Policy and Medicine

Simpson-Bowles and Daschle-Frist-Domenici: Unveil Plans for Reducing Healthcare Spending

In addition to the President’s FY 2014 we previously reported on, former Fiscal Commission heads, Alan Simpson and Erskine Bowles, unveiled an updated deficit reduction plan – building on a framework released in February 2013 – including $2.5 trillion in savings from spending cuts and revenue increases, of which $585 billion comes from healthcare reductions and reforms over the next 10 years.  Highlights from this plan, courtesy of Thorn Run Partners include: 

• Delivery System and Payment Reforms (-$60B/10): Among other recommendations, includes the cost of replacing the SGR with a payment freeze coupled with a short-term “modest” reduction below the freeze and medium-term development of a formula that promotes participation in new care models. Also expands penalties for avoidable complications and readmissions, as well as:  

o   Broadens competitive bidding to medical devices, laboratory tests, radiologic diagnostic services and other commodities;

o   Fosters “alternative benefit packages” (e.g., that combine Parts A, B and D and offer care coordination); and

• Ensures IPAB is not restricted by “special interest carve-outs.”  The report also recommends considering giving IPAB the prerogative to recommend benefit design and cost-sharing changes. 
• Reform Medicare Cost-Sharing Rules (-$90B/10): Proposes restricting Medigap first-dollar coverage and replacing current Medicare cost-sharing rules with a unified deductible, uniform co-insurance and out-of-pocket (OOP) maximum; the report also makes modifications to the original Fiscal Commission recommendation on cost-sharing changes, proposing varying the deductible and OOP limit with income. 
• Expand Income Relating of Medicare Premiums (-$65B/10) 
• Increase the Medicare Age with an Income-Related Buy-In (-$35B/10) 
• Reduce and Reform Post-Acute Care Payments (-$70B/10): Recommends adopting the President’s policy of reducing annual growth in payments to SNFs, IRFs, LTCHs and home health facilities.  
•   Reduce Various Payments to Hospitals (-$65B/10): Recommends a phase-out of all reimbursement for bad debts, reduced subsidies for graduate medical payments to “better align with patient care costs” and reduced enhanced payments to rural hospitals.     
• Reduce the Costs of Prescription Drugs in Medicare (-$90B/10): Recommends mandated rebates for dual eligibles covered under Part D but notes that “unlike other proposals, this recommendation would not extend rebates to new classes of beneficiaries who were not subject to rebates prior to implementation of Part D.” Bars pay-for-delay arrangements.
• Reduce Fraud, Abuse and Excessive Payments Within Medicare (-$25B/10): Among other policies, recommends giving HHS authority to align clinical lab payments with private-sector payments and reclassify certain payments for hospital outpatient evaluation/management (E/M) visits “so they are treated the same as similar visits to a physician’s office.” 
• Additional Recommendations: Relate to malpractice reform, a new waiver program for state innovation and reforming Medicaid financing by reducing overpayments to States. 

In addition, the Bipartisan Policy Center’s Health Care Cost Containment Initiative released a report (see executive summary) by former Sen. Majority Leaders Tom Daschle and Bill Frist, former Senate Budget Committee Chairman Pete Domenici, and former Congressional Budget Office Director Alice Rivlin presenting 50 health-specific recommendations estimated to reduce the federal deficit by $560B over 10 years. Highlights from this report, courtesy of Thorn Run Partners include: 

Medicare Networks: Creates a third option within FFS Medicare that beneficiaries could elect – or choose Traditional Medicare or a Medicare Advantage Plan – that would involve an ACO-like network. Beneficiaries electing these new Medicare Networks would receive incentives to enroll via discounted standard premiums, an opportunity to share in savings and differential cost-sharing for in-network and out-of-network providers. The SGR would be fixed, with the highest updates during a transition period going to physicians participating in Medicare Networks accepting 2-sided risk. 

Employer-Sponsored Health Insurance (ESI) Tax Exclusion: Replaces the ACA’s “Cadillac tax” on high-cost plans with a limit on the income tax exclusion for employer-sponsored health benefits at the dollar amount equal to the 80^th percentile of single and family (age and gender adjusted) ESI premiums in 2015 ($262B revenue increase/10).

Medicare Advantage (MA): Establishes a standardized minimum benefit for MA Plans that would include all services covered by traditional Medicare, a cost-sharing limit to protect against catastrophic expenses and slightly lower cost-sharing. Plans would be paid using a “competitive pricing system,” although this only would take effect in certain regions where it saves costs to the federal government versus the old benchmark (this proposal is detailed on p. 43 of the full report). Separately, the report recommends ending the MA Star Demonstration and “revert[ing] to the smaller bonus payments under current law.”

Modernized Benefit Design: Includes a single, combined A+B deductible and generally replaces co-insurance with co-payments on most covered services, similar to MedPAC recommendations, among several other provisions.  

• DME: Recommends continued implementation of competitive bidding but lower benchmarks for certain equipment types because “over the long term, we believe the median-bid level is unnecessarily generous to DME suppliers.” 
• Site of Care Differentials: Suggests equalizing the payment rates for E/M services to the rate of the lowest-cost setting, including facility payments (estimated to save $8.7B/10), and equalizing payments at the level of the lowest-cost site for procedures that are performed both in outpatient departments and physician offices in certain circumstances, such as when the procedure is conducted in physician offices more than half of the time (savings not estimated). 
• High-Quality, Low-Cost Drug Utilization: Makes various recommendations including:  

Adjusting the Part D LIS cost-sharing to encourage the use of high-value drugs (-$44.3B/10);

Changing Part B reimbursement for provider-administered drugs (specifically, changing the reimbursement to equal the average sales price of the medication plus a flat payment, with the flat payment being set separately – and being payment neutral, before any behavioral change – for each therapeutic class, as designated by HHS) (Savings not estimated);

Convert from Average Wholesale Price to Average Sales Price for remaining Part B drug and vaccine reimbursements (Savings not estimated);  

Address anti-competitive settlements between brand and generic drug manufacturers (-$4B/10); and

Close the REMS loophole that “inhibits development of generic drugs” (-$753M/10). 

• Graduate Medical Education: Makes several recommendations including reducing IME percentage add-on to inpatient hospital admissions from 5.5 percent to 3.5 percent and repurposing savings for performance-based incentive payments and additional residency slots.

Understanding the Sustainable Growth Rate (SGR) A.K.A the Doc Fix

Despite the monumental healthcare reforms enacted in the Affordable Care Act of 2010, there still remains one legislative fix that has plagued physicians and policymakers for years—the sustainable growth rate (SGR) formula for physician reimbursement under Medicare; also known as the “Doc Fix.”  A recent article from Kaiser Health News provided a good analysis of what the Doc Fix is and current proposals and concerns surrounding the issue. 

The Doc Fix resulted from efforts to control federal spending – a 1997 deficit reduction law that called for setting Medicare physician payment rates through a formula based on economic growth—the SGR.  “For the first few years, Medicare expenditures did not exceed the target and doctors received modest pay increases.  But in 2002, doctors reacted with fury when they came in for a 4.8 percent pay cut.  Every year since, Congress has staved off the scheduled cuts.  But each deferral just increased the size – and price tag – of the fix needed the next time.” 

One of the major problems with the formula is that it reinforces the fee-for-service system, which rewards “doctors for providing more tests, more procedures and more visits, rather than for better, more effective care.”  In an Oct. 14, 2011, letter to lawmakers, the Medicare Payment Advisory Commission (MedPAC), which advises lawmakers on Medicare payments, called the formula “fundamentally flawed” and said it “has failed to restrain volume growth and, in fact, may have exacerbated it.” 

Legislators have been unable to address the problem largely because of the enormous price tag that has resulted in years of delay.  On February 5^th, the Congressional Budget Office estimate lowered the cost of the doc fix over the next decade to $138.8 billion due to lower Medicare spending on physician services over the last three years.  Last January CBO estimated the cost of the doc fix at $316 billion, which it reduced to $245 billion last August.  

In addition to these positive numbers, which boost hopes for passing a permanent fix, In addition House Majority Leader Eric Cantor recently listed Medicare reform as a top goal for House Republicans this session. 

On the other side of the issue, doctors have been expressing their concern and frustration with the prospect of payment cuts.  Some doctors “say the uncertainty has led them to quit the program, while others are threatening to do so.”  A MedPAC March 2012 report stated that while beneficiaries’ access to care was good, for some “finding a new primary care physician continues to be more difficult than finding a new specialist.” 

