By John Reichard, CQ HealthBeat Editor

September 28, 2006 -- Saying he wants to "start with a clean sheet of paper," House Energy and Commerce Committee Chairman Joe Barton (R-Tex.) said Thursday that he wants to work over the next month and a half to come up with a deal that will overhaul the Medicare physician payment system.

The fact that efforts are coming to naught to pass legislation on the issue by the end of the week did not keep Barton from speaking boldly about what he aims to accomplish by the end of the year.

The big hurdle in the overhaul of a Medicare doctor payment formula that has lined up doctors for cuts totaling 40 percent over nine years is repealing the sustainable growth rate (SGR) formula, but Barton told a House hearing that he's ready to make a run at it.

The Congressional Budget Office has estimated the 10-year cost of repealing it at over $200 billion, but Barton was undeterred. "I am more than willing to support totally scrapping the SGR system and holding doctors harmless for that deficit," he said. "It's kind of funny money, anyway. It's an accounting mechanism. I think we can wipe it off the books and start from scratch."

Barton outlined other elements of his thinking on revising payments that sounded far more feasible. "I'm prepared to put on the table a multi-year approach that holds physicians harmless, at a minimum, and provides some incentives for some additional payments based on what physicians themselves voluntarily do to advance quality and efficient care," he said, adding "we'll go from there."

Barton addressed a hearing by the Energy and Commerce Health Subcommittee called to refocus efforts in preparation for the lame-duck session of Congress that starts Nov. 13.

Rep. Charlie Norwood (R-Ga.) appeared ready to fly into the breach with Barton. "He's committed to getting this done by Christmas, and it's all right with me if it's Christmas Eve," Norwood said.

Subcommittee Chairman Nathan Deal (R-Ga.) said he's game for the fight. "For us, we have to find offsets," he said, referring to cuts that likely would have to be made elsewhere in Medicare to pay for erasing a Jan. 1 scheduled cut of 5.1 percent and cuts of a similar size for many years thereafter. Finding offsets is "hard," he said, "but as I told Chairman Barton, so what if it's hard?" Norwood knows where he aims to go to erase physician payment cuts—"HMOs have to cough up some," he said.

Ranking Energy and Commerce Member John Dingell (D-Mich.) had the same target in mind. "Of course some will say that paying physicians will cost too much," he said. "But why can't we simply shift the billions in overpayments to HMOs to pay an adequate wage to doctors? There is absolutely no reason that HMOs should receive more generous payments than a senior's doctor."

The hearing saw considerable support for the idea of a committee-produced bill that would modify a three-year payment fix floated by Barton by shortening it to two years. The American Medical Association (AMA) expressed support for the idea, saying doing so would allow a higher payment increase than the modest increases floated by Barton in recent days.

The draft Barton proposal would increase Medicare payments to physicians by 0.5 percent in 2007, 2008, and 2009.

The proposal would pay physicians an additional 0.25 percent in 2008 and again in 2009 if they participated in a local utilization management program and either took part in a Medicare program for reporting on the quality of their care; participated in a pilot project to have a single primary care doctor coordinate care of the chronically ill; or reported on the use of at least three "structural" measures, such as electronic systems to follow up on referrals and abnormal test results, registries to track patient compliance with recommended treatments, and programs to reduce medical errors.

Norwood said he thought there would be bipartisan support on the committee for a deal blending the Barton proposal and a bill introduced by Dingell (HR 5916) that would provide for two years of stable payments for doctors while Congress thoroughly explored the creation of a pay-for-performance system.

Norwood said maybe the three years should be shortened to two years and doctors should be given increases on 1 percent in each of the two years instead of 0.5 percent annually over three years.

Subcommittee members and the various physician groups seemed to be in sync on the broad outlines of how to proceed—a multi-year agreement to keep doctors from being cut, development of a voluntary system of reporting data on quality of care during that period, and a study by the Centers for Medicare and Medicaid Services of what should be done to replace the SGR.

Doctors also expressed frustration over the hits they are taking under the payment system while, in their view, other sectors avoid cuts.

"Only physicians and other health professionals face steep cuts under this flawed payment formula," said AMA Board Chairman Cecil Wilson in written testimony. "Other providers have been receiving updates that fully keep pace with their costs (and will continue to do so under current law), including Medicare Advantage plans which are already paid 11 percent in excess of fee-for-service costs," he added. "Physicians and other health care professionals (whose payment rates are tied to the physician fee schedule) must have payment equity with these other providers. Physicians are the foundation for our nation's health care system, and thus a stable payment environment for their services is critical."

