SZD Health Law Scan : Health Care Lawyers & Attorneys : Schottenstein Zox & Dunn Law Firm : Strategic Planning, Managed Care, Insurance : Columbus, Cleveland, Cincinnati, Central Ohio

The October 7, 2009 edition of the Federal Register will publish interim rules implementing the Genetic Information Nondiscrimination Act’s prohibition against discrimination in the administration of health insurance coverage and group health plans. The federal agencies involved (Labor; Health and Human Services; IRS) are requesting comment on the interim rules, which will take effect 60 days after their publication (December 6, 2009).

The interim rules implement GINA’s prohibition against health benefit plans and health insurance companies increasing rates based on genetic information; requesting or requiring genetic tests; and requesting, requiring or purchasing genetic information for use in connection with enrollment or underwriting. These interim rules follow upon the EEOC’s proposed rules regarding GINA’s application to employment practices, which were issued earlier this year.

In our prior article, “The Surprising Breadth of GINA’s Protections,” we noted that the definition of “genetic information” in the EEOC’s regulations includes family medical history information. This information may not itself be genetic in nature but may reveal the occurrence of a genetically-based disease in the individual’s family. That same broad definition is incorporated into the interim regulations for health insurance coverage and group health plans. 

Comments on these interim rules may be submitted through the federal eRulemaking portal. Comments are due 90 days following the publication of the interim rules, or by January 5, 2010. For questions regarding the application of these interim rules to health insurance coverage and group health plans, please contact David Ball or any member of SZD’s Health Law Practice Group.

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The Ohio Supreme Court recently issued an opinion in corporate law, which may be of interest to readers that work for health industry participants with multiple entity organizational structures.  Per syllabus, the Court held:

 "A corporation's veil may not be pierced in order to hold a second corporation liable for the corporate misdeeds of the first when the two corporations have common individual shareholders but neither corporation has any ownership interest in the other corporation."

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President Obama’s 2010 Budget includes historic commitments to health care reform and a down payment on the principle that every American should have quality, affordable health care. The Budget provides $76.8 billion in support of the missions of the U.S. Department of Health and Human Services (“HHS”). This Budget is in addition to President Obama’s decision to reauthorize the Children’s Health Insurance Program by providing health care to 11 million children, including 4 million previously uninsured children and the funding provided under the American Recovery and Reinvestment Act. 

Below are some significant highlights from the 2010 Budget Blueprint:

• Invest $630 billion of reserve funds over 10 years to finance a fundamental reform of the Nation’s health care system to bring down costs and expand coverage. The Budget also calls for an effort beyond this down payment in order to put the Nation on a path to health insurance coverage for all Americans. 
• Invest over $6 billion within the National Institutes of Health (NIH) to support cancer research as part of the Administration’s multi-year commitment to double cancer research funding. This initiative is built upon the $10 billion already provided in the Recovery Act.
• Accelerate the adoption of health information technology by building upon the $19 billion investment under the Recovery Act. The Recovery Act offers physicians and hospitals participating in the Medicare program temporary incentive payments starting in 2011 for using a certified electronic health record (EHR), followed by financial penalties starting in 2015 for failure to use such a system. It also offers incentive payments to Medicaid providers, including physicians and children’s hospitals, to assist with the purchase, implementation and use of certified EHR technology. These incentives are expected to result in a dramatic increase in the percentage of health care providers using health IT within five years.
• Dedicate additional resources that will initially be targeted to improving oversight and program integrity activities for the Medicare Prescription Drug Program (Part D), Medicare Advantage and Medicaid Program. These resources will enable the CMS to identify excessive payments and establish new processes for correcting problems.
• Strengthen the Medicare program by encouraging high quality and efficient care and reducing excessive Medicare payments.
• Invest $330 million to address the shortage of health care providers in certain areas, by expanding loan repayment programs from physicians, nurses, and dentists who agree to practice in medically underserved areas.
• Invest over $4 billion for the Indian Health Service to support and expand the provision of health care services and public health programs for the American Indians and Alaska Natives.
• Builds upon the down payment made in the Recovery Act for the President’s “Zero to Five Plan” for early childhood education and development and creates a new Nurse Home Visitation program for first-time low-income mothers and mothers-to-be.

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As the media warn about the possibility of trade wars and protectionism, the international healthcare consumer has already set the stage for the globalization of  what could become the world's largest industry.

The movement of goods, services and capital across international borders has been well-documented, and it is hard to dispute the impact this has had on the transfer of wealth and multinational interdependence.  What is less understood is how people who seek better, more cost-effective healthcare in foreign countries are re-shaping the market for medical treatment.  As the price of healthcare in the U.S. has skyrocketed, consumers have become more willing to travel great distances to obtain less expensive care.  At the same time, U.S. hospitals have addressed their staffing shortages by recruiting qualified doctors, nurses and other professionals from other countries.

The dynamic that is steering this revolution is quite simple.  In the absence of political or economic barriers, globalization shifts the production of goods and services to those locations that produce such offerings at the lowest possible cost.  In the past two decades, this trend has been greatly accelerated by the availability of information about alternative sources on the internet and by demographic forces such as the aging of  the American population including healthcare workers.

A recent study by the Society for Healthcare Strategy and Market Development and the American College of Healthcare Executives, entitled "Futurescan 2009 -Healthcare Trends and Implications 2009-2014" revealed that nearly two-thirds of survey respondents think it is likely that the number of persons traveling overseas for medical treatment will double by the year 2014; however, an equal percentage don't believe that health insurers will amend their policies to pay for such medical tourism.  An additional 82 percent of respondents agree that existing and new forms of telemedicine will enable even greater degrees of "virtual" medical tourism.  Apparently, the public is confident that technology will increasingly bridge the distances between patients and providers, even though the source of payment remains in doubt.

