By Marissa Evans, CQ Roll Call

April 8, 2016 -- Arkansas Gov. Asa Hutchinson signed a bill to carry out his plan to overhaul and extend the state's Medicaid expansion program on Friday, but still faces uphill battles to convince his legislature to fund the program and obtain waivers for some of its provisions from the federal Department of Health and Human Services (HHS).

The Republican governor's so-called Arkansas Works plan would continue expanded Medicaid coverage for 250,000 low-income Arkansans and replace the state's current program, which is slated to end on Dec. 31. The bill would create a voluntary work and job training referral system for unemployed beneficiaries and require those with jobs to enroll in employer-sponsored plans. It would not provide a standard Medicaid benefit: coverage for services provided up to 90 days prior to enrollment.

Hutchinson has pushed the overhaul to reduce the cost of Medicaid and its expansion in the state.

"We have come up with a practical solution for this time in our history and for the people that we serve," Hutchinson said in a news conference.

Under the 2010 health care law (PL 111-148 , PL 111-152 ), states could expand Medicaid eligibility to individuals with incomes up to 138 percent of the poverty level starting in 2014. The cost of covering the additional beneficiaries is fully covered by the federal government until 2017, when states that expanded will have to start chipping in. By 2020, states will have to cover 10 percent of the cost. So far, 30 states and the District of Columbia have implemented expansion.

While the Republican legislature approved the plan, it still has to approve a separate bill to fund the state Department of Human Services, which would administer the program. That funding must get three-quarters of the vote in both houses of the legislature; of 35 members of the Senate, 10 who voted against the plan have threatened to block the funding measure. The fiscal session in which the bill will be considered starts on Wednesday.

"You can have a potential for a crash that leads to shutdowns just like in Washington and that's never happened in Arkansas," Hutchinson said of the potential impasse. "It's real to tens of thousands people in Arkansas who rely on these services." 

Even if Hutchinson's plan moves through the budget session, the state still needs HHS' approval. Hutchinson backed away from two elements in the plan that HHS prohibited in other states: that beneficiaries have a job and can establish that they have inadequate assets to pay for health insurance.

HHS Secretary Sylvia Burwell wrote in an April 5 letter to Hutchinson that neither provision would be "allowable under federal Medicaid law nor consistent with the purposes of the program." However, she wrote that she remains "committed to working with you and my counterparts in other agencies to discuss options to make job training and employment more available for Arkansas Works participants."

Burwell also noted concerns about the state's plan to eliminate coverage for beneficiaries who received care 90 days before they were approved for Medicaid. That provision is needed for people who needed medical care before they knew they were eligible. 

Marquita Little, health policy director for Arkansas Advocates for Children and Families, said the state has shown that it can take a long time to approve Medicaid applications, making the 90-day grace period an important element of the system.

"We don't anticipate it's going to be a seamless experience anytime soon," Little said. "To the extent we can protect consumers from issues that are really no fault of their own we want to make sure that's a priority."

By Jad Chamseddine, CQ Roll Call

April 8, 2016 -- Federal Trade Commission (FTC) Chairwoman Edith Ramirez disagrees with health care industry assertions that consolidation is the only way to stay competitive under the health care law.

Health care providers increasingly argue that "the only way they can accomplish the policy objectives" of the Affordable Care Act is to merge, Ramirez told reporters at an American Bar Association Antitrust event on Friday in Washington. "I don't think that's true," she said.

Ramirez argues the law encourages competition and expressed concern that more states are unnecessarily trying to shield mergers between hospital companies from antitrust suits from U.S. regulators. Several bills are circulating in state legislatures to stop federal officials from blocking health care company combinations.

Virginia and Tennessee want to let their state health departments decide whether hospital companies can consolidate assets or share information if the benefits from these arrangements would outweigh disadvantages. States would grant the businesses a certificate of public advantage.

Ramirez said these statutes, while based on good intentions, are unnecessary because the FTC works with local attorneys general to keep the health care industry competitive.

"The result of these state laws is that we will end up allowing arrangements to go forward that end up being harmful to competition," Ramirez said. She added that U.S. antitrust agencies make it "very clear" that they look favorably "upon pro-competitive collaborations among health care providers."

Her concerns are echoed by Victor J. Domen Jr., chairman of the Multistate Antitrust Task Force, a coalition of state attorneys general.  

"Most of the studies done show mergers of this type typically result in higher costs for consumers," Domen said at the event.

