This site uses cookies to provide you with a more responsive and personalized service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.

Bookmark Email Print this page

Health Care Reform Memo:
July 23, 2012

Deloitte Center for Health Solutions publication

The health care reform memos are issued on a weekly basis, highlighting news from the previous week's activities in the administration and implications for the C-suite and various stakeholder groups.

My take: a personal perspectives on health care

From Paul Keckley, Executive Director, Deloitte Center for Health Solutions

I graduated from Tyner High School in 1967 along with 252 of my classmates. Last Saturday, we had our 45th reunion. Thirty-one of my classmates have passed: Jack was our lone casualty to the Vietnam War; the rest to a variety of maladies that mark the human journey through time.

Alva brought her brother George to the reunion: he was the class favorite with a ferocious zest for life, disarming personality, room-clearing laugh, and precocious manner that endeared him to all of us even when he crossed Mr. D’s boundaries of decorum and Fesser’s rules. We played football together, and luckily, we were two of Boom Boom’s favorites: he’d get us excused from classes on game day to chalk the football field and otherwise play hooky.

George did not recognize his classmates Saturday night. He is stricken with Alzheimer’s disease. There’s no cure for now. Per recent studies, the steady genetic decay in his brain probably started 25 years ago—long before anyone noticed.

Scientists are bedeviled by Alzheimer’s disease. The issue is what to do with sticky clumps of protein—known as beta amyloid—that build up in the brain. Anticipation is high that a path to treatment is around the corner: two major teams of scientists will report findings in the next few weeks. At the Alzheimer’s Association International Conference in Vancouver, British Columbia this year, much attention was given to an immune therapy given intravenously for three years that slowed progression. The government has set 2025 as the target for finding a cure.

However, for the families and friends of the 36 million worldwide and 5.4 million in the U.S. afflicted with the disease, life is a rollercoaster of hope that a lab somewhere will find the magic cure.

Little did we know our senior year would be a landmark year in health care: all 50 states had signed on to participate in a new program called Medicaid and health expenditures hit a whopping $51.8 billion. In those days, health care occupations earned $3,986 on average ($27,370 in today's dollars vs. $72,730 on average today) and the median household income was $7,181 ($49,410 in 2012 dollars—virtually the same as today). Almost all employers offered health insurance and provider panels were wide open. The perplexing public health issues were tuberculosis and polio vs. obesity and the human immunodeficiency virus (HIV) today. Many of the cancers, neurological diseases like Parkinson’s and Alzheimer’s, and other conditions weren’t on the radar as scientists were busy addressing heart disease and infant health.

But we didn’t care: we were seniors in high school about to go to war, start families, or go to college. That the U.S. Food and Drug Administration (FDA) might approve drugs to treat obesity, consider immune therapy for HIV, or pursue a 20 year journey to find the cause of and cure Alzheimer’s disease escaped our imagination—we were young invincibles.

And we did not imagine that 45 years later, George would be with us but not know he was there.

The health care industry is unique in every dimension, but perhaps its most significant impact is deeply personal and universal: health and happiness are linked and, as we age, we cherish the two in profoundly different ways than we did when we were young. In the Declaration of Independence, the pursuit of happiness is an inalienable right. I am not sure if its authors associated it with health care at the time, but it certainly seems connected.

Paul Keckely

Paul Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions

Special Report: 2012 Deloitte Survey of U.S. Employers to be released Tuesday

Tuesday, results of the Deloitte survey of employers will be released covering their views about the Affordable Care Act (ACA), opinions about their health benefits, and ways to reduce costs. Notably, responses between human resources (HR) executives and chief financial officers (CFO) and chief executive officers (CEO) are called out, as are levels of understanding of key elements of health reform. And not surprising, the focus of employers is cost.

My take: without or without ACA, employers would be asking the same question: how can the health system improve its performance and lower its costs?