Which brings us to the crux of this commentary.  Is the American legal system ready for such a fundamental restructuring of the healthcare delivery system?  Will our current economic troubles and the Government's intense desire to put a lid on healthcare costs accelerate globalization beyond the ability of lawmakers, regulators and courts to figure out  what our  rights and responsibilities should be in this brave new world?  These and other questions must be addressed as part of the greater debate about health care reform if we are to build a sustainable model for the 21st Century.

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'Tis the season for new year predictions.  Desperate to report some good news, business writers appear to like the prospects for some health care stocks and for new jobs created in the health care sector of the economy.  But can H Street really overcome what's happening on Wall Street and Main Street?

Price Waterhouse Coopers in its advertising supplement to Modern Healthcare entitled "Top Nine Health Industry Issues in 2009: Outside Forces Will Disrupt the Industry" presents a somewhat guarded outlook.  The conclusion reached by PWC: "During 2009, the health industry may prove to be a source of profitable growth during an economic malaise.  As new players continue to enter the healthcare market and new technologies develop, the next frontier in healthcare could be hidden from view.  In addition, heightened focus by regulators will need to be monitored carefully as reducing healthcare costs are viewed as a way to stimulate the economy."   As PWC points out, three of the Top 100 Most Powerful People in Healthcare (AOL founder Steve Case, Google's Eric Schmidt, and Microsoft founder Bill Gates) have not traditionally been seen as captains of the healthcare industry.

Perhaps Americans should hope for some creative disruption by outsiders.  It is not as though healthcare insiders have proven particularly successful in prior reform efforts.  Next on the reading list, former Senator and HHS Secretary nominee Tom Daschle's book Critical: What We Can Do About the Health-Care Crisis.   SZD Health Law Scan will report on that soon.

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In the heat of a Presidential Campaign, especially one of this historical importance, it is not surprising that political commentators focus on the differences between the candidates' views.  But when it comes to health care reform, especially now that the economy will make it harder for the victor to fix the financial part of the problem, it might make sense to consider what Democratic candidate Barack Obama and Republican candidate John McCain can agree to.

At a recent  Washington, D.C. program, Peter Leibold, Executive Vice President/CEO of the American Health Lawyers Association, identified 10 areas of agreement among the candidates when seeking solutions to the problems of cost control and increased quality:

1.   Governmentally supported pooling mechanisms for catastrophic illness

2.   Payment mechanisms that encourage quality of care

3.   Support for information technology use by health care providers

4.   Promoting coordinated care and disease management

5.   Increased funding for research and public health

6.   Provider cost transparency

7.   Promoting healthy lifestyles

8.  Allowing re-importation of drugs and quicker release of generics

9.   Portable health insurance

10. Greater attention to treatment of cancer and autism

Continue Reading...

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This may well be the strangest Presidential Election Campaign in U.S. history, but excuse me, what happened to any meaningful discussion of health care reform?  Obviously, the economy and energy issues have caused health care to drop below the radar screen (see Modern Healthcare, Sept. 8, 2008, page 9), but how can this really be an election about "change" if we sweep health care under the rug?  Neither of the major candidates gave any prominence to this issue in his acceptance speech.  Does that mean we have to wait another four years to begin an honest discussion about something as vital as the health and well being of our citizenry?

While others may be tuned into the Gaffe of the Day, it is worth studying what the candidates (or more accurately their campaigns) have said about health policy reform.  This entry and the next two will focus on three aspects of reform:  1) cost, 2) quality and 3) fairness.  Let's begin with cost.

Barack Obama proposes to lower costs by modernizing the U.S. Health Care System. John McCain proposes to lower costs by restoring control of the system to patients and their families.

Continue Reading...

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Politics aside, can anyone explain how a federal program only 43 years old came to be insolvent?  When Congress enacted the Medicare Act in 1965, the program was estimated to have an annual cost of under $10 billion for quite some time.  Indeed, contributions from Part A payroll taxes and premiums for Part B were designed to create a surplus that would be held in trust for use in the future when revenues might not cover costs.  In 2007, Medicare required an infusion of $178 billion of general revenues just to pay its current bills.  How can we have gotten so far off track?

"The Facts About Medicare," an article that appeared in the July/August 2008 issue of Contingencies, the journal of the American Academy of Actuaries, attempts to answer this question. Six factors are blamed for what might be the greatest forecasting error in history.  First, the Medicare population grew much faster than expected because of a marked increase in life expectancies (which means the program worked!).  Second, new benefits and new covered populations have been continuously added since the inception of the program, the most recent being Part D prescription drug benefits.  Third, medical costs have grown faster than wages  during the same period, both because of price inflation and the addition of new medical technologies (we can do much more today than we were able to do in 1965).  Fourth, the percentage of the program's cost shouldered by consumers has steadily fallen since inception.

Continue Reading...

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It is well known that the American health care crisis has reached epic proportions, but a recent report from the Families USA Foundation finds the problem particularly acute in cities.  While the media tend to give most of their focus to the funding roles of state and federal governments, as well as employers and individuals, they often overlook the burden shouldered by city governments.  All of the cities participating in the Families USA survey state that they have seen an increase in the demand for services at safety net clinics over the past year.  Most cities are also seeing crowding in hospital ERs and growing demand for mental health, substance abuse and social services.  None of this should be a surprise given that more than 93 percent of Americans live in metropolitan areas.  However, unlike state and federal governments, municipalities rarely have the funding mechanisms to keep up with the rising cost of providing health care services to their citizens, not to mention indirect costs such as those associated with absenteeism in city schools.  Urban health care providers know this all too well.  Not only have urban ERs become a substitute for a functioning primary care system in many cities, but the closing of a growing number of inner-city hospitals has compounded the problem for those still in business. Continue Reading...

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