SECRETARY'S ADVISORY COMMITTEE ON REGULATORY REFORM REGIONAL HEARING #5
MEETING MINUTES/SUMMARY 

DAY ONE

June 10, 2002
Hyatt Regency Hotel
Minneapolis, Minnesota

8:01 a.m. Dr. Douglas Wood, the Chairman, opens the meeting

Dr. Wood re-iterated the committee’s desire to find regulatory solutions, and cautioned the day’s speakers that its mission does not include securing more funding for stakeholder groups.

8:05 a.m. Panel One, Adverse Event Reporting

Dr. Galson, the center’s deputy director, talked about the agency’s Adverse Event Reporting System (AERS). A "passive" system that relies on voluntary disclosure, AERS took in 300,000 reports from providers and manufacturers in 2001. The information is used to create case profiles, to form hypotheses for study, and to spot confusion over drug names. Because it is a passive system, AERS is limited by underreporting and incomplete reporting. In addition, it is often hard to separate out unrelated trends, and the system does not determine the number of people using the drug over time to calculate the rate at which problems are occurring. The agency’s MedWatch system aims to provide the public with information about alerts and recalls. It receives mandatory reports on drug and device problems from "user facilities" (e.g. hospitals) within 10 days. New initiatives at FDA include efforts to gather more information about pharmaceuticals for children, greater risk assessment work, greater vigilance on monitoring the effects of approved drugs, and creating a common data portal to share all this information. He recommended that the committee focus on serious rather than minor events, on improving the quality and completeness of reports, improving reporting from health care facilities, and better linking of data to medical records.

Q&A

The committee and Dr. Galson discussed the reporting burden on pharmacists, ways to make sure appropriate care gets to patients who experience adverse events, and how state Medicaid departments use MedWatch reports.

Dr. Meisel, assistant director of clinical services, said adverse event data is often a one-way street, with reports going only to the FDA. The system needs better data sharing back to providers and consumers. Dr. Meisel described several product design features that can lead to misunderstandings and adverse events. Many different types of drugs are delivered in similar-looking plastic vials, with embossed labels that are hard to read. Some drugs have similar names, leading to the wrong drug being dispensed. Some drug packaging puts information about the quantity and concentration of drugs in two different places on the label, which can cause confusion about what dose to give. The suffixes on drug names (e.g. Robitussin DM vs. Robitussin PE) are at the discretion of manufacturers and are not standardized, and even expert providers sometimes do not know what they mean. He recommended that oversight for product defects and adverse events be combined into one group and that all drugs be labeled with computerized bar codes.

Dr. Deborah Shatin, United Health Group, Center for Health Care Policy Evaluation

Dr. Shatin, a senior researcher, talked about the Centers for Education and Research on Therapeutics (CERTs). These seven collaborative centers, coordinated through Duke University and funded by the Agency for Healthcare Research and Quality, conduct research on the optimum use of pharmaceuticals, particularly in the area of minimizing drug interactions. The group’s mission also includes educating providers and the public. Recent research topics have included the use of beta-blockers in heart disease, the role of the media in communicating about health, the biological causes of adverse events, and defining acceptable risk.

Dr. Herbert Slade, 3M

Dr. Slade, medical director, talked about adverse reactions. He noted that all chemicals, including oxygen and water, are toxic to humans at some concentration. Adverse reactions come in two types. Type A reactions are the known, common reactions that relate to the desired working of the drug. These are usually detected during the drug’s clinical trial testing. Type B reactions are unknown at the time of drug approval and pass undetected through clinical trials, which are designed to reliably detect events that happen in 1 out of 500 cases. Statistically rarer events often get reported only after a drug is approved and taken by large numbers of patients. He recommended setting up "peri-approval" studies, in which the FDA sets up a risk management plan with the pharmaceutical firm early in the drug application process. Labeling changes required under the Best Pharmaceuticals for Children Act will give patients a 1-800 number to call the FDA to report adverse events. Patients currently call the manufacturer, which has skilled staff to handle the calls. He cautioned that direct reporting to FDA could take providers and manufacturers "out of the loop." He recommended that patient be encouraged to call either their provider or the manufacturer or the FDA, with a note that the manufacturers are required to report to FDA, in order to generate high-quality reports and avoid duplication.

