By Drew Armstrong, CQ Staff

November 21, 2006 -- Talk of warding off scheduled cuts for Medicare's physician payment rates took a pessimistic turn Tuesday after lawmakers said a post-Thanksgiving lame-duck session is likely to be brief. On top of that, any effort to add that proposal to a package of tax "extenders" might be risky at best.

The tax extender legislation (HR 5970) has been described as relatively benign and is ensured of passage on its own. For that very reason, some see it as a vehicle for physician payment legislation.

But if lawmakers try to attach non-germane amendments in a last-ditch effort before Congress adjourns, an overburdened legislative vehicle could overturn and wreck—especially if lawmakers see it as the only moving item in a short December session. The tax extender bill is a collection of continuations for expiring or expired tax breaks such as the credit for research and development expenditures and the deduction for college costs.

Lawmakers will not have the option of using the remaining fiscal 2007 appropriations bills as an alternative hitch for such last-minute priorities, after the announcement that they would be punted to the 110th Congress. Instead, legislators will pass a short-term continuing resolution, or stopgap spending measure, when they return the week of Dec. 4.

Given that they plan to adjourn quickly afterward, that leaves little time to pass legislation intended to stop cuts to Medicare physician pay rates.

If the payment cuts go through on Jan. 1, doctors will see a 5.1 percent reduction in payments to treat Medicare patients. The American Medical Association (AMA) says a reduction that size would propel many doctors to stop accepting new Medicare patients, potentially limiting seniors' access to health care.

Optimism over the issue has slowly declined since September, when GOP lawmakers said they would work until Christmas Eve, if necessary, to find a solution. But over the past several weeks, especially since the midterm election losses of the Republican majority in both chambers, the outlook has gone from somewhat hopeful to notably less so.

With the remaining days of the GOP majority in the 109th Congress ticking down, Republican aides were less certain of passing legislation to stop the cuts.

One GOP aide said Tuesday, "While I'd say getting something done is possible, I wouldn't say it's probable."

Not all House Republican aides were pessimistic about the payment cuts' future, however, with one saying, "If I had to handicap it, I would say the odds are better than even that we can get this done."

Outside the halls of Congress, the prevailing view is that the momentum for stopping the cuts has stalled.

"I think the rationale for staying around in a lame duck has diminished dramatically" with Monday's announcement about the continuing resolution for the remaining spending bills, said John Rother, director of policy and strategy for the seniors advocacy group AARP.

Rother sees a parallel with the delay in dealing with appropriations measures.

"If you're going to put off the finances of the federal government until next year, I think pushing a [Medicare doctor payment legislation] off until next year is more likely as well," he said.

The physicians' lobby hasn't given up on eliminating the cuts, however. A week ago, the AMA ran ads in the Washington Post and USA Today, as well as in several inside-the-beltway publications, to push for such legislation in the lame duck session. So far this year, the AMA has spent $750,000 in its lobbying efforts.

And even though some House and Senate aides say the issue is still on the table, lawmakers have yet to decide on how they would pass the legislation or what it would look like.

Questions to be resolved include whether the deal would be for one or two years, and whether it would be a freeze or a modest increase. In September, the Congressional Budget Office estimated the five-year cost of a 1 percent payment increase in 2007 as $13 billion.

As part of any deal, doctors would likely be required to report data on the quality of the care they provide starting in July 2007 in order to avoid the 5 percent cut, a health care analyst said.

Possible sources of funding to pay for avoiding the cut include a $10 billion fund to boost participation by regional managed care plans in the Medicare program, and Medicare payments for oxygen therapy, according to the analyst.

So far, an agreement has yet to be worked out among the chairmen of the Senate Finance Committee, the House Ways and Means Committee, and the House Energy and Commerce Committee.

"The biggest challenge is getting consensus from all three committee chairmen on a package, both with respect to the doctor portion and offsets," the analyst said.

John Reichard contributed to this report.

