By Mary Agnes Carey, CQ HealthBeat Associate Editor
September 21, 2006 -- House Democrats said Thursday that nearly 7 million Medicare beneficiaries were at risk of falling into the drug benefit coverage gap, while administration and health insurance industry official officials said the number was closer to 3 million.

Within the coverage gap, known as the "doughnut hole," Medicare drug plan enrollees are required to pay a greater share of their drug costs until the program's catastrophic drug coverage begins.

After meeting a $250 deductible, the government pays 75 percent of prescription costs but stops paying altogether when a beneficiary's out-of-pocket spending reaches $2,250. Medicare picks up none of the prescriptions costs between $2,250 and $5,100 in out-of-pocket outlays, after which it pays 95 percent.

In a report released Thursday, House Democrats said that in 26 states, more than 90 percent of beneficiaries are enrolled in drug plans that have a gap in coverage. The report also found that 84 percent of private drug plans offered nationwide have a coverage gap. The study excluded beneficiaries who enrolled in Medicare Advantage coverage—which provides both health and drug benefits—and dual eligibles who receive low-income subsidies.

"Despite Republican claims to the contrary, this report shows that millions of people are likely to fall into the doughnut hole, leaving them without coverage when they need it most," said Rep. Pete Stark of California, the ranking Democrat on the House Ways and Means Health Subcommittee. "The opportunity to purchase plans that fill that hole is a mirage."

Centers for Medicare and Medicaid Services Administrator (CMS) Mark B. McClellan said the Democrats' findings are based on a 2004 study "that everyone knows is outdated" and was done before the latest estimates of the drug benefit's cost. He also said that many Medicare beneficiaries have selected drug plans that cover the drug benefit's deductible and coverage gap.

Separately Thursday, America's Health Insurance Plans, a trade group representing health insurers, said health insurance plan data show that about 10 percent of Medicare drug plan beneficiaries have reached the gap so far, with approximately 3 million expected to do so this year.

"Health insurance plans have exceeded expectations by ensuring that millions of beneficiaries receive prescription drugs at lower out-of-pocket costs than previously predicted and by preventing millions from ever reaching the gap," the group's president and chief executive officer, Karen Ignagni, said in a statement.

During an afternoon news conference, McClellan outlined a series of steps CMS has taken to make it easier for beneficiaries to sign up for the drug benefit or change plans when enrollment for 2007 begins Nov. 15.

Changes to Medicare's "Drug Plan Finder," which will be available mid-October, will make it easier for beneficiaries to compare plan features such as prices, benefits, and out-of-pocket costs, McClellan said. Complaint information about drug plans also will be posted on the drug plan finder. The 2007 version of the "Medicare & You" handbook, which explains Medicare coverage and is sent annually to beneficiaries, will highlight preventative services available to beneficiaries.

While 92 percent of Medicare drug plans have received at least one compliance letter from CMS, the number of complaints CMS has received about health plans has declined, McClellan said. In July, CMS received approximately 1.4 prescription drug plan complaints per 1,000 Medicare beneficiaries enrolled in those plans. In June, the figure was 1.7 per 1,000, McClellan said.

By John Reichard, CQ HealthBeat Editor
September 19, 2006 -- GOP pollster Bill McInturff said Tuesday that he doesn't know whether Democrats will regain control of the House or Senate in the November midterm elections but expressed doubt that the Medicare drug benefit would determine any of the races involved.
McInturff, co-founder of the polling and consulting firm Public Opinion Strategies, said the benefit may be a slight negative for Republican candidates but defied the audience at his speech before the Generic Pharmaceutical Association to name a single Democratic candidate who is making the benefit the centerpiece of his or her campaign.

While some observers speculate that seniors in large numbers could turn against the benefit when they enter the "doughnut hole"—that part of the benefit that requires beneficiaries to pay 100 percent of prescription costs—McInturff said only 4 percent to 7 percent of seniors will fall into that gap this year.

The big issue in the election is Iraq, he said, and Republicans may be in trouble because voters are seeking accountability for the war. They want to know what its purpose is and how the United States will be able to withdraw. Because it is a midterm election, voters won't be particularly focused on whether Democrats offer a better alternative on the war, he suggested. "All they've got to do is say they're ticked off," McInturff said of voters. Midterms allow an opportunity to cast protest votes, whereas presidential elections force dissatisfied voters to take the added step of considering whether challengers really offer a better alternative, he said.

Voters also are unhappy about gas prices and health care costs, he said, adding that when voters are asked what they are personally most worried about, they say the price of health care. These negatives in the "national environment" help Democrats, whom he said have the "wind at their backs" going into the midterms.

But that does not mean they will regain control of either chamber, he said. Democrats are operating on "a very small playing field" and Republicans have far bigger campaign war chests. McInturff said he has worked on many a campaign for challengers who look strong in September but eventually fade because they cannot overcome the advantages that money provides incumbents in the closing weeks of a campaign.

