Category: Health Law

Comparing Aetna and Medicare: $30 vs. $4 a claim

Steven Brill has a remarkable article in Time on health care. Perhaps the paragraph that stood out the most to me was this one:

[T]he only players in the private sector who seem to operate efficiently are the private contractors working — dare I say it? — under the government’s supervision. They’re the Medicare claims processors . . . . Medicare’s total management, administrative and processing expenses are about $3.8 billion for processing more than a billion claims a year worth $550 billion. That’s an overall administrative and management cost of about two-thirds of 1% of the amount of the claims, or less than $3.80 per claim.

According to its latest SEC filing, Aetna spent $6.9 billion on operating expenses (including claims processing, accounting, sales and executive management) in 2012. That’s about $30 for each of the 229 million claims Aetna processed, and it amounts to about 29% of the $23.7 billion Aetna pays out in claims.

I’ll soon be publishing an article looking at public-private partnerships in Medicare and Medicaid. I, too, was impressed by many contractors, however much remains to be done to optimize their performance. The other lesson: the harder one looks at the supposedly “public” or “private” parts of our health care system, the more one realizes how imbricated they are. The categories simply cease to be meaningful in the context of US health care (and increasingly outdated in our finance, telecom, and other industries, as well).

Get Well Soon–or Else

There is a good debate in the WSJ on the wellness programs recently promoted by PPACA. Market-oriented thinkers have long promoted the “nanny corporation” to exert influence over workers’ lives. But as Lydia Mitts notes, this may be disadvantaging certain people:

A workplace wellness program in Wisconsin increased overweight employees’ premiums by more than $100 a month if they didn’t meet goals such as losing weight, which evidence shows can be very challenging. That kind of increase creates a real cost barrier for many families. The last thing a wellness program should do is make health coverage less affordable for those with greater health risk factors and whose health could most benefit from certain health services. Studies have found that being uninsured or underinsured leads people to delay or forgo needed care, making them sicker—and their health care costs higher—down the line.

On the other hand, it could be quite rational for an individual corporation to alienate and browbeat the people whom it sees as most likely to drive up its health care costs, as long as it can avoid running afoul of disability laws. The higher health care costs “down the line” may then rest on the balance sheet of the next employer—or the government.

Shoves, Nudges, and Freedom

Cass Sunstein reviews a book by Sarah Conly on coercive paternalism in the NYRB this month:

A natural objection [to paternalism] is that autonomy is an end in itself and not merely a means. On this view, people should be entitled to choose as they like, even if they end up choosing poorly. . . . Conly responds that when government makes (some) decisions for us, we gain not only in personal welfare but also in autonomy, if only because our time is freed up to deal with what most concerns us. . . .

Conly’s most controversial claim is that because the health risks of smoking are so serious, the government should ban it. She is aware that many people like to smoke, that a ban could create black markets, and that both of these points count against a ban. But she concludes that education, warnings, and other nudges are insufficiently effective, and that a flat prohibition is likely to be justified by careful consideration of both benefits and costs, including the costs to the public of treating lung cancer and other consequences of smoking.

As Big Beverage’s tactics come closer and closer to those of big tobacco, might it be the next target?

For those who’d like government to influence decisions in subtler ways, check out Kate Greenwood’s review of recent health care proposals from Richard Frank and Christopher Robertson. Very interesting ideas there.

RUC-rolled

A few years ago, I noted that the American Medical Association/Specialty Society Relative Value Scale Update Committee (RUC) has a dominant role in suggesting payment levels to CMS.  It raises hard questions about price-setting in the health care sector, many of which cannot be answered because its processes are opaque.  Now we know that judicial relief will not improve things any time soon.  As Brian Klepper reports, “On January 7, a federal appeals court rejected six Georgia primary care physicians’ (PCPs) challenge to the Centers for Medicare and Medicaid Services’ (CMS) 20-year, sole-source relationship with the secretive, specialist-dominated federal advisory committee that determines the relative value of medical services.”  What was the complaint?

The core of the … physicians’ legal challenge was that the RUC is a “de facto Federal Advisory Committee,” and therefore subject to the stringent accountability requirements of the Federal Advisory Committee Act (FACA). This law ensures that federal bodies have panel compositions that are numerically representative of their constituencies, that their proceedings are open, and that methodologies are scientifically credible. In other words, FACA ensures that advisory practices are aligned with the public interest.

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Weighty Matters

Here is an interesting article on BMI from the UK:

The body mass index has been around since Belgian scientist Adolphe Quetelet invented it in the 1830s and was designed to approximate whether people have a healthy weight.  Nick Trefethen of Oxford University’s Mathematical Institute has identified a flaw in the basic formula for BMI, and has created a new calculation which he says better accounts for the relationship between height and weight.

According to Mr Trefethen, the current formula to calculate the score (weight/height2) is incorrect because “it divides the weight by too large a number for short people, and too small a number for tall people. So short people are misled into thinking they are thinner than they are, and tall people are misled into thinking they are fatter than they are.”

