By Mary Agnes Carey, CQ HealthBeat Associate Editor

August 16, 2007 – An estimated 1.6 million low-income beneficiaries in the Medicare drug program will either be forced to join or be assigned new drug plans by Jan. 1, or pay more for their drug coverage, according to the consumers group Families USA.

The reassignments and higher costs will occur because of premium increases and technical adjustments in the drug law (PL 108-173), the group contends. As part of the drug benefit, beneficiaries have received subsidies as high as $33 per month to help cover the cost of their monthly premiums, but because of a combination of subsidy decreases and premium increases, those subsidies will not be enough to cover premiums of existing plans. "The choice? Pay more or change plans," Families USA said in a news release.

On Aug. 13 Medicare officials announced that monthly premiums next year for Medicare drug coverage will average about $25, far below the $41 estimated when the drug benefit was first enacted in the 2003. Program officials said that costs were lower than projections because of slower than expected growth in prescription drug costs generally.

Kathleen Stoll, director of health policy for Families USA, said in a statement that "while the administration is touting the fact that premiums have gone up less than they feared, the fact remains that our most vulnerable citizens continue to be victimized by fundamental flaws in the Part D plan ... Hundreds of thousands of those, who in many cases are the least prepared or least able to conduct this kind of research, are going to be forced to wade into this mess again."

Centers for Medicare and Medicaid Services Spokesman Jeff Nelligan said the movement of beneficiaries "is due to the competitive nature of the Part D program, which has resulted in lower costs to enrollees and taxpayers." Nelligan said CMS is working with grassroots organizations across the United States "to ensure a smooth transition for beneficiaries affected by the reassignment process" and the agency is "confident from our experience last year that beneficiaries will be reassigned to a plan that meets their needs based on cost, coverage and convenience."

By Adam Bloedorn, CQ Staff

August 15, 2007 -- With health care costs on the rise and almost 45 million Americans lacking insurance, many states have proposed initiatives to increase health care coverage for their residents and lower premiums, according to a report released Wednesday from the National Governors Association (NGA).

In 2005, the United States spent more on health care than any other industrialized nation—nearly $6,700 per person—but ranked lowest in the quality of care provided, the report said. States are taking broad approaches to overhauling health care, including increasing coverage through expanding public programs such as Medicaid and the State Children's Health Insurance Program (SCHIP), creating small business incentives and premium incentive programs to aid workers in purchasing employer-sponsored health insurance, and establishing participation requirements to encourage employers and individuals to obtain health insurance. States also are attempting to improve quality of care and increase prevention and wellness programs, the report states.

The NGA report points to several state programs already in progress that address these issues. For instance, Illinois' All Kids program expands public health programs to include all children in the state who have been without health insurance for at least 12 months, while a similar program in Wisconsin provides enhanced benefits for pregnant women.

Several states have instituted programs to aid small businesses, which often are unable to offer affordable health insurance due to prohibitive costs. Oklahoma and New York offer subsidized plans that require businesses with 50 or fewer workers to contribute a percentage of employee premiums, according to the report.

In Utah, low-income individuals who are eligible for insurance through their employer but cannot afford the premiums can receive up to $150 a month and an additional $100 per child. Texas also has instituted a similar program.

Massachusetts and Vermont both require employers to offer insurance or pay a portion of their employees' premiums. Businesses in Vermont also are assessed a $365 annual fee per full-time employee if any employees remain uninsured.

Another tactic some New England states have employed to lower costs is requiring individuals to obtain health insurance if they can afford it, thereby spreading risk for insurance companies across a larger group.

Ensuring quality of care has been a priority for several states. Washington State has implemented health records banks to aid caregivers across the state and has sought to give patients more information about treatment options, with the goal being to drive down health care costs.

By CQ Staff

August 13, 2007 – As lawmakers aim to overhaul the State Children's Health Insurance Program (SCHIP), a recent analysis found that more than 6.6 million children were covered by the program at some point last year and nearly 9 million children remain uninsured.