By John Reichard, CQ HealthBeat Editor

November 22, 2006 -- Congress should pass legislation permitting the IRS to help identify Medicare beneficiaries who might be eligible for the comprehensive drug benefit provided to low-income seniors. That's the recommendation of a new report by the Office of HHS Inspector General (IG) Daniel R. Levinson, which voiced doubt about the effectiveness of a mailing to 19 million beneficiaries this year to try to find and enroll those beneficiaries.

But the current chairman of the Senate Finance Committee and the acting administrator of the Centers for Medicare and Medicaid Services (CMS) stopped short of endorsing the idea, saying only that it merits consideration.

To qualify for the low-income benefit, a beneficiary's annual income in 2006 must be below $14,700 for an individual and $19,800 for a married couple. Assets also must be below $10,000 for an individual and $20,000 for married couples.

Some 7.2 million Medicare beneficiaries were declared automatically eligible for the low-income benefit, also known as the "LIS," which stands for low-income subsidy. Those beneficiaries already had demonstrated they met income criteria for other federal programs for low-income Americans, such as Medicaid. But many millions more were not a part of those programs, and federal officials and grass-roots organizations faced a major challenge this year trying to find and enroll them.

To that end, the Social Security Administration (SSA) mailed forms to 19 million Medicare beneficiaries to apply to confirm that they meet the asset criteria. But only 2 million of the 6.1 million beneficiaries Medicare estimated would be eligible for the coverage were actually approved, according to the study.

The effort was hamstrung by the inability of SSA to check IRS files to identify beneficiaries with incomes low enough to qualify for the coverage, the IG's report said. The IRS said it was barred from providing the data because of a federal law prohibiting disclosure of tax return information.

After it was denied access to IRS data, SSA tapped other federal data sources to come up with names of Medicare beneficiaries who might be eligible. The information included Railroad Retirement Board pension, Veterans Administration benefits, and Social Security benefits. The resulting mailing "was an overestimate of the actual potentially eligible population," the IG's report noted.

"The identification of these beneficiaries would allow for a more targeted and effective outreach effort to ensure that all those who qualify for the subsidy receive this important assistance," the IG's report said. "Without knowing the true population of potentially eligible beneficiaries, it is difficult to judge the success of current outreach and enrollment efforts."

But among the questions that might have to be addressed about such legislation is how effective IRS data would be in finding those eligible because low-income Americans may not have to file tax returns. And privacy worries may be another consideration, even though the data would only be shared among federal agencies.

Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) issued a statement on Tuesday saying that "making sure beneficiaries in need get extra help with their drug costs is a key goal of the Medicare prescription drug program." Both the Centers for Medicare and Medicaid Services and SSA have worked hard on outreach, but "despite those efforts, we know that many beneficiaries who will qualify haven't applied," Grassley said.

If followed, the IG's recommendation might help SSA "focus its limited resources more effectively," he noted. But Grassley stopped short of endorsing the recommendation. "Any change in rules regarding disclosure of tax information must be considered very carefully," he said, adding that he would work with CMS, SSA and the IRS to explore the idea.

Acting CMS Administrator Leslie V. Norwalk said "we greatly appreciate the OIG considering changes that would help us reach the LIS beneficiaries because they are very difficult to reach. We would work with the Treasury Department to consider the recommendations," she said.

By John Reichard, CQ HealthBeat Editor

November 21, 2006 -- Brand names and low premiums, not coverage in the dreaded "doughnut hole," were the big draws in the "robust" market that developed for Medicare drug coverage in its first year. That was the finding of a study released Tuesday that claimed to be the most detailed look yet at enrollment in the drug benefit created under of the Medicare overhaul law (PL 108-173).

The doughnut hole is the informal term for the portion of the standard Medicare drug benefit in which beneficiaries must pay 100 percent out of pocket when their prescription costs reach between $2,250 and $5,100. Critics of the benefit for months have slammed the doughnut hole as a major flaw in the benefit, but those criticisms appear to not have made a major impact yet on market choices.