Many physician groups have continued to lobby Congress to repeal the SGR and to enact a permanent payment fix.  The deal Congress passed Jan. 1 to avoid the fiscal cliff by raising some taxes and putting off automatic budget cuts also stopped a 26.5 percent doctor pay cut but did not raise the level of Medicare reimbursement to physicians. 

Recommendations and Proposals

In October, 2011, MedPAC recommended eliminating the formula without increasing the deficit by cutting fees for specialists and imposing a 10-year freeze on rates for primary care physicians. That proposal was strongly opposed by health industry groups, as well as the American Medical Association (AMA). 

The American College of Physicians in a letter to lawmakers proposed a 5-year period between ending the SGR and starting to reward quality -- enough time, the group says, to allow for a transition.  The AMA has also recommended a five-year transition fee scale that allows time to test new payment approaches, including several being tested as part of the 2010 health care law. 

Other options to fix the reimbursement formula include a bill introduced Feb. 5 by Rep. Allyson Schwartz, D-Pa., and Rep. Joe Heck, R-Nev., an osteopathic physician.  Among its provisions, the Medicare Physician Payment Innovation Act would repeal the SGR, maintain current payment levels through the end of 2014, increase payments to physicians for four years and test new payment and delivery models.  It also contains a “smorgasbord of provisions aimed at transitioning Medicare from the traditional fee-for-service model to new payment and delivery models, with the goal of having them in place by 2019.” 

The bill is virtually identical to a repeal plan offered by the same lawmakers last year — except that it would have paid for repealing the formula with unused funds from the wars being wound down in Iraq and Afghanistan.  “That was controversial among Republicans and some Democrats, so they stripped it out this time, leaving it up to lawmakers to find a pay-for,” reported POLITICO. 

“We firmly believe this legislation is the optimal vehicle to move the payment reform conversation forward,” said Martin Levine, immediate past president of the American Osteopathic Association, who attended the bill announcement event on the Hill. “There’s still a hill to climb, but it’s not the mountain it once was.” 

The American Medical Association stopped short of endorsing this particular bill, but AMA President Jeremy Lazarus said it’s “an important part of the continuing discussion on the future of Medicare and the end of the SGR.”  He repeated the AMA’s desire to “move past the SGR and transition to an array of Medicare delivery and payment options that give physicians the flexibility they need to help lower costs and improve the quality of care for their patients.”  The AMA has recommended a five-year transition fee scale that allows time to test new payment approaches, including several being tested as part of the 2010 health care law. 

John Rother, president and CEO of the National Coalition on Health Care, which represents businesses, medical societies, unions, insurers, healthcare providers, and patients, noted in the press release that "This bipartisan legislation would help deliver the real reform we need, moving us away from today's fee-for-service system to higher-quality, lower-cost care.”

Some key House Republicans also have a plan as well.  The chairmen of the Energy and Commerce and the Ways and Means committees, as well as subcommittee leaders, unveiled an SGR repeal plan that would freeze physician payment rates at their current levels for the next 10 years with future increased based individual physicians’ quality of care and efficiency.  They have promised any fix “will not add a dime to the deficit.”  They are seeking comments on the proposal, which are due February 25th.   

Health Subcommittee Chairman Kevin Brady (R-Texas) has said he’ll introduce legislation later this year.  Democrats also have a strong backer for SGR repeal in Rep. Jim McDermott, MD (D-Wash.), a psychiatrist who takes over as the subcommittee's top Democrat after last year's defeat of longtime congressman Pete Stark (D-Calif.).  The House Republicans stated that SGR Reform must: 

• Not increase the deficit;
• Involve the physician community and other stakeholders;
• Foster clinically meaningful (not government determined) care for patients;
• Encourage achievable improvements in quality, efficiency, and patient outcomes based on physician-endorsed measures;
• Be applicable to all specialties, practice arrangements, and geographic locations;
• Reward the value rather than the volume of services;
• Motivate all stakeholders to adopt reforms; and
• Strengthen Medicare for seniors. 

The proposal, modeled after reimbursement systems that are employed widely in the private sector, improves upon Medicare’s outdated system by: 

• Fully repealing the SGR and eliminating the estimated 25 percent across-the-board rate cut in 2014 and any future rate cuts called for under the SGR;
• Establishing a period of predictable, statutorily-defined payment rates, enabling physicians to prepare for and participate in payment reform;
• Empowering physicians to determine the quality and efficiency measures that are clinically meaningful for Medicare beneficiaries;
• Rewarding physicians who deliver high-quality and efficient care rather than continuing the current system that encourages volume and unnecessary spending;
• Requiring the Centers for Medicare & Medicaid Services (CMS) to provide timely feedback and data to physicians, enabling physicians to make adjustments to improve patient care and their assessed performance;
• Providing reimbursement options – instead of the current one-size fits all approach – that enable physicians to select the Medicare payment system that best fits their practice; and
• Engaging the physician community in efforts to improve, reform, and update Medicare’s outdated physician reimbursement system 

The SGR Reform proposal would be rolled out in three (3) Phases.

PHASE 1: Repeal SGR and provide a period of predictable, statutorily-defined payment rates. 

While the duration and size of the payment rates to be set in statute are not yet determined, this phase will provide physicians time to transition to, and play a prominent role in, reforming the Medicare FFS physician payment system. 

PHASE 2: Reform Medicare’s FFS payment system to better reflect the quality of care provided. 

• Reform is needed to maintain a viable FFS system and an emphasis on value mirrors many private payer efforts.
• After the period of stability, physician fee schedule payment updates will be based on performance on meaningful, physician-endorsed measures of care quality and participation in clinical improvement activities (e.g., reporting clinical data to a registry or employing shareddecision making tools).
• Medical specialty societies will develop meaningful quality measures and clinical improvement activities using a standard process.
• Performance will be based on both risk-adjusted relative rankings amongst physician specialty peer groups and improvement on quality over time.
• Physicians will be provided with timely access to their quality performance score as well as with an appeals process to ensure accuracy.
• This proposal will reduce the reporting burden on physician practices, override the current ineffective CMS quality measurement programs, and align Medicare payment initiatives with private payer initiatives.
• Physicians who are participating in certain alternative reimbursement models under Medicare may opt out of this modified FFS payment system. 

PHASE 3: Further reform Medicare’s FFS payment system to also account for the efficiency of care provided. 

• After several years of risk-adjusted quality-based payments, physicians who perform well on quality measurement will be afforded the opportunity to earn additional payments based on the efficiency of care.
• Physicians will be provided with timely access to their efficiency performance score as well as with an appeals process to ensure accuracy.
• This proposal will reduce the reporting burden on physician practices and align Medicare payment initiatives with private payer initiatives.
• Physicians who are participating in alternative reimbursement models under Medicare may opt out of this modified FFS payment system. 

ASSESSMENT OF MEDICARE PHYSICIAN PAYMENT OPTIONS: Providing information for further improvements. 

• An assessment of the reformed FFS payment system and alternative Medicare and private sector delivery models will help to ensure that physicians can select from payment system options.
• The Department of Health and Human Services will provide an annual report to Congress on the reformed FFS payment system and alternative model options that include recommendations, as appropriate.
• Congress will solicit recommendations from physician societies and other relevant stakeholders on how to further reform and improve the Medicare physician payment system. 

OTHER ISSUES FOR CONSIDERATION: Developing complementary reforms to improve the practice environment 

• Medical liability reform.
• IPAB repeal.
• Private contracting/balance billing in Medicare without penalty to providers or patients to ensure patient choice and access.
• Gainsharing for improvements in quality and efficiency across defined patient populations 

Schwartz said there are a lot of similarities between her bill and the Ways and Means Republicans’ approach. 

In October, 2011, MedPAC recommended eliminating the formula without increasing the deficit by cutting fees for specialists and imposing a 10-year freeze on rates for primary care physicians. That proposal was strongly opposed by health industry groups, as well as the American Medical Association (AMA).  

The current fix expires on Dec. 31, but a permanent fix would likely have to be melded into larger financial reforms.  “Meanwhile, doctors could still face a more moderate Medicare pay cut this year.  A series of automatic cuts in federal spending, called sequestration, was put off for two months by the Congress with the Jan. 1 vote. Those cuts include a 2 percent reduction to physicians and other Medicare providers – including hospitals.”