Of course, even the new BMI isn’t that great an indicator.  Dr. Robert Lustig argues for a more granular approach, focused on visceral fat. Expect more controversy over biomarkers and wellness programs, as well as the inevitable privacy concerns about close monitoring of weight, waistlines, and more.

Goldacre on Pharma Research Credibility

Ben Goldacre is once again arguing that pharmaceutical “industry-funded trials are too common, can’t be trusted — and bring pills to market that likely don’t work.” The NY Times features his argument today. He has exhaustively compiled problematic practices that add up to a shocking claim: “the entire evidence base for medicine has been undermined by a casual lack of transparency.” For example, here’s one vignette from his most recent book:

In October 2010, a group of researchers were finally able to bring together all the trials that had ever been conducted on reboxetine. Through a long process of investigation — searching in academic journals but also arduously requesting data from the manufacturers and gathering documents from regulators — they were able to assemble all the data, both from trials that were published and from those that had never appeared in academic papers.

When all this trial data was put together it produced a shocking picture. Seven trials had been conducted comparing reboxetine against placebo. Only one, conducted in 254 patients, had a neat, positive result, and that one was published in an academic journal for doctors and researchers to read. But six more trials were conducted in almost 10 times as many patients. All of them showed that reboxetine was no better than a dummy sugar pill. None of these trials were published. I had no idea they existed.

I have not come across a convincing industry, FDA, or Richard Epstein response to Goldacre’s work. (I don’t find this brief letter particularly compelling.). He offers several case studies like the reboxetine one. Isn’t it time to fund systematic reviews of the evidence of effectiveness on all drugs?

A recent lawsuit against the FDA will test its usual trade secret rationale for failing to require drug companies to release all data from trials. If it succeeds, systematic reviews may be easier to complete, and will help save patients from the scourge of unnecessary or ineffective drugs. In the current information environment, perhaps the best hope we have is big data leading to more personalized comparisons of treatment effectiveness.

Implementing Health Reform

The Commonwealth Fund has recently reported on how states are lagging in implementing consumer protection aspects of the ACA.  In case you are looking for a comprehensive overview of the options open to a state as it implements the MLR provisisons of the ACA, check out my colleague Tara Adams Ragone’s policy brief The Affordable Care Act and Medical Loss Ratios: Federal and State Methodologies.  Though the piece focuses on New Jersey, its structure suggests the issues that will come up for many other states:

As part of sweeping health care reform in 2010, Congress established MLR requirements for health insurance issuers offering coverage in the group and individual health insurance markets, including grandfathered but not self-insured plans, hoping to increase the value consumers receive for their premiums and to improve transparency. Medical loss ratio refers to a measure of the percentage of premium dollars that a health insurance company spends on health care as distinguished from administrative expenses and profit, including advertising, marketing, overhead, salaries, and bonuses. Prior to the ACA, some states but not the Federal government regulated loss ratios. The new Federal MLR law, which went into effect on January 1, 2011, for the first time established a national MLR standard, which varies from existing state MLR requirements in important ways.

This Policy Brief analyzes the new Federal MLR requirements and how they intersect with and affect New Jersey law and its insurance markets. After providing background on medical loss ratios and highlighting the major similarities and differences between the existing Federal and New Jersey MLR regulatory schemes, this Brief examines several requirements and policy options that New Jersey must consider as it implements the Federal requirements. This Brief also includes appendices that provide more extensive details regarding the components of the Federal MLR requirements, New Jersey’s MLR legal structure, and research regarding experiences with loss ratios nationally and in New Jersey, pre- and post-the ACA.

My former student Ina Ilin-Schneider has also posted on the MLR, after authoring a very interesting paper on the state waivers granted (and denied) by HHS.

Finally, a quick note to recommend Ann Marie Marciarille’s several recent posts at PrawfsBlawg on ACA implementation and health policy generally.  It’s hard to write about these topics gracefully and for a general audience, while conveying the expertise of a scholar.  I think of her posts as real models on both counts.

X-Posted: Health Law Profs.

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Volume 60, Issue 2 (December 2012)

Volume 60, Issue 2 (December 2012)


Articles

The Battle Over Taxing Offshore Accounts Itai Grinberg 304
The Structural Exceptionalism of Bankruptcy Administration Rafael I. Pardo & Kathryn A. Watts 384
Patients’ Racial Preferences and the Medical Culture of Accommodation Kimani Paul-Emile 462


Comments

“Not Susceptible to the Logic of Turner”: Johnson v. California and the Future of Gender Equal Protection Claims From Prisons Grace DiLaura 506
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Prohibitions on Egg and Sperm Donor Anonymity and the Impact on Surrogacy

Egg and sperm donations are an integral part of the infertility industry. The donors are usually young men and women who donate relying on the promise of anonymity. This is the norm in the United States. But, internationally things are changing. A growing number of countries have prohibited egg and sperm donor anonymity. This usually means that when the child who was conceived by egg or sperm donation reaches the age of eighteen he can receive the identifying information of the donor and meet his genetic parent.