McInturff said Democrats face a much tougher time regaining the House than Republicans did in the 1994 midterm elections that saw a massive shift to the GOP. In 1994, there were 52 open seats and 110 competitive races, compared with 32 open seats and 50 competitive races this year, he said. And for Democrats to net six seats in the Senate is "a long stretch," he said, adding that he doesn't expect it to happen.

If Democrats do win big in November, he predicted they will seek to pass legislation granting Medicare the authority to negotiate drug prices paid for the prescription drug benefit. They also will offer costly plans to cover uninsured children and push for passage of legislation allowing importation of low-cost prescription drugs from abroad, he predicted. Democratic plans to cover the insured would mean new reimbursement pressures on providers and drugmakers, he said.

If Republicans retain their hold on the two chambers, new efforts will be made to enact legislation creating association health plans to lower costs of health care to small businesses, he said. Republicans will feel comfortable pushing for AHPs, health savings account tax breaks, and medical liability changes at the federal level but will see much pressure at the state level to adopt other strategies, McInturff indicated.

If Democrats win in the fall, the political environment in Washington will be "nasty" because of partisan sniping, McInturff predicted. Voters will get fed up with the acrimony, decide which party's ideas they prefer, and tilt strongly to that party in the 2008 election, he predicted.

McInturff opined that Arizona Sen. John McCain is likely to win the GOP presidential nomination while New York Sen. Hillary Rodham Clinton is the likely Democratic nominee, with former Virginia Gov. Mark Warner as her running mate. McInturff went one further and predicted McCain will win the election by 5 percentage points.

By Mary Agnes Carey, CQ HealthBeat Associate Editor
September 18, 2006 -- The bipartisan leadership of the Senate Finance Committee has introduced legislation that would give researchers greater access to data on Medicare beneficiaries' use of hospital, physician, and prescription drug services.

Medicare processes 500 million benefit claims a year, and allowing federal, university, and other researchers to analyze that data could help determine the safety and effectiveness of various medical treatments, according to a statement issued Monday by panel chairman Charles E. Grassley (R-Iowa).

"Researchers could help us better understand why services that we know can help people maintain good health are not being used and to develop policies to promote their use," he said.

Max Baucus of Montana, the panel's ranking Democrat, said the measure (S 3987) would allow federal agencies to work together for the first time to evaluate the medical care of a large segment of the population, data that could be used to improve America's health care system.

Grassley and Baucus said they added strong safeguards in the measure to protect beneficiaries' and providers' privacy and confidentiality. Researchers given access to information would be required to meet criteria, including "significant expertise" in analyzing the type of data involved, the senators said in a statement.

The measure would apply to the Food and Drug Administration, the Centers for Disease Control and Prevention, the National Institutes of Health, and the Agency for Healthcare Research and Quality. Researchers would be required to publish their methodology and findings and would be prohibited from selling the data or using them to create any commercial products. Provider-specific information could not be made public.

In addition, the Congressional Budget Office, Congressional Research Service, Government Accountability Office, and the Medicare Payment Advisory Commission would also have access to the data to help fulfill their responsibilities to Congress concerning Medicare.

Other lawmakers are also interested in analyzing Medicare data as a way to improve the efficiency of the nation's health care system. Senate Budget Committee Chairman Judd Gregg (R-NH), introduced legislation Sept. 14 that would allow employers and insurers access to Medicare claims data to study the cost and quality of health care services.

Automakers, business lobbies, insurers, and provider groups, including the American Hospital Association and the American Nurses Association, are backing Gregg's bill.

By CQ Staff

September 18, 2006 -- A coalition of more than 80 health care and consumer groups have asked members of Congress to take "immediate action" to help states avert projected federal funding shortfalls in fiscal 2007 for the State Children's Health Insurance Program (SCHIP).

SCHIP was created in 1997 as part of the balanced-budget law (PL 105-33) to help states provide coverage for children in families with incomes up to 200 percent of the federal poverty level. Since its enactment, the measure has helped reduce the number of uninsured children by one-third, witnesses told the Senate Finance Health Subcommittee in July.

At that same hearing, Centers for Medicare and Medicaid Services (CMS) Administrator Mark B. McClellan said there is no need to worry about funding shortfalls in any state because there are enough surplus funds to distribute to states that need more SCHIP money.

At the end of fiscal 2006, McClellan said, there is a projected total of $4.1 billion in unexpended state allotments that will be available in fiscal 2007. In addition, $5 billion more in federal funding will become available that year, for a total of $9.1 billion.

But in the letter delivered to Capitol Hill on Monday, the groups wrote that if Congress does not take action, "SCHIP funding shortfalls could add even more children to the ranks of the uninsured." Quoting estimates from CMS, the Congressional Research Service, and other analysts, the groups write that up to 18 states face an estimated $800 million to $950 million in total funding shortfalls in 2007.

