By Mary Agnes Carey, CQ HealthBeat Associate Editor

JULY 20, 2006 -- Medication errors are harming at least 1.5 million people a year, according to an Institute of Medicine (IoM) report released Thursday.

Treating medication errors in hospitals alone costs an estimated $3.5 billion yearly and another $887 million for Medicare beneficiaries. Neither figure, however, accounts for lost earnings or compensation for pain and suffering, according to the report prepared by the IoM, a division of the National Academies.

Studies indicate that 400,000 preventable drug-related injuries occur each year in hospitals, with patients subjected on average to one medication error each day. Another 800,000 medication errors occur in long-term care settings, and roughly 530,000 occur just among Medicare beneficiaries in outpatient clinics, according to the IoM committee, which also noted that the figures are likely underestimates.

The report, mandated by the 2003 Medicare drug law (PL 108-173), lists a series of recommendations for health care providers, patients, federal agencies, and drug manufacturers to help reduce medication errors. Key steps include all prescriptions to be written electronically by 2010 and changes to be made to the labeling, naming, and packaging of drugs to prevent errors.

"Our recommendations boil down to ensuring that consumers are fully informed about how to take medications safely and achieve the desired results and that health care providers have the tools and data necessary to prescribe, dispense, and administer drugs as safely as possible and to monitor for problems," said committee Co-Chair J. Lyle Bootman, dean and professor, College of Pharmacy, University of Arizona, Tucson. "The ultimate goal is to achieve the best care and outcomes for patients each time they take a medication."

One of the best ways to reduce medication errors, researchers found, is to have patients and health care providers operate more as partners, with a particular emphasis on patients playing a greater role in their health care.

"Doctors, nurses, pharmacists, and other providers must communicate more with patients at every step of the way and make that communication a two-way street," a summary of the report states. Patients should know which medications they are taking and be told about the risks, including what to do if they experience a side effect.

The IoM committee recommends that the Food and Drug Administration, the National Library of Medicine, and other government agencies work together to standardize and improve medication information leaflets provided by pharmacies, make more and better drug information available over the Internet, and develop a 24-hour national telephone helpline that offers consumers easy access to drug information.

Senate Finance Committee Chairman Charles E. Grassley, R-Iowa, said the IoM's finding that many medication errors are due to confusion about a drug's name, label, and packaging should spur the FDA to take action.

"Drug names look and sound alike, labels are cluttered, and warnings are given inadequate prominence," Grassley said in a news release.

FDA officials said Thursday that the agency has taken several steps over the last year to address many of the recommendations in the IoM report.

For example, FDA said in a statement, the agency in January called for a major revision to the format of prescription drug information, to give health care providers clearer prescribing information. The agency also said it will continue to evaluate its process for evaluating drug approvals if a drug's name, label or labeling will cause confusion and possibly medication errors. "We plan to issue guidance for industry on drug naming, labeling and packaging as recommended in this report," FDA said.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

JULY 21, 2006 -- Within one week, the Centers for Medicare and Medicaid Services (CMS) has twice defended its sweeping plan to change the way Medicare pays for inpatient hospital procedures as lawmakers and medical groups continue to push for a one-year delay.

In a July 20 letter to Sen. Rick Santorum, R-Pa., that CMS made public late Thursday, Administrator Mark B. McClellan wrote that proposed changes to Medicare's hospital inpatient prospective payment system (IPPS) to be issued Aug. 1 "will reflect modifications as appropriate to achieve the goal of smooth and effective implementation" based on a review of comments the agency has received. Santorum and 52 other senators, as well as 189 House lawmakers, had written to McClellan on July 13 asking for the payment changes to be delayed for one year.

McClellan's letter, which was sent to all the lawmakers, came just three days after CMS published a news release that detailed why the agency believes the payment changes are necessary. The Bush administration wants to ensure that taxpayer dollars "are spent wisely so Medicare is not overpaying for some services, while underpaying for more severely ill patients and those with more complex illnesses," the agency stated, adding that payments to all hospitals would increase by 3.4 percent in fiscal 2007.

Both CMS moves follow pressure by Capitol Hill lawmakers, a coalition of medical device makers, hospitals, and medical specialty and patient groups that have urged a one-year delay for implementation of the changes. Among other concerns, the groups and legislators have questioned the accuracy of the methods used to calculate the proposed changes, and they say that hospitals need more time to adjust their planning and business operations for the changes, of which some are scheduled to take effect Oct. 1, 2006.

While the letter and news release show the administration pushing back against key lawmakers and powerful health care interest groups, McClellan's wording that the agency is "acutely aware of the disruptions that could occur if major changes are made too quickly or inappropriately" also might mean CMS is leaning toward a delay.