Deal expressed some reservations about a pay-for-performance system in which the government decided what constituted better performance. Another approach is to measure doctors on quality and give that information to consumers to decide which physicians to go to for treatment, he suggested.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

September 29, 2006 -- Medicare beneficiaries will be able to choose from a wider selection of prescription drug plans in 2007 that on average will cost about $24 a month, the same as this year, government officials said Friday. But beneficiaries now enrolled could face higher premiums next year and should reevaluate their plans to see if they still cover the drugs they need at a price they can afford, analysts said.

"There have been some pretty significant changes in the marketplace," said Dan Mendelson, president of Avalere Health, a health care consulting firm. "People are going to think 'I went through all this rigmarole to sign up for a plan' and they're done, but they're not. They're going to have to do it all again."

According to an Avalere analysis, beneficiaries in most states will have between 50 and 60 prescription drug plans to choose from. Beneficiaries in most states will have about 15 or 16 plans that will offer drug coverage through the Medicare drug benefit's "doughnut hole," or coverage gap; but most of those plans will only cover generics in the gap, Avalere found.

Some consumer advocates predicted that the large amount of choices available for Medicare drug coverage could be difficult for beneficiaries to sort through during the enrollment period that begins in mid-November and ends Dec. 31. The 2006 enrollment period lasted six months.

"The incredible confusion that persisted in the past year about the Medicare drug program is about to get worse," said Ron Pollack, executive director of Families USA, a liberal-leaning consumer group. Pollack and others also said beneficiaries might find that the cost of their low-cost plans will increase in 2007.

"In Maryland, for example, the lowest Humana plan premium will rise from $6.44 to $13 per month—doubling seniors' costs. As another example, the premium for the lowest-price plan for a seven-state region in the upper Midwest will increase more than fivefold," Pollack said in a statement.

Others said the abundance of choices plus the stability in the average monthly premiums was a plus. "The announcement today . . . shows once again that when competition is injected into Medicare, seniors win," said House Ways and Means Committee Chairman Bill Thomas (R-Calif.), a key architect of the Medicare drug law (PL 108-173).

Medicare officials said Friday that while beneficiaries will have about the same number of plans to choose from, more will offer enhanced benefits from the standard Medicare drug package, such as eliminating the doughnut hole, where beneficiaries must pay their own drug costs between when costs reach $2,250 and when catastrophic coverage begins at $5,100.

"The Medicare prescription drug benefit...is saving seniors an average of $1,200 a year and it just keeps getting better," said Department of Health and Human Services Secretary Michael O. Leavitt. "In 2007, there will be more plans with coverage in the gap, more drugs covered, and more help from Medicare in choosing the plan that's best for you."

More than 80 percent of Medicare beneficiaries will have access to premiums lower than they paid in the program's first year, with many plans having monthly premiums of $20 or less, Leavitt said.

Medicare drug plans will cover 13 percent more drugs than before, with fewer plans using drug utilization techniques, such as prior authorization or requiring that beneficiaries first use a less expensive drug before paying for a more expensive one. But drug industry analysts stressed that plans also may have changed formularies and dropped certain drugs they previously covered.

Enrollees who are happy with their current coverage can stay in that plan when the 2007 Medicare enrollment period begins Nov. 15, but they should evaluate their current plans and compare them with what is available for 2007, said Centers for Medicare and Medicaid Services Administrator Mark B. McClellan. Plan details will be available in mid-October.

Both stand-alone Medicare prescription drug plans as well as "Medicare Advantage" plans that cover both prescription and medical coverage will offer doughnut hole coverage.

McClellan said monthly premiums for plans providing drug coverage through the gap will range from zero in some Medicare Advantage plans to $100 or more in some stand-alone prescription drug plans.

Very few drug plan providers left the Medicare market in 2007, McClellan said, but the plan choices have shifted, with fewer plans offering basic coverage and more offering enhanced coverage due to guidance from CMS that encouraged plans to offer no more than two options unless a third provided expanded coverage, such as filling in the doughnut hole.

Karen Ignagni, president and chief executive officer of America's Health Insurance Plans, a trade group representing health care insurers, said lower premiums for Medicare drug coverage will help reduce the program's cost. "The program will now cost 25 percent less than earlier projections, providing tangible evidence that the Medicare prescription drug benefit is more affordable than ever for both seniors and taxpayers," she said.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

September 28, 2006 -- Nearly 90 percent of America's 9 million uninsured children age 18 and younger live in families where at least one parent works, according to a report released Thursday by the Campaign for Children's Health Care.