Nancy Sailer, Alzheimer’s Association, Minnesota Dakotas Chapter

Ms. Sailer, director of program services, talked about the problems her family has experienced with side effects and adverse reactions. Her father-in-law, who is in his late 70s, was prescribed the drug Halcion for anxiety, which caused him to hallucinate. It took persistent advocacy on her part to get him off the drug. Her mother-in-law’s arthritis medication left her mentally cloudy, and she eventually she chose to bear the pain instead. In a hospital, her husband was given heart medications meant for another patient. She recommended stricter requirements on physicians and other providers to report adverse drug events.

Kirstin Johnson, Boston Scientific Corporation

Ms. Johnson is manager for quality and regulatory compliance for the medical device maker, where she has worked with cardiology devices, among others. Several things about the adverse event reporting system work well, she said: the need for reporting is well understood, the instructions are clear, alternatives for quarterly batch reporting are efficient, and the MedWatch office is responsive. Other factors need improvement. For malfunctions, many companies over-report to be safe. The FDA should review its definitions and coding to see what information is truly useful. The agency should have a better electronic reporting to make the process more efficient. Manufacturers get fewer reports from user facilities than they would expect. Finally, manufacturers must provide detailed product information as part of "baseline reporting," but the agency has not explained the purpose and value of this, and it often comes across as busywork. She recommended more data sharing and more communication with manufacturers on how the data are analyzed and what are the flags for action. FDA should have separate MedWatch forms for drugs and devices, since the current form is more geared to drugs, and it is difficult to interpret some fields for devices.

Q&A

The committee and the panel discussed drug re-importation, the work of the CERTs, the impact of HIPAA on information sharing, drug labeling issues, proposed rules to require bar codes on drugs, and recent reports of drug shortages.

9:45 a.m. break

10 a.m. resume, Public Comment

Dr. Wood noted that to accommodate the many people who requested time to speak, the public comments would be limited to four minutes per speaker.

Jill Egan, a senior vice president and operating officer for the Minnesota Hospital and Healthcare Partnership, said hospitals were doing a great deal of work on adverse events in response to the Institute of Medicine report on hospital errors. She recommended that the committee pursue a voluntary approach, one that recognizes state-specific initiatives already in place. In general, regulations should be kept consistent with intent of Congress. Congressional efforts to provide regulatory relief are often canceled out by the red tape needed to apply for the relief. An example of this is the rules governing critical access hospitals. Regulations should not make retroactive demands, and they should leave adequate time for implementation. Fiscal intermediaries should be held to timeliness standards for payment.

Dan Peterson, senior director for community services at North Memorial Hospital, said the definition of what can be done by skilled versus non-skilled nurses found on the OASIS form is very confusing. He recommended requiring OASIS for Medicare patients only. It is unnecessary for home health agencies to have to describe the frequency with which they give services to patients, since payments are no longer visit-based, and it consumes significant resources to fill out the forms. Medicare condition of participation rules should apply only to Medicare patients, not all patients at a Medicare-certified agency as is currently required. Many home health agencies go through the trouble to set up separate administrative structures for their non-Medicare lines of business to get around the rule.

Dr. William Preston, with the Illinois Academy of Family Physicians, said physicians spend one third of their time trying to comply with other people’s rules. The Clinical Laboratory Improvement Amendments (CLIA) have made it impossible for physicians to run office-based lab testing, which decreases efficiency and timeliness of the results. He recommended a "start low and go slow" approach to regulation.

Debora Klatkiewicz, administrator of personnel and regulation at Park Manor nursing home, said the enforcement of nursing home regulations is burdensome. Park Manor’s May 2000 annual survey took up 151 hours of staff time. Ten months later, a federal survey took up 465 hours. It found 37 deficiencies, several of which were dropped during informal dispute resolution. She said her agency chose to go public with information, alerting the media and members of the government. All the deficiencies were later reversed by administrative law judges, which found the surveyors were second-guessing the agency and families as they confronted difficult care decisions. The survey process made the nursing home staff very tense, and the surveyors treated patients’ family members poorly.

