its own research, some of which is more than a decade old) to support its case: 31 percent of U.S. health spending goes not to patient care but administrative costs; the U.S. health system is already 60 percent publicly financed with 20 percent paid for by businesses and 20 percent from out-of-pocket costs; and for-profit, investor-owned hospitals score lower in quality but higher in cost on average than their nonprofit counterparts.

Ross spoke with MedCity News about why he believes a health system based on profit will never provide the high quality and low cost the U.S. needs, what he sees as the major weaknesses of Obama’s health reform, and how his up-close experience with an HMO led him to support single-payer.

Q: Talk a little about how your own thinking evolved to support a single-payer health system. Did you previously believe in the structure of the current U.S. system? What caused you to change your mind?
A:  For about 10 years from the mid-1980s onward, my employer, Mercy Health Partners, started and ran a nonprofit HMO. I was asked to be the medical director for the health plan. It was this experience that changed my thinking completely.

I saw up-close the dirty underbelly of the insurance industry. I saw all the shady things health insurers needed to do to stay in business. Essentially, the way to make money in the health insurance business is to avoid sick people who will be costly to insure. Since 5 percent of the patients generate 50 percent of the healthcare costs, it is essential to avoid insuring these sick people if you want to stay profitable. When you see what it takes to be successful as a health insurer, you realize it has nothing to do with high-quality patient care. Our nonprofit HMO had to do the sleazy risk-rating, denials of coverage and limitations on specialist care just like the for-profit insurers if we wanted to stay in business. It was a race to the bottom.

Q: Why do you believe that a profit-based health system can’t solve the problems of access, cost and quality?
A: As long as the profit motive is there, the insurance industry, the pharmaceutical industry, the healthcare equipment makers, etc. will be seeking profits rather than better health for the American public. Why would any of these industries want us to be healthy?  The drugmakers and equipment makers only make money when we are sick and need to take their medications and use their equipment. The insurers design their premiums to keep a nice percentage of whatever we spend on healthcare. The more we spend, the more they make. Why would they have any interest in controlling the long-term costs of healthcare in this country when they get to keep a percentage of whatever we spend? The unhealthier we are, the more we spend and more they make.

A healthcare system should be designed to improve the health of the public, not to improve the health of corporate bottom lines. When you’re designing something, you should begin with the end in mind.  If we’re designing a health system, is the end we want a fabulously profitable medical-industrial complex, or is it a fabulously healthy country?

Q: Are you generally supportive of the federal health reform law that passed last year? What do you see as its greatest strength and weakness?
A: It’s very hard for me as a single-payer advocate to be completely supportive of the Affordable Care Act, though there are many good things in it. The positives include lots of money for public health, primary care and improving our data systems with electronic health records.

As for the weaknesses, if you had a house with a crumbling foundation, would you put a third floor on it anyway? That’s what the ACA does. It takes our crumbling foundation of a private health insurance system, which leaves people about as covered as an open-back  hospital gown, and adds more of the same — more Medicaid and private insurance without doing anything to reduce the system’s complexity. One of the fundamental flaws of our system is that it is way too complicated. We spend 30 percent of our health dollars on administration and chasing the money because our financing is incredibly complex. We have hundreds of different insurance companies with hundreds of different rules, so the problem with the ACA is it leaves all that complexity in place. Until we simplify the financing, we can’t simplify the system.

Q: I imagine lots of doctors oppose single-payer (whether they admit it or not) because they think it’ll lead to a reduction in their salaries. Do you find that to be true? What’s your response to that complaint?
A: We have good research on how doctors feel about national health insurance. In general, 60 percent of primary care doctors support it. Specialists are less likely to support it, but in a few specialties, such as psychiatry and general surgeons, more than half favor it. Of course, there are some physicians who are very much opposed, like the American Medical Association, but that’ll be true with any reform effort. Even though they complain of being prisoners of the insurance industry, they do not want to give up their golden handcuffs. Many doctors who were opposed to single-payer reform in the past come up to me and say, ‘I’ve been studying this and now I think you’re right. We need an improved Medicare-for-all.’ How could PNHP grow to 17,000 members otherwise? Several of the large physician groups, including the American College of Physicians and the American Academy of Pediatrics, have come out and said that Medicare-for-all is a reasonable option.