An expanding movement of commentators is advocating a shift in the United States to an open identity model, which will prohibit anonymity. In fact, last year, Washington state adopted the first modified open identity statute in the United States. Faced by calls for the removal of anonymity, an obvious cause for concern is how would prohibitions on anonymity affect people’s willingness to donate egg and sperm. Supporters of prohibitions on anonymity argue that they only cause short-term shortages in egg and sperm supplies. However, in a study I published in 2010, I showed that unfortunately that does not seem to be the case. My study examined three jurisdictions, which prohibited donor gamete anonymity: Sweden, Victoria (an Australian state) and the United Kingdom. It showed that all these jurisdictions share dire shortages in donor gametes accompanied by long wait-lists. The study concluded that although prohibitions on anonymity were not the sole cause of the shortages, these prohibitions definitely played a role in their creation.

In a new article, titled “Unintended Consequences: Prohibitions on Gamete Donor Anonymity and the Fragile Practice of Surrogacy,” I examine the potential effect of the adoption of prohibitions on anonymity in the United States on the practice of surrogacy. Surrogacy has not been part of the international debate on donor gamete anonymity. But the situation in the United States is different. Unlike most foreign jurisdictions that adopted prohibitions on anonymity, the practice of surrogacy in the United States is particularly reliant on donor eggs because of the unique legal regime governing surrogacy here.  Generally, there are two types of surrogacy arrangements: traditional surrogacy and gestational surrogacy. In a traditional surrogacy arrangement the surrogate’s eggs are used and she is the genetic mother of the child, while in gestational surrogacy the intended mother’s eggs or a donor’s eggs are used and the surrogate is not the genetic mother of the conceived child. Most U.S. states that expressly allow surrogacy provide legal certainty only to gestational surrogacy, which relies heavily on donor eggs, while leaving traditional surrogacy in a legal limbo. Without legal certainty, the intended parents may not be the legal parents of the conceived child, and instead the surrogate and even her husband may become the legal parents. Infertility practitioners endorse the legal preference for gestational surrogacy also for psychological reasons, believing that a surrogate who is not genetically related to the baby is less likely to change her mind and refuse to hand over the baby.

The adoption of prohibitions on anonymity in the United States could destabilize the practice of surrogacy in a way that did not occur in other countries that adopted these prohibitions. If, as has happened elsewhere, prohibitions on anonymity will play a role in creating shortages in donor egg supplies in the United States, this could affect the practice of surrogacy in two ways. Individuals seeking surrogacy may need to resort to traditional surrogacy, which does not rely on donor eggs, with the accompanying legal uncertainty. Alternatively, those deterred by the uncertainty enveloping traditional surrogacy may refrain from seeking surrogacy altogether, resulting in a significant contraction of  the practice of surrogacy in the United States. These potential complications suggest that those supporting the adoption of prohibitions on anonymity in the United States, should consider these changes with great caution and think beyond the traditional debate about the privacy of the donors, the privacy and procreational interests of the intended parents, the best interests of the children and the direct effect on gamete supplies.

 

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Why Did Egg Freezing Wait So Long?

Thank you to the permanent bloggers of Concurring Opinions for having me back. It is great to be here.

Egg freezing has become the new hot trend in the infertility industry. Although infertility practitioners first used  egg freezing in the mid 1980s,  it was only recently that success rates have significantly risen making this an attractive option for women.  A woman can now freeze her eggs at any age and use it a few years later or much later with the sperm of her then chosen partner or a donor to have a baby through IVF. Using egg freezing technology, a woman can today have a baby at a time that best suits her career and family situation.

There is no doubt that egg freezing as a viable option is a huge revolution for women’s autonomy. But the big question is why only now? Why has egg freezing become a really viable option only during the first decade of the Twenty-First Century. We have known how to freeze sperm since the 1950s. And, embryo freezing was first tried out around the same time as egg freezing, during the mid-1980s. Yet, unlike egg freezing, embryo freezing became common practice soon thereafter. So why did we have to wait so long for effective egg freezing technology?

The answer usually given to this question is that it was just too complicated technologically and took a long time to develop. But were technological complications the only cause for delay?  Is it really much harder to freeze and thaw eggs for later IVF use than to freeze and thaw embryos for later use? We tend to be taken by the illusion that science is value neutral — that scientific progress is not affected by choices directed by social values. But even if technological diffiuclties played a role in the delay, could egg freezing technology have been held back because resources were invested elsewhere? Unlike other forms of reproductive technology that promote the reproductive interests of both men and women, egg freezing promotes mainly the autonomy interests of women.  Egg freezing’s impact on women autonomy can be compared only to the revolutionary effect of the birth control pill. At the same time, the infertility industry is comprised overwhelmingly by male practitioners. And while some have no doubt worked relentlessly to promote egg freezing technology, it may be time to stop assuming that technological complications held back this important women emancipating technology. It may be time to begin asking whether  the advancement of egg freezing was placed on the back burner for years because of the type of interests it promotes?