To participate in the Dbrief tomorrow, July 24: Health Cost Management and Health Benefits Plans: What Are Employers Planning?
Employer-sponsored insurance fact file:

  • 157 million in the U.S. under the age of 65 are covered under employer-sponsored insurance. (Source: AcademyHealth, “The Affordable Care Act and Employer-Sponsored Insurance for Working Americans,” 2011)
  • 60 percent of all companies provide health insurance coverage of some kind to employees (2011) vs. 68 percent in 1999. The biggest drop in coverage was seen in companies with fewer than 50 employees. (Source: Kaiser Family Foundation)
  • 96 percent of employers with more than 5,000 employees and 79 percent of companies with 1,000-4,999 employees self-insure. (Source: Kaiser Family Foundation, “Employer Health Benefits: 2011 Annual Survey,” September, 2011)
  • Employee wages have not kept pace with insurance premium increases. Wages and single coverage premiums, percent change over previous year, 2002-2011:

    (Sources: Kaiser Family Foundation, Employer Health Benefits Survey 2011, Average Annual Premiums for Single Coverage, 2001-2011; Bureau of Labor Statistics, Annual Mean Wage, All Occupations, 2001-2011)
  • Health costs increased in the aggregate 7 percent annually from 2000 to 2009, and are forecast to increase at 5.7 percent annually through 2022. (Source: Congressional Budget Office)

Implementation update

House committee passes bill to cut HHS, CMS funding, restrict implementation of ACA

Wednesday, the House Appropriations Labor-Health and Human Services (HHS) subcommittee approved (8-6) a bill that would prohibit the use of the agency’s funds for implementation of ACA. HHS would receive an exception for Medicaid prescription drug rebates and also be permitted to use the appropriations to set Medicare rates. The bill would also terminate the Agency for Healthcare Research and Quality effective October 1, 2012. Representative Jeff Flake (R-AZ) joined the subcommittee Democrats in opposing the bill.

Proposal cuts: total discretionary spending reduction of $6.4 billion below fiscal year (FY) 2012; $1.3 billion cut from FY2012 HHS budget of $68 billion; $1.8 billion cut from the administration’s request. The Centers for Medicare & Medicaid Services (CMS) would receive $3.5 billion under the bill, $409 million below FY2012 levels and $1.4 billion below the administration’s request.

Note: next the bill goes to the full committee for a vote.

GOP members introduce resolution challenging constitutionality of ACA as an unlawful tax

Thursday, Representative Louie Gohmert (R-TX) and ten GOP co-sponsors introduced H.R. 735 which asserts the ACA violates the Constitution on the basis that it was a bill for raising revenue, and that it did not originate in the House of Representatives. Article I, Section 7, Clause 1 of the Constitution states, “All Bills for raising Revenue shall originate in the House of Representatives.” The bill outlines the history of ACA, which was introduced in the Senate as an amendment to H.R. 3590, the Service Members Home Ownership Tax Act.

House E&C committee seeks clarity on 340B drugs, updated definition of “patient”

Wednesday, Chairman of the Energy and Commerce Committee's health panel Representatives Joseph Smith (R-MO) and Bill Cassidy (R-LA) sent a letter to Health Resources and Services Administration (HRSA) Administrator Mary Wakefield requesting clarification of eligibility standards for the 340B drug program. The letter requested that HRSA revise the definition of “patient” under the 340B program, and raised concern that the current definition, last updated in 1996, is outdated. In a 2011 report, the U.S. Government Accountability Office (GAO) recommended that the Secretary of HHS should instruct the administrator of HRSA to finalize new, more specific guidance on the definition of a 340B patient to ensure appropriate use of the program updates in the ACA. (Source: GAO, “Manufacturer Discounts in the 340B Program Offer Benefits, but Federal Oversight Needs Improvement”, September 2011)

Note: per Section 7101 of ACA, HRSA is required to conduct annual recertification of eligibility for all covered entity types, develop more detailed guidance on the procedures covered entities can follow to avoid the Medicaid duplicate discount, establish a standard identification system for all covered entities to be identified for the purposes of ordering, purchasing, and delivery of 340B drugs, and impose certain sanctions on covered entities that knowingly and intentionally divert 340B drugs.

