By Emily P. Walker, CQ Staff

November 16, 2007 -- North Dakota Democrat Earl Pomeroy recently introduced legislation that aims to revitalize nursing homes by restructuring payment policies and strengthening the long-term care workforce.

According to the Department of Health and Human Services, about 40 percent of all people 65 and older will require long-term care at some point.

"Our nation's long-term care facilities are facing a looming crisis with workforce shortages, aging infrastructure, and outdated technology," Pomeroy said in a statement.

The bill (HR 4082) would create a commission that would develop and enact a national plan to improve nursing home care. The commission would launch a two-year pilot plan at five sites in five different states. During that time, care providers and state surveyors would be trained on ways to increase transparency and to better comply with Medicare care quality regulations.

The bill also would allow for the time a patient spends in observation status in a long-term care facility to count for the three-day stay required for Medicare services. Currently, patients must spend three days in a hospital to qualify for skilled nursing facility services.

The bill contains several provisions to combat shortages in the long-term care workforce among nurses and physical therapists. The bill would allow loan repayment for nurses working in for-profit nursing homes under the Nurses Reinvestment Act. The bill also would create a national database to forecast future supply of nurses, and create a grant program to help recruit and retain physical therapy faculty and students.

The bill would amend several payment rules to allow Medicare to reimburse a physician for specific diabetes tests administered in nursing home. The bill also would update CMS' payment policies so Medicare could directly reimburse providers for magnetic resonance imaging, radiation therapy, ambulance services, and certain chemotherapy medications for nursing home patients.

The bill aims to modernize long-term care facilities by expanding telemedicine services to nursing home patients who may be too ill to leave their facility for doctor appointments and emergency room visits. In addition, the bill would amend an IRS code to establish a 15-year improvement period for long-term care facilities that have been operated for at least three years at the time of the bill's enactment.

By John Reichard, CQ HealthBeat Editor

November 15, 2007 -- A panel of experts on the elements needed to create a "high performance" U.S. health system said Thursday that current proposals by presidential candidates are not daring enough. Those proposals must go beyond creating universal coverage to include various measures to improve the quality and efficiency of the system, said the report released by the Commonwealth Fund Commission on a High Performance Health System.

The report said candidates should measure their plans against these standards:

• Affordable health coverage should be extended to all Americans in a way that maintains their health care benefits when they change jobs, become a widow or a widower, or become ill.
• The current fee-for-service payment system should move to a model where doctors and hospitals "share the accountability for the total care of their patients." In addition, the payment gap between primary care and specialty care physicians should be narrowed.
• Doctor, hospital, and other health care services should be linked together to better coordinate treatment and to make it easier for patients to go from a primary care doctor to a specialist or hospital or other types of services.
• Investments should be made in health information technology to make care more efficient and of a higher quality, including by promoting "evidence-based medicine."
• The creation should be explored of a national body to set goals for the health system, develop performance measures, and recommend ways to achieve them.

The report lays out "why and how we need to go beyond coverage," Commonwealth Fund President Karen Davis said Thursday at a Washington luncheon to release the findings. "It's absolutely clear we don't get value for our health care dollar." The arrival of a new administration in 2009 "affords an historic opportunity to transform our health system," she said.

The commission plans other steps in coming months to influence health care proposals in the presidential campaign. In December it will release a report analyzing the pros and cons of various ways to control health care costs. In January it will release an analysis of how the candidates' plans stack up against the benchmarks announced by the commission. And next spring it will release an analysis comparing presidential proposals in terms of how much they cost and how many people they would cover. Reports also are planned in May on what must be done locally and in the fall on what must be done nationally to organize a high performance system.

Commission members said at the luncheon that they've made visits around the country to identify efficient ways to deliver care, including to Minneapolis and to California to meet with executives of the Kaiser Permanente health plan. The aim is to showcase ways to improve the system without running up costs. Another visit to North Dakota showed there are ways to organize effective care in areas where health care resources are limited, said commission member Mary K. Wakefield. Wakefield is a former member of the Medicare Payment Advisory Commission and is currently a researcher at the Center for Rural Health at the University of North Dakota.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

November 16, 2007 -- As Medicare recipients mull their choices for drug coverage in 2008, a new analysis warns that the most popular Medicare standalone drug plans will cover fewer drugs in 2008, and consumer groups are urging seniors to closely review their current coverage for price hikes and other changes.

"Medicare private drug plans are a moving target for Americans with Medicare," said Robert M. Hayes, president of the Medicare Rights Center, a consumer group. "A plan that worked well for someone this year may be more expensive, cover different medications, and have different restrictions on their covered drugs in 2008. No one should assume that their drug coverage will remain the same if they stay in their current plan."

The annual Medicare prescription drug enrollment period began yesterday and continues through Dec. 31. Beneficiaries can select a health plan that offers drug coverage or a prescription drug only plan for 2008. CMS announced Thursday that the Medicare Web site, www.medicare.gov, now provides beneficiaries with the five-star ratings of the quality and performance of individual health plans and drug coverage plans.

But too many plans are receiving those five-star ratings, which may render the new system meaningless, said Consumers Union senior policy analyst Bill Vaughan. "The move to five stars starts sets the stage for Medicare to give beneficiaries more helpful information about the range of quality," Vaughan said, "but when you look at the Web site . . . many of the ratings don't deal with issues that seem relevant to consumers."