Hearing on SGR Repeal 

In addition to the developments noted above, the House Energy & Commerce Committee, Subcommittee on Health, also held a hearing on SGR and how to Build a Future Medicare Physician Payment System.  The panel heard testimony from: 

• Glenn M. Hackbarth, J.D., Chairman of MedPAC
• Harold D. Miller, Executive  Director, Center for Healthcare Quality and Payment Reform
• Elizabeth Mitchell, CEO, Maine Health Management Coalition
• Robert Berenson, M.D., Institute Fellow, Urban Institute; and
• Cheryl L. Damberg, Ph.D., Senior Policy Researcher; Professor, Pardee RAND Graduate School 

As reported by Medpage Today, “multiple lawmakers questioned whether Medicare’s current attempts at paying for quality and outcomes -- accountable care organizations (ACOs) and bundled payments for episodes of care, both of which are currently voluntary or in a pilot stage -- would work for all providers, including those in rural areas or small practices.” 

“The ACO model by design is a flexible model," Hackbarth said in its defense. "It does not dictate a particular form of medical practice or a particular way for money to be distributed within the ACO.” 

Harold Miller, executive director of the Center for Healthcare Quality and Payment Reform in Pittsburgh, said some models currently being tested may not work.  “Many current payment reform efforts, I think, will have limited success because they leave the current broken fee-for-service system in place,” Miller told lawmakers.  In particular, some systems result in physicians losing money even as Medicare makes money, he said. 

Rep. Mike Burgess, MD (R-Texas), defended the Republican framework released last week because it would allow for flexibility, while noting that a fee-for-service model -- criticized for paying for quantity, not quality -- may not disappear.  “The framework realizes there are always going to be areas where providers choose or need to practice in a fee-for-service model,” Burgess said.  “That doesn't mean there aren't better ways to revamp fee-for-service, but it does mean that fee-for-service may continue to exist.” 

Medpage noted that “There was agreement that physician specialty groups have a hand in crafting some details of performance metrics that an SGR replacement would hold. Rep. Henry Waxman (D-Calif.), the top Democrat on the full committee, said lawmakers must seek input from beneficiaries and nonphysician providers as well.” 

Whatever is done, Hackbarth, as MedPAC has done before, called for a re-basing of physician fee schedules to better incentivize primary care.  “The fee schedule doesn't recognize all of the activities that make primary care important for the care delivery system,” Hackbarth said, such as the patient education, care coordination, and follow-up care that primary care physicians provide. Hackbarth also suggested Congress lift the caps on graduate medical education to allow for more residents -- both primary care and specialists -- to be trained, reported MedPage.

 

HHS Offers Look into the Future for Meaningful Use Stage 3

One of the central pieces to the Affordable Care Act (PPACA), along with the American Reinvestment and Recovery Act (ARRA) was the implementation and “meaningful use” of electronic health records (EHRs)—through the HITECH provision.  Consequently, the Office of the National Coordinator for Health IT's (ONCHIT) HIT Policy Committee has released a copy of its proposed recommendations for public comment. 

Under the 2009 federal economic stimulus package, health care providers who demonstrate meaningful use of certified electronic health record systems can qualify for Medicaid and Medicare incentive payments.  The final rules for Stage 3 of the program are expected to take effect in 2016. 

The 38-page document, unveiled at the committee’s meeting Nov. 7, recommends some of the percentage thresholds be increased and suggests several new objectives for stages beyond Stage 3.  Some of the provisions new to Stage 3 include offering patients the capability to submit patient-generated information, and to request amendments to their records online, requiring electronic health records to receive, generate or access appropriate immunization recommendations, and requiring EHRs to be able to query other entities for outside records. 

One recommendation would require participating hospitals and physicians to “provide 10% of patients with the ability to submit patient-generated health information to improve performance on high-priority health conditions and/or to improve patient engagement in care.”  The committee also is seeking input about: 

• Whether existing standards could incorporate medical device data from the home; and
• How consumer-reported data could be incorporated into clinical quality measures.  

In a prior meeting this past June, some of the concepts addressed included aligning with emerging payment, supporting population health, and tools to assist interaction with patients "that may be a bit more difficult" according to the meeting materials.  At another meeting in late October, the Committee had several potential opportunities for inclusion of prescription drug abuse: 

• Including prescription drug monitoring program (PDMP) prescription drug history in medications reviews before a prescriber finalizes a controlled substance prospection order;
• Adopting a clinical quality measure that reports a provider's performance based on the use of the PDMP prescription drug history;
• Mandatory provider registration with the applicable state PDMP drug monitoring program
• Requiring a single sign-on or hyperlink to access PDMP data. 

Reporting the release of the recommendations, FierceEMR noted that the committee explained that to be considered for Stage 3, an objective should support new models of care, address national health priorities, have broad applicability, promote advancement, be achievable, and reflect the reasonableness/feasibility of EHR products.  The committee prefers that standards for EHRs should be available if not widely adopted.

The committee also said that it recommends that “Stage 3 is the time to begin to transition from a setting-specific focus to a collaborative, patient- and family- centric approach. 

ONC added several additional items for public comment, including questions on identity matching, transitions of care and the need for health IT safety risk assessments.  The recommendations will be published in the Federal Register later this month; public comments will be accepted for 45 days after that date.  Here is where public comments are to be submitted. 

The committee said that it will analyze the comments and hold further public meetings about Stage 3 in 2013 before formal rules are issued.

In addition to these rules, ONCHIT recently announced applications to be considered for Health IT Policy and Standards Committee Workgroups.  Also, ONCHIT released a new primer on the 2014 Edition of the certification criteria for electronic health records under Stage 2 of the Meaningful Use program. The primer provides an overview of the new certification requirements and compares the 2014 Edition to the current 2011 Edition. The materials also detail how to prepare for the objectives and clinical quality measures, and outline timing and penalty concerns

 

Payment Penalties May Not Curb Hosptial Aquired Infections

In October 2008 the Centers for Medicare & Medicaid Services (CMS) discontinued additional payments for preventable hospital-acquired conditions (HACs), which according to the American Society for Healthcare Risk Management, included: 

• Vascular-catheter-associated infection
• Catheter-associated urinary tract infection
• Pressure ulcers (stage III and IV)
• Falls and trauma
• Surgical site infection after bariatric surgery for obesity
• Certain orthopedic procedures
• Bypass surgery (mediastinitis)
• Administration of incompatible blood
• Air embolism
• Foreign object unintentionally retained after surgery 

“The idea was that the infections are avoidable, and hospitals should not be paid more money for providing faulty care.”  Four years after doing so, a recent study published in The New England Journal of Medicine found that the policy has had “no effect on curbing infections.”   

Although the policy only cut back an average of six-tenths of a percent of Medicare revenue, according to The Boston Globe, it was a high-profile policy change toward a pay-for-performance approach to reimbursement.

Researchers looked specifically at data from 2006 through 2011 from 398 hospitals in 41 states on central catheter-associated bloodstream infections and catheter-associated urinary tract infections and compared infection data against rates of ventilator-associated pneumonia, which is not under the nonpayment policy. 

The result: Researchers found “no evidence that the 2008 CMS policy to reduce payments for central catheter-associated bloodstream infections and catheter-associated urinary tract infections had any measurable effect on infection rates,” study authors wrote.  The results did not “appear to be affected by whether the hospitals were in states that required reporting of such infections or by other hospital characteristics, such as size, share of patients on Medicare or ownership,” the study’s authors wrote. 

What this might suggest is that government threats for penalties may be the wrong approach.  Instead, it may be more useful for the government to invest in educational resources, such financial support for continuing education (CE) programs, which have proven effective in helping improve HACs. 

Although infections rates have generally dropped since 2006, it was not because of the Medicare penalties, U.S. News and World Report’s HealthDay reported.  “It had really nothing to do with the CMS policy,” Grace Lee, associate professor at Harvard Pilgrim Health Care Institute and Harvard Medical School, told The Boston Globe.  Lee added that the CMS policy “may not have been enough to motivate further change of behavior.” 

Infection rates were already dropping without the CMS policy because hospitals were taking steps to control infections through improvements such as rigorous coding procedures, which may demonstrate better administrative skills rather than better quality, HealthDay noted. 

In addition, many of those 398 hospitals were voluntarily reporting that data even before the payment policy was implemented, which means they may have been further ahead in their infection control efforts than others, thus resulting in no additional slowdown after the penalties, says Lisa McGiffert of Consumers Union, publisher of Consumer Reports. 