On the topic of rising prices for lifesaving drugs, Ramirez said her agency will take necessary steps to "root out anti-competitive consolidation or conduct" in the pharmaceutical industry that unfairly boosts prices.

Ramirez pointed to actions taken by the FTC this month in its charging of Endo International Plc with entering into anti-competitive agreements that delay the introduction of drugs and raise prices for consumers.

But Ramirez added not all price increases are necessarily antitrust matters, especially when the higher costs are related to manufacturing or supply problems, or if there is a shortage in a key ingredient of a drug.

By Kerry Young, CQ Roll Call

April 8, 2016 -- Medicare payment adviser William J. Hall said he sees firsthand the challenges of trying to reduce the federal health program's spending on low-value services, or treatments and procedures that researchers say provide little benefit and often carry some risk.

One example is prostate-antigen testing for men older than 75 who show no symptoms or strong risk for the urological cancer.

"If I take 100 patients that I have counseled on any of these topics here, PSA testing, X-rays for low back pain, et cetera, 99 of 100 would have one response after my pitch," said Hall, a University of Rochester geriatrician and Medicare Payment Advisory Commission (MedPAC) panelist, at a Thursday MedPAC meeting. "They say 'Does Medicare pay for it?' and that just erases the last 10 minutes of my life."

A  MedPAC analysis suggests that 23 to 38 percent of people enrolled in Medicare may have received at least one low-value service in 2013, with an estimated cost of $2.6 billion to $7.1 billion, according to a Thursday presentation from commission analyst Ariel Winter. In some cases, these procedures can trigger a cascade of follow-on procedures and services, MedPAC staff said. 

MedPAC members and staff discussed ways to reduce the widespread use of low-value services, which Medicare coverage often inadvertently encourages. The panel did not vote on any recommendations, however.

The commission's interest in low-value services builds on a growing trend to identify common practices that may offer little benefit. CMS officials, for example, have suggested looking to the kind of recommendations by the Choosing Wisely campaign as they write the rules needed to carry out an overhaul of Medicare's payment for doctors. Recommendations from the campaign suggest that men older than 75 rarely need a PSA test unless they are at higher risk for prostate cancer, such as having a family history of the disease.

The American Urological Association in 2013 said that routine PSA screening is not recommended in men over age 70 or any man with a life expectancy of less than 10 to 15 years. Prostate cancer is often a slow-growing disease, with tumors in many cases unlikely to threaten men's lives. Prostate cancer treatment can save lives, but also may result in harms such as incontinence and impotence.

Still, Medicare covers annual PSA tests for men age 50 and older without charge. "You pay nothing for a yearly PSA blood test," Medicare says on a web page that explains the program's benefits in simple terms.

The Medicare site does link to more detailed advice on prostate cancer screening from the Centers for Disease Control and Prevention (CDC) and the American Cancer Society.

The CDC follows the recommendations of the U.S. Preventive Services Task Force, which seek to reduce widespread routine PSA screening. The CDC notes that other organizations may differ. Its website links to the American Cancer Society and the American Urological Association.

"There is no question that screening can help find many prostate cancers early, but there are still questions about whether the benefits of screening outweigh the risks for most men," the American Cancer Society said. "There are clearly both pros and cons to the prostate cancer screening tests in use today."

Growing awareness of the risks of the PSA makes it easier to have candid conversations with patients, Hall told CQ HealthBeat in an interview.

But it's difficult to get the time needed to counsel people about why they may not need other services, such as an X-ray for back pain, and to explain how this could lead to unneeded follow-on treatment, Hall said.

"The evidence suggests that it really doesn't make much difference and it could lead to some harm, because everybody has an abnormal back x-ray after a certain age," Hall said. He sees a common response when patients learn that Medicare covers a procedure or test: "Well, what's the problem then?'" 

By Kerry Young, CQ Roll Call

April 4, 2016 -- Medicare officials on Monday shaved their estimate for an expected increase in payments next year for insurer-run Advantage plans, but allowed a longer transition to reimbursement changes in a program in which some retirees benefit from contributions by their former employers.

The average base payment increase for each person covered by Advantage plans in 2017 will be little changed from this year at 0.85 percent. That will rise to about 3.05 percent after accounting for additional payments allowed in the system, said Sean Cavanaugh, the director of Medicare, on a conference call with reporters. This is less than an earlier proposed increase of 1.35 percent in base payments and total increase of 3.55 percent that Centers for Medicare and Medicaid Services (CMS) had suggested in February. The change is due largely to new calculations regarding risk adjustment factors, CMS officials said.