"McClellan's letter suggests that the proposal will be phased in," Paul Heldman, health care analyst for the investment firm Citigroup, wrote in a July 20 report. "We also infer from the letter that Medicare will propose at least a modest delay in the start of the new payment system."

At issue are two parts of the rule proposed by CMS for updating Medicare inpatient payments to hospitals. One is switching to "cost-based payment weights" in an attempt to make payments more closely reflect a hospital's actual cost of delivering care to a patient rather than its charges for doing so. The second calls for adoption of "severity-adjusted payments," which seek to pay hospitals less if a patient with a particular condition is relatively healthy otherwise or more if the patient is relatively sick and therefore more costly to treat.

The proposed rule calls for the cost-based payment weights to begin Oct. 1, 2006, and the severity adjustments to start one year later.

In his letter, McClellan said CMS had received comments "on how the recommended reforms can be improved, what transition steps are needed to avoid any disruptions from sudden changes in the payment system, and what steps can be taken to limit any potential short-term impact of the proposal. "

By Mary Agnes Carey, CQ HealthBeat Associate Editor

July 21, 2006 -- As physicians warn Capitol Hill that seniors may have a tough time finding care if Medicare doctor payments are reduced, a Government Accountability Office (GAO) report released Friday concludes that no more than 7 percent of Medicare beneficiaries nationwide have had major difficulties accessing a physician.

In general, the GAO found that an increasing proportion of beneficiaries from April 2000 to April 2005 received physician services and an increasing number of physician services were provided to beneficiaries who were treated.

Two other access-related indicators—the number of physicians billing Medicare for services and the proportion of services for which Medicare's fees were accepted as payment in full—increased from April 2000 to April 2005. "These increases suggest that there was no reduction in the predominant tendency of physicians to accept Medicare patients and payments," GAO concluded.

Since the early 1990s, lawmakers, health care analysts, and physician groups have raised concerns that Medicare's attempts to control spending on physician services by limiting pay increases could hurt beneficiaries' access to physicians. Those concerns, GAO noted, were heightened in 2002 when Medicare's formula for setting physician fees required a 5.4 percent reduction in fees to help moderate rapid spending increases for physician services.

In January 2005, GAO reported that based on beneficiaries' utilization of physician services, the 2002 fee cut did not appear to have an immediate impact on beneficiary access to physician services and that access increased from April 2000 to April 2002. The report published Friday, which was mandated as part of the Medicare drug law (PL 108-173), looked at several areas, including trends and patterns in beneficiaries' perceptions of the availability of physician services from 2000–04, beneficiaries' use of physician services from 2000–05, and indicators of physician supply and willingness to serve Medicare beneficiaries from 2000–05.

But the American Medical Association cautioned that the GAO analysis "should not be interpreted as an improvement in access." The AMA's response, included in the GAO report, said increases in the utilization of physician services could be the result of beneficiaries growing sicker, the substitution of physician services in doctors' offices for care in the hospital or other settings, or beneficiaries taking advantage of new Medicare-covered benefits.

Separately on Monday, 80 senators sent a letter to Senate Republican and Democratic leaders urging them to increase Medicare physician payments before Congress adjourns in October. If Congress does not act, the Medicare sustainable growth rate will cut payments to physicians and health care professionals by about 5 percent as of Jan. 1, the senators warned.

The senators' letter also noted that a 2006 American Medical Association survey found that if there are payment cuts in 2007, 45 percent of physicians said they planned to decrease the number of new Medicare patients they accept and 43 percent will decrease the number of new Tricare patients they accept because Tricare ties its physician payment rates to Medicare's rates. Tricare is the health insurance program for military personnel and their families.

By John Reichard, CQ HealthBeat Editor

JULY 18, 2006 -- Cuts in Medicare payments for medical imaging that are scheduled to start Jan. 1 took a beating at a House hearing Tuesday, with only one or two lonely voices offered in defense.

The cuts were mandated in a provision slipped into a fiscal 2006 budget savings law (PL 109-171) that will trim $2.8 billion from those payments over five years. But a number of lawmakers and witnesses at the House Energy and Commerce Health Subcommittee hearing said the cuts should be delayed until 2009, pending a Government Accountability Office study of their impact.

Rep. Charlie Norwood, R-Ga., who appeared to be grimacing through testimony by an administration official explaining the cuts' rationale, led the critical questioning.

Noting his own recent brush with death from lung disease and opining that medical imaging probably helped save his life, Norwood fired off a series of questions aimed at showing that Medicare can't be confident the cuts won't slice into medically necessary treatment because the agency doesn't know enough about the reasons for rapid increases in imaging costs.

Dissatisfied with answers provided by Herb Kuhn of the Centers for Medicare and Medicaid Services (CMS), Norwood said pointedly, "It seems to me that it's pretty important that we understand totally and completely what these increases are all about."