The results of this study may trouble hospitals facing penalties for readmissions, which CMS began assessing this month.  For example, American Hospital Association Vice President Nancy Foster told The Wall Street Journal that the study should make policy makers “take a step back and say, ‘Are payment penalties the right way to go; do they actually add to the efforts?’ on reducing infections and other hospital-acquired conditions?” 

Foster told Kaiser Health News that a key piece of any effort to reduce hospital infections is not just to count the number of patients who have problems, but to have a specific, detailed prevention strategy. Preliminary results from the association study found a 40 percent reduction in central line-associated bloodstream infections in intensive care units when they used a team-based approach. 

CMS said, “Taken all together, our policies are working” to reduce infections patients get while in the hospital.  The agency pointed to other efforts, including one program funded by the federal Agency for Healthcare Research and Quality that was tied to a 40% decrease in the rate of the catheter-linked bloodstream infections in hospital intensive-care units. 

Dr. Jeffrey Rothschild, an associate physician at Brigham and Women's Hospital in Boston, suggested that the findings are not unexpected.  “This is a really difficult thing to study, because often the data and discharge coding concerning hospital infections doesn't actually reflect what’s really happening,” Rothschild said. 

Back in June of this year, HHS posted online an updated National Action Plan to eliminate healthcare-associated infections for public comment.  The update confirmed progress in the effort to make healthcare safer and less costly by reducing preventable complications of care, including healthcare-associated infections (HAIs).  This new study, however, may cast down on this progress.   

HHS, however, also laid out its new plan to address HAIs through its Partnership for Patients.  This program may have the potential to address the study’s findings, although the success of the Partnership is too soon to predict.   

While the results of this study cause concern, the Affordable Care Act and the Obama Administration’s stance on improving quality will remain, and government agencies and private insurers will continue to tie payment to quality measures.  For example, beginning in 2015, CMS “will begin financially penalizing hospitals that have the highest rates of certain hospital-acquired health conditions,” reported WSJ. 

11 Ways to Reduce Healthcare Spending

Healthcare spending is out of control.  That was the reason why Congress passed the Affordable Care Act (ACA), right?  Over two years later, we have yet to realize the benefits of healthcare reform, yet spending continues to rise though less than before, outcomes are improving in some areas, but in others still lacking, and what about quality? 

The ACA has a lot of bells and whistles, but have we really seen any improvement?  It’s great that 26-year-olds have insurance and that individuals with pre-existing conditions are getting coverage, but what about spending?  Almost 20% of America’s GDP, how can we solve this problem?  In fact, this year, national spending on health care will reach $2.8 trillion, or about 18% of total spending on all goods and services.  And national health spending is projected to continue to grow faster than the economy, increasing from 18% to about 25% of the gross domestic product (GDP) by 2037.

Healthcare reform proposed Accountable Care Organizations (ACO), value-based purchasing, and several other semi-novel ideas, however, the benefits will likely be realized only years from now.  Accordingly, a group of Democrat health policy experts recently published “A Systemic Approach to Containing Health Care Spending,” in the New England Journal of Medicine (NEJM).  Authors included Tom Daschle, Ezekiel Emanuel, M.D., Ph.D, Donald Berwick, M.D. (former CMS administrator), and Josh Sharfstein, M.D. (former deputy FDA commissioner).

These experts convened through the Center for American Progress to develop bold and innovative solutions that meet certain criteria, such as effectively containing costs, both medical prices and the quantity of services; reducing costs for public and private payers, and rooting out administrative costs that do not improve health status or outcomes.  Accordingly, they offered 11 solutions that would be most effectively offered as a package. 

Promote Payment Rates within Global Targets: The authors recommended that an independent council composed of providers, payers, businesses, consumers, and economists set and enforce the spending target to contain costs.  The federal government would award grants to states to promote this self-regulation model.  States could phase in this model, one sector (e.g., hospitals) at a time.  To receive grants, states would need to publicly report measures of quality, access, and cost and would receive bonus payments for high performance.  For providers, the negotiated rates would be adjusted for performance on quality measures, which should be identical for public and private payers.

Accelerate Use of Alternatives to Fee-for-Service Payment: Instead of paying a fee for each service, payers could pay a fixed amount to physicians and hospitals for a bundle of services (bundled payments) or for all the care that a patient needs (global payments).  As soon as possible, both public and private payers should adopt the bundles for 37 cardiac and orthopedic procedures used in the Medicare Acute Care Episode program.  The bundles will also need to include rehabilitation and postacute care for 90 days after discharge.  Within 5 years, Medicare should make bundled payments for at least two chronic conditions, such as cancer or coronary artery disease. Within 10 years, Medicare and Medicaid should base at least 75% of payments in every region on alternatives to fee-for-service payment.

Use Competitive Bidding for All Commodities: Evidence suggests that prices for many products, such as medical equipment and devices, are excessive.  Instead of the government setting prices, market forces should be used to allow manufacturers and suppliers to compete to offer the lowest price.  In 2011, such competitive bidding reduced Medicare spending on medical equipment such as wheelchairs by more than 42%.  The ACA requires Medicare to expand competitive bidding for equipment, prosthetics, orthotics, and supplies to all regions by 2016.  The authors recommended expanding this program nationwide and extend competitive bidding to medical devices, laboratory tests, radiologic diagnostic services, and all other commodities.  To oversee the process, they recommended that Medicare establish a panel of business and academic experts.

Require Exchanges to Offer Tiered Products: To address market dominance, insurers can offer tiered plans. These insurance products designate a high-value tier of providers with high quality and low costs and reduce cost sharing for patients who obtain services from these providers.

Require All Exchanges to be Active Purchasers: As soon as reliable quality-reporting systems exist and exchanges achieve adequate scale, it is critical that federal and state exchanges engage in active purchasing — leveraging their bargaining power to secure the best premium rates and promote reforms in payment and delivery systems.  The authors recommend that exchanges adopt bonus payment model for the Medicare Advantage plans or a similar pay-for-performance model for participating plans and award a gold star to plans that provide high quality at a low premium. 

Simplify Administrative Systems for All Payers and Providers: The United States spends nearly $360 billion a year on administrative costs, accounting for 14% of excessive health spending.  Section 1104 of the ACA requires uniform standards and operating rules for electronic transactions between health plans and providers.  Although plans must comply with these standards and rules, the law does not require providers to exchange information electronically.

First, the authors suggest that payers and providers electronically exchange eligibility, claims, and other administrative information as soon as possible. Second, public and private payers and providers should use a single, standardized physician credentialing system.  Currently, physicians must submit their credentials to multiple payers and hospitals.  Third, payers should provide monthly explanation-of-benefits statements electronically but allow patients to opt for paper statements.  Fourth, electronic health records should integrate clinical and administrative functions — such as billing, prior authorization, and payments — over the next 5 years.  For instance, ordering a clinical service for a patient could automatically bill the payer in one step.  They also recommend another task force consisting of payers, providers, and vendors to set binding compliance targets, monitor use rates, and have broad authority to implement additional measures to achieve systemwide savings of $30 billion a year.

Require Full Transparency of Prices: Price transparency would allow consumers to plan ahead and choose lower-cost providers, which may lead high-cost providers to lower prices.  Although price transparency could facilitate collusion, this risk could be addressed through aggressive enforcement of antitrust laws.  It is important that all private insurers and states provide price information that reflects negotiated discounts with specific providers. The information should include one price that bundles together all costs associated with a service, individualized estimates of out-of-pocket costs at the point of care, and information on quality of care and volume of patients so that consumers can make informed decisions on the basis of value.

Make Better Use of Nonphysician Providers: Restrictive state scope-of-practice laws prevent nonphysician providers from practicing to the full extent of their training. For instance, 34 states do not allow advanced-practice nurses to practice without physician supervision.  Making greater use of these providers would expand the workforce supply, which would increase competition and thereby lower prices.  The authors recommend that the federal government provide bonus payments to states that meet scope-of-practice standards delineated by the Institute of Medicine.  Medicare and Medicaid payments to nonphysician providers should allow them to practice to the full extent permitted under state law.

Expand the Medicare Ban on Physician Self-Referrals: The authors recommend expanding the Stark law to prohibit physician self-referrals for services that are paid for by private insurers.  In addition, the loopholes for in-office imaging, pathology laboratories, and radiation therapy should be closed.  Physicians who use alternatives to fee-for-service payment should be exempted because these methods reduce incentives to increase volume.