HHS releases final rule on essential health benefits for qualified health plans

Section 1302 of ACA, directs that, for plan years beginning on or after January 1, 2014, health insurance issuers offering non-grandfathered plans in the individual or small group markets must insure that such coverage includes essential health benefits (EHB). The law directs that EHBs reflect the scope of benefits covered by a typical employer plan and cover at least the ten general categories of items and services previously listed. And it requires the Secretary of HHS to define each category and set an appropriate balance considering all. Last week, HHS published its 56-page final rule.

Section 1311of ACA requires that in order to be certified as a qualified health plan (QHP) and operate in a health insurance exchange (HIX), a health plan must be accredited by a recognized accrediting entity on a uniform timeline established by the applicable HIX.

“This final rule establishes data collection standards necessary to implement aspects of Section 1302 of the Patient Protection and Affordable Care Act (Affordable Care Act), which directs the Secretary of Health and Human Services to define essential health benefits. This final rule outlines the data on applicable plans to be collected from certain issuers to support the definition of essential health benefits. This final rule also establishes a process for the recognition of accrediting entities for purposes of certification of qualified health plans.” (Source: U.S. Department of Health and Human Services, “Patient Protection and Affordable Care Act; Data Collection to Support Standards Related to Essential Health Benefits; Recognition of Entities for the Accreditation of Qualified Health Plans,” July 18, 2012)

House Dems propose expanded drug coverage in essential health benefits

Last week, 28 House Democrats wrote HHS Secretary Kathleen Sebelius requesting a revision to the proposed EHB coverage limit of one drug per therapeutic class. The letter states that such a policy would be “overly restrictive” and result in poor outcomes. The members propose that HHS adopt the Medicare Part D “all or substantially all” policy into the EHBs. The Part D policy requires prescription drug formularies to carry all or substantially all antidepressentants, antipsychotics, anticonvulsants, antiretrovirals, antineoplastics, and immunosuppresants.

Note: ACA Section 2707 requires that QHPs cover “essential health benefits” covering ten broad categories of care; prescription drugs are among these.

House Republicans challenge tax credits if federal government runs state HIXs

People who earn up to 400 percent of the federal poverty level (FPL)—$44,680 for a single person this year—will be eligible to apply for tax credits averaging $4,780 per person to help offset the cost of insurance purchased through HIXs per ACA. The Congressional Budget Office (CBO) estimates that 18 million people could have their insurance costs subsidized at a cost of $681 billion through 2021. The point of dispute raised by Republican House members stems from the possibility that many states will not set up exchanges and instead will let the federal government run them. Challengers to ACA say wording in the health-care law means that federally run exchanges aren't authorized to offer people insurance tax credits. To fix the problem, the Internal Revenue Service (IRS) issued a regulation that allows the credits to go to people regardless of whether they purchase insurance through an exchange run by a state or the federal government. The agency said the rule was "consistent with the language, purpose, and structure" of the law but the GOP lawmakers challenge its authority. Congressmen Phil Roe (R-TN) and Scott DesJarlais (R-TN) have introduced legislation to block the agency from going ahead with its new rule. A spokesperson for Senator Max Baucus (D-MT), Chairman of the Senate Finance Committee, issued a statement last week saying the clear intention of the health care law is to provide consumers with tax credits through either a state or a federally-facilitated exchange.

Legislative update

Federal reserve chair issues dire outlook for economic recovery

Tuesday, Chairman of the Federal Reserve, Ben Bernanke advised Congress that economic recovery was slower than expected: “We are looking very carefully at the economy trying to judge whether or not the loss of momentum we've seen recently is enduring and whether or not the economy is likely to make more progress toward lower unemployment and more satisfactory labor market conditions.” In his bi-annual briefing to Congress, he called attention to the housing crisis, euro-zone instability, expiring tax cuts, and government spending. Excluding food and energy prices, the consumer price index increased 2.2 percent vs. the year earlier and in line with forecasts.

Telemedicine bill would allow physicians treating veterans to practice across state lines

Last week, Congressmen Charles Rangel (D-NY), Glen Thompson (R-PA), and 11 bipartisan co-sponsors introduced H.R. 6107, the Veterans E-Health & Telemedicine Support Act of 2012 to remove restrictions on providers practicing within the U.S. Department of Veterans Affairs (VA) to practice across state lines. Current law prohibits providers from practicing across state lines if they are not licensed in the same state as the patients to whom they are providing care—a restriction that can only be lifted if both the physician and patient are located in a federally-owned facility. The bill is endorsed by the American Telemedicine Association, the American Foundation for Suicide Prevention, and Veterans for Foreign Wars.