Norwood then turned to Medicare Payment Advisory Committee Chairman Glenn Hackbarth, asking him what proof he could offer to justify his testimony that the recent increase in imaging stemmed in part from an effort by some doctors to supplement their incomes.

When Hackbarth began to talk about pitches made to physicians at conferences about using imaging to increase income, Norwood interjected that proof is "pretty important because you're saying to us this is one of the major causes" of increased imaging costs. Hackbarth then said he wanted to make it clear that he wasn't saying this was true of all physicians, but Norwood again cut him off, saying, "I speculate you're right—I want proof."

"I can give you examples of it happening," Hackbarth continued.

"OK, then I need you to give me examples of it not happening," Norwood interjected, saying Congress needs to know how often doctors order imaging to boost income, whether rarely or routinely. "We have cut what we pay for imaging, which is absolutely vital to health care today, and the patient is maybe the one in the end who is not going to fare well under this.

"You say you have a study, but you and I have been in this town long enough to know you can make a study say anything you want it to say," Norwood added.

Rep. Lois Capps, D-Calif., told Kuhn that she is worried the cuts will affect cancer patients' access to radiation therapy. Asked how access will be maintained, Kuhn said that issue will be part of the discussions CMS aims to elicit on the cuts in publishing a proposed rule later this summer on how to implement them.

Kuhn also said it is unclear in the budget savings law whether the cuts are to apply to therapeutic as well as diagnostic imaging, and that CMS wants to obtain comment on that matter with the proposed rule.

Rep. Anna G. Eshoo, D-Calif., warned against a meat-axe approach to imaging cuts, noting Norwood's suggestion that imaging may have helped save his life and reiterating the doubt that CMS thoroughly understands the impact that imaging cuts would have on savings generated by imaging technology on hospital care.

Manufacturers say imaging saves Medicare large sums by avoiding exploratory surgery and by catching diseases before they grow worse. When Eshoo asked what kind of savings imaging generates, Kuhn said CMS hasn't done a detailed analysis. Eshoo then asked whether the agency had done any analysis, and Kuhn repeated the agency hadn't done a detailed analysis.

Imaging use should not be discouraged without a thorough understanding of its impact, said Edolphus Towns, D-N.Y. "I know we're trying to cut costs . . . but we really have to be careful," he said.

Kuhn noted that imaging spending has been rising at a fast clip. "Between 2000 and 2005, spending for imaging services paid under the physician fee schedule more than doubled from $6.6 billion to $13.7 billion, an average annual growth rate of 15.7 percent. This compares with an annual growth rate of 9.6 percent for all physician fee schedule services."

Spending for "advanced" imaging, a category largely consisting of CAT scans and MRI procedures, grew by 25 percent during 2005 and 82 percent from 2003–05, he said.

Those rapid increases raise questions about overutilization of imaging services, Hackbarth testified. While individual patients' imaging clearly improves medical outcomes, research shows that more imaging spending in the aggregate is not necessarily tied to better outcomes, he said.

Kuhn similarly testified that "the rapid increase in Medicare spending for imaging services, coupled with extensive geographic variation in their use, raises questions about whether such growth is appropriate and whether all imaging services are used appropriately."

In part, the increase in spending relates to the shift in imaging services from hospitals to doctors' offices, which receive higher payments. Kuhn noted that in 2006 the Medicare physician fee schedule pays $903 for performing MRIs, but hospital outpatient departments are paid $506 for doing the same test, with a separate fee paid for interpretation of the image.

The budget savings measure caps imaging payments at the level paid to hospital outpatient departments. Screening and diagnostic mammograms are exempt from the change.

A bill (HR 5704) introduced by Rep. Joe Pitts, R-Pa., that would delay the start of the cuts for two years pending a GAO study drew support from a number of subcommittee members as well as from industry and provider groups.

But Kuhn noted that the imaging cuts are funding part of the cost of erasing Medicare physician payment cuts in 2006. And fast-rising imaging outlays are contributing to the rapid rise in the Medicare Part B premium, he added.

The hearing also featured testimony on the issue of adopting standards to improve the quality of imaging. Robert V. Baumgartner, representing the National Coalition of Quality Diagnostic Imaging Services, urged that all providers be subject to the regulations that govern independent testing facilities. "Imaging equipment and facilities operated by providers not specifically trained to provide complex diagnostic imaging services can be suboptimal with regard to equipment quality, technologists operating the equipment, the quality of images produced, and ultimately interpretation of these diagnostic images," he said.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

July 18, 2006 -- The nation's health care system moved a step closer on Tuesday to electronic health care records becoming standard operating procedure for patients and their health care providers.