Leverage the Federal Employees Program to Drive Reform: The Federal Employees Health Benefits Program (FEHBP) provides private health insurance to 8 million federal employees and their families.  They recommended that the FEHBP align with Medicare by requiring plans to transition to alternative payment methods, reduce payments to hospitals with high rates of readmissions and hospital-acquired conditions, and adjust payments to hospitals and physicians on the basis of their performance on quality measures. In addition, the FEHBP should require carriers to offer tiered products and conduct competitive bidding on behalf of plans for all commodities. Finally, the FEHBP should require plans to provide price information to enrollees and prohibit gag clauses in plan contracts with providers.

Reduce the Costs of Defensive Medicine: A more promising strategy would provide a so-called safe harbor, in which physicians would be presumed to have no liability if they used qualified health-information-technology systems and adhered to evidence-based clinical practice guidelines that did not reflect defensive medicine. Physicians could use clinical-decision support systems that incorporate these guidelines.  Under such a system, the physician could use the safe harbor as an affirmative defense at an early stage in the litigation and could introduce guidelines into evidence to avoid a courtroom battle of the experts. The patient could still present evidence that the guidelines were not applicable to the particular situation, and the judge would still determine their applicability.

Conclusion

Though we are still early in the implementation of the Affordable Care Act, we are seeing signs that the fee for service culture is leaving us behind and the rate of costs increases have slowed down.  Ultimately, the authors maintained that these 11 proposes are “the types of large-scale solutions that are necessary to contain health costs.”  

ONC-AHIMA Public-Private Guide on Privacy and Security of Electronic Health Records

The Office of the National Coordinator for Health IT recently release a new instructional guide addressing concerns about privacy and security with respect to electronic health records (EHRs) and health information technology, as reported in FierceHealthcare

The guide--a collaboration of ONC's Office of the Chief Privacy Officer and the American Health Information Management Association (AHIMA) Foundation--is designed to teach healthcare professionals about the roles of privacy and security in the use of EHRs and in Meaningful Use.

The 47-page “Guide to Privacy and Security of Health Information” includes sections on Meaningful Use, security risk analysis, and working with health IT vendors, as well as a privacy and security action plan. In addition, it includes lengthy explanations of the HIPAA privacy and security rules.

The manual explains in detail the two core Meaningful Use Stage 1 requirements related to privacy and security.  The first is the requirement that patients who request it be supplied with an electronic copy of their health information within three business days.  This access is mandated by the HIPAA privacy rule, which is imbedded in the Meaningful Use criteria.

Providers who want government incentives for Meaningful Use of electronic health records also must conduct a security risk analysis of their EHRs, as required by the HIPAA security rule.  The guide defines a security risk analysis and shows how to conduct it.

Another section includes a checklist for risk management in medical practices. Among other things, providers are urged to employ user names and passwords, encryption, and data backup systems.  ONC also lists actions to take to protect against cyber-attacks.

One of the guide’s more interesting sections compares the security risks inherent in office-based EHRs vs. Internet-based EHRs.  The manual notes that while an office-based system gives users more control of security, the security features may not be updated regularly, and natural disasters can destroy the system.  Meanwhile, in an Internet-based EHR, according to the guide, the vendor controls the security settings, but the data may be stored in other countries that have different security requirements, and users are dependent on the reliability of their Internet connections.

Basic principles of information sharing between providers and patients, meanwhile, were the subject of a recently updated guide from The Markle Foundation.  Originally released in 2006, the Markle Connecting for Health Common Framework for Private and Secure Information Exchange provides what Markle calls "a comprehensive approach for secure, authorized, and private health information sharing based on Fair Information Practice Principles (FIPPs)."

The 2012 update, the Markle Connecting for Health Common Framework Policies in Practice for Health Information Sharing (Policies in Practice), addresses "a range of critical health information sharing implementation needs identified by experts working in the field."

HHS Regulatory Priorities for 2012

The Department of Health and Human Services (HHS) recently released a report of its Regulatory Priorities for FY 2012.    

HHS operates more than 300 programs covering a wide spectrum of activities, manages almost a quarter of all Federal outlays, and administers more grant dollars than all other Federal agencies combined.  The Department’s major program responsibilities include: 

• Medicare and Medicaid;
• Control and prevention of communicable and chronic disease;
• Support for public health preparedness and emergency response;
• Biomedical research;
• Substance abuse and mental health treatment and prevention;
• Assuring safe and effective drugs, devices, and other medical products;
• Protecting the food supply;
• Assistance to low-income families;
• The Head Start program; and
• Improving access to health care services to the uninsured, isolated, or medically vulnerable. 

HHS is also the principal agency charged with implementing one of the President’s signature achievements—transformative health care reform through the Affordable Care Act of 2010. 

To implement this vast program portfolio, HHS develops an active regulatory agenda each year, driven largely by statutory mandates and interactions with stakeholders. The President also called upon Federal agencies to reform the regulatory process in his January 18, 2011, Executive Order 13563 “Improving Regulation and Regulatory Review.”  A key directive in that Executive order was to require agencies to conduct an inventory of existing regulations to determine whether such regulations should be modified, streamlined, expanded, or repealed to make an agency's regulatory scheme more effective or less burdensome in achieving its programmatic objectives. 

With these regulatory drivers in mind, HHS Secretary Kathleen Sebelius has worked with HHS agencies to craft a regulatory agenda that reflects her commitments to implementing meaningful health care reform, access to health care coverage, and high value health care services that are safe and effective for all Americans.  The agenda also reflects her other strategic initiatives, which include: 

• Securing and maintaining health care coverage for all Americans;
• Improving quality and patient safety;
• More rapidly responding to adverse events;
• Implementing a 21st century food safety system;
• Helping Americans achieve and maintain healthy living habits;
• Advancing scientific research; and
• Streamlining regulations to reduce the regulatory burden on industry and States.   

Within the agenda, the Secretary has also been mindful of the need to reform the ongoing regulatory process through retrospective review of existing regulations, and this agenda reflects her commitment to that review by incorporating some of the most significant burden reduction reforms across all Federal agencies.  In fact, of the $10 billion in savings from retrospective regulatory review across all Federal agencies announced by the Administrator of the Office of Information and Regulatory Affairs, $5 billion was attributable to regulations contained within HHH’s current regulatory agenda.  Below is a brief overview of mainly the health related priorities. 

Making Health Insurance Coverage More Secure for Those Who Have Insurance and Extending Coverage to the Uninsured 

As a result of the Affordable Care Act, HHS is making affordable health care coverage more stable and secure through insurance market reforms designed to protect consumers against unreasonable insurance premium increases, provide them with more comprehensive and understandable information with which to make decisions, and enable eligible consumers to receive financial support for health insurance easily and seamlessly.  In 2014, all people who suffer from chronic conditions will no longer be excluded from insurance coverage or charged higher premiums because of a pre-existing condition or medical history. 

Already, insurers are prohibited from putting lifetime dollar limits and restrictive annual caps on what they will pay for health care services needed by the people they insure, ensuring that those people have access to medical care throughout their lives, especially when it is most needed.  HHS is working with States to help identify and put a stop to unreasonable health insurance premium rate increases and will require new health plans to implement a comprehensive appeals process for those beneficiaries who have been denied coverage or payment by the insurance plan.  

New health insurers will also be required to spend the majority of health insurance premiums on medical care and health care quality improvement, not on administration and overhead.  As well, the Affordable Care Act is providing reimbursement to employers that offer health benefits to early retirees, providing insurance coverage through the Pre-existing Condition Insurance Plan to people who would otherwise be locked out of the insurance market because of their pre-existing health conditions, and requiring plans that offer dependent coverage to make that coverage available to young adults up to age 26. 

In addition, the Centers for Medicare & Medicaid Services (CMS) will finalize three rules that will expand access to health insurance and provide consumers with better options and information about insurance: 

-       CMS will issue standards for the establishment of the Affordable Insurance Exchanges (Exchanges) to provide competitive marketplaces for individuals and small employers to directly compare available private health insurance options on the basis of price and quality.  These Exchanges will help enhance competition in the health insurance market, improve choice of affordable health insurance, and give small businesses the same purchasing clout as large businesses. 

-       Another rule helps to make coverage more secure by offsetting market uncertainty and risk selection to maintain the viability of Exchanges.  Under risk adjustment, HHS, in consultation with the States, will establish criteria and methods to be used by States in determining the actuarial risk of plans within a State to minimize the negative effects of adverse selection.  Under reinsurance, all health insurance issuers, and third-party administrators on behalf of self-insured group health plans, will contribute to a nonprofit reinsurance entity to support reinsurance payments to individual market issuers that cover high risk individuals. 