In truth, physician incomes should go up. Everyone will be covered so there will be no bad debt as there is now for patients with no or lousy insurance. Malpractice premiums will fall since about half of our premiums go to cover the care of the injured patient.  Given everyone will be covered, these costs will not need to be part of our premiums.  We would believe that primary care incomes should grow some and the differential between primary care and specialist incomes should narrow somewhat, but overall in our budget calculations we hold caregiver incomes stable.

Single-payer administrative simplicity saves enough money by reducing administrative costs that we can cover everyone comprehensively, with no co-pays or deductibles, give complete choice of hospital and doctor, and still spend no more than we do now. It will free us from the grip of the insurers and the need to do a wallet biopsy looking for the green before we see the patient. We can just be good doctors again.

Uh, not yet. Although the chances for this seem to have just improved. Earlier this week, the Centers for Medicare and Medicaid  put out a  memo, also known as the Proposed Decision Memorandum, that said, “We propose to change the language in … the NCD Manual to remove the contraindication for Medicare coverage of MRI in beneficiaries with implanted [pacemakers] when the [pacemakers] are used according to the FDA-approved labeling for use in an MRI environment.” A final decision on  Medicare coverage will follow after a 30-day comment period.

On Feb. 8, Fridley, Minnesota-based Medtronic announced that its Revo MRI SureScan became the first FDA-approved MRI-safe pacemaker. But CMS  announced later that month that the federal government would only reimburse MRI procedures for patients with implanted permanent pacemakers when they are enrolled in a clinical trial.

Medtronic immediately sent CMS a letter asking for reconsideration. Their argument was that the Revo SureScan pacemaker is specifically approved by the FDA to be used under MRI environments. CMS had until Sept. 3 to respond to the letter. But in this week’s memo, it said that there is adequate evidence “to conclude that magnetic resonance imaging (MRI) improves health outcomes for Medicare beneficiaries with implanted permanent pacemakers (PMs) when the PMs are used according to the FDA-approved labeling for use in an MRI environment.”

A Medtronic spokeswoman responded with cautious optimism.

“Medtronic is pleased that Medicare has expedited review of our request,” said Wendy Dougherty in an email. “The Proposed Decision Memorandum (PDR) is a positive step for pacemaker patients who may someday need access to an MRI scan. We look forward to the final Medicare coverage decision on this issue.”

That Medicare will cover the procedure is almost a foregone conclusion, unless some adverse event were to occur between now and May 25, the end of the comment period, said Barb Peterson, a reimbursement expert and president and CEO of Minnetonka, Minnesota-based Emerson Consultants.

“It’s obviously good news for Medtronic,” Peterson said, because reimbursement from Medicare helps in the adoption of new technology.

Medtronic has high hopes for the Revo SureScan and leads the competition in getting an MRI-safe pacemaker approved for sale in the U.S. In his final earnings call as CEO of Medtronic hosted after the FDA approved the device (but before CMS decided that Medicare would only cover MRI-safe pacemakers for patients in a clinical trial), Bill Hawkins said the following:

“We believe this product will help to draw share and alleviate pricing pressure [on pacemakers]. So I’m fairly bullish that this is going to be a real big opportunity for us.”

Now here’s the best of what YOU had to say:

New Medicare healthcare reform: Everyone for themselves. “There is a dangerous but beguiling econometric logic behind the idea that turning Medicare over to the insurance industry will lower health care costs. It’s an idea that could catch on if the general public became convinced that there is nothing we can do acting together as a society to lower the cost of care. Only the market can do it, the Republicans claim. Force seniors (or the poor or anyone, for that matter) to have more skin in the game, and they’ll use their clout as consumers to separate the wheat from chaff in modern medicine. Expensive, wasteful tests, procedures, and drugs will wither for lack of customers.”

Some of the best Android, iPhone medical apps for students. Every year in April, we survey the HMS medical students about their use of mobile devices. On our Mobile Resources page, we offer downloads of many popular applications. Most include native iPad support. What are the most popular in 2011?

Relaxation Tips for Nurses. A nurse’s job can’t be completed without precision and accuracy. Nurses must possess top-notch organizational, time management, and communication skills. This is not a job that can be done partially. Nurses must come to work feeling like giving 100 percent and not being an idler. This profession can put an enormous amount of pressure on our nurses. The weight may be a leading factor in preventing the longing to pick up extra shifts or residing in the profession for a long time- hence the importance of relaxation and stress reduction. Without this, nurses become what is described as “burnt out.”