Steve Brennan, with Providence Health System in Seattle, Washington, said CMS and the FDA need a joint office of breakthrough technologies to better coordinate approval of new devices. This would allow the baton to be handed off earlier and more smoothly in the approval "relay race." CMS should also exclude certain new technologies from the prospective payment system for long-term care, since the system does not accurately account for their cost. New technologies should be paid for on a cost basis, instead.

Dr. Rick Kingston, with the University of Minnesota College of Pharmacy said he is concerned about FDA’s plans to collect adverse event information through a toll-free number. Providers need to get good information and advice back from the system. FDA should enact a system more like the Environmental Protection Agency’s FIFRA system (Federal Insecticide, Fungicide, and Rodenticide Act), which more actively engages the manufacturers to solve problems. He said it was unrealistic for FDA to expect only serious adverse events to be reported by the public. A better line of communication would be through manufacturers, who should be required to share information with the agency.

Thea Pallansch, a physical therapist from South Dakota, said Medicare rules are discriminatory in how they treat on-site, in-room physical therapy. She recommended that the rules be less restrictive in how they treat private-practice therapy, as opposed to hospital-based therapy.

Connie Bacon, co-owner of a physical therapy practice in rural South Dakota, said she was concerned with the $1500 cap on therapy services for Medicare patients. People with multiple ailments may hit the cap, shortening care and forcing them into another care setting, which is not in the patients’ best interest. Also, Medicare could save money in direct access states, like South Dakota, if therapists did not have to do a 28- to 30-day review with a physician. Physical therapists should be able to review and refer patients in verbal consultation with a physician.

Dr. Justin Sedlek, with the Association of American Physicians and Surgeons, said regulatory burden and the threat of criminal prosecution are hurting doctors’ ability to care for patients. To cope with Advance Beneficiary Notice requirements, there should be a computer system using direct physician entry to compare ICD-9 and CPT codes. Confusion on HIPAA privacy requirements threatens to dampen communication between physicians. In general, providers are over-interpreting regulations to avoid criminal prosecution. A successful reform must address the legislative process and involve a free-market solution with more self-regulation by patients. He supports the medical savings accounts expansion bill currently before Congress.

Gail Sheridan, with Care Providers of Minnesota, said that regulation of long-term care facilities takes needed resources away from patient care, and media portrayals of nursing facilities generate a skewed picture. She recommends that CMS enact pilot projects to test new ways of regulating the facilities. The current system focuses on compliance, but it does not recognize innovation or quality efforts. It shows zero tolerance but applies the rules inconsistently. The informal dispute resolution process is limited by the fact that surveyors review their own actions. There should be an independent system. Also, surveyors write up facilities for deficiencies without undertaking adequate investigation of the circumstances.

Bradley Thompson, with the Indiana Medical Device Manufacturing Council, said FDA and CMS responsibilities for device approval should be harmonized and integrated. Currently, both agencies are looking at some similar questions relating to the public health function of new devices and duplicate one another’s efforts. The definition of what is "reasonable and necessary" for Medicare coverage is vague and should be made more clear. CMS should focus on the insurance aspects of coverage decisions and should leave the public health questions to FDA.

10:45 a.m. committee business

The Data and Information Subcommittee, Tony Fay chairman, presented its recommendations on MDS, OASIS and obsolete forms for a series of committee votes.

The Regulatory Flexibility subcommittee, Heidi Margulis, chairwoman, presented its recommendations on home health, dual eligibles, and Medicare+Choice for a series of votes.

The Communications and Oversight Subcommittee, Erik Olsen, chairman, presented its recommendations on Medicare+Choice, EMTALA, and beneficiary education for a series of votes.