-       To extend health insurance to greater numbers of low-income people, Medicaid eligibility in 2014 will expand to cover adults under the age of 65 earning up to 133 percent of the Federal poverty level, and those who earn above that level may be eligible for tax credits through the Exchanges to help pay their premiums.  New, simplified procedures for determining Medicaid, CHIP, and tax credit eligibility will be forthcoming in 2012.  CMS will simplify eligibility rules to make it easier for eligible individuals and families to obtain premium tax credits and Medicaid coverage, including ensuring that Medicaid uses the same eligibility standards as other insurance affordability programs available through the Exchange, as directed by law.  The rule further outlines how Medicaid and CHIP will coordinate closely with the Exchange, including sharing data to ensure that individuals are determined eligible for the appropriate insurance affordability program regardless of where an applicant submits the application. 

Improving Health Care Quality and Patient Safety 

Across America and for all Americans, HHS is working to improve patient outcomes, ensure patient safety, promote efficiency and accountability, encourage shared responsibility, and reduce health care costs.  Through improved administrative processes, reforms, innovations, and additional information to support consumer decision making, HHS is supporting high-value, safe, and effective care across health care settings and in the community. 

In 2011, the Department published a key regulation to advance this priority—the final rule for Accountable Care Organizations (ACOs).  This rule establishes a system of shared savings for qualified organizations that deliver primary care services to a given patient population.  The objective is to promote accountability and shared responsibility for the delivery of care, especially to those with co-morbidities of chronic health problems in order to prevent unnecessary and costly in-patient hospital care, reduce health care acquired conditions, and improve the quality of life for those individuals.  

This rule serves as a companion to additional demonstration programs designed to explore alternative services delivery and payment systems that are being sponsored by the new Center for Medicare and Medicaid Innovation.  Several more key regulations are on the agenda to move forward in meeting these quality and patient safety goals:

-       CMS is implementing value-based purchasing programs throughout its payment structure in order to reward hospitals and other health care providers for delivering high-quality care, rather than just a high volume of services.  The payment rules scheduled for publication this year will reflect a mix of standards, processes, outcomes, and patient experience of care measures, including measures of care transition and changes in patient functional status. 

-       The Department continues to encourage health care providers to become meaningful users of health information technology (IT) by accelerating health IT adoption and promoting electronic health records to help improve the quality of health care, reduce costs, and ultimately, improve health outcomes.  Electronic health records and health information exchange can help clinicians provide higher quality and safer care for their patients.  By adopting electronic health records in a meaningful way, clinicians will know more about their patients to better coordinate and improve the quality of patient care, and they can make better decisions about treatments and conditions.

 Improving Response to Adverse Events 

In a related activity, the FDA will be proposing a new rule to establish a unique identification system for medical devices in order to track a device from pre-market application through distribution and use.  This system will allow FDA and other public health entities to track individual devices so that when an adverse event occurs, epidemiologists can quickly track down and identify other users of the device to provide guidance and recommendations on what steps to take to prevent additional adverse actions.   

 Advancing Scientific Research 

To effectively address the challenges HHS faces in crafting the best, evidence-based approaches to advance health services delivery, protect the public health, ensure essential human services, promote biomedical research, and ensure the availability of safe medical and food products, HHS must rely on research.  The lynchpin of this research is found in the ethical rules governing research on human subjects. 

In a major undertaking, HHS is in the process of reviewing and revising those ethical rules, commonly referred to as the Common Rule.  The Common Rule serves to guide researchers and investigators in the Department, but also throughout the Federal Government, in the conduct and protocols for doing research on human subjects.  The proposed revisions will be designed to better protect human subjects who are involved in research, while facilitating research and reducing burden, delay, and ambiguity for investigators. 

Streamlining Regulations to Reduce Regulatory Burdens 

Consistent with the President’s Executive Order 13563, HHS continues its commitment to reducing the regulatory burden on the health care industry through the use of modern technology.  As part of this effort, FDA will advance several rules designed to reduce the reporting and data submission requirements from manufacturers of drugs and medical devices. 

In one such rule, FDA will permit manufacturers, importers, and users of medical devices to submit reports of adverse events to the FDA electronically. This proposed change will not only reduce the paper reporting burden on industry, but also allow FDA to more quickly review safety reports and identify emerging public health issues.  

Under another proposed rule, FDA would revise existing regulations to allow clinical study data and bioequivalence data for new drug applications and biological license applications to be provided electronically.  Again, this rule will reduce the reporting burden on industry and also permit FDA to more readily process and review applications. 

CMS is also engaged in regulatory reduction and streamlining activities.  Of particular note are several rules on conditions of participation for hospitals and other providers.  The most comprehensive of these rules is the one reducing regulatory burdens on hospitals, which is expected to save as much as $940 million annually over the next 5 years.  This rule will implement changes to hospital conditions of participation to reflect substantial advances in health care delivery and patient safety knowledge and practices.

HHS Global Health Strategy 2012

The Department of Health and Human Services (HHS) published its “Global Health Strategy” (GHS).  Although the chief mission of HHS is to enhance the health and well being of all Americans, HHS noted the importance of cooperating with other nations and international organizations to reduce the risks of disease, disability, and premature death throughout the world.   

Whether implementing life-saving vaccination programs or building public health infrastructure where none exists, HHS has consistently offered its unmatched expertise and resources for the betterment of Americans and people around the world.  But some of the most critical global health issues can only be tackled in concert with other entities, whether in our own country, like the State Department or the U.S. Agency for International Development, or with partnerships with the international community through the World Health Organization, Ministries of Health, and non-government organizations around the world.  Only through these multiple and collaborative efforts will we truly make a mark by improving global health. 

It is with these thoughts in mind that HHS Secretary Kathleen Sebelius called for the creation of the Department’s first Global Health Strategy.  The GHS will guide HHS’ actions as the agency asserts its important role in the global health environment.  The strategy reflects the best advice from the Department’s leading experts – from the Food and Drug Administration (FDA) scientists stationed in China who monitor global food trade, to the National Institutes of Health (NIH) laboratory researchers in Mexico who strengthen HHS preparedness for the many diseases that threaten to cross borders. 

The strategy reflects the importance of global public health in realizing not only America’s own diplomatic and security goals, but also the goals of other nations. The GHS articulates the strategies that will guide these global efforts to prevent disease, disability and death, promote health and well-being, advance knowledge and innovation, and strengthen partnerships and systems to improve responsiveness to myriad health challenges at home and abroad.  The strategic approach to global health requires: 

• Implementation and evaluation of research, policies, programs, and practices that improve health, health services, and health equity;
• Emphasis on transnational health issues, determinants and solutions; and
• Promotion of interdisciplinary collaboration within and beyond the health sciences 

Goals of GHS 

The Global Health Strategy identifies three goals that contribute to achieving HHS’s global health vision of a healthier, safer world: 

1. To protect and promote the health and well-being of Americans through global health action;
2. To provide leadership and technical expertise in science, policy, programs, and practice to improve global health; and
3. To work in concert with interagency partners to advance U.S. interests in international diplomacy, development, and security through global health action. 

Supporting these goals are ten critical objectives that focus on strategic priorities that benefit the American people as well as populations across the globe: 

1. Enhance global surveillance to detect, control and prevent diseases and health concerns;
2. Prevent infectious diseases and other health threats from crossing borders;
3. Prepare for and respond to international outbreaks and public health emergencies;
4. Increase the safety and integrity of global manufacturing and supply chains for medical products, food and feed;
5. Strengthen and implement international science-based international health and safety standards;
6. Catalyze biomedical and public health research and innovation for new interventions that improve health and well-being;
7. Identify and exchange best practices to improve health strategies and health systems;
8. Address the changing global patterns of death, illness and disability;
9. Support the President’s Global Health Initiative to achieve major improvements in health outcomes for women, children and families; and

10.  Advance health diplomacy through scientific and technical expertise. 

The Principles underlying the Global Health Strategy are:

• Using evidence-based knowledge to inform decisions
• Leveraging strengths through partnership and coordination
• Responding to local needs
• Building local capacities
• Ensuring a lasting, measurable impact
• Emphasizing prevention
• Improving the equity of health 

Legal Framework  

HHS is directed by Congress and entrusted by the American people to protect their health and well-being. HHS’s global authorities reside in three major areas: U.S. Code, appropriations law, and International Health Regulations. Within the U.S. code, several titles authorize global action on health issues: Title 6—Domestic Security, related to the control of communicable diseases; Title 21—Food and Drugs, relating to foods, human and veterinary drugs, biologics, and medical devices; Title 22—Foreign Relations and Intercourse, covering research and training, as well as HIV/AIDS, tuberculosis, and malaria; and Title 42—The Public Health and Welfare, which includes the codification and roles of the Public Health Service (PHS) and covers research, capacity building, and activities related to influenza, border health, outbreak and emergency response, infectious diseases, public health, and immunization programs.

