SEPTEMBER 28, 2005 -- Democratic Senators Hillary Rodham Clinton of New York and Barack Obama of Illinois offered legislation Wednesday that they hope will help move Congress out of its stalemate on medical liability overhaul.

Their bill would provide liability protections for physicians who disclose medical errors to patients and would encourage early settlement before litigation is pursued.

It also would encourage physicians to apologize for errors—with the aim of reducing the number of medical malpractice lawsuits and forcing physicians to learn from their mistakes, Clinton said.

"Medical errors are out of control in this country," Obama said, adding that medical errors are the eighth-leading cause of death in the United States, taking 98,000 lives a year. "This is unacceptable and we need to do more."

The measure would call for the creation of a National Medical Error Disclosure and Compensation (MEDiC) program. Injuries would be reported to a designated officer, who would determine whether they resulted from medical errors. If an error occurred, the hospital or physician would have to disclose an account of the incident to the patient and enter into compensation negotiations.

The program also would require the hospital or participating physician to apologize to the patient. The apology would be kept confidential and couldn't be used in any legal proceedings as an admission of guilt, according to the bill.

Health care providers currently are not guaranteed such protection, so they are reluctant to report their errors, Clinton said, which then fuels malpractice lawsuits.

"Instead of keeping patients in the dark . . . we should encourage honesty and accountability," Obama said. "When patients hear the truth, they sue less. The reward is the settlement and health care professionals can learn from their mistakes."

He pointed to the University of Michigan Hospital System's full disclosure program, which reduced the number of pending lawsuits against the hospital by half and cut the average defense litigation cost by $30,000.

"We want to build on the results of the local level and make it national," Obama said.

The bill does not include medical malpractice caps, an issue pushed by President Bush and GOP lawmakers but which has stalled in Congress. Republicans say the caps would curb rising malpractice awards, which have caused malpractice premiums to escalate and driven physicians out of the medical business. Democrats say caps are unfair to injured patients.

The House in July passed legislation (HR 5) that would cap noneconomic damages awarded in medical malpractice suits for pain and suffering at $250,000, but the bill has not moved forward in the Senate.

Similar bills have passed through the House eight times before, but the issue has not been brought up for a vote in the Senate.

Obama said he was confident his bill would move through Congress more easily because the disclosure angle will gain support from lawmakers in both parties.

SEPTEMBER 28, 2005 -- Lawmakers pressed ahead Wednesday with more efforts to aid victims of hurricanes Katrina and Rita, clearing legislation that would give assistance to people with disabilities and sparring with the Bush administration over the broader question of providing health care for displaced residents.

At a Wednesday hearing on Gulf Coast rebuilding efforts that included testimony from Louisiana Gov. Kathleen Babineaux Blanco, members of the Senate Finance Committee continued to knock the administration for opposing their legislation (S 1716) to expand Medicaid to cover low-income residents of the Gulf Coast region affected by the hurricanes.

Chairman Charles E. Grassley, R-Iowa, introduced the bill (S 1716) on Sept. 15. It would provide five months of Medicaid coverage to anyone from Louisiana, Mississippi, and parts of Alabama whose income is below the federal poverty level. Unlike traditional Medicaid—in which states share the costs—the federal government would pick up the tab for the hurricane victims. The Congressional Budget Office has scored the measure's cost at $8.9 billion.

Administration officials oppose the bill, saying they prefer to provide waivers to individual states so they can address the problems themselves and avoid the precedent of expanding eligibility for the entitlement program.

At the hearing, Grassley underscored his displeasure with the administration's handling of the Medicaid question by hinting the issue could complicate the committee's work on a package of spending cuts the White House wants and that GOP leaders hope to advance this year. Grassley said getting the package—expected to include up to $10 billion in cuts over five years to Medicaid—through his committee would be "very difficult" if the hurricane bill is not given sufficient backing, particularly because leaders have encountered problems getting GOP moderates behind those plans to trim Medicaid spending.

Sen. Trent Lott, R-Miss., pledged to forge ahead with the Grassley legislation despite the administration's objections. He encouraged White House support for their effort, but said they would try to pass the bill "with or without" it.

"I'm going to look after our people first," Lott said.

Whether Grassley and Lott have enough votes to get the bill through the Senate is unclear. An effort to bring the measure to the floor by unanimous consent the last two nights was blocked by Republican senators who objected to its costs.

Lawmakers and administration officials spent the early part of the week trading blunt letters outlining their positions. On Sept. 27, Grassley and other lawmakers sent a letter to Health and Human Services Secretary Michael O. Leavitt pointing out senators' problems with the administration's proposal to provide Medicaid waivers to states. They wrote the costs of caring for evacuees would be charged back to their home states.

"The States of Louisiana, Mississippi and Alabama have suffered tremendous devastation that will drastically affect their ability to meet state obligations," the lawmakers wrote. In addition, they expressed concern that evacuees would not get equal coverage if states offered different benefits.

In a letter to Senate leaders, Leavitt explained his opposition to Grassley's bill, namely that it would allow people who would typically be ineligible to join the Medicaid rolls.