Israeli medical device firm EarlySense makes Massachusetts its HQ. “EarlySense Ltd. announced its intentions to open its U.S. headquarters in Massachusetts. The move is a “direct result” of Mass. Gov. Deval Patrick’s March trip to Israel, where he met with EarlySense officials, according to a Mass. Life Sciences Center official.”

ACOs seek to generate savings by providing efficient, high quality care.

The healthcare reform discussions, of a few years back, and resulting policy creation, advocate the formation of accountable care organizations (ACOs). The ideas behind this concept and projected outcomes seem positive and beneficial to all parties involved: physicians, hospitals, patients, and the third-party payer. The new health law is slated to launch in January 2012 and only seven of its thousands of pages speak to the concept of accountable care organizations. Will ACOs lead us down the road to healthcare paradise or perdition? Or something in between?

Definition

Accountable care organizations represent a healthcare reform model, which seeks to associate physician compensation and reimbursement with quality of care. The ultimate goal for proponents of this model is a reduction in total cost of healthcare for certain patient groups without sacrificing quality. Physician groups, individual physicians, hospitals and other qualified healthcare professionals can agree to form an ACO and provide care to their target population of patients. The resulting organization is then accountable to a third-party payer (Medicare) and patients based on quality metrics and cost savings.

How Is It Different?

ACOs will provide an all-in-one healthcare solution for patients. The network will include primary care physicians, specialists, hospital facilities, home care, and therapies, ensuring that communication between the providers and quality of care remain highly efficient and cost effective. Patients will still have the freedom to choose specialists and other providers outside of the ACO network, but physicians will most likely refer patients to those within the network as a first choice.

Benefits

ACOs present a unique opportunity for cooperative physicians and third-party payers, with Medicare representing the biggest by a large margin, to save on healthcare spending. The network of providers and healthcare facilities in an ACO must provide and manage the care of at least 5,000 Medicare patients for a minimum of 3 years. The savings generated by more efficient care with less waste leaves monies available to reward the providers for high quality care. Theoretically, physicians will strive to provide the highest quality, most efficient care possible since they receive bonuses based on quality metrics. If the standards of care are not met, the physicians do not receive a share in overall savings and stand the possibility of losing their contracts.

Risks

As hospital conglomerates buy physician partnerships and practices in an effort to integrate into the ACO model, this leaves fewer private hospitals and healthcare providers in the market. The resulting massive healthcare systems, with their greater market share, will have more negotiating power with insurers, which may send health care costs soaring higher than ever. Furthermore, as ACOs gain in popularity and size, they could run into legal issues associated with anti-trust and anti-fraud statutes. Some behemoth-sized organizations may have most providers in a region within their networks, limiting competition and causing higher prices.

Considerations

Whether it’s ACOs, boutique medical groups, or a future healthcare service concept, Americans and lawmakers must consider all aspects and possibilities associated with its implementation. Like many industries in the U.S., those in healthcare tend to follow the latest and greatest medical trends without thinking through the business side of things. Proven, cutting edge medical technology only works to its fullest potential in a functional healthcare business environment. Any healthcare model that promotes massive conglomerate systems, coupled with close governmental oversight, should send up red flags for those who believe physicians should have the ultimate freedom to decide what is best based on their medical training and experience, not a government metric.

Democrats, in attacking the Republican plan that passed the House, relentlessly hammered away at the cost to future seniors of having “more skin in the game.” Two-thirds of the cost of care within a decade of Medicare privatization in 2023 will fall on them. But the 2030s must seem very far away to people in their 40s and 50s. Isn’t it likely that they won’t think about that far-off time, but instead grab on to the promise of future lower costs, which, let’s be frank, the Affordable Care Act (health care reform) may not be able to achieve.

So here’s the real argument young and middle-aged people need to hear, and the real reason why the “more skin in the game” argument can never work for seniors or other vulnerable populations, including them when they reach that age. Seniors and the poor account for over half of health care spending. Within those groups, 5 percent of the population accounts for 50 percent of health care costs; and 20 percent of the population accounts for about 80 percent. These costs come for the most part at times when economic incentives have no influence at all on medical decision-making: in medical crises; in treating chronic conditions; and, for most Medicare patients, in the last six months of life.

