Category: Medicare/Medicaid

Upcoming Medicare Forum on Appeals Backlog, Posts

mlawrence Leave a comment

Next week (on October 29) Medicare’s Office of Medicare Hearings and Appeals (OMHA) is holding another appellant forum to discuss the ongoing backlog of Medicare claims waiting for a hearing.  In one sense, a lot has happened since the last forum in February (I covered that here): OMHA announced pilot projects to try statistical sampling and facilitated settlement in some cases (see here and here); CMS (effectively the “defendant” for settlement purposes in these appeals; functionally independent from OMHA) announced a willingness to settle a subset of pending inpatient hospital billing claims for 68 cents on the dollar (see Nick Bagley’s post at the incidental economist); the backlog came up at a couple congressional hearings; and two lawsuits were filed to challenge it, one by providers (see here) and another by beneficiaries (see here).

In another sense, not that much has happened. Unless Thursday’s forum brings big news—and I know that OMHA and CMS have been working hard on reforms so perhaps it will—there is still a big backlog of Medicare appeals, there is still not a resource fix in sight, and the influx of Medicare appeals seems to still far outstrip OMHA’s capacity to hold hearings.

In advance of the forum, I’m planning a series of posts offering my thoughts, such as they are, on where we are and where we are going. I invite anyone who disagrees or thinks I’ve gotten something wrong to post their own views in the comments. Or you can email me and I will look into sharing your thoughts as an independent posting. You can get all my posts on this subject, including new ones as they come in, by clicking here.

A caveat: I’m approaching these as blog posts—trying to get my educated thoughts based on everything I have read out in a timely way—but I might be missing something. If the upcoming forum or comments reveal that I am–I won’t be there in person but will be watching remotely–I will either post a general update or go add particular updates in the text of my posts as necessary.

And a disclosure: I’ve said this before but want to do it once more again before pontificating—I worked in government until a little over a year ago, so my views on these matters may be biased. (And of course I will not discuss anything I worked on.)  But I’ve done my best to be objective.

PhRMA Sues HHS (Again) For Trying To Expand 340B Discounts To Orphan Drugs

rachelsachs Leave a comment

By Rachel Sachs

For all those who have been following the ongoing fight between pharmaceutical companies and HHS over the 340B Program’s coverage of orphan drugs (I know you’re out there), last week PhRMA filed a new complaint challenging HRSA’s interpretive rule on the subject under the APA. For all those who are not (but should be) paying attention to this battle, here’s what’s happening.

The 340B Program allows certain health care organizations (such as disproportionate share hospitals) to purchase drugs for their patients at significant discounts. The Affordable Care Act expanded the number and kind of organizations that can participate in the 340B Program, but it also added an exception stating that most of the covered organizations could not obtain 340B discounts for orphan drugs — or, as the statute puts it, for “a drug designated … for a rare disease or condition.” 42 U.S.C. § 256b(e).

The battle between PhRMA and HHS is over is whether this statutory exclusion applies to orphan drugs or orphan indications. There are many drugs which have received an orphan designation for certain indications but are also FDA-approved and prescribed more generally for non-orphan indications. In such a case, can a 340B facility purchase the drug at a discount if it is being prescribed for a non-orphan indication?  Read More

Gilead Announces Access Program for Hepatitis C Drug

The Petrie-Flom Center Staff Leave a comment

By Rachel Sachs

For all those who are interested in issues of global health, access to medicines, and drug pricing, yesterday Gilead formally announced its access program for enabling many developing countries to purchase its new Hepatitis C drug, Sovaldi, at low prices. This announcement is particularly noteworthy because Sovaldi represents a significant improvement over the current standard of care for Hepatitis C, as it can cure a much greater percentage of sufferers than could standard therapies, and it does so with many fewer negative side effects. Gilead’s partnership-based program will permit seven Indian generic drug companies to produce and sell the drug in 91 developing countries. The discounts are significant: although Gilead formally charges $1,000 a pill (or $84,000 for a course of treatment) for Sovaldi in the United States, it will charge just 1% of that, or $10 a pill, in India (the total cost there is estimated at $1,800, given the difference in strain prevalence).

The global health community has reacted to the announcement with mixed reviews. The 91 countries in the program include more than half of the world’s Hepatitis C patients. But tens of millions of other patients in large nations like China, Brazil, Mexico, and Thailand are left out of the program. Going forward, some of the excluded nations may seek to issue compulsory licenses in an effort to expand access to Sovaldi.