"The legislation requires a new Medicaid entitlement for Katrina survivors . . . . This new program is unnecessary," he wrote.

Funds for the Disabled
Also Wednesday, the House passed and the Senate cleared by voice votes a bill (HR 3864) that would give preferences to hurricane-affected states in receiving additional funds from the Rehabilitation Services Administration. The legislation, sponsored by Rep. Charles Boustany Jr., R-La., was passed under suspension of the rules, which limits debate, bars amendments, and requires two-thirds support for passage.

Typically, the administration provides unused rehabilitation funds to states each fiscal year. The bill would waive a requirement that those additional funds may go to a state only if all other states not receiving the extra money are able to pay for their vocational services. Under the bill, the additional funding has to be used to pay for training, mentoring, or job-shadowing opportunities for people with disabilities.

SEPTEMBER 27, 2005 -- Expanding Medicaid may be one of most important tools lawmakers could use to recover from economic recession, according to a report for the Joint Center for Political and Economic Studies released Tuesday.

The report comes as Hill lawmakers are scrambling to fund Katrina relief and debating a $10 billion reduction in the growth of Medicaid spending as part of the budget reconciliation process.

If Congress decides to place a cap on Medicaid enrollment or federal Medicaid spending, it would not only deny health coverage to low-income and laid-off workers, it could also effect how the country could recover from recession, according to Stan Dorn, an analyst from the Economic and Social Research Institute who co-authored the report.

Dorn's reasoning is that when the economy is weak, more households have low incomes that qualify for Medicaid. As Medicaid enrollment rises, state and federal spending increases, which stimulates the economy as more goods and services are being purchased by the government, the report said.

The report also said Medicaid has an important role as a "fiscal stabilizer."

Medicaid's stimulus to the economy is comparable to the stimulus provided by unemployment insurance, which lessened the loss in real GDP by 15 to 17 percent during the five recessions between 1969 and 1999, the report said.

"A huge problem with Medicaid is that during recession when people need coverage most, that is when Medicaid cuts are most likely to happen," Dorn said.

The study recommends solutions other than Medicaid enrollment caps or federal spending caps. It suggests Congress should automatically increase federal matching payments whenever the unemployment level rises to a certain level.

The study points to the Federal Medical Assistance Percentage (FMAP) enacted in May 2003, which increased the percentage of Medicaid costs paid by the federal government. The study suggests making the increase in FMAP automatic to reflect a certain unemployment rate, which would automatically stimulate the economy when unemployment level is high.

"What we are suggesting is to take the issue out of the hands of the lawmakers and have Medicaid funding automatically be determined," Dorn said. "What economists have been telling us is that if you wait for lawmakers to stimulate the economy, the stimulus can be ill timed."

SEPTEMBER 30, 2005 -- Federal officials announced Friday that all beneficiaries in traditional Medicare will have access to prescription drug plans that fill the so-called "doughnut hole" in coverage—one of the most criticized aspects of the prescription drug benefit offered under the Medicare overhaul law.

The overhaul law (PL 108-173) passed by Congress in 2003 left a gap in drug coverage in which beneficiaries pay 100 percent of prescription costs after they exceed a certain level of out-of-pocket spending and before protection kicks in against catastrophic drug expenses.

The gap means patients hammered with high drug costs year after year would have to pay bigger percentages of their annual drug bills than patients with relatively low yearly costs, said a study published in July in the journal Health Affairs. (See related story, July 12.)

The news, coupled with the low premiums announced last week, is a big boost for the Bush administration after months of fending off Democratic criticisms of Medicare drug benefits under the law. Many Democrats remained concerned, however, that the dozens of coverage options to be offered to seniors will prove overwhelming.

Filling the Gap
In addition to the premiums they will pay for the standard Medicare drug benefit offered under the overhaul law, beneficiaries must pay a $250 deductible, 25 percent of prescription costs between $250 and $2,250, and 100 percent of costs between $2,250 and $5,100. For costs exceeding $5,100, the government picks up 95 percent.

A Kaiser Family Foundation study released late last year estimated that one of every four Medicare enrollees in 2006 would have prescription drug spending high enough to reach the "doughnut hole" between $2,250 and $5,100 in which they would have to pay 100 percent of prescription costs.

Friday's announcement means that beneficiaries will have options to help cover the drug costs that fall into that gap. But there are tradeoffs involved. Plans that offer coverage filling the gap will typically charge premiums of $50 to $60 a month, Centers for Medicare and Medicaid Services Administrator Mark McClellan said in a conference call with reporters Friday. It's also unclear whether gap-filling coverage options would entail paying other types of out-of-pocket expenses that might be higher than in other plans.

Beneficiaries who prefer paying lower premiums can stick with options that typically would not fill the gap.

Even so, the announcement underscores the wide variety of types of coverage, premium, and deductible options Medicare enrollees will be offered starting Saturday October 1 for the year 2006. Plans are allowed to vary coverage design as long as it meets a certain actuarial minimum, and McClellan emphasized Friday that competition is spurring them to offer more generous benefit designs.