1:50 p.m. HHS Secretary Tommy Thompson joined the meeting

Dr. Wood reported to the Secretary on the progress of the committee. He praised committee members and staff for their hard work. He recognized the work of former lead HHS staff member Christy Schmidt, who recently retired, and the new staff leader, Peggy Sparr, as well as other HHS staffers. The committee’s work has been parceled out, not by industry group, but based on how beneficiaries access care, he said. Covering a wide range of topics, and reviewing a number of public comments delivered by mail and electronically, the committee has generated over 100 specific recommendations to date. Areas that the committee hopes to work on include improving beneficiary communication, shortening the time required for data collection on patient assessments, and easing the burden of EMTALA on emergency rooms.

Secretary Thompson thanked the chairman and the committee. He said that their advice would not be put on a shelf to be forgotten, but rather would be implemented. It is vitally important to change the health care delivery system in America, he said. With some common sense, government can implement regulations that serve people. Already, with the committee’s input, HHS is moving to streamline paperwork for the Minimum Data Set (MDS), to clarify EMTALA requirements for hospitals, to allow hospitals to gather Medicare Secondary Payer forms less often (once every 90 days), to issue new Medicare cards with 1-800 number and website printed on them, to streamline the OASIS home health paperwork, and to craft an online process for medical equipment supply forms. He assured the committee that its report would not only be read but also acted upon. Reform is important, he said, given the rising costs of health care in America and the high numbers of uninsured people. Beyond regulatory reform, the Secretary said he was also interested in tort reform and setting up a fund for hospitals to invest in new technology.

Q&A

The committee and Secretary Thompson discussed use of new technology, the uninsured, the prospects for tort reform, and medical savings accounts.

2:25 p.m. Secretary Thompson left the meeting, break

Mr. Scully announced that CMS was making substantive changes to the OASIS home health assessment form, reducing the length of the entrance and exit questionnaires by 20-25 percent. In addition, the number of required questions for patient renewals (after the first 60-day capitated payment) is being reduced from 92 to 25. CMS is also seeking to enroll six states for a home health quality demonstration in the coming spring. The OASIS changes, which were crafted with the goal of keeping good data on quality, will be implemented by Dec. 1. In addition, the agency is considering arguments for and against limiting OASIS requirements to Medicare patients only.

2:50 p.m. CMS and FDA Approval Process for New Medical Technologies

Dr. Feigal, director of the Center for Devices and Radiological Health, said medical device regulation, as a field, is less than 30 years old. The challenge is to sensibly regulate many thousands of devices that have a great diversity of functions. Unlike new drugs, most new devices do not undergo controlled clinical trials. Those that are low to medium risk (Class I and II), and/or are substantially similar to existing devices on the market are cleared with minor scrutiny. Class III devices, which are either risky or entirely novel, undergo a full pre-market application and must be proven safe and effective, sometimes through randomized controlled trials. The governing statute says that the regulatory structure should provide devices with the least burdensome path to market. The vast majority of device makers are small businesses with less than 500 employees, and thousands of manufacturers have just a handful of employees.

Dr. Sean Tunis, HHS

Dr. Tunis, acting deputy director of the Office of Clinical Standards and Quality, described the process by which CMS approves Medicare coverage for new devices. As new medical technologies move from discovery to FDA approval to CMS coverage, evidence and knowledge about the devices accrues. The trick is to minimize the time required while still gathering the needed information. The coverage decision can take several paths. Most technologies are incremental advances and get paid through a bundled payment system, without going through a separate national coverage decision. This is possible as long as there is an existing procedure code, and an updating system keeps payments in line with changes. For those devices that require a coverage determination, the decision is made by local Medicare contractors in the majority of cases. Device makers prefer it that way, since the contractors often decide more quickly than CMS would. Major advances may require a national coverage decision by CMS, which would involve a federal process. To be approved, devices must fall in a defined benefit category found in the Social Security Act and must have FDA approval for at least one medical indication. The standard for coverage approval is "reasonable and necessary," but efforts to define these terms have bogged down. For an item to be approved, there must be evidence that it is clinically effective for the populations Medicare serves. Cost is not a factor in the coverage decision. Current criticisms of the process include duplication of effort between FDA and CMS, a lack of coordination, and vague coverage standards. One solution would be to set up a formal mechanism for the two agencies to share information in a more simultaneous review, though the issue of CMS’s handling of trade secrets would need to be addressed. Industry groups might also meet with CMS during the clinical trials phase to get guidance on coverage.