Gilead has also drawn fire in the United States for Sovaldi’s $84,000 sticker price (which, for various reasons, very few if any will actually pay), to the degree that members of both houses of Congress have asked Gilead to justify the price of the drug. Those opposing Sovaldi’s price have generally not come out publicly against the high price of many orphan drugs, which can cost $250,000-$350,000 per year. But because Hepatitis C afflicts about 2.7 million people in the US, as compared to the few thousand people with one of the relevant orphan diseases, its impact on insurers (both public and private) is likely to be much larger (as this very blog has previously noted).  Read More

Beneficiaries File Class Action Lawsuit Challenging Medicare Hearing Delays

mlawrence Leave a comment

I have blogged a few times about the current backlog in Medicare’s coverage appeals process, including observations about a lawsuit by providers challenging the backlog in federal court in the District of Columbia.  (See here.)  Yesterday a new lawsuit was filed, this one a class action lawsuit by beneficiaries represented by the Center for Medicare Advocacy.  (See their press release here.)  The case is Lessler et al. v. Burwell, 3:14-CV-1230 (D.Conn.).  I am blocked from accessing the complaint on PACER but am working on getting a copy.

Without access to the complaint it is dangerous to speculate, but I wonder whether this suit may be subject to many of the exhaustion-based arguments that I thought could lead to dismissal of the provider suit.  But the Center for Medicare Advocacy has had success pursuing class action suits on behalf of Medicare beneficiaries before, most notably the Jimmo case that led to a significant change in the standard of qualification for skilled nursing care.  (See here.)

One thing about this suit that may only be interesting to administrative law buffs is the choice of forum.  This case was filed in Connecticut, not the District of Columbia (where the providers filed their suit).  As I have written about elsewhere, there are pros and cons to channeling administrative law cases through DC, among them DC’s expertise in exhaustion and other administrative law issues.

I can’t say whether the Center for Medicare Advocacy chose to file in Connecticut rather than the District solely because that is their home forum, or whether they thought they’d get a more sympathetic judge/more plaintiff-friendly exhaustion doctrine.  And the same goes for the providers’ choice to file in the District rather than some other state.  I can say from experience, though, that the choice can really matter; DC judges’ familiarity with administrative law issues just makes them perceive these cases differently from the start.  So it would not surprise me at all if there are considerations beyond mere location at play here.  (Not that there’s anything wrong with that!)

Another Hole in the Halbig Verdict

The Petrie-Flom Center Staff Leave a comment

Much attention has been paid recently to the contradicting decisions issued on the Halbig and King cases, which challenged the Obamacare subsidies offered to individuals purchasing insurance on federal exchanges. In a piece for Politico Magazine, Abbe R. Gluck finds a weakness in the Halbig plaintiffs’ arguments, in their own words. As Gluck writes:

What’s less known, however, is that in the 2012 constitutional case, these same challengers filed briefs describing Obamacare to the court in precisely the way they now say the statute cannot possibly be read. Namely, they assumed that the subsidies were available on the federal exchanges and went so far as to argue that the entire statute could not function as written without the subsidies. That’s a far cry from their argument now that the statute makes crystal clear that Congress intended to deny subsidies on the federal exchanges.

I am not a fan of the “gotcha” flavor that some aspects of this case have taken on, but the challengers’ 2012 statements are relevant as a legal matter because what the government has to prove to win—as a matter of black-letter law under the Chevron doctrine—is that the statute is ambiguous. (Chevron says that federal courts defer to the relevant agency’s reading of the statute when a federal statute is unclear—here, that agency is the IRS.)

The challengers have spent more than a year arguing that no reasonable reader of text could construe the statute in any way other than denying federal subsidies to insurance purchasers on exchanges operated by the federal government. But what about their statements from 2012—statements then echoed by Justices Scalia, Kennedy, Thomas and Alito in their joint dissent to the Supreme Court’s ruling in the constituitional challenge, NFIB v. Sebelius?

You can read more, including the relevant passages from the NFIB v. Sebelius briefs, here.