Some plans are angling for a competitive edge by substituting fixed co-payments for the 25 percent of prescription costs beneficiaries pay under the standard benefit for drug spending between the $250 and $2,250 mark. As an example, McClellan said the beneficiary in those cases would pay a $5 co-payment when filling a prescription for a generic drug, $15 for a brand name drug on the plan's formulary, and $40 for a non-formulary brand name drug.

"Everyone in Medicare, no matter what their income or how they get their health care, can choose coverage that reflects what they want, including lower cost, more complete coverage, and convenient access," McClellan said.

Beneficiaries also have the choice of getting their drug coverage through Medicare Advantage plans rather than through traditional Medicare. Many of those plans—HMOs and PPOs—won't charge any premiums for drug coverage.

McClellan said Friday that 70 percent of Medicare beneficiaries would have access to Medicare Advantage plans charging no drug coverage premiums. In some local markets, Medicare Advantage plans will charge no drug premiums for coverage that fills the "doughnut hole" gap, added CMS spokesman Gary Karr.

Too Many Options?
But all of the options mean greater potential for beneficiary confusion, Democrats said Friday.

In California, for example, 47 drug plans will be offered in traditional Medicare along with 113 Medicare Advantage drug plans, said Rep. Pete Stark, D-Calif. (many of the 113 will be offered only regionally, however).

Sen. Max Baucus, D-Mont., said he welcomes the news about affordable coverage but cautioned plans against confusing seniors.

"Over 40 benefit designs will be offered from 21 different organizations in Montana," he said. "The number of benefits designs will greatly exceed 70 in several other states, like California, Florida and New York."

Baucus also worried about the marketing of drugs plans, which can begin Oct. 1 by print or radio or—for the first time under Medicare—direct telemarketing to beneficiaries' homes. He urged firms to "market their plans appropriately and strictly within the guidelines established by the program."

Karr noted that plans cannot telemarket to beneficiaries on the Federal Trade Commission's "do not call" list.

SEPTEMBER 29, 2005 -- Despite continuing uncertainty about whether Congress will act in coming weeks to block scheduled Medicare physician payment cuts, the Medicare program itself is moving ahead administratively with plans to overhaul the troubled physician reimbursement system. Centers for Medicare and Medicaid Services Administrator Mark B. McClellan said at a House hearing Thursday afternoon that his agency is setting up the "infrastructure" to allow doctors to voluntarily report data next year on the quality of care they provide.

Payment is likely to be reformed over the next several years by tying higher reimbursement to higher performance on selected measures of quality. While the money part of that equation is in question right now, McClellan said the quality measures needed in such a system are falling into place.

McClellan told the House Ways and Means Health Subcommittee that his people "have made considerable progress creating consensus around a set of primary quality measures." While measures for care provided by specialists are generally thought to lag considerably behind those for primary care, McClellan reported "substantial progress" on the specialty front as well.

"We now have 66 quality measures for 29 specialties," he said. "Those 29 specialties represent about 80 percent of Medicare physician spending." Although many of the standards have not gone through a consensus-setting process, they are "still of great value," McClellan said. "Physician reporting of these measures will help foster their acceptance in the medical community and help prepare physicians for their eventual adoption."

McClellan also said existing claims forms could be used as the vehicle to report the quality data, and that they also could be the basis for payment based on quality data.

The hearing shed little new light on prospects for legislation that would erase scheduled payment cuts and replace them with modest increases.

The American Medical Association is seeking a permanent overhaul of the payment system that would erase not only cuts next year but cuts scheduled for the six years after that. As part of that effort, the AMA is hoping CMS will agree to remove drug spending from the Sustained Growth Rate (SGR) formula used to calculate physician payment rates—a technical change that would sharply reduce the cost of a legislation permanently overhauling the SGR payment system.

McClellan said the agency is about to begin reviewing comments on that proposed change as it prepares to publish a final rule on physician payment next month. He noted that even if the agency were to remove drug spending from the formula retroactively, payment cuts would not be averted over the next two years. That step would lessen the legislative cost of a permanent overhaul, however.

To the extent that a "physician payment fix" came up at the hearing, the talk was about a two-year postponement of cuts. McClellan said that would give Congress time to review pilot projects that he said show considerable savings squeezed from payment incentives to improve the quality and efficiency of care.

But Rep. Pete Stark, D-Calif., showed no sense of urgency about fixing the SGR formula and the scheduled cuts it is generating. Stark mocked the idea that doctors are taking a financial hit under the SGR, saying that while payments per service might drop, doctors can more than make it up on the growing volume of services they provide to Medicare patients.

Yearly incomes of physicians are growing at a robust yearly rate, he said, adding that providing fee schedule payment increases for doctors will increase Medicare premiums for doctor care.

Robert Berenson, M.D., a former Medicare official, cautioned lawmakers that payment based on quality measures by itself would not control the volume of physician services and spending. Doctors who fail to provide quality care would take a hit of 1 or 2 percent to payments for a service, but could erase the impact by ordering an extra test or seeing another patient, he said.