In the past, unlike this year, CMS officials' final version had provided more funds for insurers in the final policy than in the proposed version.

CMS also said that there will be a two-year transition to the new payment approach for what are called employer-group waiver plans. There's been considerable opposition to proposals to overhaul the employer-group plans, which critics have said could make it more difficult for firms to offer this coverage. Under the new policy, the costs of these plans will be tied more to the cost of other Medicare Advantage plans, which don't have the retiree subsidies. About 3.2 million people are enrolled in these employer-group waiver plans.

The eight House lawmakers with the most influence over Medicare last month questioned CMS' plan to change the approach for the employer-subsidized Advantage plans. The signers of this letter were Ways and Means Chairman Kevin Brady, R-Texas, and the ranking Democrat on that committee, Sander M. Levin of Michigan; Energy and Commerce Chairman Fred Upton, R-Mich., and the ranking Democrat, Frank Pallone Jr. of New Jersey; Pat Tiberi, R-Ohio, chairman of the Ways and Means health subcommittee and the ranking Democrat, Jim McDermott of Washington; and Joseph R. Pitts, R-Pa., the chairman of Energy and Commerce's health subcommittee and the panel's ranking Democrat, Gene Green of Texas.

"We are concerned that the proposed changes to the methodology may harm employers' ability to provide retiree benefits through a consolidated health plan encompassing both Medicare benefits and supplemental retiree offerings," the lawmakers wrote.

An annual flurry of intense lobbying has developed around Medicare's attempts to refine its Advantage payment policies. The program is popular with lawmakers in both chambers and parties.

Many older Americans are attracted to the Medicare Advantage program because it can offer extra benefits, such as dental care, that the traditional program doesn't offer.

America's Health Insurance Plans, an industry trade group, has worked to build an active network of supporters through its Coalition for Medicare Choices. Separately, the nonprofit Better Medicare Alliance does similar work on behalf of insurers Aetna, Humana and UnitedHealth as well as medical specialty and business groups.

Also working to block reductions to Medicare Advantage is the nonprofit conservative American Action Network. This group last month announced a $500,000 ad campaign to target lawmakers, with an aim of stopping the proposed changes to the Advantage plans to which employers contribute.

By Kerry Young, CQ Roll Call

April 7, 2016 -- Congressional advisers on Thursday approved recommendations for overhauling Medicare's fragmented approach to paying for treatment for people recovering after hospital stays for serious surgeries and illnesses.

Members of the Medicare Payment Advisory Commission (MedPAC) voted unanimously by a show of hands to approve a report on the initial steps needed to move toward creating a unified payment for so-called post-acute care. They discussed the broad themes of this work, but left many of its details to be revealed when the report is published in June.

MedPAC member Jack Hoadley described the commission's report as a guide for a future overhaul of payments for post-acute care.

"I hope it does happen and that it does happen as quickly as possible," said Hoadley, a Georgetown University researcher.

Medicare payments for post-hospital care more than doubled, to $59 billion, between 2001 and 2013 despite concerns about fiscal waste. The absence of clear guidelines on appropriate post-hospital care is seen as one of the reasons for this growth. People can be assigned fairly randomly now to care in one of four tracks: skilled nursing centers, specialty inpatient rehabilitation centers, long-term care hospitals and services provided at home. Medicare often pays more in certain settings for care of similar patients, without establishing if there is an advantage to the more expensive care. 

Medicare officials and lawmakers may want to use an overhaul of payments to shift the program's goals, according to MedPAC commissioner William J. Hall, a geriatrician and professor at the University of Rochester. An overhauled approach may need to weigh more carefully how well people maintain the abilities of daily life. 

"The purpose of health care is really to help people stay independent," Hall said Thursday.

Among the ideas discussed at the meeting was the possible need for a measure of hospital readmissions for frail people treated in post-acute settings.

Congress and Centers for Medicare and Medicaid Services (CMS) may act more quickly to overhaul post-acute payments than would be expected under the framework that lawmakers created last year in legislation (PL 113-185) that stretches the timetable of an overhaul into the next decade. MedPAC members previously raised concerns about this timeline.

The law mandates MedPAC to publish ideas for a payment overhaul--through the report the panel approved Thursday--by June 2016. The Department of Health and Human Services then must issue another report by 2022. MedPAC must respond by around 2023 with a design for a new post-hospital payment.