"The success of SCHIP over the past decade has been a rare piece of good news on the health care front," Robert Wood Johnson Foundation president and CEO Risa Lavizzo-Mourey said in an Aug. 10 statement. "This highly successful partnership between federal and state government needs to continue its good work and cover more kids."

The analysis, released by the Robert Wood Johnson Foundation, found that since Congress first authorized the program in 1997, the percentage of uninsured children in America has fallen by 24 percent. Having children covered by health insurance is important because uninsured children are more than three times less likely than insured children to visit a doctor in the course of a year, and more than half of all uninsured children did not have a "well-child" checkup in the past year—more than double the rate of children with insurance.

Before adjourning for the month-long August recess, the House and Senate passed different versions of SCHIP legislation (HR 3162, S 1893). President Bush has promised to veto them both, saying they are too large and that he favors a far smaller expansion. The program is set to expire Sept. 30.

SCHIP proponents urged Congress and the White House to reauthorize the program.

The report, a state-by-state analysis of children's access to health insurance and health care, including how that has changed since SCHIP was introduced, was prepared by the State Health Access Data Assistance Center at the University of Minnesota. The report analyzes data from a variety of federal agencies, including the U.S. Census Bureau, the Centers for Medicare and Medicaid Services, and the Centers for Disease Control and Prevention.

By Susannah Crepet, CQ Staff

August 15, 2007 – States should be allowed to use the State Children's Health Insurance Program (SCHIP) to cover young, childless adults if they extend their regular Medicaid programs to cover low-to-moderate-income children, according to Sara Rosenbaum, a health law professor at George Washington University's School of Public Health and Health Services.

Young adults who have grown out of child health insurance programs are the most uninsured group, according to the Commonwealth Fund. In 2006, more than 10 million young adults ages 19–26 were uninsured, according to Rosenbaum, whose paper, "SCHIP Reconsidered," was published in Health Affairs on Tuesday.

According to Rosenbaum, SCHIP's reauthorization is an opportunity for policymakers to reassess and alter SCHIP to address the "staggering" number of young adults who are uninsured, while also taking into account developments in Medicaid policy that have changed the interaction between Medicaid and SCHIP.

"Despite Medicaid's broad coverage, financing medical assistance for children is so inexpensive—even with comprehensive coverage, children cost Medicaid $719 each, on average, in 2001—that many states might respond to this opportunity to secure funding for older children, pregnant women, and parents," Rosenbaum said.

Because Medicaid is an entitlement program, it would give child health financing a "more secure financial base," Rosenbaum said. In addition, covering children through Medicaid and young adults through SCHIP would make sense, partly because Medicaid coverage includes Early Periodic Screening, Diagnosis, and Treatment (EPSDT) benefits, she said. These benefits are essential to monitoring children's health and not necessary for young adults, or available through SCHIP.

Children covered through Medicaid could also take advantage of the 100 percent federal funding contribution rate for vaccines through Medicaid's Vaccines for Children program, as well as the 90 percent federal funding rate for family planning services and supplies, Rosenbaum said.

Mary Kahn, a spokeswoman at the Centers for Medicare & Medicaid Services, said "As always, we are quite concerned that every child who is eligible for either Medicaid or SCHIP receives these benefits. We recognize the particular importance of early regular medical care in early childhood development and are always ready to assist states in improving outreach strategies." She said CMS hadn't yet reviewed the report and could not comment on its findings.

By Joanna Anderson, CQ Staff

August 16, 2007 – Physicians in the United States are moving increasingly to midsize, single-specialty practices instead of large, multispecialty practices, according to a study released Thursday by the Center for Studying Health System Change (HSC).

The study, which examined how the organization of physician practices impacts patient care and the general practice of medicine, found that many experts and policy makers envision large multispecialty practices as the best setting for high quality care. Proponents of this model argue that multispecialty practices provide enhanced care coordination and larger groups provide better financial and administrative resources and more structured physician leadership.

