Of course, Pennsylvania reforms are not exactly new.  The state took action back in 2003 to address a situation in which, according to a Philadelphia Daily News columnist, “courts were clogged with cases and lawyers hit Vegas-level jackpots.”  The state began requiring attorneys to produce certificates of merit from medical professionals to prove that a legitimate case existed and it declared that cases must be tried in the same jurisdiction in which the alleged injury took place.   That put an end to ‘venue shopping,’ in which attorneys strived to get their cases tried in Philadelphia with its notoriously free-spending juries.

What’s new is the evidence that these reforms have had an effect.  The state Supreme Court announced last week that the number of medical malpractice cases filed in the state was down 44 percent in 2011 compared to the years before liability reforms were instituted.  With higher standards being required, attorneys are less likely to invest time and resources into questionable litigation.

There are still cases, though, that must have less than impeccable merit. In 2011, seven of every 10 liability cases were won by the defendant health providers.

It should be noted that Pennsylvania physicians and hospitals insist that further reforms are still necessary, that it is difficult to recruit new physicians to a litigation-heavy state and too much defensive medicine is being practiced.

Still, this is significant progress.

But it’s also the smaller companies, those that scrap for capital to fund exciting new innovations, that are taking a beating from this tax.  The fact that this tax is applied to revenues, not to profits, is particularly devastating for smaller innovators that are still trying to get to the point of being highly profitable.

Take Spectranetics, a Colorado Springs-based medical laser manufacturer, as a prime example.

At a panel discussion hosted by the Colorado BioScience Association, the CEO of Spectranetics pointed out that his company generally earns about $1.5 to $3 million on approximately $135 million in annual revenues.  If the device tax was applied this year on Spectranetics’ income, the company would have to pay the government slightly over $3 million, essentially wiping out the resources that could be invested into product development, clinical research or additional hiring.

And, as the company pointed out, it can’t compensate for the tax by raising prices doctors and hospitals pay for the medical lasers because healthcare providers are also being squeezed with comparatively low Medicare and Medicaid reimbursement rates.

At a time in which our economy needs an infusion of well-paid jobs and our growing healthcare needs require new medical innovation, the Spectranetics case is just one of many examples demonstrating why Congress needs to reconsider the medical device tax.

In his Forbes op-ed, Lechleiter outlines four vital components that must be in place in order to have a vibrant, successful “innovation ecosystem” to tackle these illnesses.  They include:

• Intellectual property protection to enable scientists and investors to stay in the business of innovation.
• Open access to healthcare markets, a component that is threatened by new public policies like the creation of the Independent Payment Advisory Board (IPAB), which could slash Medicare spending and limit seniors’ access to healthcare innovations.
• Free-market pricing, which hinges on the avoidance of real or de facto government price controls on medical innovators.
• A regulatory system that is “timely, predictable, consistent, transparent and scientifically rigorous.”

The agenda Lechleiter has outlined should be at the forefront of Washington, DC health policy discussion.  As he put it, entirely correctly, “Our policymakers must do everything they can to….ensure that the dreams and discoveries of today turn into the lifesaving treatments of tomorrow.”

CBS provided webspace for a consulting actuary to argue that there is really no difference between IPAB and private insurers.  IPAB will, he said, “assess whether certain procedures will be denied reimbursement, either due to ineffectiveness or excessive costs,” the same as private health insurers.  IPAB members may be unelected, but, he argues, private insurance claims adjusters aren’t elected either.

“It’s just a reality that any insurance program, whether commercial or governmental, will deny some claims, states this CBS News-hosted editorial.

We won’t even get into some of the obvious differences between IPAB and private coverage, such as the fact that employers can take their business to different insurers.  Or the fact that private insurers have appeals mechanisms, whereas IPAB decisions aren’t even subject to judicial review.

But that’s not even the biggest problem with this pro-IPAB argument.  IPAB isn’t structured to cut costs by denied payment for ineffective procedures.  It’s not about that at all.

As the Congressional Budget Office has made quite clear, the law creating IPAB explicitly forbids the board from rationing care, changing Medicare benefits or increasing beneficiary cost-sharing.  According to CBO, the board will, for all practical purposes, be limited to cutting healthcare provider payments to meet its cost-cutting targets.