Groups signing the letter include the American Academy of Pediatrics, the American Public Health Association, and the March of Dimes.

By Mary Agnes Carey, CQ HealthBeat Associate Editor
September 21, 2006 -- A "pay-for-performance" system in Medicare would do more than the current fee-for-service payment system to improve the quality of health care provided to the program's approximately 43 million beneficiaries, according to an Institute of Medicine panel's report released Thursday.

Funding for the program could come from existing Medicare funds, with a reduction in payments, perhaps a 2 percent cut for some services, that would be redistributed to higher-performing providers.

"In general we think this is the way to go in the initial period," said panel member Gail R. Wilensky, senior fellow at Project HOPE. The panel also stated that more money may be needed eventually to encourage greater participation.

Capitol Hill lawmakers are currently considering giving Medicare physicians financial incentives to report data on the quality of care they provide. Many hospitals are already submitting quality data as part of the Medicare drug benefit (PL 108-173).

The shift to pay-for-performance in Medicare should be phased in over time, with participation by small physician practices voluntary for the first three years, the panel recommended in its report to Congress. Larger health care providers and companies that already have the ability to report quality data should be required to do so immediately, the panel said. After three years, the secretary of Health and Human Services should decide if participation must be mandatory for Medicare fee-for-service providers.

While the current Medicare system pays for treating injuries and illness and encourages the use of technology, it often does not reimburse for items such as patient education, which could save money over time, the panel found. Medicare also does not pay for the coordination of care from several different physicians—a common situation for beneficiaries suffering from several chronic conditions—nor does it offer financial incentives to improve a patient's overall health.

Panel members said that one difficulty they experienced in drafting the report was the limited amount of information on existing pay-for-performance programs. While more than 100 performance incentive and physician reward programs have been introduced over the last decade "a robust evidence-base on the effectiveness of these programs is not yet available," the panel concluded.

Health care providers and insurers praised the IOM findings, saying they would improve the Medicare program.

"This is ultimately about better care for Medicare beneficiaries," Jack Ebeler, president and chief executive officer of the Alliance of Community Health Plans, said in a statement. "The quality of care that they receive varies form plan to plan and provider to provider, and falls short of the consistent standards of excellence that we all deserve."

By Mary Agnes Carey, CQ HealthBeat Associate Editor

September 20, 2006 -- A "scorecard" of the nation's health care system released Wednesday gave the United States an average of 66 out of a possible 100 on a series of health quality measures, with those shortcomings costing as many as 150,000 lives and $100 billion annually.

The report, compiled by the nonpartisan Commonwealth Fund's Commission on a High Performance Health System, found that the United States was not the top scorer in any of the 11 international indicators of health outcomes, quality, access, equity, and efficiency, despite the fact that Americans spend more on their medical care than citizens in Germany, Canada, France, Australia, or the United Kingdom.

"You can run but you cannot hide from these massive statistics presented today," commission chairman James J. Mongan said at a news conference.

Commonwealth Fund President Karen Davis said the data demonstrates that "we are not getting good value for that investment," while Senior Vice President Cathy Schoen said the results present "significant missed opportunities to do better."

The United States does a poor job with medical care at birth—ranking last among industrialized countries on infant mortality—and at the end of life as well, the report found. The United States ranks 15th out of 19 countries in deaths potentially preventable with timely and effective medical care. According to the report, 115 people per 100,000 Americans die of illnesses amenable to medical care before age 75, compared with 75 to 84 per 100,000 in the top three countries.

Overuse and waste of medical services, coupled with poor access and variations in cost and quality of care, gave the United States a score of 51 on efficiency. Other problems cited in that category include the fact that the United States is far behind other countries in the use of electronic medical records, wide variances in 30-day hospital readmission rates, and high insurance administrative costs. "We have very high overhead costs to run our insurance system," Schoen said.

Mohit Ghose, a spokesman for America's Health Insurance Plans, a trade group representing health insurers, said recent studies have shown that health insurance plan "administrative expenses" include expenditures for value-added services that are working to improve the quality and affordability of health care services. Those services include prevention, disease management, care coordination, investments in health information technologies and health support, and provider support, Ghose said.

On quality, the United States scored 71, in part because only half of adults received preventative and screening tests according to guidelines for their age and sex. While 87 percent of the nation's top-performing hospitals give heart failure patients written instructions and educational materials at discharge, only 9 percent of the lowest-performing hospitals do so.

On access, the United States scored 67, due to the nation's high uninsured rate and the fact that one-third of adults under age 65 have problems paying their medical bills or have medical debt they are paying off over time.

To develop the scorecard, Commonwealth researchers used the Institute of Medicine's framework for quality of care and drew on 37 indicators developed by the U.S. Department of Health and Human Services, the Agency for Healthcare Research and Quality, the National Committee for Quality Assurance, and other experts.

The findings were published Wednesday as a Web Exclusive in the journal Health Affairs.