State update

HHS announces regional forums in states

HHS will hold four regional forums over the next several weeks where department officials will discuss with states and other stakeholders the next steps in implementing the health reform law. The regional forums will take place on the following dates: August 14 in Washington, DC; August 15 in Atlanta, GA; August 21 in Chicago, IL; and August 22 in Denver, CO.

Report: state fiscal crisis acute

“The ability of the states to meet their fiscal obligations to public employees, to creditors and most critically to the education and well-being of their citizens is threatened.” The July State Budget Task Force report, based on in-depth analysis of data from California, Texas, New York, Illinois, New Jersey, and Virginia, projects a shortfall of $1 trillion in unfunded pensions facing states. Some have used delayed pension payments pushing expenditures into the next fiscal year or delayed borrowing to make ends meet. It recommends…

  • Transparent, accountable state government finances
  • Strengthening and better use of states’ main tool for counter-cyclical policy, their rainy day funds
  • Pension systems and states need to account clearly for the risks they assume and more fully disclose the potential shortfalls they face
  • States should mitigate the trend of eroding tax bases by seeking reforms that would make their tax structures more broad-based, stable, and productive
  • There should be a permanent national-level body to consider the ways in which federal deficit reduction or major changes in the federal tax system will affect states and localities
  • Governments at both the federal and state level should work together to control health care and Medicaid costs
  • State governments should have effective procedures for monitoring the fiscal condition of their local governments in a timely manner or taking early action to help local governments resolve their fiscal problems before they threaten insolvency or bankruptcy
  • State governments should adopt and fund realistic annual capital budgets based on multi-year capital plans

(Source: State Budget Crisis Task Force, “Report of the State Budget Crisis Task Force,” July 2012)

Massachusetts attempts alignment of state and ACA reform legislation

Massachusetts reform legislation requires any business with 11 or more employees to offer health insurance and pay a portion of the tab or pay a $295-per-employee penalty. ACA requires businesses with more than 50 employees who don’t offer insurance to pay a penalty of $2,000-per-employee (exempting the first 30 employees). At issue is whether the federal penalty would be in addition to the state penalty, and in parallel, the individual penalty in Massachusetts and ACA. Lawmakers have until July 31 to recommend legislation to align the two.

Background: the Massachusetts health care insurance reform law, “An Act Providing Access to Affordable, Quality, Accountable Health Care,” passed in in 2006. It mandates that nearly every resident of Massachusetts obtain a state-government-regulated minimum level of healthcare insurance coverage and provides free coverage for residents earning less than 150 percent of FPL. The law was amended significantly in 2008 and twice in 2010 and major revisions related to health care industry price controls were introduced in the Massachusetts legislature in May 2012 with expectation that some version of these controls would pass by July 2012.

The law and its amendments established an independent public authority, the Commonwealth Health Insurance Connector Authority, also known as the Health Connector, that acts as an insurance broker to offer private insurance plans to residents. The law also included tax penalties on residents for failing to obtain an insurance plan and tax penalties on employers for failing to offer an insurance plan to employees. In 2007, Massachusetts tax filers who failed to enroll in a health insurance plan which was deemed affordable for them lost the $219 personal exemption on their income tax. Beginning in 2008, the penalty became pegged to 50 percent of the lowest monthly premium for insurance available from the Connector Authority.