The study also found that 30 percent of those uninsured children live in families where both parents work but cannot afford to purchase health care coverage.

While two-thirds of uninsured children qualify for health care coverage under either Medicaid or the State Children's Health Insurance Program (SCHIP), a variety of obstacles often prevent that coverage from happening, Campaign for Children's Health Care officials said at a news conference.

"The story of uninsured children is a story of children in families where parents are working," said Ron Pollack, executive director of Families USA, one of the coalition's more than 50 organizations representing health care, consumers, and children.

Going without health coverage can have devastating effects on children because it often means they do not receive preventive care, which helps avoid medical problems. Uninsured children are three times as likely as children with health insurance to not have seen a doctor in the last year, the report found, and are 13 times as likely as insured children to not have a regular physician to call for both routine and emergency medical care situations.

The coalition's report follows Census Bureau figures released earlier this month, which found that the number of children under 18 without access to health coverage grew in 2005 for the first time in seven years. Last year, 11.2 percent of children in that age group had no coverage, compared with 10.8 percent the previous year, according to Census figures.

The Coalition report analyzed the recent Census data and other federal statistics to determine the extent and scope of uninsured children in America.

The study found wide variations in uninsured children among states—Texas was the highest at 20.4 percent and Vermont the lowest at 5.6 percent. The study also concluded that more than 60 percent of uninsured children are racial or ethnic minorities, and more than two out of every three are in families with incomes below 200 percent of the federal poverty level, or $33,200 in annual income for a family of three. Only 8.5 percent of uninsured children are in families with incomes above four times the federal poverty level.

While many of the nation's uninsured children qualify for coverage from either Medicaid or SCHIP, sometimes states' outreach efforts are not as aggressive as they should be, Pollack said. He also said state enrollment procedures are "not always the simplest" and that children can sometimes lose benefits unless their parents re-enroll them each year. "We have enormous churning and turnover at the end of the enrollment period," he said.

Pollack and other coalition members said they will continue to monitor how states implement the Medicaid provisions of a budget savings bill, signed by President Bush in February (PL 109-171), to see how they impact coverage for the 25 million children now enrolled in Medicaid.

The advocates also said they plan to keep a close eye on Congress' reauthorization of SCHIP next year, in particular how lawmakers plan to deal with a funding shortfall of as much as $900 million for fiscal 2007. Average SCHIP enrollment is about four million children and more than six million enrolling for some part of the year.

Centers for Medicare and Medicaid Services spokeswoman Mary Kahn said Thursday that Congress would have to take action to correct any shortfalls, much like they did in the budget-savings package. Kahn also added that states will have new SCHIP allotments when the 2007 fiscal year begins Oct. 1. Also on Thursday, Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) introduced legislation that he said would appropriate new funds and redistribute unspent money from states with an SCHIP surplus to states expected to run out of money. The redistribution, Grassley said, would apply for only half of the fiscal 2007 year.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

September 25, 2006 -- By 2012, all Americans should have access to an affordable, easy-to-navigate health care system that provides them with medical coverage no matter where they work or live, according to a national commission charged with developing health care recommendations for the president and Congress.

Other recommendations the Citizens' Health Care Working Group released Monday include guaranteeing financial protection against very high health care costs and defining a set of core benefits and services for all Americans. Promoting efforts to improve the quality and efficiency of care given to Americans was another priority, as was restructuring end-of-life care so that patients can have increased access to such services in the environment they choose.

The group was created by the 2003 Medicare drug law (PL 108-173). Within 60 days from receiving the report, congressional committees with jurisdiction over health care matters must hold hearings on the recommendations.

Over 18 months, the group heard from 6,650 people who attended 84 community meetings across the nation. More than 14,000 people responded to an Internet poll. In interim recommendations the group released in June, the panel recommended universal health care by 2012.

Sen. Max Baucus of Montana, the Senate Finance Committee's ranking Democrat, said Monday that the report highlighted important issues that need quick attention, not only to improve the health of the American public but also to improve the nation's competitiveness abroad.

"Changes are absolutely necessary to get Americans the affordable, accessible, and high-quality system they deserve," Baucus said in a statement. "This report recommends improving the health care system by more effectively spending the nation's 2 trillion dollar health budget, and in my view the pay-for-quality approach is the right way to begin. We need to reward providers for quality of care and get the most bang for our health care buck."