HHS’s global authorities are also embedded in appropriations law, such as establishment of the Global Disease Detection program through the 2004 Consolidated Appropriations Bill, and funding for pandemic influenza preparedness and surveillance activities under the 2006 Defense Appropriations Act. Finally, the United States is bound by the International Health Regulations (IHR), a treaty binding on all the Member States of the World Health Organization (WHO), focused on prevention of, and response to, acute public health risks with the potential to cross borders and threaten people worldwide. 

To accomplish their mission, HHS acts both domestically and internationally. Most of the 11 HHS agencies and 18 staff offices engage in global health activities, particularly the Centers for Disease Control and Prevention (CDC), FDA, the Health Resources and Services Administration (HRSA), and NIH. HHS has over 300 officials stationed in more than 75 foreign countries – including a significant number working within foreign ministries of health and multilateral organizations – where we have seen growing demand for HHS scientific, technical, and regulatory expertise in policy, programs and practice. 

Given current resources and our core mandate, it is not possible to meet every demand, but through the GHS, HHS will leverage our assets to maximize global impact.  HHS will do this by setting priorities for international engagements, improving collaboration and coordination among HHS agencies and offices, strengthening relationships with USG, multilateral, and other partners at headquarters and in the field, and supporting the global exchange of best practices and lessons learned. 

In addition, HHS has included, for the first time, a global health topic area within Healthy People 2020 – the Nation’s public health goals and objectives for the next decade. While we believe the USG and HHS play a strong leadership role in the global health arena, it is nonetheless important to recognize that our own programs and policies can learn and benefit from the successes of other countries and partners as well. 

Specific GHS Objectives 

Objective 1: Enhance Global Health Surveillance.  To achieve this objective, HHS will Strengthen global surveillance to detect, track, identify, control and prevent diseases and address health concerns that may directly or indirectly have an impact on the U.S. population. Key priorities:  

• Support countries and multilateral organizations to strengthen surveillance systems, addressing current gaps (e.g., integrating surveillance for human and animal diseases, and communicable and non-communicable diseases) and ensuring interoperability of systems, both within and across countries
• Assist with improving workforce and laboratory capacity to support diagnosis for disease surveillance
• Provide leadership and technical expertise, often embedded within Ministries of Health, to ensure surveillance efforts are timely, evidence-based, data-driven, internationally shared and actionable to inform public health policies and decision-making
• Develop and evaluate innovative surveillance, information management, and communication strategies 

Objective 2: Prevent Infectious Diseases and Other Health Threats.  To achieve this goal, HHS will work with global partners to enhance health security and prevent the introduction, transmission and spread of infectious diseases and other health threats within and across borders. Key Priorities:  

• Support the development of sustainable capacities among partner governments and international agencies for addressing both public health emergencies and day-to-day public health needs, consistent with the International Health Regulations (2005)
• Facilitate development, use, and evaluation of vaccines and other prevention strategies such as vector control and safe water, focusing on achieving global disease reduction goals
• Support database and information technology infrastructure with global access and common portals for monitoring purposes, including measures for early warning systems and monitoring holdings of dangerous pathogens
• Ensure effective risk and crisis communication by coordinating with global partners to disseminate public information and emergency notification, especially to at-risk populations and stakeholders 

Objective 3: Prepare for and Respond to Public Health Emergencies.  To meet this objective, HHS will  mobilize and support an immediate health-sector response to international outbreaks and public health emergencies. Key Priorities:  

• Support the development of sustainable response capacities and coordination mechanisms for addressing public health emergencies consistent with the International Health Regulations(2005)
• Provide technical expertise and share mechanisms for investigating disease outbreaks and identifying their cause
• Collaborate with international partners to develop best practices and standard indicators and guidelines for responding to natural and man-made disasters, including a focus on improved coordination and response practices
• Develop policy frameworks, agreements and operational plans to facilitate HHS decision-making in response to both single and multiple international requests for emergency assistance, including for the deployment of medical countermeasures and HHS personnel 

Objective 4: Increase the Safety and Integrity of Global Manufacturing and Supply Chains.  HHS will meet this objective by  enhancing regulatory systems and global manufacturing and supply chains to ensure the safety of medical products, food, and feed that enter into the United States.Key Priorities: 

• Identify key risks in the global manufacturing and supply chain and implement strategies to mitigate them in cooperation with other governments and international agencies
• Strengthen strategic regulatory partnerships to promote a safer, higher quality global supply of medical products, food and feed 

Objective 5: Strengthen International Standards through Multilateral Engagement.  HHS will provide leadership to establish, strengthen and implement science-based international health and safety standards and support multilateral efforts to improve global health policies, programs, and practice. Key Priorities:

• Ensure an appropriate leadership role for the U.S. in the development of science-based norms and standards, particularly within the World Health Organization and other multilateral bodies addressing health issues
• Strengthen existing multilateral relationships and develop new strategic alliances to maximize the achievement of our global health goals and objectives 

Objective 6: Catalyze Health Research Globally.  HHS will catalyze biomedical and public health research and innovation globally to promote the discovery, development, delivery and evaluation of new interventions that improve health and well-being across national borders. Key Priorities:  

• Address research priorities that are linked to scientific opportunity, public health needs, and the evolving burden of disease
• Support the rapid translation of research results into new or improved preventive, diagnostic, and treatment products and processes, and incorporation into health policies and practice, in diverse global settings, including resource-poor environments
• Encourage research that identifies causative pathways of the spread of infectious disease and other health threats 

Objective 7: Identify and Exchange Best Practices to Strengthen Health Systems.  HHS will increase the exchange of best practices to improve health strategies, with a focus on comprehensive strengthening of health systems. The six critical building blocks of a health system are health services, the health workforce, health information systems, medical products and technologies, health financing, and leadership and governance. Key Priorities:  

• Support collaborative health system strengthening activities, including workforce development, that are both consistent with country priorities and have the greatest potential public health impact
• Promote the global exchange of best practices and lessons learned to ensure that evidence supports decisions and program implementation
• Address the underproduction and retention of health professionals in developing countries 

Objective 8: Address the Changing Global Patterns of Death, Illness and Disability.  HHS will encourage global action to address the major current and emerging contributors to global death, illness and disability. Key Priorities:  

• Promote the development, implementation, evaluation and dissemination of cost-effective prevention, policies, strategies and interventions for NCDs
• Promote the integration of effective public health policies and trade policies
• Strengthen health system capacities to address multiple NCDs by fostering evidence-based interdisciplinary practice and promoting integrated community approaches that include other sectors 

Objective 9: Support the Global Health Initiative (GHI). HHS will support the GHI to achieve major improvements in health outcomes through strengthened health systems, with emphasis on women, children and families, as confirmation of the US commitment to the health-related Millennium Development Goals. Key Priorities:  

• Contribute to the achievement of GHI goals and principles in the areas of HIV, malaria, TB, neglected tropical disease, maternal and child health, nutrition, safe water, sanitation, and hygiene, and focusing on women-centered programming, country ownership, integration and coordination, and health system strengthening
• Support the integration of public health services for prevention and control of key diseases such as HIV/AIDS and vaccine-preventable diseases with other priority health interventions in health facilities and other settings, as appropriate. 

Objective 10: Advance Health Diplomacy. Within the broader context of U.S. foreign policy, HHS will engage on health issues with diplomatic partners, whether individual countries or international organizations and strengthen peer-to-peer technical, public health, and scientific relationships. Key Priorities:  

• Assign health attachés to selected U.S. embassies for international cooperation, ensuring that political, security, development and health objectives are maximized
• Establish a Global Health Career Track within HHS to formalize career opportunities and training for people working in the global health arena, including in overseas assignments
• Partner with the Department of State to bolster knowledge about global health among the diplomatic corps
• Strengthen diplomatic knowledge, negotiation skills and understanding of development principles for HHS field staff and technical health experts

HHS to Begin HIPAA Audits

Starting this month, healthcare organizations will be subject to audits by the Office of Civil Rights (OCR), evaluating their compliance with the HIPAA privacy and security rules and breach notification standards.

