By Drew Armstrong, CQ Staff Writer

December 13, 2007 -- A proposed Senate Medicare package will be slimmed down from earlier versions and will not deeply cut the private insurers who had been targeted to pay for the bill, according to leaders of the Finance Committee.

Chairman Max Baucus, D-Mont., backed away Thursday from earlier plans to cut Medicare Advantage, a private-sector version of Medicare run by health insurers paid by the government. The Bush administration has threatened to veto any legislation that severely cuts the private plans, and Republicans have vowed to use their numbers in the Senate to block such cuts.

The legislation is being written to stop a 10 percent cut to doctors' Medicare payment rates that is scheduled for Jan. 1. The package will also likely contain a funding extension of the State Children's Health Insurance Program that will last through 2008.

That the Senate is crafting the bill instead of the House already represents a concession for Democrats. House Speaker Nancy Pelosi, D-Calif., announced Thursday that the House would wait for legislation from the Senate instead of writing its own bill. "We will not be originating a Medicare bill in the House," she said.

That means the House has essentially given up on a raft of changes to Medicare that had been a priority for Democrats. It is a deferral to political realities in the Senate, where Republicans have used the threat of a filibuster to force a narrower Medicare package acceptable to the White House, conservative Republicans and private health firms.

Baucus previously had said that any bill would end up cutting the private plans. But asked Thursday, he indicated otherwise. "No… the president will veto MA cuts, or general MA cuts," Baucus said, referring to Medicare Advantage.

Baucus said the bill would be written to avoid a political showdown. "It's designed to pass... and be signed by the president," he said.

Iowa Republican Charles E. Grassley, the committee's ranking minority member, said the bill would contain no new policy initiatives. "There'll be other fixes," he said, but only to current policies.

A bare-bones package will likely give doctors only a small payment increase, if any. It will likely be paid for, in part, with money out of a "stabilization fund" slated to pay private plans offering new services to patients living in areas with relatively few Medicare services. Medicare Advantage payments to hospitals with teaching programs, which receive increased Medicare reimbursement in return for educating new doctors, would also be cut.

"It's my understanding that the double-dipping in medical education is the only thing the president will approve [directly] out of Medicare Advantage," said Grassley.

He predicted that the coming bill would make it to the president's desk, despite House Democrats' grumbling about having to give up many of their priorities. "I kind of read this that when we've got a midnight hour and nobody wants to go home and [let] doctors take a 10 percent cut... that [the House] might just go along with it," Grassley said. F

Richard Rubin contributed to this report.

December 10, 2007 -- People who use Medicare's stand-alone prescription drug program to help pay for medicines will see an average 17 percent increase in the cost of their coverage next year, a new analysis by the Kaiser Family Foundation says.

In its study of changes slated for Medicare Part D for 2008, the Kaiser foundation—a nonprofit health care advocacy group—finds that the average premium for a stand-alone plan, or PDP, will jump from about $27 to $32 a month next year. The best way to avoid that cost increase is to switch plans, the study says.

The finding underscores one of the criticisms of the Medicare Part D program, which the federal government launched in 2006 to defray rising U.S. drug costs.

The program allows people to enroll in a host of different plans depending on what drugs they need on a regular basis. People can choose stand-alone drug coverage or a privately run Medicare Advantage program that provides broader health benefits as well as a drug benefit.

The Part D current six-week open enrollment period, during which people can switch plans, ends Dec. 31, and critics say choosing a plan has been confusing for the program's mostly elderly users. Of the 24 million people enrolled in the Medicare Part D coverage, 17 million are spread among 1,800 different stand-alone plans nation-wide, the Kaiser study says.

Only 7 percent of users switched their plan last year, said Jeff Nelligan, spokesman for the Center for Medicare and Medicaid Services.

"That shows people are satisfied with their plans," he said.

The Kaiser foundation's study found that since 2006, average cost for a 30-day supply of "non-preferred" name-brand drugs—the most expensive type—has increased by 29 percent, from $55.36 to $71.31. The average cost of "preferred" name-brand drugs has increased by 11 percent, from $26.87 to $29.86. Cost for generic drugs has been stable.

The study also found that more Medicare Part D providers are using "specialty tiers" to designate the most expensive drugs—those that cost $600 or more. Unlike "non-preferred" drugs, patients cannot request exemptions from the specialty tier drug costs. The study found that 41 of 47 national stand-alone Medicare Part D plans include specialty tiers, double the number of plans that used the designation when the program began in 2006.

As a result of those increases, one in four stand-alone Medicare Part D users who stick with the same plan in 2008 they have used since 2006 will see their costs go up 50 percent over the price they paid three years ago, the study says. One in five people will see their costs go up $120 annually next year if they do not switch plans.

Nelligan said his office has been encouraging people to look into new plans since October.

He pointed to polls that show the program is popular with most of its users and said that more than 90 percent of stand-alone Part D users will be able to choose a 2008 plan that would actually cost less than what they pay now.

All beneficiaries will have access to at least one plan that costs less than $20 a month, Nelligan said.