Lawmakers in search of an offset for a future budget deal next year or beyond may be tempted to mandate changes in post-acute care that could save Medicare funding and allow more spending elsewhere in the federal government. For now, Congress seems unlikely to soon take up legislation specifically to make major changes in Medicare, despite the deep interest of House Ways and Means Chairman Kevin Brady, R-Texas, in the field of post-acute care.

CMS could take the lead in these efforts.

Its Comprehensive Care for Joint Replacement Model addresses one of the biggest areas in post-acute care, which is how people on Medicare recover after hip and knee replacements, the most common inpatient surgery among people on Medicare. The program paid more than $7 billion for more than 400,000 procedures in 2014.

Medicare on April 1 kicked off this program that compels about 800 hospitals in 67 regions of the country to eventually face financial risks and rewards based on how well people fare after hip and knee replacements. The hospitals' future pay will reflect how well their elderly and disabled patients are judged to fare in the 90 days after their discharges after surgery. 

Surgeons and hospitals until now have not needed to figure out which forms of post-hospital care work best for elderly people, said Blair Childs, senior vice president at Premier Inc., an alliance of about 3,600 U.S. hospitals and 120,000 other medical providers.

The test program provides an incentive for hospital officials to determine which approaches to recovery after orthopedic surgery most benefit their patients, Childs said. It should foster a greater coordination of care.

"It's breaking down the silos that exist in Medicare that are completely illogical," Childs said in an interview last week. "It's forcing the payment system to match the patient experience."

By Kerry Young, CQ Roll Call

April 7, 2016 -- A panel of advisers to Congress on Thursday voted in favor of packages of recommendations intended to restrain growth in Medicare's drug spending, including moves to scale back a safety-net program for insurers and cut dispensing fees for costly treatments given in doctors' offices.

The Medicare Payment Advisory Commission (MedPAC) faced special challenges in creating recommendations on drug policy as part of a wide-ranging June report to Congress about the federal health program, said panel chairman Francis J. Crosson.

"We have much more complicated work to do" in this part of Medicare due to a lack of direct control over prices, he said.

Health insurers manage the Part D drug plans and negotiate prices with drugmakers. The program, Medicare's biggest drug expense, may cost an estimated $98 billion this year, up from about $84 billion in 2014. 

For the roughly $22 billion worth of drugs administered annually in doctors' offices through the Part B program, Medicare pays a roughly 4 percent premium to the average sales prices set by pharmaceutical companies.

Among the recommendations approved by MedPAC Thursday was a bid to lower over time what's known as reinsurance for Part D to 20 percent from 80 percent. This program was designed to aid insurers during the startup of Part D plans in 2006, providing a cushion for so-called catastrophic cases where a customer's spending on medicines crosses a set threshold. Last year, that was about $7,000.

MedPAC staff and members previously had questioned whether the current level of support for insurers who underestimate their Part D customers' needs is blunting their incentive to negotiate the best bargains on drug prices and take steps to encourage their members to use generic drugs.

The panel also offered a recommendation that could aid insurers in their negotiations with drugmakers. MedPAC suggested having Medicare remove two kinds of drugs, antidepressants and immunosupressants, from the classes of medicines that are required to be broadly covered, which limits insurers' ability to drive bargains.

This proposal drew an immediate protest from advocacy groups such as the Partnership for Part D Access, which includes medical societies and drugmakers Johnson & Johnson and Lundbeck among its members. In a Thursday statement, the group noted that a similar move to reduce the so-called protected classes had been proposed and defeated in 2014.

MedPAC members on Thursday also approved a recommendation to scale back on certain dispensing and supplying fees for the Part B drugs, with savings from this proposal estimated at less than $1 billion over five years.

Lawmakers are likely to pay heed to the recommendations on drug pricing in MedPAC's June report. Public concern is rising about the cost of medicine, with average 6.3 percent annual growth in prescription spending for the United States from 2015 through 2024, according to the Centers for Medicare and Medicaid Services (CMS).

Congress may eventually consider new laws to address this growth, although no major legislative action is expected before the November election. The Obama administration is looking to kick off a fairly ambitious test program for outpatient drugs in its final months. CMS last month unveiled a proposal for changing how Medicare pays for Part B outpatient drugs in much of the country through a test program. It's unclear whether CMS will be able to implement this plan, which drew significant opposition.