However, the study found that "despite these advantages, the vision of a growth in large, multispecialty practices so far is at odds with the actual trends." The proportion of physicians in multispecialty practices fell from 30.9 percent to 27.5 percent between 1998–99 and 2004–05. Between 1996–97 and 2004–05, the proportion in solo and two-physician practices fell by 8.2 percent, and those in three- to five-physician practices fell by 2.4 percent. Meanwhile, the share of doctors practicing in groups of six to 50, meanwhile, increased from 13.1 percent to 17.6 percent.

The study attributed changes in practice settings to shifts in physician financial incentives. The rise of tightly managed care in the 1990s was expected to fuel the creation of large, multispecialty groups to gain leverage with health plans and manage risk-sharing arrangements and specialty referrals. Managed care, however, did not grow as expected and was in "full retreat" by the early years of this decade. Multispecialty group creation ceased. Many large physician practices faced financial trouble in the form of downward pressure on income with expenses growing faster than reimbursement rates. Such pressures prompted physicians to move to midsize, single-specialty practices to distribute fixed costs, such as equipment and facilities, over a larger number of physicians.

In a single-specialty environment, "specialists could reap the advantages of a group practice without having to redistribute income to primary care physicians—traditionally the procedure in multispecialty groups." Such a setting also presented "opportunities to gain negotiating leverage with health plans while the referral advantage provided by multispecialty groups waned as health plans eased referral restrictions," the study found.

The study detailed a number of policy concerns raised by current trends. In some markets, the movement toward single-specialty practices creates the potential that certain specialties can drive up prices in negotiation with health plans. In addition, larger practices give doctors more chance to legally provide referrals under exceptions to self-referral laws, which could lead to an overuse of certain services, and consequently, higher costs for care.

The opportunity to lower practice expenses and, especially for specialists, to enhance revenues from profitable services could more strongly influence physician organization than potential opportunities to improve the quality of care, the study found.

By John Reichard, CQ HealthBeat Editor

August 17, 2007 -- The way HHS Secretary Michael O. Leavitt sees it, a dynamic new figure is needed to lead the next stage of the nation's adoption of health information technology—and it ain't him. Government must play a major role in lowering barriers to the spread of the technology, but putting a government leader in charge of that effort will muck things up, Leavitt said Friday.

Bringing the issue of leadership to the fore is the current effort by the Department of Health and Human Services to phase out the "American Health Information Community" (AHIC), a HHS advisory group formed by Leavitt in 2005 to find ways to speed adoption of health information technology. AHIC should give way to a public–private advisory body that continues the work of developing and adopting standards to ensure that the different components of health information technology systems function smoothly together, Leavitt said.

At a meeting Friday on efforts that are underway to find an AHIC successor, Leavitt said "this meeting, in my judgment, is about asking the question, 'who is George Washington? Who should be the entity that forms up AHIC 2.0 in terms of its concept?'" Although some say that leader ought to be the head of HHS, "I would suggest to you that in a political environment that may not be the right answer."

Too large a government leadership role is a bad idea for several reasons, he said. One is that in 17 months there will be a transition of the kind that happens every four years with presidential elections, he said. That could mean months of delay in changing federal leadership of health IT, he said.

"This organization ultimately needs to have an executive team that has continuity to it, that isn't done by political appointment," he said. "Another thing I would mention is the need for a business model. If Congress has to continue to appropriate money to this, and someone gets unhappy with it, then there's no certainty to it if they can defund it, in essence."

What's needed is a George Washington-type figure—or organization or organizations—that can bring competing points of view into the debate over furthering the field without bogging it down; what Leavitt referred to as bringing together "the Alexander Hamiltons and the James Madisons in a process that will bring balance."

But while Leavitt clarified that government can go too far, he also suggested that if government is too timid, the field won't move forward. Government money won't be used to fund health IT systems that don't comply with standards coming out of the work of the AHIC successor group, he said. Emphasizing that government will be a major player in that successor group, Leavitt said "I underscore the word 'major' because we're clearly going to be one of the biggest payers."

HHS is inviting organizations to apply for a two-year $13 million grant to design, establish and operate the successor group to AHIC. That grant will be awarded this fall with the goal of launching the successor in the spring of 2008.