Category: Health Alerts

Artificial Intelligence, Machine Learning, and The FDA

Doctors Examining X-Rays ca. 1980s-1990s

Doctors Examining X-Rays ca. 1980s-1990s

(A version of this Health Alert was published by Forbes.)

In July, the Food and Drug Administration issued guidance on three topics important to the future of medical innovation. These welcome guidelines demonstrate the FDA is doing the best it can to ensure it does not interfere inappropriately with advances in medical technology that rely on processing information.

However, the guidelines also show the FDA will be limited in its ability to respond effectively to future innovations. Current law does not really define the FDA’s powers to regulate devices that depend on advances in artificial intelligence and machine learning, as applied to health care. Guidelines give medical entrepreneurs some comfort the FDA will not impose an undue regulatory burden on them, but they are no substitute for legislation precisely defining the FDA’s powers in the digital age.

Fortunately, new legislation that moves in the right direction – the 21st Century Cures Act – has passed the House of Representatives and will hopefully finish its passage through the Senate quickly enough that reconciliation between the two chambers can take place, and a good bill will pass before the 114th Congress adjourns.

The “Public Option”: Obamacare’s Final Bailout

Obamacare-protest-AP(A version of this Health Alert was published by RealClearHealth.)

Most Americans disapprove of Obamacare. In a poll conducted in July by the Kaiser Family Foundation, which supports the goals of Obamacare, 46 percent of respondents disapproved of the law while only 40 percent approved. The first poll was conducted in April 2010, when Obamacare was fresh off the press. Then, 46 percent of the public favored the new law, while 40 percent opposed. In July 2010, half of respondents voiced support for the law. In the mind of the American public, that was Obamacare’s high-water mark. It has been downhill since then.

What was Hillary Thinking When She Hatched Her Plan to Lower Drug Costs?

Newsflash! Hillary Clinton is concerned about your drug costs. Unfortunately, her plan could actually raise drug prices and force you to pay more, albeit indirectly. She proposes to accomplish both feats simultaneously by capping your prescription drug co-pays at no more than $250 per month. This reckless proposal is central planning of the ilk you would find in Cuba or Venezuela. But I’m getting ahead of myself.

Double-Digit Premium Hike Debunks California’s “Active Purchaser” Claim

Covered California(A version of this Health Alert was published by Orange County Register.)

With some embarrassment, Covered California (the state’s Obamacare exchange where people can purchase health coverage) has announced the average premium hike next year will be 13.2 percent. For many subscribers, the hike will be much greater because of the way federal tax credits discount premiums.

This year, a 40-year-old single person making between $17,820 and $23,760, can buy a Blue Shield Silver level plan with a monthly premium of $318. However, the subscriber only pays $122 while the federal government chips in $196. Next year, the premium will go up 20 percent to $381, of which the subscriber will pay $170, while the government will chip in $211. The total premium will increase by 20 percent ($63), while the subscriber’s net premium will increase 39 percent ($48).

Next year’s premium hikes debunk Covered California’s claim that its power to act as an “active purchaser” gives it an advantage in holding down rate increases. California is one of only four states in which the Obamacare exchange has the statutory authority to act as an “active purchaser,” substituting its own judgement about benefits consumers value for their own. Covered California dictates, for example, a primary-care visit has a $45 co-pay for those with Silver plans; or that a family deductible is $4,500.

First, Do No Digital Harm: Regulating Telemedicine

Laptop and Stethoscope(A version of this Health Alert was published by Forbes.)

Telemedicine, whereby physicians use email, phone, text, or video for prescribing and consultations, is growing rapidly. Seeking to encourage faster uptake of telemedicine, many well-intentioned parties are prodding Congress to take actions which will likely have harmful unintended consequences.

So far, Congress has done well. With respect to regulating actual devices, the 21st Century Cures Act, passed by the House in 2015 with overwhelming bipartisan support, is forward thinking. If passed into law, the policies it would implement would lead to a responsible and responsive regulatory environment for mobile health apps.

However, there are other areas in which a Congressional take-over would do more harm than good. In recent testimony to the House Energy & Commerce Committee’s Subcomittee on Commerce, Manufacturing and Trade, I encouraged Congress to First, Do No Digital Harm. Two of the most important areas of risk are federal interference in the practice of medicine and how Medicare pays for telemedicine.

When is President Obama Going to Admit Obamacare is a Colossal Failure?

Progressive supporters of health reform wanted a public plan option to compete with private insurers offering insurance in the state and federal health exchanges. To draw support from progressives, proponents of the Patient Protection and Affordable Care Act (ACA) created a type of nonprofit health insurance cooperative that would compete with established health insurers. Consumer Operated and Oriented Plans, or health insurance COOPs, as they are commonly known, were a political compromise for those who supported allowing non-seniors to buy their way into Medicare or a similar public program.

