Medical Device Daily Washington Editor

The Centers for Medicare & Medicaid Services released its annual report on national health expenditures (NHEs), and the news was mixed for policymakers. Healthcare inflation was again flat in 2011 compared to 2010, coming in at about 3.9%, but nonetheless outstripped GDP growth of 1 .7% for the year, suggesting that healthcare spending will likely remain a concern for policymakers in the years to come.

Micah Hartman, a statistician with the Office of the Actuary at CMS, said on a Jan. 7 conference call, "total national [healthcare] expenditures grew 3.9%, reaching $2.7 trillion, or $8,680 per person" in 2011. Hartman said, "this marked the third consecutive year of growth at that rate," adding that 3.9% is the slowest rate of growth in the 52 years that NHEs have been calculated.

Hartman said healthcare's share of GDP "remained stable in 2011 at 17.9% for the third consecutive year." He said the stable growth in national healthcare spending was "the result of mixed trends," including "slower growth in the net cost of health insurance and non-commercial research" along with "a decline in government public health activities." These were offset by "slightly faster growth in personal goods and services," he said, which rose 4. 1% in 2011 compared to 3.7% the previous year.

The use of retail prescription drugs and physician services were largely responsible for the faster growth in personal goods and services, but slower growth in hospital services offset these two to some extent, Hartman explained.

Hartman said Medicare, private payers and consumers all spent more on healthcare in 2011 over the prior year, while Medicaid spending grew at a slower pace. "Some provisions of the Affordable Care Act were in effect" in 2011 and 2010, he said, adding "their impact on the overall health spending trends was minimal." Hartman stated that retail drug spending increased 2.9% largely due to "more rapid growth of name brand and specialty drug prices."

Physician and clinical services grew 4.3% in 2011, Hartman noted, and the accompanying article in Health Affairs indicated that hospital spending slightly exceeded $850 billion in 2011, although that 4.3% increase "was 0.6 percentage point slower than in the previous year." The article explains further that hospital price growth as measured by the Producer Price Index "contributed to the overall trend by increasing 2.1% in 2011," which the article states further was down "from 3.0% in each of the prior three years." One of the more interesting metrics in this discussion was that the number of inpatient days dropped 1.1% in 2011, a figure that was 1.6% in 2010.

Outpatient visits rose by 0.7%, but this too was a drop compared to the 2010 figure of 1.5%. The Health Affairs article explains that private health insurance spending for hospital services rose along with increased enrollment, but per-enrollee spending growth tailed off to 4.3%, down substantially from the inflation of 6% seen in the previous year. This lower inflation was attributed to an enrollment of a younger, presumably healthier set of enrollees.

The war of words over the report ensued immediately, starting with a statement by Secretary of Health and Human Services Kathleen Sebelius at the HHS blog. Sebelius said the report was "very good news," claiming that the Affordable Care Act "is already making a difference." Among the factors she said were constraining healthcare inflation is the mandate that insurers spend at least 80% of revenues on healthcare services, along with the federal government's review of premium rate increases, which Sebelius said "has helped to save Americans an estimated $1 billion."

Coming from the opposite direction was a Jan. 7 statement from the office of Rep. Dave Camp (R-Michigan), chairman of the House Ways and Means Committee. Committee spokeswoman Michelle Dimarob said the numbers "tell us what so many are already painfully aware of – the President's health care law has failed to provide the lower costs he promised to families and employers, and will add to our nation's deficit."

Dimarob said the Affordable Care Act is "failing to bend the cost curve," an outcome she said "underscores that ObamaCare is a failed $2 trillion dollar government power grab that is doing more harm than good for those struggling to keep up with the rising cost of health care."

FDA pulls notice regarding pre-sub draft

FDA announced in the Jan. 7 Federal Register it was withdrawing a Dec. 11, 2012, notice dealing with a draft guidance for pre-submission interaction. According to the Jan. 7 FR announcement, the December notice was for a proposed collection of information in connection with the draft, but that the agency "has not finalized the policy document underlying this request," hence the withdrawal.

The draft of the pre-sub guidance emerged last summer, expanding the program to 510(k) devices as well as PMAs (Medical Device Daily, July 16, 2012). The agency offered a comment period of 90 days, but the final version has yet to emerge despite the passage of six months since publication of the draft.

FDA told Medical Device Daily in an e-mailed statement that final publication of the guidance "continues to be a priority for the agency in 2013," explaining that FDA has not withdrawn the guidance, but is "working expeditiously through the necessary process to be able to re-submit the paper work collection activities to OMB and will publish another notice in the Federal Register when that happens."

SCOTUS declines Armey Medicare suit

Dick Armey, former GOP member of the House of Representatives, filed a suit against the government for requiring that those who enroll in Social Security also enroll in Medicare. The Supreme Court has declined to hear the case, however, leaving those who prefer their private insurance with no choice but to enroll in Medicare or forgo their Social Security benefit.

Armey and his four co-litigants lost a case in the Court of Appeals for the District of Columbia last year, but the news means the case is dead unless the litigants want to try again. The Fund for Personal Liberty, which underwrote the effort, had not posted a statement at its website at press time yesterday.

Mark McCarty, 703-361-2519

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