The American Recovery and Reinvestment Act of 2009, in Section 13411 of the HITECH Act, requires the Department of Health and Human Services (HHS) to provide for periodic audits to ensure covered entities and business associates are complying with the HIPAA Privacy and Security Rules and Breach Notification standards. 

To implement this mandate, OCR is piloting a program to perform up to 150 audits of covered entities to assess privacy and security compliance.   Audits conducted during the pilot phase will begin November 2011 and conclude by December 2012.  Auditors will conduct a site visit, interview key personnel, and record results in reports that will be shared with the organization and the OCR.

The audit program serves as a new part of OCR’s health information privacy and security compliance program.   OCR will use the audit program to assess HIPAA compliance efforts by a range of covered entities.  HHS asserted that, “audits present a new opportunity to examine mechanisms for compliance, identify best practices and discover risks and vulnerabilities that may not have come to light through OCR’s ongoing complaint investigations and compliance reviews.”  OCR will broadly share best practices gleaned through the audit process and guidance targeted to observed compliance challenges via this web site and other outreach portals.

The pilot audit program itself is a three-step process.  The first step entailed developing the audit protocols.  The second step is the initial audits beginning this month.  The results of the initial audits will inform how the rest of the audits will be conducted.  The last step will include conducting the full range of audits using revised protocol materials.  

Every covered entity and business associate is eligible for an audit.  Selections in the initial round will be designed to provide a broad assessment of a complex and diverse health care industry.  OCR is responsible for selection of the entities that will be audited.

OCR will audit as wide a range of types and sizes of covered entities as possible; covered individual and organizational providers of health services, health plans of all sizes and functions, and health care clearinghouses may all be considered for an audit.  OCR expects covered entities to provide the auditors their full cooperation and support and remind them of their cooperation obligations under the HIPAA Enforcement Rule.  Business Associates will be included in future audits.

The privacy and security performance audit process will include generally familiar audit mechanisms.  Entities selected for an audit will be informed by OCR of their selection and asked to provide documentation of their privacy and security compliance efforts. In this pilot phase, every audit will include a site visit and result in an audit report. During site visits, auditors will interview key personnel and observe processes and operations to help determine compliance.

Following the site visit, auditors will develop and share with the entity a draft report; audit reports generally describe how the audit was conducted, what the findings were and what actions the covered entity is taking in response to those findings. Prior to finalizing the report, the covered entity will have the opportunity to discuss concerns and describe corrective actions implemented to address concerns identified.

The final report submitted to OCR will incorporate the steps the entity has taken to resolve any compliance issues identified by the audit, as well as describe any best practices of the entity.

Audits are primarily a compliance improvement activity.  OCR will review the final reports, including the findings and actions taken by the audited entity to address findings.  The aggregated results of the audits will enable OCR to better understand compliance efforts with particular aspects of the HIPAA Rules.  Generally, OCR will use the audit reports to determine what types of technical assistance should be developed, and what types of corrective action are most effective.

Should an audit report indicate a serious compliance issue, OCR may initiate a compliance review to address the problem.  OCR will not post a listing of audited entities or the findings of an individual audit which clearly identifies the audited entity.

Merck CEO Government Boards and Price Controls Threaten Medical Progress

 
In a recent editorial in the Wall Street Journal, Kenneth C. Fraizer, President and CEO of Merck & Co. asserted that, “government boards and drug price controls threaten to throw sand in the gears of medical progress.”

Fraizer recognized how life-science companies today are among America's premier innovators, with six of the top 10 companies in global research and development expenditures being biopharmaceutical, according to a 2010 report by Booz & Co. This innovation is what drives millions of jobs and tax dollars in America. For example, Merck has over 40,000 people on its payroll in the U.S.  And these high-quality jobs in biopharmaceutical research are skilled and labor-intensive, with an average salary of more than $95,000.

Moreover, American drug companies reinvest more than 20% of their U.S. sales revenues in research. As recently as 2008, more than 67% of all U.S. biopharmaceutical patents were issued to U.S.-based life-science companies. In addition, almost two-thirds of research on new medicines approved in the last 10 years was performed in this country.

Today, the U.S. accounts for 82% of the biotechnology research and development in the world and has over 2,900 medicines in the pipeline. In addition, U.S. biopharmaceutical exports rose to $46 billion in 2009 from $29 billion in 2005.

He also pointed out how the biopharmaceutical industry's scientists have produced a global revolution in health care. Medicines and vaccines created and produced by Merck treat patients in more than 140 countries. Among these are Victrelis, approved by the Food and Drug Administration this year as the first new drug in a decade to treat Hepatitis C; and Isentress, which has helped change HIV from a certain killer to a manageable chronic disease.

America and Innovation

Consequently, the Merck CEO noted how many Americans “generally agree that our economic future depends on nurturing new ideas.” In fact, he pointed to President Obama’s 2011 State of the Union speech, in which the President said that, “the first step in winning the future … is encouraging American innovation.”

However, Fraizer pointed out that, “the life sciences are largely absent from most discussions about encouraging innovation, while the extensive research and development that stands behind each new vaccine or medicine is invisible to all but a few.” Most Americans have no clue about the extraordinary scientific innovation and huge R&D investment embodied in the small pill or capsule their doctors prescribe.

Moreover, “the actions of the administration and the proposals of some in Congress may significantly impede innovation in the biopharmaceuticals industry for the foreseeable future.” Fraizer noted that, “American leadership in pharmaceuticals and biotechnology is now threatened,” which also means the future health of Americans is threatened.

The loss of patent protection for older medicines, the imposition of artificial controls on prices and reimbursements in the U.S. and abroad, and the increased difficulty and cost of medical research breakthroughs has dimmed the prospects for companies large and small. Our complex discovery process comes with high costs and failure rates. In response, U.S. companies are consolidating and contracting, costing the U.S. an estimated 200,000 jobs since 2006 and more than 300,000 since 2000.

Threats to US Innovation

Consequently, Fraizer asserted that, “there are two big public-policy threats on the horizon for Merck and the biopharmaceutical industry.”

First, the Independent Payment Advisory Board, or IPAB, which originated in last year's health-reform law. This board has the power to reduce Medicare payments for innovative products simply because overall Medicare costs exceed certain budget targets in any one year. This effort is inherently designed to focus on reducing short-term costs at the expense of long-term investments.

The other harmful proposal on Washington's agenda would impose price controls for the first time on the Medicare Part D prescription-drug program. This successful program has allowed nearly 30 million seniors to have comprehensive drug coverage at a cost that is nearly 50% below initial projections. Frazier asserted that, “it makes no sense to overlay—as would bills proposed by Rep. Henry Waxman (D., Calif.) and Sen. Jay Rockefeller (D., W.Va.)—a price control onto a program that is already delivering high value at lower-than-projected costs.”

Consequently, the Merck CEO maintained that, the IPAB and the proposed Medicare price controls “will dampen incentives for innovation and job-creation, ultimately reducing access to life-saving and cost-saving treatments.” He pointed to a report from the Battelle Memorial Institute, which estimates that the kind of Medicare Part D policy now being considered in Congress could kill 130,000 or more U.S. jobs in and around the pharmaceutical industry.

Discussion

Accordingly, “rather than choke innovation,” Fraizer asserted that, “policy makers must find savings by readjusting existing incentives to use services and technologies that have little benefit and, in some cases, cause harm.” According to Medicare data published last month, for example, hospitals perform expensive double CT scans on 5.4% of patients, increasing costs and exposing patients to additional radiation.

Additionally, Fraizer recommended that, “policy makers focus, as does the new health-reform law, on creating positive incentives to prevent and treat diseases.” He noted how future medicines can reduce the costliness and pain of diseases such as Alzheimer's and cancer, for which there are many promising research leads. One study by the Alzheimer's Association found that the development of a new treatment that delays the onset of Alzheimer's could reduce Medicare and Medicaid spending on patients with Alzheimer's by more than $100 billion annually by 2030.

As with other companies in the industry, Fraizer acknowledged Merck's mission—to “discover, develop and provide innovative products and services that save and improve lives around the world—can play a critical role in meeting America's economic goals.”

He noted that, “the investment decisions Merck makes today will pay off in new cures a decade or more from now. Similarly, the fiscal decisions our nation makes today will profoundly influence the innovation investment that will help decide the economic and personal well-being of our children and grandchildren.”