The Obama administration will invest in new technology to prevent wasteful and fraudulent payments in federal health programs, officials said Thursday.

The Centers for Medicare and Medicaid Services will issue a solicitation for fraud-fighting analytic tools to help the agency predict and prevent potentially improper payments before they occur, Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder announced during a healthcare fraud prevention summit in Boston.

HHS said it is exploring systems similar to the predictive modeling tools used by banks and other companies to identify potential fraud before it occurs. The technology will help CMS prevent bad actors from enrolling as care providers or suppliers, HHS said.

CMS said it is already starting to take administrative action to stop fraudulent payments before they are made, instead of chasing down payments after they have been made.

“By using new predictive modeling analytic tools we are better able to expand our efforts to save the millions — and possibly billions — of dollars wasted on waste, fraud and abuse,” CMS Administrator Donald Berwick said in a statement.

The new healthcare reform law also provided an additional $350 million over the next 10 years to fight fraud and abuse. It also toughens sentencing for criminal activity, enhances screening and enrollment requirements and expands overpayment recovery efforts.

Pharmaceutical companies were responsible for 25 percent of fines paid to the government under the False Claims Act over the past decade, according to a new study by the consumer advocacy group Public Citizen.

That's twice as much as the perennial top culprits, defense contractors, who only paid out 11 percent of claims.

The study found that four companies — GlaxoSmithKline, Pfizer, Eli Lilly & Co. and Schering-Plough — accounted for more than half of all financial penalties over the past two decades, paying $10.5 billion in fines collectively.

A coalition of research institutions, patient advocates and private businesses is urging Congress to pass the pending omnibus bill because it contains $32 billion for the National Institutes of Health in Fiscal Year 2011.

That amounts to a $750 million increase over the current NIH budget, which United for Medical Research says could help fund cancer research, aid with the development of an artificial pancreas to help the 23 million Americans struggling with diabetes and expand an ongoing blood pressure study.

"As we face tough economic times," coalition spokesman Gregory Lucier said in a statement, "NIH funding is not only a vital tool in our pursuit to reduce the burden of disease and its associated health care costs, but it also yields significant dividends for our nation, from job creation and life sciences industry growth to better quality of life for millions of patients and families. In fact, six million high wage jobs in the U.S. are fueled by NIH research."

The Food and Drug Administration recommended revoking approval of an expensive drug for treating late-stage breast cancer two years after approving it.
 
The agency said it made the recommendation after reviewing clinical studies that showed Avastin does not prolong overall survival in breast cancer patients or sufficiently slow the disease’s progression. The FDA rejected speculation the decision was based on the treatment’s cost, which can run upwards of $90,000 each year.

“The FDA did not consider the cost of Avastin,” said Janet Woodcock, director of the FDA’s Center for Drug Evaluation and Research, during a Thursday morning call with reporters.
 
The Centers for Medicare and Medicaid Services will wait for the resolution of the appeals process before considering any changes to its reimbursement policy, Woodcock said. The recommendation will not have any immediate affect on use or prescription of the drug for breast cancer, she said, adding that oncologists should use their judgment whether to continue prescribing the treatment.

Genentech, Avastin’s manufacturer, has 15 days to request a hearing to dispute the agency’s recommendations.

The decision did not come as a surprise after an FDA advisory panel voted 12-1 in July to revoke approval. The recommendation has no affect on Avastin’s other approved uses.

The Department of Health and Human Services on Thursday began a two-day meeting with more than 150 officials from 44 states to discuss the next steps in creating state health insurance exchanges.

The exchanges, called for by Democrats' healthcare reform law, are set to begin operating in 2014. However, states must show by the end of 2012 that they're ready to set their own exchanges up if they want to avoid the federal government taking over.

"This working meeting is part of our regular communication with the states to provide the support they need to help turn the health care law into a reality," HHS Secretary Kathleen Sebelius said in a statement, "including several major meetings and weekly calls with hundreds of state officials."

All but two states — Minnesota and Alaska — have applied for and received federal grants to help them plan the creation of their exchange.

A presidential commission gave the green light to synthetic biology but said the federal government should keep close tabs on this growing field in recommendations issued Thursday morning.

The Presidential Commission for the Study of Bioethical Issues rejected the need for additional federal regulations or a moratorium on synthetic biology. The study was ordered after scientists in May announced they created a new organism by inserting a laboratory-made genome into a bacterial cell.

"The Commission believes that the field of synthetic biology can proceed responsibly by embracing a middle ground — an ongoing process of prudent vigilance that carefully monitors, identifies, and mitigates potential and realized harms over time," wrote the 13-member panel composed of scientists, ethicists and public policy experts. 

The panel recommended the federal government coordinate efforts to provide an ongoing review of developments, risks, opportunities and oversight of this growing field. Reasonable risk assessments should precede any field release of new synthetic biology products, the commission also recommended. 

Most of the anticipated health benefits of synthetic biology, however, are still in the preliminary research stage, the report said.

"We are unlikely to see commercial applications from much of the biomedically oriented synthetic biology research for many years, although the pace of discovery is unpredictable," the commission wrote.

FreedomWorks is urging House Republicans to vote on repealing the entire healthcare law in January, a confidential memo shows.

Welcome to The Hill's evening roundup of the day's health policy news and advance look at tomorrow's schedule.

Wednesday’s health news:

Administration to hold private meetings on reform: The White House has invited medical societies to discuss the healthcare reform law with the administration's controversial appointee to head Medicare, according to a memo obtained by The Hill. The event on Friday with Medicare Administrator Donald Berwick at the Eisenhower Executive Office Building will be the first of several meetings administration officials will hold on the reform law’s implementation, the invite says. The meeting comes as a number of lobbyists say they've noticed more White House outreach toward K Street in the wake of the midterm elections.

GOP upset: Republicans who circulated the invitation in an e-mail Wednesday afternoon criticized the White House for holding closed-door meetings. Republicans are still seeking access to Berwick, saying they did not have enough opportunity to question him during his testimony before Congress last month. http://bit.ly/ggPQRq

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The White House has invited stakeholders to discuss the healthcare law with the administration's controversial appointee to head Medicare.