Authors of the Massachusetts law have maintained consistently its primary focus was to expand coverage; cost containment was not it focus as lawmakers and industry leaders believed access the primary issue at the time. Result: “Massachusetts succeeded in expanding coverage to nearly all state residents. Within a year of implementation the state experienced an unprecedented drop in the number of uninsured and, despite the economic recession, continues to retain the lowest rate of uninsured residents in the country. While Massachusetts has sustained gains in coverage, the rate of uninsured has continued to climb nationally.” (Source: Kaiser Family Foundation, “Massachusetts Health Care Reform: Six Years Later,” May, 2012)

HHS announces funding for multi-payer innovation in states

Thursday, HHS announced a new program for states through the State Health Care Innovation initiative that will fund state-led projects that test multi-payer payment and delivery system improvements to Medicare, Medicaid, and Children’s Health Insurance Program (CHIP). States can apply for Model Testing awards (for assistance in implementing models that have already been developed) or Model Design awards (to provide funding and technical assistance as states determine their needs). Up to five states will be chosen for the first round of Model Testing awards ($225 million total) and up to 25 states for Model Design awards ($50 million).

Federal judge dismisses state’s challenge to contraceptives case on grounds that states do not have standing to bring the case

Tuesday, U.S. District Judge Warren Urbom dismissed a lawsuit from seven states challenging the ACA regulation requiring employer-based health insurance plans to cover contraceptives. In February, Nebraska Attorney General, along with Attorneys General from Florida, Michigan, Ohio, Oklahoma, South Carolina, and Texas, brought suit on the ACA requirement that new health insurance plans cover birth control and sterilization without copay. The new regulation exempts churches and other religious organizations from paying for the coverage if they object on religious grounds, but does not exempt universities, charities, and other similarly religiously-affiliated groups from the requirement. The plaintiffs argued the regulation challenges First Amendment rights to freedom of religion, but Judge Urbom said the suit did not have basis since the states and organizations could not prove they would fall under the regulation, and that the suit was premature.

Note: at least a dozen suits related to the contraception coverage requirement in ACA are still pending including one brought by the Roman Catholic Church. Per ACA, new health insurance plans must cover birth control and sterilization without copays, exempting churches from paying for services they object to, but requiring other religious-affiliated groups such as universities and charities to pay for such coverage. Under a compromise offered by the administration, health insurance companies, not the religious-affiliated employers, would have to pay for the coverage.

CMS will limit dual eligible pilot program to two million, one-third lower than state requests

Melanie Bella, Director of the Medicare-Medicaid Coordination Office at CMS indicated last week that enrollment in the dual eligible program will be kept to below two million people rather than expanded to three million as earlier estimated. At a Senate Aging Committee Hearing held on Wednesday, the director told committee members that three million beneficiaries in 26 states have been proposed to enroll in the pilot program. To reduce the pilot’s national enrollment, CMS will deny applications from states who included elements not allowed when CMS proposed the program (e.g. lock-out periods for enrollees wishing to opt-out of the pilot and return to the standard program). CMS will also continue with a proposed rule to allow auto-enrollment of beneficiaries in some of the state pilots. CMS will soon begin announcing approval of the state pilots on a rolling basis.

Note: Senator Jay Rockefeller (D-WV) had challenged the ability of CMS to adequately manage the expansion to three million resulting in the testimony last week. See Monday Memo for July 16, 2012.

Multi-state Medicaid crackdown on drug fraud

Federal prosecutors in New York arrested 48 individuals in New York, Pennsylvania, Massachusetts, Florida, and Texas on charges of Medicaid fraud after discovering an illegal drug ring of HIV medications and other drugs. The Federal Bureau of Investigation (FBI) seized 250,000 pills worth $16 million. Medicaid lost an estimated $500 million last year as a result of reimbursements to secondhand markets. Vulnerable beneficiaries in poor neighborhoods were being offered money in exchange for their medications, and were selling to the defendants for the resulting extra income.

Industry update

IOM report: changes in Medicare cost index could change provider payments 5 percent, rural providers hit hardest

If Medicare moves to a more accurate cost index outlined last year by the Institute of Medicine (IOM), a majority of hospitals and physicians would see up to a 5 percent change in payment—either higher or lower—as a result. Providers in rural areas, especially those with a high concentration of minority patients, would be more adversely affected by lower payments. The report found that 88 percent of hospital discharges and 96 percent of physician billings would differ less than 5 percent from current payments, and that access and quality of care would generally remain unchanged under a new payment index. Providers in the frontier states (North Dakota, South Dakota, Nevada, Wyoming, and Montana) and Alaska would see the biggest reductions under the adjustment model proposed. In its report, the IOM also predicted that calculating costs based on data from the Bureau of Labor Statistics rather than on hospital cost reports would result in generally higher relative wages in rural areas. (Source: Institute of Medicine, “Geographic Adjustment in Medicare Payment - Phase II: Implications for Access, Quality, and Efficiency,” July 17, 2012)

Meaningful use stage two guidelines: final rule pending release

A final rule detailing Stage 2 of the "meaningful use" program for electronic health records (EHR) through CMS is now awaiting the Office of Management and Budget’s (OMB) approval. Stay tuned.