That’s why a voucher program for Medicare, which will shift an increasing share of those inevitable costs onto the elderly themselves, can fairly be categorized as a 100 percent estate tax or death tax. People under 55 need to know that if the plan crafted by Rep. Paul Ryan were passed, most of them will never have a cent to leave to their children. It will all go to the health care industry to support the American way of dying.

The author, Merrill Goozner, is an award-winning journalist and author of “The $800 Million Pill: The Truth Behind the Cost of New Drugs” who writes regularly at Gooznews.com.

Serving Medicare patients with walkers, diabetes supplies and other durable medical equipment has been a cornerstone of Bill Griffin’s Charlotte, North Carolina business for nearly 30 years.

But now the only equipment Griffin Home Health Care offers Medicare patients is oxygen supplies. That was the only product category Griffin won under a new competitive bidding program launched in January. Griffin concedes that the rule changes have cost him some business and he’s also had to cut staffing. But he says the bigger impact is on patients. Griffin has turned away longtime clients seeking anything besides oxygen supplies, sending them to other providers. Some of those bid winners are out of the region, even out of state – too far for a provider to conveniently connect with a patient to meet a medical equipment need.

“It’s just frustrating for the Medicare beneficiaries that they have to go somewhere else,” Griffin said.

Charlotte is one of the first cities in the country implementing Medicare’s new competitive bidding program for suppliers of durable medical equipment, or DME. Included among the other nine first round markets are Cleveland, Dallas-Fort Worth, and Miami-Fort Lauderdale. North Carolina’s Research Triangle is scheduled for a later round.

Medicare spends more than $8 billion a year buying durable medical equipment for Medicare beneficiaries. The competitive bidding program being phased into select markets was established by the Medicare Modernization Act of 2003. It aims to cut those annual costs, which are borne by taxpayers.

Competitive bidding is replacing a system that relies on a fee schedule to determine what Medicare pays for equipment. Ellen Griffith, a spokeswoman for the Centers for Medicare & Medicaid Services, or CMS, said that the 1980s-era schedule was too far out of date — meaning the prices CMS pays are higher than necessary. The outdated prices have Medicare paying three to four times more than what pharmacies or retail stores currently charge for the same equipment, she said.

“From a taypayer standpoint, that doesn’t make sense,” Griffith said.

Under competitive bidding, DME suppliers in each market bid what they will charge for equipment in specified categories. The bid winner becomes the Medicare supplier in that market. CMS said that a two-week test of the program in 10 markets in 2007 resulted in projected savings of 26 percent compared to the Medicare fee schedule. For DME suppliers, that amounts to a 26 percent cut in prices. CMS projects that the new bidding program will save more than $17 billion in Medicare expenditures over the next 10 years.

Equipment providers claim the bidding program is flawed. Griffin has voiced his concern about the program to Congress. Here is his February 11 testimony before the House Committee on Small Business:

Beth Bowen, executive director of the North Carolina Association for Medical Equipment Services, or NCAMES, says that some of the bid winners are not legitimate equipment providers. Some of them are not in the region where they bid, leaving it up to the patients to figure out how to get the equipment from a distant provider because Medicare won’t pay for supplies from the local company they’ve been using for years. Bowen adds that patients who need equipment falling in more than one equipment category are further burdened by the new rules. Before, patients could have all their needs met by one supplier. Now, in order to secure equipment from bid winners, patients must make multiple trips to multiple vendors.

“That’s not exactly efficient access,” Bowen said.

CMS’ Griffith disputes such claims. She says the agency has heard no complaints from Medicare beneficiaries regarding equipment access, nor have there been any concerns raised about patient health being adversely affected by the new bidding program. “We’re not seeing the (patient) problems,” Griffith said. “We are seeing a lot of suppliers who are not happy.”

While it may be early to assess the patient impact and cost savings, it’s hard to dispute that out-of-state companies are winning Charlotte bids. A search on the CMS website shows competitive bid vendors serving Charlotte include a number of out-of-state vendors. A search for suppliers of walkers and related supplies turned up a bid winner from Florida; a search for power wheelchair vendors turned up a Connecticut company.

DME suppliers in North Carolina and around the country have marshaled support from some lawmakers who introduced legislation to rescind the competitive bidding program. House Bill 1041, the “Fairness in Medicare Bidding Act,” was sponsored by two Pennsylvania Congressmen, Republican Glenn Thompson and Democrat Jason Altmire. It has a bipartisan slate of 53 cosigners, including several members of the North Carolina delegation. Griffin says rather than competitive bidding, CMS should provide a list of the prices it will pay for certain equipment. Vendors who don’t like those prices wouldn’t have to sell to Medicare patients, and beneficiaries would still be free to choose from a number of providers.