Ron Pollack, executive director of the liberal-leaning consumers group Families USA, said the report "reinforces the urgency of finding solutions to the growing problem of people without heath coverage. We hope the Working Group's recommendations will inspire policymakers to take immediate and appropriate steps to achieve high-quality health care for everyone. "

Not all groups, however, were as enthusiastic about the report's recommendations. "Unfortunately, while well-intentioned, the Working Group's final recommendations have such serious flaws that they fail to provide the country with any meaningful guidance on how we might improve our health care system," said Sarah Berk, executive director of Health Care America, an advocacy group promoting private sector health care.

Janet Trautwein, chief executive officer and executive vice president of the National Association of Health Underwriters, called the report's recommendations "oversimplified" and said they would do little to help improve health care.

"I have grave concerns about the development of a core benefits package for all Americans and strongly oppose the federal government getting into the health benefit mandating business," she said.

By John Reichard, CQ HealthBeat Editor

September 27, 2006 -- If Michael O. Leavitt is right, the nation must get a grip on rising health costs or its long tradition of economic prosperity will die. Proven quality-measurement tools must be used to get more value for the U.S. health care dollar, yet only about one of four Americans benefits from those tools, according to a study released Wednesday by the National Committee for Quality Assurance (NCQA), an organization that accredits health care plans and measures their quality.

The study was the tenth of NCQA's annual assessments of health plan quality, and two things are clear from the decade of annual reports: The measures are linked to an abundance of data suggesting they improve care and save lives; and much of American health care nevertheless goes unmeasured, with little evidence that will change dramatically any time soon.

Yet the stakes are critical as the United States struggles to compete in a world economy where other nations have far lower health costs, Department of Health and Human Services Secretary Leavitt said Tuesday in a speech to health information technology executives.

"We now live in a global marketplace," he said. "We can no longer afford, nor can we remain prosperous if we continue on the glide path that we're on. This is the kind of problem that, allowed to continue unchanged, could have a Draconian impact on the future of this country."

Eliminating wasteful health care spending by creating a marketplace that responds to price and quality is essential if the nation is to continue to lead the world economically, Bush administration officials say. But while quality measurement helps to add the "value" to health care spending that administration officials say is key, measurement lags, quality analysts say.

"The past decade has demonstrated the benefits of measurement, reporting, and accountability, but three out of four people don't enjoy those benefits today," NCQA President Margaret E. O'Kane said at a press briefing Wednesday. "It's time to ask, 'Why not?' "

NCQA requires HMOs to report data on dozens of quality measures in order to gain accreditation. Public reporting of the data allows consumers to compare plans and becomes a powerful prod for plans to improve.

According to the findings of the study, children in commercial health plans that report data on NCQA measures are three times as likely to receive all recommended immunizations, compared with eight years ago. Diabetics were more than twice as likely to have their cholesterol controlled to recommended levels as in 1998. More than 96 percent of patients who suffered a heart attack were prescribed beta-blockers to prevent a second heart attack—up from 62 percent in 1996—saving between 4,200 and 5,300 lives over that period.

Improvements in high blood pressure control saved between 47,800 and 83,000 lives, based on trends over the 1999–2005 period, the study said. In 1999, 39 percent of plan enrollees with high blood pressure had it properly controlled, compared with 68 percent in 2005. Those gains are particularly important, O'Kane said. "There's a long litany of body systems that fail because of high blood pressure," she noted.

NCQA said that overall, long-term improvements on NCQA measures by plans that publicly reported performance data saved between 53,000 and 91,000 lives and prevented "hundreds of thousands of serious complications."

Not all of the latest data is positive, however. Breast cancer screening rates have declined for the past three years, apparently because of news reports raising questions about the value of screening, O'Kane said. "The case has become more cloudy," but "this is a lifesaving technology," O'Kane emphasized.

Mental health care remains poor, the NCQA report said. "Patients on antidepressant medication are about as likely to receive appropriate care today as they were in 1999. Similarly, patients hospitalized for mental illness are only marginally more likely to receive appropriate follow-up care."

But overall, commercial plans saw improvement on 35 of 42 clinical measures.

The bad news is that HMOs are predominantly the plans undergoing measurement and their enrollment is declining as more Americans switch to PPOs. A total of 76.5 million Americans are in "accountable" plans, while 173 million are in an unaccountable system, NCQA said.