IOM report: PTSD programs reach half of service members diagnosed

Last week, IOM released a report concluding that post-traumatic stress disorder (PTSD) treatment programs reached slightly more than half of U.S. service members deployed to Iraq and Afghanistan diagnosed with PTSD. The gap in treatment may be a result of patients’ concerns that the stigma of PTSD might jeopardize careers, difficulties getting to appointments with mental health providers, lack of providers trained to treat PTSD, and restrictions on PTSD medications. IOM estimates PTSD affects between 13–20 percent of the 2.6 million service members who fought in Iraq or Afghanistan since 2001. (Source: Institute of Medicine, “Treatment for Posttraumatic Stress Disorder in Military and Veteran Populations: Initial Assessment,” July 13, 2012)

CMS updates Hospital Compare and Nursing Home Compare websites

CMS announced Thursday improvements to its Hospital Compare and Nursing Home Compare websites.

Updates to Nursing Home Compare include:

  • Specific findings from inspections of nursing home facilities
  • New measures reporting facilities’ use of antipsychotic medications
  • Updated data for quality measures previously available on the site
  • Information on ownership of facilities

Additions to Hospital Compare include:

  • New measures covering potential health risks of imaging services, such as exposure to unnecessary radiation
  • Updated data for existing quality measures

Note: in the first half of 2012, Hospital Compare had 1.2 million hits and Nursing Home Compare had over 500,000 hits.

Hospital trade group requests streamlined auditing for hospital errors

In a letter to the Senate Finance Committee, the Federation of American Hospitals (FAH), which represents investor-owned hospitals, recommended that Congress streamline all Medicare auditing under one type of entity to make it easier for hospitals to comply with investigations and reduce penalties for errors made by their admitting physicians. Currently, three different contractors are responsible for auditing in addition to HHS auditors. The group also requested explicit guidance on how hospitals and their physicians are to admit and classify inpatients. Lastly, FAH recommended that physicians be held at fault when errors in medical judgment lead to incorrect decisions on hospital admissions.

U.S. Postal Service in danger of defaulting on retiree health benefits payment

The U.S. Postal Service (USPS) faces the potential of defaulting on its annual payment for future retiree health benefits. The FY2011 payment of $5.5 billion was deferred and is now due August 1, along with a $5.6 billion payment for FY2012 due in September. Senate lawmakers approved a bill in April that would stretch payments to the future retiree benefits over 40 years, making the annual payments lower at around $2.5 billion and would return the $11 billion USPS overpaid in one of its pension funds to the service, as well. The House has not taken up a measure to move the bill forward, and it is not expected to come up for vote before the elections.

Naming for biosimilars point of tension

Drug industry groups are telling the FDA that pharmacy concerns about information technology systems' ability to process unique naming schemes for biosimilars are “misplaced.” Pharmacy groups have said there could be safety issues associated with having separate names for a biosimilar and its reference product, and support tracking biosimilars by their National Drug Code as opposed to a unique name. The innovator drug industry has lobbied FDA to require separate names as it implements the health reform law's biosimilars approval pathway. However, generic drug makers say such a policy would stifle interchangeability of products and have pushed for biosimilars and their reference product to have the same name.

Late last month, Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Industry Organization (BIO) sent a letter to the FDA reasserting their position that unique naming is key to monitoring the safety of biosimilars. They further countered pharmacy concerns about information technology—citing a letter sent in May by the American Pharmacists Association, National Association of Chain Drug Stores, and National Community Pharmacists Association—and said concerns about information technology are “misplaced.”