Serious Risks from New Prescription Drugs

dlight 5 Comments

by Donald W. Light

Based on https://www.ethics.harvard.edu/lab/blog/436-new-prescription-drugs-a-major-health-risk

Few people know that new prescription drugs have a 1 in 5 chance of causing serious reactions after they have been approved. That is why expert physicians recommend not taking new drugs for at least five years unless patients have first tried better-established options and need to. Faster reviews advocated by the industry-funded public regulators increase the risk of serious harm to 1 in 3. Yet most drugs they approve are found to have few offsetting clinical advantages over existing ones.

Systematic reviews of hospital charts by expert teams have found that even properly prescribed drugs (aside from misprescribing, overdosing, or self-prescribing) cause about 1.9 million hospitalizations a year. Another 840,000 hospitalized patients given drugs have serious adverse reactions for a total of 2.74 million. Further, the expert teams attributed as many deaths to the drugs as people who die from stroke. A policy review done at the Edmond J. Safra Center for Ethics at Harvard University concluded that prescription drugs are tied with stroke as the 4th leading cause of death in the United States. The European Commission estimates that adverse reactions from prescription drugs cause 200,000 deaths; so together, about 328,000 patients in the US and Europe die from prescription drugs each year. The FDA does not acknowledge these facts and instead gathers a small fraction of the cases.

Perhaps this is “the price of progress”? For example, about 170 million Americans take prescription drugs, and many benefit from them. For some, drugs keep them alive. If we suppose they all benefit, then 2.7 million people have a severe reactions, it’s only about 1.5 percent – the price of progress?

However, independent reviews over the past 35 years have found that only 11-15 percent of newly approved drugs have significant clinical advantages over existing, better-known drugs. While these contribute to the large medicine chest of effective drugs developed over the decades, the 85-89 percent with little or no clinical advantage flood the market. Of the additional $70 billion spent on drugs since 2000 in the U.S. (and another $70 billion abroad), about four-fifths has been spent on purchasing these minor new variations rather than on the really innovative drugs.

In a recent decade, independent reviewers concluded that only 8 percent of 946 new products were clinically superior, down from 11-15 percent in previous decades. (See Figure) Only 2 were breakthroughs and another 13 represented a real therapeutic advance.

Read More

Pharmaceutical Pricing– The Story That Just Keeps Going

rbohrer Leave a comment

By Bob Bohrer

Cross-post from Pharmaceutical Policy

After last week’s foray into patents and pharmaceutical policy, which is perhaps the most technical and specialized area of pharmaceutical policy, I will return to the never-ending story of pharmaceutical prices and the controversy over Sovaldi, Gilead’s break-through Hepatitis C drug. Sovaldi has a “sticker price” of $84,000 for a 12-week course of treatment, at the end of which 90% or more of patients would be expected to be cured. Since Sovaldi is a pill that is given once a day, the 12-weeks of treatment means that there are 84 daily doses. The math is easy, even if the price, unlike the pill, is hard to swallow–$1,000 per pill. The drug has been a huge financial success for Gilead, which reported $2.274 billion in sales in just the first quarter of 2014.   However, the backlash has been equally huge. In a rare display of bipartisanship in Washington, Senator Ron Wyden (D.-Ore), the Chair of the Senate Finance Committee and Senator Chuck Grassley (R.-Iowa), the Ranking Member of the Finance Committee, sent a demand for information concerning the development costs of Sovaldi and Gilead’s pricing decision. However, even more than the investigation by two senior senators, the impetus for today’s post came from the blog RxObserver, which featured a post entitled Sovaldi: A Poster Child for Predatory Pricing [sic]. Before discussing the epithet “predatory pricing,” the perspective of RxObserver requires a bit of explanation. RxObserver is a site that primarily provides the views of pharmaceutical benefit managers (PBMs), or as the blog itself states its purpose: “the Clearinghouse of the Future for Pharmacy Benefits.” It is, in general, a very high-quality blog, with an editorial staff composed primarily of well-recognized academic and government experts in health care policy. I regularly read it and find it useful, although I was taken aback by that “predatory” epithet. Read More

Update and Thoughts on Lawsuit Over Medicare Hearing Backlog

mlawrence Leave a comment

Several months ago, I promised to post my thoughts on the viability of the American Hospital Association’s threatened lawsuit against the Secretary of Health and Human Services challenging the growing backlog of coverage appeals.  (See my post here).  That issue has become timely, because the AHA and several providers filed suit in May in the District of Columbia, and a few days ago filed a motion for summary judgment.   (See here).  There has been some coverage of the suit.  (See here and here.)  In short, their argument is that the statute says that a hearing must be held in 90 days and Medicare officials admit that the plaintiffs will not get a hearing for years, so therefore the court should order “mandamus,” forcing compliance with the 90 day deadline.