"The fact is, Part D is working well and helping seniors live better, healthier lives," he said.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

If benefits are tailored to meet specific needs of high-risk beneficiaries, Medicare's special-needs plans hold the promise of improving health care and reducing costs, according to a new analysis from Avalere Health.

The report was commissioned by the Association of Community Affiliated Plans, a group whose members cover more than 4 million Medicare and Medicaid beneficiaries. Of the 29 health plans in the association, 12 are special-needs plans or SNPs, according to the group's Web site.

In a news release, Avalere said it studied six not-for-profit Medicare managed care health plans across the country that entered the SNP insurance market over the last two years, documenting how the plans use highly tailored strategies and focused care models to provide benefits that the report said go beyond traditional models of insurance for dual-eligible beneficiaries: individuals who qualify for both Medicare and Medicaid. SNPs also cover beneficiaries who are institutionalized and patients with severe chronic diseases or conditions.

Some of the tailored services provided by the health plans include assignment of patient navigators who are dedicated to helping coordinate the complexities of Medicare and Medicaid benefits, deployments of intensive medical case management programs for those at highest clinical risk and enhanced benefit designs that cover dental care or other services that are not covered by Medicare or Medicaid.

"These six plans are using the SNP flexibilities as an opportunity to develop targeted programs that meet unique needs," the lead author of the paper, Avalere senior manager Ellen Lukens, said in the release. "Their approaches may serve as models of innovation for policymakers as they consider reauthorization of this program."

The number of SNPs grew to 477 plans operating in 2007 from 276 in 2006, according to Avalere. Authorization of the program sunsets Dec. 31, 2008, and Congress will need to reauthorize the program for it to continue.

At its December meeting, the Medicare Payment Advisory Commission (MedPAC) approved a recommendation to have Congress extend the authority to limit SNP enrollment for three additional years, with the extension to reflect a number of conditions specified in other recommendations the panel approved.

One of those stated that Congress should require the secretary of Health and Human Services to establish additional tailored performance measures for the plans and evaluate their performance on those measures every three years.

Another recommendation would have the HHS secretary provide beneficiaries and individuals who counsel them with information that compares SNPs' benefits and performance to those of other Medicare Advantage plans and traditional Medicare. Additional recommendations on SNPs would require the plans that serve dual-eligibles to work more closely with states within three years to better coordinate benefits with Medicaid, and would compel Congress to require SNPs to enroll at least 95 percent of their members from their target population.

By John Reichard, CQ HealthBeat Editor

December 12, 2007 -- Scarred veterans of the failed attempt to overhaul health care in the early 1990s offered their advice Wednesday to those who would wage the struggle anew, urging them to make passing overhaul legislation the first order of business of the next administration and to avoid specifying every detail needed to change the system in the legislation.

"The answer is 'pass it, pass it, pass it," said George Washington University Professor Christine Ferguson at a forum on "Health Reform Do's and Don'ts" sponsored by the non-partisan Alliance for Health Reform and the Robert Wood Johnson Foundation.

Speakers added the next president should be prepared to expend all of his or her political capital in the effort if it is to succeed. "You're not going to come out smelling like a rose," said Ferguson, who served as a top aide to the late Republican Sen. John H. Chafee of Rhode Island, a key player in the failed effort by centrists to create a bipartisan overhaul plan.

Speakers agreed that an overhaul would be extremely difficult to pull off, in part, they said, because the political atmosphere is more partisan than it was in the early 1990s. But they were not without optimism that a new system of universal health coverage is possible.

"I'm very optimistic about the prospects," insisted David Nexon, formerly a top health policy advisor to Democratic Senator Edward M. Kennedy of Massachusetts and now a senior official at the Advanced Medical Technology Association. However, Nexon quickly added that his optimism "may be like the guy on his third marriage—a triumph of hope over experience."

Although there was some defense of then-President Bill Clinton's proposed Health Security Act, no one on the panel of policy insiders defended Clinton's strategy of presenting Congress with a fait accompli—an extremely complex piece of legislation not designed to be modified or to have certain elements filled in later by Congress.

"We don't want to get lost in the details," cautioned David Colby, vice president of research at the Robert Wood Johnson Foundation and a former analyst at the Medicare Payment Advisory Commission and the Congressional Budget Office. "You do have to make some decisions and postpone some decisions."

The recent successful effort in Massachusetts to pass legislation creating a system designed to achieve near-universal coverage in the state shows that not every element of the new system has to be resolved right away in law. The approach at a national level should tilt more than it did in the Clinton era to "we'll fill in the technical details as we go on," Colby said.

Karen Pollitz, a Georgetown University professor who served as assistant Health and Human Secretary for health legislation during the Clinton era, agreed that it's not necessary to "spec out" every element of a new system in overhaul legislation, but cautioned that "not just anything that will pass can work."

Pollitz also traced much of the complexity of the Health Security Act to Clinton's decision not to seek higher taxes to pay for universal coverage.