Background: according to the FDA, a biosimilar “is a biological product that is highly similar to a U.S.-licensed reference biological product notwithstanding minor differences in clinically inactive components, and for which there are no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity, and potency of the product.”  

Unlike small molecule drugs, biologics exhibit high molecular complexity and are sensitive to changes in manufacturing processes. Follow-on manufacturers do not have access to the originator's molecular clone and original cell bank, or the exact fermentation and purification process. As a result, copies of biologics might perform differently than the original branded version of the product—explaining scant approvals to date in the U.S. The global market for prescription drugs is estimated to reach $1.1 trillion by 2015, increasing at a compound average growth rate (CAGR) of 3-6 percent. IMS Health estimates that sales of biosimilars are expected to reach $1.9-2.6 billion by 2015. (Source: PharmaTech, “Biosimilars: Market Weaknesses and Strengths,” July 11, 2012)

FDA drug approvals: obesity, HIV

Last week, the FDA approved Qsymia for obesity—the second anti-obesity drug it has cleared in the past month. The drug is intended as an addition to a reduced-calorie diet and exercise for chronic weight management for adults with a body mass index (BMI) of 30 or greater (obese) or adults with a BMI of 27 or greater (overweight) who have at least one weight-related condition such as high blood pressure (hypertension), type 2 diabetes, or high cholesterol (dyslipidemia).

Note: both drugs approved had been rejected by the FDA in 2010 but the companies submitted additional research to clear the FDA’s approval process. Per the Centers for Disease Control and Prevention (CDC), 35.7 percent of U.S. adults and 17 percent of children and adolescents are obese.

Gilead Sciences Inc. won U.S. approval to market Truvada, a drug used to prevent HIV, the virus that causes acquired immune deficiency syndrome (AIDS). It will carry a warning to physicians and patients that the drug should only be used by those confirmed HIV-negative prior to prescribing the drug and at least every three months during use.

Note: 25,000 AIDS researchers and activists will gather in Washington, DC this week for AIDS 2012. Prevalence: 34.2 million worldwide, 1.2 million American, 2.5 million new HIV infections annually. In the U.S., one in four has the condition under control, and one in five is unaware they have it.

AMA alliance aims to standardize payer-provided physician data transparency

Last week, 60 medical organizations signed on with an American Medical Association (AMA) initiative aimed at helping physicians put payer-provided data reports to better use to enhance quality of care.

To help create data reports that physicians can easily understand and use, the AMA created the "Guidelines for Reporting Physician Data" meant to provide a methodology for improving the usefulness of physician data reports by encouraging greater format standardization, process transparency, and level of detail. Several major health insurance plans have signed on in support of the effort.

Quotable

“It is a given that corporate responsibility initiatives or human resources initiatives are complex and difficult to implement. Putting a gym in a major office center, monitoring the food served in the cafeteria, and building organized participation in community-based fitness programs such as the Fit- Friendly Campaign by AHA are not expensive or difficult to implement. They are a win for both C.R. and H.R., one that companies can put in place quickly to benefit their employees and their bottom lines. Sick workers make fewer widgets, and the dead ones, well, they don’t meet quota either.”

— Elliot Clarke, Forbes, “Making the ‘Body Corporate’ Healthy Starts with Employees,” Corporate Social Responsibility Blog, July 16, 2012

“You can’t allow government to tax people to pay for medical care for citizens over the age of 65 and not allow government to do the same for those under 65...You can call that a mandate, a fee, a penalty or an aardvark. You can also call it a tax, if it’s something you have to pay.”