Last Year’s Medicare “Doc Fix” Is Already Breaking Down. Here Are Some New Fixes

man-in-wheelchair(A version of this Health Alert was published by Forbes.)

What a difference a year makes! In April 2015, a bipartisan super-majority in Congress overwhelmingly passed a bill to give the federal government even more control over how doctors practice medicine on Medicare beneficiaries. Advertised by Republican and Democratic leaders as a permanent solution to the flawed way Medicare paid doctors, the Medicare Access and CHIP Reauthorization Act (MACRA) was actually Republican politicians’ first vote for Obamacare.

The president himself confirmed this shortly after signing the bill, congratulating leaders of both parties at a White House garden party celebrating the law’s concentration of power within the U.S. Department of Health & Human Services: “I shouldn’t say this with John Boehner here, but that’s one way that this legislation builds on the Affordable Care Act. But let’s put that aside for a second.”

The MACRA was largely pushed the professional societies which claim to represent physicians. Unfortunately, practicing physicians who see patients all day were too busy to pay attention to how the federal government was going to impose itself even more on their practices. In a survey of 600 physicians published earlier this year by Deloitte, half had never heard of MACRA and one third recognized only the name.

That blissful ignorance is dissipating, in the wake of a lengthy rule proposed by the Centers for Medicare & Medicaid Services (CMS) last March. Just the first step in implementing the many technical requirements necessitated by MACRA, the rule has been described as “962 pages of gibberish” by Margalit Gur-Alie, a leading healthcare consultant.

As more practicing physicians have learned about MACRA and the proposed rule, a deluge of comments have forced the Acting Administrator of CMS, Andy Slavitt, to admit its implementation might be delayed beyond its January 2017 start date. This delay provides a window of opportunity to make some changes that could re-direct MACRA in a more positive direction, according to a new report published by the National Center for Policy Analysis.

Well Duh! Combat Opioid Abuse by Tracking Prescriptions

Both houses of Congress have passed a bill to tackle opioid abuse. The bill funds training for emergency medical technicians and emergency room personnel and makes drugs to reverse the effects of opioids more readily available in an emergency. According to an article in Modern Healthcare, the legislation just passed should have taken advantage of existing safeguards to strengthen state drug monitoring programs to prevent opioid abuse enabled by doctor shopping. The bill does increase grants to states for drug monitoring programs. But the bill does not require states to ensure doctors actually check the state database.

A Bipartisan “Yes” On A Health Care Tax Credit

health-insurance(A version of this Health Alert was published by RealClearHealth.)

Ready for some good news on health reform? Both the presumptive Democratic candidate for President and the Republican majority in the U.S. House of Representatives agree people should be able to spend more money directly on medical care without insurance companies meddling.

Both sides would be shocked to have their respective health reforms described as sharing any common ground. However, identifying this common ground might be necessary if either side wants to fix the worst aspects of Obamacare.

If Republican politicians in Congress want to give people any relief from the burden of Obamacare, they need to be prepared for the possibility they will have to deal with Hillary Clinton’s White House next year.

Speaker Ryan’s recently released Better Way health reform plan would offer a refundable tax credit for health care, to anyone who does not have employer-based health benefits. This tax credit would increase with age, but be available regardless of income. It would be a fixed-dollar amount for each age bracket. This is superior to Obamacare for at least two reasons.

Should Drug Investors Worry About Medicare Revenues?

(A version of this Health Alert was published by Forbes.)

The pharmaceutical sector has held up quite well in this aging bull market. Now, a new political risk is on the horizon: The Independent Payment Advisory Board (IPAB), which was instituted in the 2010 Affordable Care Act. Starting in 2015, the IPAB was empowered to cut Medicare spending if costs increased faster than a certain rate. It quickly faded into the background as the growth in Medicare spending moderated after President Obama signed the Affordable Care Act.

Those days are gone. The latest annual Medicare Trustees’ report, published on June 22, indicates Medicare spending will cross the threshold for IPAB to swing into action in 2017. The 2017 threshold is determined by a target rate of growth which is the average of the change in the Consumer Price Index (CPI) and the medical-care component of the CPI. Estimates of both actual Medicare spending per capita and the target rate are calculated as five-year averages.

Table I, extracted from a recent presentation by Medicare’s Chief Actuary, illustrates why investors are becoming concerned. Table I highlights this year’s Medicare spending per capita will increase 2.21 percent (averaged over the five years, 2014 through 2018). The target rate is 2.33 percent, higher than the estimated actual rate, so the threshold is not crossed. IPAB remains asleep.

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