Some critics say Medicare has not done enough to make beneficiaries aware of the gap. And many of the plans offered to beneficiaries do not have gap coverage.

"Few enrollees chose plans with gap coverage in 2006, which could be a concern for those with relatively high drug costs who might be better off in a plan with full-year coverage and no gaps, despite the higher premium," said the authors of the study, which was posted Tuesday on the Web by the policy journal Health Affairs.

The Medicare drug benefit, or Part D, market consists of "PDPs," or Prescription Drug Plans offered to beneficiaries in traditional Medicare, and "MA-PDs," or drug benefits offered through health plans in the Medicare Advantage managed care side of the program.

About 4 percent of the 22.5 million beneficiaries enrolled in PDP or MA-PDs signed up for plans that provide coverage in the gap for both brand-name and generic drugs, according to the study by Juliette Cubanski and Patricia Neuman of the Henry J. Kaiser Family Foundation. Another 8 percent have coverage in the gap for generic drugs only.

The authors said 10.9 million of the 22.5 million people enrolled in Medicare would be liable for all prescription drug costs in the gap. The remainder either have gap coverage or are among the 9.3 million low-income beneficiaries qualifying for subsidized coverage in the gap.

According to the Kaiser Foundation, four million beneficiaries actually will have spending that reaches the coverage gap in 2006.

The study found that 72 percent of enrollment is concentrated in 10 companies. United HealthCare plans accounted for 25 percent of Part D enrollment, and Humana accounted for 19 percent.

The study noted that the private sector responded strongly to the market created by the Medicare law. Many analysts were skeptical that private plans would enter the Part D market, but with the federal government on the hook for a portion of any losses that they incurred, many plans jumped in.

In 2006, 266 firms took part in the Part D market, offering a total of 3,873 plans. And next year "the Part D market is expanding rather than contracting, with 17 national plan sponsors—up from 9 in 2006—and 31 percent more stand-alone PDPs nationwide," the researchers said.

The strong response by insurers "is at least partly attributable to their drive to gain market share in Medicare given limited opportunities for growth in other sectors and to payment policies that encourage plan participation and mitigate risk, including reinsurance and risk corridors," the study said. Risk corridors provide for partial government payment of losses sustained by plans.

By John Reichard, CQ HealthBeat Editor

November 20, 2006 -- It's a myth that Medicare pays the added care costs associated with infections acquired in the hospital, according to research findings released at news conference Monday. Hospitals lose an average of $26,839 per case in which patients develop a "central line infection" in which a catheter is pushed through a vein into the heart, according to the data.

And the data show that infection is largely the result of the processes of care followed by a hospital in treating patients, rather than the medical condition of the patients themselves when they are admitted to the hospital, researchers said at the briefing.

The findings demonstrate that thousands of lives and billions of dollars could be saved each year through mandatory public reporting by individual hospitals of their infection rates, the researchers said. The issue is ripe for congressional action that would slash national health spending, said Marc P. Volavka, executive director of the state agency that last week became the first in the nation to publicly post data on surgical infection rates at individual facilities.

"This one is here for the taking—and it's billions and billions of dollars," said Volavka of the Pennsylvania Health Care Cost Containment Council. But the hospital industry and the Bush administration have shied away from endorsing a program along the lines of the one in Pennsylvania that reports the actual number of infections at a hospital.

The data released Monday, published in the American Journal of Medical Quality, "will do much to help explode the myth that infections . . . cannot be prevented," said Dr. David B. Nash at the press briefing. Nash is chairman of the Department of Health Policy at Philadelphia's Thomas Jefferson University and the editor of the medical journal.

Many in health care believe that infections acquired in the hospital are "almost an expected outcome from the care of seriously ill patients, especially those in our high-technology settings, such as the operating room, intensive care unit or renal dialysis center," Nash said in an editorial accompanying the studies.