—Joe Klein, Time, “And Now, How to Improve Obamacare,” June 29, 2012

Fact file

  • House fundraising per Federal Election Commission (FEC) reports: the 2010 campaign set a record of $1.1 billion raised for House campaigns. Through last quarter’s filings, $566 million has been raised to date by House candidates race as of the 15-month mark in the campaign—$57 million more than at the same point two years ago and more than double at the same time in 2002. (Source: Anna Palmer, Politico, “House candidates raise more than $566M,” July 16, 2012)
    Note: these campaign figures don’t include money from super political action committees (PACs) and independent nonprofits, which can make outside ad buys.
  • Consumer hospital, physician prices: the medical care index rose 0.6 percent, the largest increase since September 2010. For the year that ended last month, hospital consumer prices increased 5.8 percent compared with 6.1 percent for the prior year. Per the Bureau of Labor Statistics, the increase was the result of growth in inpatient prices, which increased 1.7 percent, compared with outpatient prices, which climbed 0.9 percent. Prices for physician services increased 0.8 percent last month vs. 0.2 percent increase in May. For the year that ended last month, the physician consumer price index rose 2.2 percent compared with 2.7 percent the prior year. (Source: Bureau of Labor Statistics, “Consumer Price Index,” June 2012)
  • Physician use of EHRs: in 2011, 55 percent of office-based physicians said they used an EHR system, and of those, 85 percent said they were very or somewhat satisfied with the technology. (Source: Centers for Disease Control and Prevention, “Physician Adoption of Electronic Health Record Systems: United States, 2011,” July 2012)
  • ACO results in Massachusetts: the Blue Cross Blue Shield of Massachusetts Alternative Quality Contract in 2009 produced overall savings of 2.8 percent (1.9 percent in year one, 3.3 percent in year two) compared to those who did not participate. Participating provider organizations also saw improved quality of care chronic care management, adult preventive care, and pediatric care—and care that was better in the second year compared to the first. (Source: Zirui Song, et al, “The ‘Alternative Quality Contract,’ Based On A Global Budget, Lowered Medical Spending And Improved Quality,” Health Affairs, July 2012)
  • Mergers and acquisitions (M&A) in health information technology (IT): in the first half of 2012, M&A increased by 28 percent (196 deals, $5.07 billion total valuations, down from $5.92 billion deal values in last half of 2011) over the second half of 2011. Private equity and venture capital represented 27 percent of the deals, up 7 percentage points same period last year. (Source: BerkeryNoyes, “Trend Reports: 2012 Mid Year,” July 2012)
  • Health care labor markets: near-term demand for health care workers is strong and will continue to grow. The west will see the highest growth, and Dallas and Charlotte have consistently outperformed other cities across the nation. Top five metropolitan areas of growth for quarter two of 2012: San Jose, CA, Portland, OR, Charlotte, NC, Denver, CO, and Houston, TX. (Source: Health Workforce Solutions, “Q2 2012 HWS Labor Market Pulse® Index,” July 2012)
  • Global computerized physician order entry (CPOE) market: $1.5 billion by 2018. (Source: Global Industry Analytics, “Computerized Physician Order Entry (CPOE) Systems – A Global Business Report,” July 2012)
  • ACA impact on coverage for women: when fully implemented, ACA will reduce the uninsured rate among women from 20 percent to 8 percent. Twenty-six percent of U.S. women with health insurance ages 19-64 had medical bill problems from 2009 to 2010, 39  percent spent $1,000 or more on out-of-pocket medical costs and 43 percent said they had access problems because of cost, the report found. (Source: Commonwealth Fund, “Oceans Apart: The Higher Health Costs of Women in the U.S. Compared to Other Nations, and How Reform Is Helping,” July 2012)
  • Gallup poll on ACA: 59 percent think it would make things better for the uninsured, 55 percent think it is good for people who get sick, 57 percent think the law is bad for businesses, 51 percent think it will make things worse for doctors, and 60 percent think it is bad for taxpayers. (Source: Gallup Poll, “Americans: Healthcare Law Helps Some, Hurts Others,” July 16, 2012)
National health reform: What now?

National health reform: What now?

At Deloitte, we continue to explore and debate the key questions facing 
the industry, and we look forward to helping our clients find and implement 
the right answers for their organizations. To learn more, visit www.deloitte.com/us/healthreform/whatnow today.

Subscribe to the health care reform memo

Health care reform memo — The weekly health care reform memo is available for subscription. Please visit www.deloitte.com/us/healthmemos/subscribe

  • Step 1, confirm your sector(s) of interest. 
  • Step 2, select the health care reform memo as one of your subscriptions.

 

Related links

Share this page

Email this Send to LinkedIn Send to Facebook Tweet this More sharing options

Stay connected