The committee and the panel discussed national vs. local coverage determinations, definitions of "reasonable and necessary," and the cycle of payment systems updates.

Panel discussion: Perspectives From the Field

Dr. Smith, director of regulatory affairs, said he and his colleagues at Massachusetts General Hospital work to bring medical technology from the lab to the patients as quickly as possible. There are many opportunities for FDA and CMS to help this mission by working in parallel, rather than sequentially. The legal obstacles to this collaboration within HHS are minor, but both agencies need adequate people and resources to make their decisions in a timely fashion.

Dr. Marshall Stanton, Medtronic

Dr. Stanton, vice president of arrhythmia management, said it was important to keep the two agencies’ missions distinct in the discussion about collaboration. FDA approves devices for the whole country, while CMS is concerned with applicability to Medicare populations. For FDA he recommended: 1) establishing an office of combination products (those that combine devices and drugs or biologics), 2) setting up an expedited review for breakthrough products, and 3) setting up electronic forms for labeling and product manuals. For CMS, he recommended: 1) maintaining coverage policies mostly at the local level, 2) setting a six-month deadline for national coverage decisions (12 months for those that require panel review), and 3) eliminating the executive committee ratification step. Local coverage decisions better assist the technology diffusion process, are more effective, and coincide with sites where the new devices are being assessed. A national coverage decision is necessary only when significant controversy or variability persists over time.

Dr. Jim Gardner, Cook, Inc.

Dr. Gardner, a medical and science officer, also stressed the two agencies’ clear and distinct missions. FDA decides if an item goes on grocery store shelf, he said, while CMS is the shopper. That said, there is room for efficiencies in data collection and analysis on new devices. He recommended: 1) early and confidential interaction between CMS and industry, 2) better data sharing between the two agencies and coordination of their requests for evidence, 3) making sure that the agencies request the least burdensome type and amount of information they need to make their decisions, and 4) better consistency between the two agencies in how a product is defined.

Dr. Keith Folkert, Blue Cross Blue Shield Minnesota

Dr. Folkert, medical director, said the approval of new technology is difficult, because providing access to new technologies that are inferior could divert patients from more beneficial treatments and use up scarce resources. CMS should clarify the definition of "reasonable and necessary" and institute an evidence-based process to make coverage decisions. Both national and local review processes should continue, but with greater standardization. Several forces are increasing the pressure on device approval: the pace of new technology discovery is accelerating, the technologies are getting more complex, the approval processes are faster, devices are being approved for use in small populations and for narrow indications, and there is increased pressure to cover off-label uses. Greater coordination is warranted.

John Hagman, AARP

Mr. Hagman, the association’s Minnesota state president, said he agreed that FDA and CMS should work together, but CMS should take a skeptical approach to coverage decisions. The latest technology is not necessarily the greatest, he said. AARP’s top priority is to get a Medicare prescription drug benefit enacted. Congress should keep the drug benefit affordable and include a formulary to contain costs and enhance quality.

Q&A

The committee and the panel discussed the evidence available for CMS coverage decisions, local vs. national coverage decisions, payment issues for high-technology devices, and bar codes for drugs and devices.

4:38 p.m. Break

4:45 p.m. resume, Public Comment

Marty Gates, a member of the Minnesota Senior Federation, said she is worried about access to services. There are disparities in Medicare payment formulas by state and county and a great deal of variation in benefits and payments under supplemental coverage. Low reimbursement rates are impacting rural hospitals and forcing doctors to exclude Medicare patients or close up shop. Patients are forced to shop around to find a Medicare doctor. Much of Minnesota and other Midwestern states is rural with a large aging population. These states, which are on the low end of Medicare reimbursements, are engaging in a multi-state campaign called the Medicare Justice Coalition to increase their payments.