The proposal had many provisions to hold down costs as a way to fund universal coverage, she noted. If an overhaul plan is going to be less complex and coverage is truly going to help people when they need it, higher taxes are going to be needed to pay for it, she said. And because private coverage in the individual market has too many loopholes, regulations are needed to make sure coverage is comprehensive, she suggested. Leaders in the overhaul effort must find a way to bring in more revenues and to delineate a government role in a compelling way, she said.

Dean Rosen, formerly a top health care advisor to former Republican Sen. Bill Frist of Tennessee, warned, however, that "philosophical differences today are more pronounced" than they were in the early 1990s. Republicans have more fully developed ideas than they did then on how to change health care, he said. And he noted that funding Democratic plans for universal coverage would entail ending tax cuts Republican voted into law.

Nexon agreed the political environment is more partisan, but suggested that the more developed ideas Republicans now hold on health care present an opportunity. Many Republicans have been talking about funding wider coverage through tax changes and in some cases, by mandating that individuals obtain coverage, he said. That suggests there is a basis for a compromise with Democrats that could lead to wider coverage—and even to universal coverage, he said.

December 11, 2007 -- A national system for sharing electronic medical data is a long way off, suggests a new study, which found that only a fraction of regional attempts at data sharing networks have been successful.

While a national medical data network has been proposed as a solution to everything from improving quality of care to cost control, the experience of regional networks suggests that system compatibility issues and financial difficulties will put a national network out of reach for the time being, according to the analysis.

The study, conducted by a team of Harvard University researchers and published online in Health Affairs, found that more than a quarter of the 145 regional health information organizations (RHIOs) existing in July 2006 were defunct by early 2007. Of the 83 non-defunct RHIOs that took part in the study, only 32 were actively "facilitating clinical data exchange," within a medical network. The other networks were either stuck in the planning stages of their operation, stalled for lack of funding or only facilitating sharing between a few independent groups, not a network, the study found.

"These findings suggest that nationwide electronic clinical data exchange will be much harder than what many people have envisioned," lead study author Julia Adler-Milstein said in a news release. She also said the findings subvert the traditional thinking on a national data network: that it would begin as a series of regional networks that would join together over time. Instead, regional networks have only seen tepid support, making it unlikely such a network would branch out nationally.

Of the 32 RHIOs that were able to facilitate data exchanges, 12 were only doing so in small geographic regions. The remaining 20 RHIOs were focused primarily on test data (85 percent), inpatient medical histories (70 percent) and outpatient records (60 percent). Fifteen percent were only exchanging one type of data.

But the financial news for those 20 networks that carry out their mission isn't much brighter, as many of these networks are still heavily reliant on grants, one-time financial contributions and in-kind payments, even after they become fully operational, the study found. Just 65 percent of the 20 up and running networks could claim subscription or transaction fees as a "substantial" source of support. The study's authors said that RHIOs' floundering in the free market makes the case for greater government involvement, either in the form of financial incentives or direct assistance.

"Either we have to create the right market conditions or have much greater public investment, but the vision of a national health information network is unlikely to come to fruition without one or the other," said co-author Ashish Jha in the news release.

December 12, 2007 -- The National Federation of Independent Business (NFIB) introduced ten principles to overhaul the heath care system on Wednesday and announced a major research initiative with the Lewin Group, a health care consulting firm.

"For 25 years, our members have been telling us their top issue is health care costs," NFIB Spokeswoman Stephanie Cathcart said. In the coming years, she said she expects that both the president and Congress will play an important role in addressing health care concerns. "We're asking [presidential] candidates and members of Congress to use these principles as a starting point," Cathcart said.

NFIB developed these ten principles in the fall with health care experts from across the political spectrum. That group included representatives from the Heritage Foundation, the Urban Institute and the Cato Institute. NFIB said in a press release that it specifically sought out perspectives from broad philosophical camps, and that the representatives and their organizations did not necessarily endorse the health care principles.

NFIB President Todd Stottlemyer highlighted the need for universal and affordable health insurance — two major elements of the 10 principles, he said — on a press conference call. Small businesses make up the largest segment of the uninsured population, and those that do provide insurance for their employees share risk among a smaller pool, making coverage more expensive. Either the business or the employees must absorb the added cost, he said.

Portability is another major aspect of overhauling health insurance that the NFIB supports. Potential entrepreneurs may not be able to start their own businesses if they cannot afford to leave their old jobs and lose their health insurance, Cathcart explained.
The NFIB also believes a health care system should be: competitive, transparent, efficient, unbiased and evidence-based. In addition, the NFIB supports private insurance over government coverage whenever possible, and notes that any changes to U.S. health care must proceed at pace that allows firms and individuals to adjust.

The research initiative with the Lewin Group will focus on specific policy options and preferences of small businesses with regard to health care, Cathcart said. NFIB has established a health care advisory board of small business owners. In addition, the NFIB recently joined the Divided We Fail Coalition, which includes the AARP, the Service Employees International Union and the Business Roundtable. This group works with citizens, non-profits, businesses and elected officials to address health care issues.