Department of Health and Human Services Secretary Michael O. Leavitt announced a list of ambulatory, or outpatient, electronic health record systems that have been approved by a federally sanctioned panel charged with setting standards for such products. The Certification Commission for Healthcare Information Technology's seal of approval will give providers "peace of mind to know they are purchasing a product that is functional and interoperable and will bring higher quality, safer care to patients," Leavitt said in a statement.

President Bush and many lawmakers on Capitol Hill have said electronic medical records will reduce health care costs and improve patient care. Bush has said he wants most Americans to have an electronic medical record within 10 years. Having federal health care programs—the largest purchasers of health care services—adhere to a specific set of standards for sharing medical data might spur the private sector to follow.

But some physicians, hospitals, and other providers have been reluctant to invest in electronic health record (EHR) systems, fearing the technology will become outdated and unable to share information with other providers, the essence of "interoperability" that advocates say can reduce paperwork and shave billions off of health care costs.

"Those who are expected to make the investment do not always reap the financial benefit," Leavitt acknowledged during a news conference at George Washington University's Medical Faculty Associates, which adopted an EHR system last year. Leavitt and other speakers sought to assure providers that taking a similar step will save money in the long run. Stephen L. Badger, chief executive officer of the facility, said installing an EHR has eliminated more than $1 million in staff costs and freed up more than 5,100 square feet of space formally designated for paper medical records.

In a statement, American Medical Association Executive Vice President Michael D. Maves said the list of certified vendors is "invaluable" for physicians who must consider several factors such as cost, interoperability, and ease of use when purchasing an EHR system.

Leavitt said HHS would soon publish rules creating exceptions to anti-kickback statutes and safe harbor, and physician self-referral laws, which would allow certain donations of health information technology that might not have been permitted before. Those new rules would allow hospitals and other health care providers and suppliers to take a more active role in contributing to health information technology adoption, Leavitt said.

Eighteen products were certified for use Tuesday while two were still being tested, and other products could be approved later this month, said Mark Leavitt, chairman of the certification commission but no relation to HHS' Leavitt. Mark Leavitt said the panel will certify "health IT" products in three initial phases: the outpatient, or ambulatory electronic records that were released Tuesday; inpatient record certification planned for 2007; and certification of the networks through which records are shared planned for 2008.

Last year, HHS awarded a $2.7 million contract to the panel, a private nonprofit organization, to develop certification standards for health IT products.

But privacy experts have expressed some concerns about EHRs' ability to protect personal data. Dr. Deborah Peel, founder and chairwoman of Patient Privacy Rights, said in May that while her organization sees the merits of EHRs, "they'll only be realized if patients really, really trust that only the people they want to know about them do." Peel also said legislation governing such records should include elements such as audit trails for disclosures and meaningful criminal penalties.

By Michael Teitelbaum, CQ Staff

July 21, 2006 -- Two senators who have experience on health care issues introduced legislation this week designed to deal with catastrophic health care costs.

The bill (S 3701)—introduced Thursday by both of Oregon's senators, Republican Gordon H. Smith and Democrat Ron Wyden—would create up to six pilot projects for which states can apply through the Department of Health and Human Services. These projects would provide basic coverage for the uninsured with additional protection for those with high out-of-pocket health costs.

Wyden noted, "no one should go to bed at night wondering if they are going to lose their home . . . because they or someone in their family had a health care tragedy. Our legislation would bring peace of mind to Oregonians dealing with catastrophic health expenses."

At least two projects would help states create a hybrid health insurance plan that would combine a primary and preventive health care benefit with high-deductible catastrophic coverage. Private insurance providers would be able to market the plans to uninsured individuals and small businesses.

At least two other projects would target catastrophic costs by assisting individuals who have private insurance but have out-of-pocket costs that exceed $10,500 in a given year (the threshold can be as low as $8,000 to reflect a state's average out-of-pocket costs).

In addition, to allow low-income workers to pay for the premiums of these plans, the bill would institute a graduated subsidy. Individuals with incomes at or below 200 percent of the federal poverty level would be eligible for the help.

The bill would allow for catastrophic coverage through high-risk pools, reinsurance mechanisms for small businesses, or other public/private arrangements.

Smith said that with 46 million uninsured people, including 600,000 in his state, and the fact they get their health care from hospital emergency rooms, which are uncompensated for the care, health care is costing state governments, hospitals, and other health care providers millions of dollars. In turn, uncompensated care is a major factor in the form of higher prices for health care services, which insurance companies pass onto their policyholders.

With health costs increasing, small businesses might stop providing health insurance benefits to their employees. This legislation, as Smith noted, might allow a small business, if they had a catastrophic policy for their employees, to offer or extend their health care coverage.