That’s not distinguishing one treatment or therapy from another based on cost and effectiveness.  That’s simply paying physicians less to treat Medicare patients.  And, in so doing, IPAB threatens to widen the payment level gap between Medicare and, you got it, private insurers.  It will result in care for Medicare beneficiaries that is less accessible, not more cost-effective.

There is a legitimate debate to be had over whether IPAB is a wise public policy choice.  To have that debate, though, we need to be on the same platform in terms of understanding what this board will actually do.

Dual eligibles account for 27 percent of Medicare’s spending, although they represent only 16 percent of beneficiaries.  That gap is even wider in Medicaid.  According to a Wall Street Journal article last year, one reason costs are so high for this patient group is imperfect coordination between Medicare and Medicaid which is contributing to “hundreds of thousands of hospitalizations that could be avoided.”

A new report released this week shows that progress can be made in providing better, more cost-effective care to the dual eligible population.  Avalere Health, a highly-regarded research and analysis firm specializing in health policy, has studied an integrated care model developed by SCAN Health Plan, a health insurer serving 130,000 Medicare Advantage beneficiaries in California and Arizona.  (SCAN is also a member of the Healthcare Leadership Council.)

The Avalere study found that SCAN’s team-oriented case management approach for dual eligible patients, utilizing individually-tailored care plans, has resulted in hospital readmission rates that are 25 percent lower than traditional fee-for-service Medicare.  SCAN also outperformed conventional Medicare by 14 percent in prevention indicators, maintaining patient wellness and keeping them out of the hospital.

As Avalere senior vice president Bonnie Washington put it, “Better coordinated care for low-income elderly patients is a critical imperative for federal and state governments.  This study shows that well-developed care management models can result in measurable differences in quality, hospitalization and rehospitalization – and cost savings – for a vulnerable population in need of close care coordination.”

Is the individual mandate sufficient to achieve its intended goal, to bring healthy Americans into the health insurance pool?  In answering this question, the stakes are high.  If millions of currently uninsured Americans choose to remain without coverage, and simply pay the noncompliance penalty instead, serious questions are raised as to whether other insurance reforms can take effect – most importantly, eliminating pre-existing conditions as a barrier to coverage – without destabilizing the marketplace.

This is a legitimate worry.  In 2014, a person who chooses to remain uninsured would be penalized $95 or one percent of adjusted taxable income, whichever is greater.  And even when the penalty is fully implemented in 2016, the penalty will be the greater amount of $695 or 2.5 percent of adjusted taxable income.  These penalties will still be less than the cost of purchasing health coverage.

As University of Illinois law professor Richard L. Kaplan put it, accurately, “(A) person might choose not to buy health insurance, opting to wait until something medically unfortunate happens.  Insurance companies will not be able to refuse her at that point, a situation that might imperil the private insurance market.”

Even if the Court upholds the constitutionality of the individual mandate, lawmakers can’t complacently assume that it will be strong enough to move uninsured citizens into the insurance marketplace.  It would be worth studying the efficacy of other incentive programs, such as those used by the Medicare Part D prescription drug program.  Part D has utilized both limited enrollment windows as well as higher costs for those who delay enrollment.

The goal of incentivizing Americans to acquire health insurance is a good and necessary one.  It’s necessary, though, to keep in mind that the constitutionality of the individual mandate may be the most visible issue, but it’s far from the only one.

The Healthcare Leadership Council and the Congressional Wellness Caucus are hosting a briefing this Friday, March 23 on the innovative actions hospitals and health systems are taking to strengthen patient and community wellness.  Our speakers will include Baylor Health Care System CEO Joel Allison, Dr. Michael Roizen of the Cleveland Clinic, and Dr. Donald Hensrud of the Mayo Clinic.  Under Allison’s leadership, Baylor has been recognized as one of the top facilities in the country when it comes to medical research and innovative approaches to care.  Roizen is the author of books on wellness that have hit the top of the New York Times bestseller charts.  Hensrud is an author and recognized expert on nutrition, diabetes, and wellness.