When I was in practice before moving to academia, I represented the Secretary in cases like this, so keep in mind my view might be biased.  But the government’s response to the complaint is due (by my calculation) Monday, July 28, so I wanted to offer my quick reactions about the case and what sort of response we might hear from the government.  I’ve just read over the AHA’s motion for summary judgment and I think that in a case like this, with an admitted violation of a statutory requirement, you have to start with the presumption that things could go bad for the government.  But with that said, I don’t think that the government’s case is as gloomy as it might at first appear, so this could be an interesting case to watch going forward.

Read More

Medicare Coverage for Sex Change Surgery: How We Got Here

cguo Leave a comment

As mentioned in co-blogger Matthew Lawrence‘s prior posts (here) and (here), Medicare’s Departmental Appeals Board (DAB) recently vacated a decades-old National Coverage Determination (NCD) precluding coverage for sex change therapy.  That opens the door for Medicare coverage for sex change therapy, but does not guarantee coverage.

In this second blog of a two-part post, we will discuss how we got here: the somewhat unique process taken by the Centers for Medicare & Medicare Services (CMS) to invalidate its old coverage decision.

The decision has a somewhat odd procedural history.  On the morning of March 29, 2013, the CMS announced that it was reconsidering the NCD through the formal process for doing so, and sought public comment on what it should do.  (See enthusiastic coverage here.)  The statutory, public process for reconsideration of an NCD includes the opportunity for comment and so on, analogous to notice and comment rulemaking.  And the ultimate decision is subject to judicial review.  (See here for more on the NCD process.)  The NCD reconsideration process could have not only vacated the old standard, but offered specific standards to govern coverage across claimants (and thereby avoided some of the limbo discussed in our last post).

But on the night of March 29, 2013, the CMS rescinded its call for public comment, saying that it would instead allow a “just filed” appeal challenging the NCD before the DAB to proceed.  (See here.)  The DAB process is more adversarial and pits a single beneficiary challenging CMS policy in his or her case against the CMS.  (Although there are opportunities for amici to participate.  In this case, six amici participated, and all of them argued that the ban was unlawful.)  The CMS went on to decline to defend the policy, which made the ultimate DAB decision vacating the (undefended) policy unsurprising.

We can’t say why the CMS chose to rescind the reconsideration process rather than push for the individual appeal before the DAB to be held in abeyance pending the outcome of the reconsideration.  (In federal court, the doctrine of “ripeness” would have made the pendency of the NCD reconsideration grounds for dismissal of the individual appeal.)  And for transgender persons seeking coverage, the process by which their cause was furthered is surely of little moment.  But we can’t help but note that, for better or worse, proceeding through the DAB rather than the formal NCD reconsideration process meant less public attention on the proceeding, and less opportunity for comment by interested groups.

Big Data, Predictive Analytics, Health Care, Law, and Ethics

I. Glenn Cohen Leave a comment

Update: The Moore Foundation has generously paid to make my article available as open access on their website here. Today I am speaking at Health Affairs’ “Using Big Data to Transform Health Care” in DC, that will also launch its new issue devoted to the topic. I have a co-authored paper in the volume entitled “The Legal And Ethical Concerns That Arise From Using Complex Predictive Analytics In Health Care” that has just been released. Ironically the article is behind a paywall (while data wants to be free, I guess big data is different!) Here is the abstract.

Predictive analytics, or the use of electronic algorithms to forecast future events in real time, makes it possible to harness the power of big data to improve the health of patients and lower the cost of health care. However, this opportunity raises policy, ethical, and legal challenges. In this article we analyze the major challenges to implementing predictive analytics in health care settings and make broad recommendations for overcoming challenges raised in the four phases of the life cycle of a predictive analytics model: acquiring data to build the model, building and validating it, testing it in real-world settings, and disseminating and using it more broadly. For instance, we recommend that model developers implement governance structures that include patients and other stakeholders starting in the earliest phases of development. In addition, developers should be allowed to use already collected patient data without explicit consent, provided that they comply with federal regulations regarding research on human subjects and the privacy of health information.

I will also have a related paper on mobile health coming out later this summer that I will blog about when it comes out…