Steve Azia, a counselor with the Power Mobility Coalition, a group of motorized wheelchair manufacturers, said Medicare carriers are failing to adhere to the process to evaluate Certificates of Medical Necessity, which determine whether a device is reasonable and necessary for coverage. This forces suppliers to second-guess doctors’ decisions and request additional documentation to justify payment. Carriers should more closely adhere to the rules, and the process should be more consistent.

Penny Murphy, executive director of the Michigan Palliative Care and Hospice Association, said that the requirement that a registered dietitian see every hospice patient is burdensome, unnecessary, and creates coordination problems. The rule should be rescinded. Local medical reviews of patient records by Medicare fiscal intermediaries have become a club to deny hospice payment. The intermediaries often make multiple requests for review and even request information on patients who have already died. There should be a more prudent type of review for patients who live past the expected six months. The rules governing nursing homes and hospice should be harmonized to allow nursing homes to provide more respite care.

Dr. Bernard Morrey, an orthopedic surgeon with the Mayo Clinic, said the current FDA regulatory scheme, which dates back to 1976, is out of date. With a lack of real evidence on which to base decisions, approval policy is being set based on the pressures that are brought to bear. For some devices there is pressure to use them with no evidence of benefit, while for others, there is pressure to withdraw them from the market with no evidence of harm. He recommend a panel or task force to overhaul the whole FDA device approval structure. The risk classification scheme should be revised to include finer divisions between implants and risky devices in Class III. Safety should be the paramount concern, since efficacy can only be established over time.

Dr. Robert Beck, with the HealthEast Care System in Minnesota, said HIPAA is forcing his hospitals and nursing homes to spend large sums and hire new employees for equipment upgrades to submit the same bills they currently submit. In addition, staff must be trained and lawyers must be paid to execute "business associate" agreements with hundreds of entities the system has relationships with. Other costs include new software to implement new billing codes. The privacy rule is cumbersome, forcing providers to precisely define their relationship with each entity they deal with. In addition, patients will have to fill out multiple forms and acknowledge receipt of the privacy rules.

Dr. Robert Gumnit, a specialist in seizure disorders, said that in general, government agencies suffer from a lack of institutional memory and exhibit a blind adherence to rules that they do not really understand. Particular problems for his epileptic patients include long delays in establishing eligibility under Medicaid, SSI, SSDI, and Medicare rules – up to 5 years in some cases. Care delayed is care denied, and in the meantime, people with seizure disorders can lose jobs and become totally dependent. The various government agencies involved should work cooperatively to speed the process. Also, the FDA gives inadequate attention to the technical sensitivity of epilepsy treatments when approving generic drugs, and its finding that generics are bioequivalent to brand-name drugs does not guarantee that they are therapeutically equivalent. This is particularly a problem when state Medicaid departments require generics. Thirdly, the Medicare DRG system does not adequately support treatment for chronic epileptics, who often require a six- to ten-day hospital stay for evaluation.

Dr. Susan Bartlett-Foote, with the University of Minnesota School of Public Health, said she has an article forthcoming that details the history of CMS’s "reasonable and necessary" rule and efforts to clarify it. Despite 30 years of work, there is no agreement on what the criteria should be. She is also working on a second study on how local coverage decisions are made.

Bob Thompson, with Medtronic, said the process to pay for new devices is not working, and the underpayments give hospitals a disincentive to provide services. With uneven hospital markups, hospitals close their doors to under-compensated procedures. He recommends that CMS use external data to determine the acquisition costs of devices in order to validate their payment process.

5:30 p.m. Committee business

The Regulatory Flexibility subcommittee, Heidi Margulis, chairwoman, presented several recommendations for a vote.

5:42 p.m. additional public comment

Joan Gumble, with the Visiting Nurse Association of Southeast Michigan, said the current nursing shortage makes it hard to hire nurses for hospice work. Hospice agencies need more flexibility to hire contract nurses. Also, the rule limiting hospice care to people with an expected six months to live results in conservative treatment decisions and very short hospice stays.

5:45 p.m. Break for Day

Meeting summary prepared by John McCoy, Health Policy Analyst Mathematica Policy Research, Inc.