But a study by Richard P. Shannon, professor of medicine at the University of Pennsylvania, "found that there was no link between the severity of illness on admission and the risk" of central line-associated bloodstream infections, Nash said. Although a second study did find that factors associated with patients themselves—their age, for example, or whether they had diabetes—helped predict their risk of developing infections from surgical incisions, factors associated with the hospital's care itself were much more important in predicting that risk. Christopher S. Hollenbeak, a professor at Pennsylvania State University's College of Medicine, led the second study.

The study led by Shannon examined 54 cases of patients at Allegheny General Hospital who developed central-line associated bloodstream infections. On average, the hospital received a payment of $64,894 for treating the patient. The actual costs of care, however, were $91,733, resulting in a net loss per patient of $26,839.

The Pennsylvania data released Nov. 14 on numbers of infections at individual hospitals in the state also showed large outlays for treatment. A total of 19,154 cases of hospital-acquired infection occurred in the state in 2005, according to the data. Hospital charges for treating the patients totaled $3.5 billion. The death rate for patients with a hospital-acquired infection was 12.9 percent, compared with 2.3 percent for patients without an infection.

The rates of infection in Pennsylvania , if applied to other states, suggest that nationally 400,000 cases of hospital-acquired infection occur each year, resulting in 50,000 deaths and $20 billion in payments for treatment, Volavka said Monday.

Nash and Volavka said that requiring hospitals around the country to publicly post their infection rates would spur their executives to quickly take steps to improve care. Shannon attributed high infection rates to the complex and variable processes that go into treating patients. But if those processes were standardized and routinely followed, infection rates would plummet, he said.

Shannon said his team observed many different ways in which operating room personnel put on gowns and gloves to guard against infection. In many instances, nurses didn't have everything they needed to prepare for surgery and had to run in and out of the operating room to get equipment, trips that added to the risk of infection, he said.

"If you eliminate the variation, I think you can eliminate 85 percent of cases" of infection, Shannon said.

Volavka said that if Congress were to deny Medicare payments for cases of hospital-acquired infection, hospital executives would start scrambling today to figure out how to eliminate them. Nash said Medicare could begin by refusing to pay for "sentinel events"—cases that should never occur, such as treating the wrong limb, or incorrectly identifying a patient, for example. The researchers also urged increased federal funding to help states gather data on numbers of infections and to study improved processes of care.

William Vaughan, a senior policy analyst at Consumers Union, said the issue is ripe for congressional action. Sixteen states have laws requiring some form of disclosure, three others have laws requiring studies of disclosure and two more have laws requiring gathering of infection data without public reporting, he said.

"With 20-plus state laws that vary, . . . we're rapidly reaching a point and getting enough provider experience that national legislation should occur fairly soon," he said. "It's time to complete the circle. We are going to keep pounding it state by state, but we are going to seek a national solution."

The Centers for Disease Control and Prevention (CDC) has offered states pursuing mandatory reporting advice on how to conduct those programs but has not endorsed them. A spokesman referred a reporter to a Feb. 28, 2005 statement on the issue by Dr. Denise Cardo, director of CDC's Division of Healthcare Quality Promotion.

"The goal of mandatory reporting is to provide consumers with information they can use to make informed health care choices," Cardo said. "We don't know yet if public reporting will reduce the number of infections, but we do support collecting information that can lead to improvements in patient safety."

An official with the American Hospital Association said the lobby is focusing its efforts on disclosure on data hospitals are reporting for Medicare's Hospital Compare Web site. "We are not reporting the same [data] yet" as Pennsylvania, said the official, Nancy Foster, vice president for quality and patient safety quality.

Hospitals are reporting data for the site—which allows the public to compare individual hospitals on a variety of measures—on three measures relating to preventing surgical infections, Foster said. One measure assesses the extent to which a hospital gives patients antibiotics within an hour before surgery, another examines whether the right antibiotic was administered, and a third looks at whether the antibiotic was properly discontinued within 24 hours after surgery.