CMS has no official position on federal legislation but perhaps the agency sensed that further changes could be in store for the bidding program. Round two of competitive bidding was scheduled to launch on Jan. 1, 2013, in 91 markets. CMS this week announced it would postpone the second round launch until summer 2013.

I’m therefore very encouraged that House Budget Committee Chairman Rep. Paul Ryan has made a proposal to limit the growth of Medicare spending. In particular I’m grateful that this proposal actually goes directly at the unsustainable spending issue and is sufficiently bold to address the problems. It doesn’t dance around the edges or focus on red meat but irrelevant issues like “death panels” and tort reform. There are plenty of problems with the specifics but Ryan has opened the debate in a useful way.

Ironically, there is a chance that Ryan’s move will actually bring Republicans and Democrats closer together on health care reform and that Ryan will help in making PPACA more successful. Here’s what I mean:

• The effects of health care reforms in the commercial market –whether by private industry, states or the federal government– are heavily muted by Medicare. As the largest customer by far of most hospitals and many physician practices, what Medicare does dominates provider decision making. When commercial payers try to change something they get ignored. Under the Ryan proposal, Medicare patients would act much more like commercial patients than they do today, and insurance market reforms would presumably cross into the Medicare population to a much greater extent.
• Putting seniors into the private health insurance market will lead to a convergence of views about how that market should operate. In particular, the debate over the treatment of people with pre-existing conditions (which is most people in Medicare) will become much more real.
• We’ll also see the limitations (some would say the folly) of relying on private health insurers to control costs. It will become clear that very serious delivery system restructuring is needed along with changes in attitude on the part of patients and providers. I can’t wait for that discussion to begin in earnest.
• Today seniors –regardless of income or wealth– are subsidized by many working class people who pay Medicare taxes and income taxes. Reducing the burden on them will make health insurance more affordable or at a minimum share the societal burden more equally.

While I’m not ready to buy in to the Ryan plan as it stands, I’m very appreciative of the fact that he’s putting it forward and hope it will lead to a serious, civil debate.

David E. Williams is the co-founder of MedPharma Partners who writes regularly on the Health Business Blog.

Rex Healthcare is paying $1.9 million to settle allegations that the Raleigh, North Carolina-based hospital routinely submitted false Medicare claims.

The settlement figure, plus interest, was announced Monday by the U.S. Department of Justice. The government alleged that the hospital submitted claims to Medicare for a variety of minimally invasive procedures in the 2004 through 2007 time frame. The government claims these procedures were classified as inpatient admissions in order to increase the hospital’s Medicare reimbursement even if there was no medical need justifying the more expensive inpatient admissions.

The claims come from a lawsuit brought under the whistle-blower provisions of the federal False Claims Act. The law permits citizens with knowledge of fraud against the government to bring a court action on behalf of the United States. Citizens can also share in any recovery resulting from the suit.

The 2008 suit was filed in Buffalo, New York by Craig Patrick and Charles Bates, former employees of Medtronic (NYSE:MDT) subsidiary Kyphon. They will receive $80,000 for claims related to kyphoplasty, a type of minimally invasive surgery for treating compression fractures in the spine.

The Justice Department says that since January 2009, it has recovered more than $6.8 billion in False Claims Act cases.

Kathleen Schaum writes a very informative article on the ins & outs of reimbursement for surgical dressings.  She gives a self-test to help you and your team assess your knowledge:

…If you pass the LCD/Article self-test, congratulate yourself for a job well done. If you do not pass the self-test, you should immediately take steps to become compliant. Let’s start the self-test now.

* Do you know how to find the LCD for Surgical Dressings and the Surgical Dressing Policy Article that is pertinent to the geography that you serve?

If yes, have you printed both documents, read them, and shared them with your entire wound care team? If no, the Web sites in Table 1 will connect you with each of the DME MACs’ LCDs and Articles. Remember that your wound care patients are counting on you to understand and implement a process that will meet all the LCD/Article guidelines.

* Can you correctly answer these frequently asked questions?

Unfortunately, the LCD for Surgical Dressings and its attached Article have been either forgotten by or not introduced to some modern-day wound care professionals.