The briefing is being held from 12:00pm-1:30pm in the Capitol Visitors Center, room SVC 203-02.  For more information, contact Teresa de Vries at 202-449-3436 or tdevries@hlc.org.

And for more information on the latest and most effective approaches to disease prevention in the private sector, take a look at the examples contained in the HLC Wellness Compendium.

In making these points, the Post editorial goes off the rails early by focusing too heavily on inside-the-Beltway political banter.  In fact, opposition to IPAB extends well beyond conventional White House-v-GOP partisan skirmishing.   As of today, over 400 patient, healthcare, employer, veteran and disability organizations from all 50 states have signed a letter to Congress urging an immediate repeal of IPAB.

That kind of strong grassroots sentiment transcends partisan gamesmanship.

That’s not to say the Post editorial is entirely offbase.  Actually, the opinion piece is right on the mark in saying that the Medicare status quo cannot stand and that Washington politicians have been negligent in not pursuing substantive change to address the program’s serious financial problems.

The newspaper is dead wrong, though, in asserting that IPAB represents a workable solution to this problem.  The editorial pulls out what have become, by now familiar canards – that IPAB will be made up of healthcare experts, that the law creating it specifically forbids any kind of healthcare rationing.  The simple fact is, though, that IPAB’s structure, in which changes must be made immediately in order to get program spending below an arbitrary level, will limit the board’s realistic options to cutting payments for healthcare services.

In some policy circles, chopping Medicare reimbursement levels is referred to as bringing greater efficiency to the program.  In the real world, though, it means fewer physicians seeing Medicare patients and less beneficiary access to new healthcare innovations.  The law may say that IPAB can’t recommend rationing, but reduced access to care is an inevitable result.

First, the Congressional Budget Office came out with new forecasts showing that, under health reform, the number of Americans enrolled in the Medicaid program will be even greater than expected.  Even before these new numbers emerged, it was estimated that more than 15 million Americans would be moved into the Medicaid program because of the new eligibility thresholds established by the Patient Protection and Affordable Care Act.

We saw a preview of the potential impact of Medicaid expansion through a study issued by the Annals of Emergency Medicine.  The study, authored by Dr. Atil Ginde of the University of Colorado School of Medicine, found that, between 1999 and 2009, 39.6 percent of Medicaid patients visited an emergency room compared to just 17.7 percent of privately insured patients.

The reason, Dr. Ginde determined, that Medicaid patients are more than twice as likely to be in an ER is because not only are they in poorer health generally, but they are less likely to be seeing a primary care physician.   This situation is not likely to improve once health reform is fully implemented.  In fact, it could severely worsen.  As Dr. Ginde put it, “Our findings are particularly worrisome in light of the additional 16 million people who will be added to the Medicaid rolls over the next decade.  The shortage of primary care providers in the U.S. seems to affect Medicaid patients disproportionately and more harshly.”

And, I would add, Medicaid’s significantly lower reimbursement rates compared to private insurance make it even more difficult for physicians to see Medicaid patients.

If the CBO trends, showing fewer people receiving employer-based private coverage and more individuals enrolled in Medicaid, continue, policymakers are going to have to revisit the mechanisms being used to provide Americans with health coverage.

We’re seeing one answer in the form of technology that is helping to reduce hospital readmissions and enable health facilities to evaluate patient conditions and needs without requiring them to come to the doctor’s office.

This week, the Geisinger Health Plan and AMC Health announced the results of a two-year evaluation of a telemonitoring program developed by AMC.  Geisinger found that home telemonitoring of patients with congestive heart failure reduced 30-day hospital readmission rates by more than 40 percent.

Here’s how the system works.  Patients receive scheduled calls from an interactive voice response system.  The patients report their symptoms, with those responses immediately stored in their electronic health record and evaluated.  A determination is made whether the patient needs a follow-up with a nurse or a case manager.  96 percent of the Geisinger case managers said the system was allowing them to monitor heart failure patients more effectively.

This also bolsters our argument that there are better ways to address healthcare’s cost issues than simply axing dollars out of the system and consequently reducing patient access and care quality.  There are technological solutions, as shown in this innovative work by AMC Health and Geisinger, that can make the system more cost-effective while providing even better care to patients.