But Volavka said reliance on those "process" measures by hospitals and the Medicare program is "disappointing." There are many elements that go into whether or not a patient develops a surgical infection, and those processes are just one of many steps along the way to preventing infection, Volavka said. "Outcome" measures should be used instead of process measures, he said.

By Cheyenne Hopkins, CQ Staff

November 20, 2006 -- The federal government could learn a lesson or two from recent state initiatives that extend health care to the uninsured, but sustainable funding is still necessary to move these types of experiments forward, policy experts said at a discussion Monday.

At the forum, hosted by the Alliance for Health Reform and The Commonwealth Fund, health care experts from Massachusetts, Utah, and Vermont described recent initiatives taken in their states to extend coverage to uninsured residents.

A Massachusetts law that was signed on April 12 will require the state's 6.4 million residents—550,000 of whom are uninsured—to obtain health care coverage by July 1, 2007. The law also will subsidize premiums on a sliding scale for people earning below 300 percent of the federal poverty level.

The Vermont Legislature in May created a comprehensive health insurance plan for uninsured residents under which the state provides premium assistance to lower-income individuals to keep premiums low. Under this plan, everyone who is uninsured for 12 months will have access to—and will help pay for—a comprehensive health insurance package. The benefits will be administered through the private market and premiums will be based on income.

And in Utah, the state is using a Medicaid waiver to implement its Primary Care Network (PCN), which provides primary care and preventive services to low-income adults who otherwise would lack health insurance through increased cost-sharing for already eligible Medicaid beneficiaries.

Alice Burton, vice president of AcademyHealth, where she leads the Robert Wood Johnson Foundation's State Coverage Initiatives program, said at the discussion that states are raising hopes and expectations for solving the uninsured problem.

She outlined some trends in the state initiatives, such as the fact that comprehensive changes take time; plans often expect shared financial responsibility; expansions in coverage often rely on private insurers to deliver services; and voluntary purchasing pools, as a stand-alone strategy, are not likely to be sufficient to expand coverage.

She encouraged the federal government to enact and fund health care strategies that build on successful state plans, because not all states will be able to implement comprehensive change due to variations such as the number of uninsured in the state and the resources to address the problem. Burton said states going forward with these initiatives will be the "laboratory of democracy" for other states and the federal government, but she added that sustainable funding is essential for states to implement changes. States and the federal government need to be able to implement and fund the strategies of successful state programs, she concluded.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

November 21, 2006 -- The expected chairman of the House Ways and Means Health Subcommittee told lobbyists Tuesday that he is ready to begin oversight hearings into the Medicare drug benefit starting as early as February.

In a meeting at the lobbying firm Patton Boggs LLP, Rep. Pete Stark (D-Calif.) also said that Democrats are mulling over three options for changing the drug benefit, according to sources familiar with the meeting.

The first would be to strike language in the Medicare overhaul law (PL 108-173) that prohibits the Secretary of the Department of Health and Human Services (HHS) from negotiating drug prices on behalf of Medicare beneficiaries. The second—which Stark said he is leaning toward—would direct the HHS Secretary to do a first round of price negotiation on covered drugs, but drug plans could negotiate prices below that amount.

The third option would be to create a government-run option for Medicare drug coverage that would compete with private plans.

Stark stressed that any decision about how to proceed on Medicare would be done in collaboration with the House Energy and Commerce Committee, which shares Medicare jurisdiction with Ways and Means, and incoming House Speaker Nancy Pelosi (D-Calif.).

Pelosi has said that when Democrats assume control in January, she wants the chamber to act within 100 hours to give the HHS Secretary the power to negotiate drug prices for Medicare recipients.

In his meeting at Patton Boggs, Stark lamented what he described as a lack of collaboration between Republicans and Democrats in the lame-duck session and said he does not know what if any action may be taken to avert a 5 percent cut in Medicare physician payments set for Jan. 1.

Stark also dubbed pending health care information technology legislation "hollow" and said he wants the government to help finance a move to health IT among providers.