A Boost From Bush?
An executive order issued by President Bush on Aug. 22 will help boost the number of Americans in accountable health plans, administration officials say. The order requires health plans doing business with Medicare, the Federal Employees Health Benefits Program, and military health care programs to report data on the cost and quality of their care, among other requirements. The Centers for Medicare and Medicaid Services is requiring PPOs in Medicare to publicly report data on quality measures developed by NCQA in 2007.

And the Office of Personnel Management, which runs the federal employees health program, is requiring PPOs and other fee-for-service plans serving 9 million federal employees to report data on five quality measures in 2007 for public release in 2008.

The Bush initiative also calls on employers to issue the same demands for cost and quality data. Leavitt expressed conviction that the combination of payer pressure, the development of quality measurement standards, increased posting of the prices of health care, and the development of standards to make health care information systems compatible are all combining to transform the health care "sector" into a "health care system."

The way Leavitt sees it, "this is the marketplace beginning to organize itself." Employers want badly to control health care costs. "Their hair is on fire" and they see rising costs as a threat to their economic competitiveness, he says.

"This is a very important moment in health care history," Leavitt told the information technology executives. "All of the components of change are in place." He added that "every component of society is feeling anxiety about health care right now. And I believe that it is putting us in a position where we're prepared to do things that in the past we haven't."

But conviction does not make it so. Quality measurement in PPOs, for example, may occur only gradually, and the number of measures applied to PPOs is limited right now. In some cases, contracts between PPOs and doctors might only allow access to claims data for quality measurement purposes, when a fuller picture of quality requires looking at medical records as well. For example, claims data might show an enrollee's blood pressure has been measured but not that it has been controlled.

But NCQA is applying more pressure to obtain quality data from PPOs. In 2005, it called on them to voluntarily report data on NCQA quality measures, and a total of 80 commercial PPOs providing care to 14 million Americans did so. It now plans to mandate that they provide the data in order to receive accreditation and to urge employers to demand that accreditation. That's the pattern it followed with HMOs, most of which report quality data. But with more than six of 10 Americans in PPOs or other health plans, NCQA has a long way to go.

By Rebecca Adams, CQ Staff

With health care costs near the top of personal economic issues for many families, a new survey is not likely to provide much comfort. Almost half of employers reported that it is "very" or "somewhat likely" they will increase the amount that employees pay for health insurance in the coming year, according to the survey, released by the nonpartisan Kaiser Family Foundation.

Twenty-one percent of employers found it "very" likely that they would ask workers to share more of the burden for health insurance, while 28 percent found it "somewhat" likely.

The positive news in the report was that health insurance premiums rose 7.7 percent from the spring of 2005 to 2006, a lower rate than in previous years.

Karen Ignagni, president and chief executive officer of America's Health Insurance Plans, said in a statement on Tuesday, "Our community has reinvented cost-containment strategies and is deploying a new generation of tools and techniques to stretch health care dollars and mitigate the burden of rising medical costs."

However, the increase still outpaced the growth of workers' earnings.

"Nobody should be celebrating too wildly," said Drew Altman, Kaiser Family Foundation president and chief executive officer, adding that families "are still feeling the pain" of health care costs that have risen steadily in recent years.

Health insurance premiums for workers and their employers have skyrocketed by 87 percent since 2000, the survey found, while workers' earnings have risen by 20 percent over the same time period. That gap is leading consumers to rate health care costs as one of their top economic concerns in polls.

However, the pocketbook concerns are not translating into political liabilities for incumbents this year. Concerns about national security, Iraq, and economic issues in general are weighing more heavily on voters' minds.

Smaller firms are feeling the strain of higher health care costs more than large corporations. Premiums rose by 8.8 percent at small firms but 7.0 percent at large firms, the survey found.

Interest in consumer-driven health plans, a topic of much discussion among Washington policymakers because its growth is a priority for President Bush, may be slightly, but not significantly, higher than last year. Currently, about 4 percent of workers get their care through consumer-driven plans, such as health reimbursement accounts and health savings accounts. In 2005, 2.4 million Americans received their care through consumer-driven health plans, compared with 2.7 million in 2006.

A smaller percentage of workers are getting benefits from their employers, which bears out data released by the U.S. Census Bureau earlier this year. The proportion of workers receiving benefits from their employees has fallen from 65 percent in 2001 to 59 percent in 2006.