Q: Why do medical suppliers tell my patients with skin tears that Medicare does not cover the dressings that I order?

A. Wound dressings are covered by Medicare when they are used on a surgical wound, partial-, or full-thickness skin wound, or partial- or full-thickness burn. Dressings are not covered for skin tears, abrasions, Stage I ulcers, first-degree burns, or cutaneous fistulas unrelated to a surgical procedure.

The helpful web sites given in Table 1 of the article:

CIGNA Government Services (CIGNA) — http://www.cignagovernmentservices.com

National Government Services (NGS) — http://www.ngsservices.com

National Heritage Insurance company (NHIC) — http://www.medicarehic.com

Noridian Administrative Services (Noridian) — https://www.noridianmedicare.com

REFERENCES

Can You Pass the Surgical Dressing Ordering and Documentation Test?; Schaum, Kathleen D.; Advances in Skin & Wound Care. 24(3):112-117, March 2011; doi: 10.1097/01.ASW.0000395044.66516.02

That was the primary complaint heard at an experts panel that the life sciences trade group LifeScience Alley held in downtown Minneapolis on Wednesday. The hope that many at the gathering expressed is that health reform will spur the government and private insurers to compensate in different ways and that, in turn, could spur innovation.

Kevin Nickels — who was CEO of Eden Prairie, Minnesota-based wound treatment company Celleration for nine years and is now president and CEO of Advanced Vein Therapy — urged health insurance companies to make clear where treatments could improve and then seek out medical technology companies with solutions. Nickels said there needs to be “clarity of need” and “support after the fact” for the device makers.

“We have to realize we’re all in this together. It’s not about pushing it on the payer, the provider, the supplier,” Nickels said. “I think you could find some incredible ideas bringing things forward.”

For now, needs aren’t so clear, Nickels said. He recounted how Celleration approached the Centers of Medicare and Medicaid Services (CMS) nearly 10 years ago about a wound treatment device and was told they needed a solid, multimillion-dollar study to back it up. A few years later, CMS wanted three studies, then five. The original CMS official Nickels had spoken with had left by then.

“You couldn’t leave and get back from the moon fast enough with the rising expectations,” Nickels said.

Meanwhile, open wounds that aren’t treated properly are costing billions of dollars a year for Medicare alone, Nickels said.

Government programs such as Medicare and private insurance companies still mostly pay health providers for each office visit, each test, each procedure and hospitalization. Wound care doesn’t fit into that model because it really requires monitoring of patients to make sure they’re following physicians’ instructions when they’re not around.

“Whenever you have a treatment that goes on and on and on, payers get skeptical,” said Barb Peterson, founder of Minnetonka, Minnesota-based Emerson Consultants. The irony is that “payers would love to see treatments that get these wounds closed; that get people out the door.”

Nickels remarked that he recently tried to convince a health insurer to cover a device that allowed patients to take pictures of their wounds at home and transmit them to health professionals who could assess whether the wounds are healing properly. The problem was that the device didn’t fit what the insurer usually covers. “It wasn’t a diagnostic tool. It wasn’t an intervention tool. It was a monitoring tool,” Nickels said.

All of the experts at the Wednesday gathering were hopeful that the situation will soon change because the largest healthcare payer in the United States, the Medicare health insurance program for seniors, will start setting up a new payment model called accountable care organizations (ACOs) next year. Health providers and private insurers across the country are already experimenting with such arrangements in anticipation of the changes.

Under an ACO, payers hold a health provider or group of health providers accountable for patients who frequent their primary care clinics. There are still fees for each service, but there are also financial bonuses for meeting goals with the patients, such as better chronic disease management, that control costs in the long run.

The ACOs are meant to fix a major flaw in the U.S. healthcare system: “If you’re sick, we’re great at treating you. But we’re not very good at keeping you from getting sick,” said Patty Curoe-Telgener, vice president of reimbursement services at Emerson.

Telgener pointed out that diabetes is already getting attention as a chronic disease that obviously needs better management. Medicare has already increased reimbursement for diabetes management programs and is looking to get rid of co-pays in the area.

Because ACOs have health providers doing more with preventative health, organizations such as UnitedHealth Group Inc.’s OptumHealth subsidiary that provide wellness programs to employers see an opportunity setting up similar programs at health providers — or even offering them directly to individuals, said Sue Willman, vice president of disease solutions product at OptumHealth.