Consumers Union has urged the Centers for Medicare and Medicaid Services (CMS) to rate on a grading curve, or tier plans into percentiles of performance, which they said would make it easier for consumers to understand how well plans are serving beneficiaries. The group also asked the agency to implement a quality system that concentrates on key consumer issues, such as how often and how much a plan increases prices once a beneficiary enrolls and how they handle consumer complaints.

An analysis released Friday by the firm Avalere Health found that of the top 10 prescription drug plans by enrollment, all but two will decrease the total number of covered drugs next year. When taken together, the top 10 plans decreased the size of their formularies by 26 percent, from an average of 3,094 drugs in 2007 to 2,285 drugs in 2008.

Overall, the report concludes, the enrollment weighted average of covered drugs in 2008 is 2,134, a 26 percent decrease from the 2007 average of 2,892. Avalere officials said the reductions may be attributed largely to plans' reaction to a decision from CMS to no longer include drugs that have not been approved by the Food and Drug Administration (FDA) on the CMS list of formulary-approvable drugs.

CMS Spokesman Jeff Nelligan said Friday that while the agency determined that Medicare drug plan formularies should only include FDA-approved drugs, the number of FDA-approved drugs on the list has increased. "Because of the Medicare requirement for beneficiaries to have access to all medically necessary drugs, drugs that have been proven safe and effective will be available to substitute for these non-FDA approved drugs," Nelligan said.

Some reports indicate Medicare beneficiaries will be paying more next year for their drug coverage. An analysis from the consumer group Families USA found that in 2008, premiums for the average beneficiary in a standalone prescription drug plan will increase by 21 percent. A report from the Kaiser Family Foundation found that the average monthly premium for standalone Medicare drug plans in 2008 will increase by 17 percent, from $27.39 to $31.99, if enrollees remain in their current plans. Nearly one of five of this year's enrollees will experience an annual increase of at least $120 if they stay in the same plan next year, the study found.

The Department of Health and Human Services said Thursday that more than 90 percent of beneficiaries in a standalone Part D prescription drug plans will have access to at least one plan in 2008 with premiums lower than they are paying this year. Beneficiaries in every state will have access to at least one prescription drug plan with premiums of less than $20 a month, and a choice of at least five plans with premiums of less than $25 a month, HHS said, with the national average monthly premium for the basic standard benefit expected to average $25, far below the original estimate for 2008 of $41.

By Alex Wayne, CQ Staff

November 16, 2007 -- A dispute over Medicaid eligibility is now the major sticking point in negotiations on children's health legislation, two Republican senators said Friday.

One of them, Orrin G. Hatch of Utah, said the Medicaid flap threatens to "blow up the bill"—a bipartisan measure that is intended to renew and expand the State Children's Health Insurance Program (SCHIP).

SCHIP covers about 6 million children whose families are low-income but not poor enough to qualify for Medicaid, the larger state-federal health care entitlement program for the poor. A bipartisan group of lawmakers from the House and Senate has been talking for about two weeks about changes to a bill (HR 3963) that would expand SCHIP by $35 billion over five years, to $60 billion—changes that might garner enough House Republican votes to overcome a promised presidential veto.

Lawmakers have not previously mentioned Medicaid as an issue in the talks, much less a major point of contention. But SCHIP and Medicaid are closely related. Efforts to find and enroll children in SCHIP often result in increased Medicaid enrollment, and some states operate the two as a single program.

On Thursday, House Republicans delivered a proposal to Senate Finance Chairman Max Baucus, D-Mont., and Sen. Charles E. Grassley of Iowa, the senior Republican on Baucus' committee, asking that the bill cap eligibility for Medicaid at three times the poverty level, or about $62,000 for a family of three.

Hatch and Grassley said that Democrats have balked at that request.

"They say this is a SCHIP bill, not a Medicaid bill," Grassley said. A spokeswoman for Baucus declined to comment.

"It's most assuredly one of the most significant issues," a House Republican leadership aide said.

The House Republicans also want to prohibit states from ignoring some kinds of expenses, such as rent and transportation, when calculating eligibility for SCHIP or Medicaid—a change from current law. Democrats say those proposals would cause states to drop children from Medicaid.

"Democrats feel that the proposals put forward by Republicans would undermine Medicaid and walk away from the bipartisan goal of covering 10 million kids," a House Democratic leadership aide said.

Eligibility Issue
States are allowed wide latitude to set eligibility in both programs. The government requires states to provide Medicaid coverage to children under age 6 from families earning 133 percent of the federal poverty level or less, and to older children in families at or below the poverty level.

There is no cap on eligibility for Medicaid, though few states are willing to go much above the federally mandated minimums because the federal government covers as little as half the cost. The exact federal share varies from state to state.

The government covers up to 85 percent of the costs of SCHIP, according to the Congressional Budget Office, as an incentive for states to enroll people in the program. Eligibility for SCHIP is also uncapped, although states must seek permission from the federal government to extend coverage to families above 200 percent of poverty or more than 50 percentage points above their Medicaid eligibility limits, whichever is higher.

In the SCHIP legislation, lawmakers have agreed to cap SCHIP eligibility at three times the poverty level. Only one state, New Jersey, allows people from families making more than that to enroll in SCHIP. No state has expanded Medicaid eligibility above 300 percent of poverty.

Grassley said he does not believe Democrats are trying to leave the door open for Medicaid expansions above 300 percent of poverty. He said he does not understand why they object to writing a limit into law.

"They say they don't want to [go above that level], and I believe them that don't want to," he said. "But they're not willing to put language into the bill that the House Republicans want that would guarantee that."

Grassley added, "It seems to me we all agree on the policy; why can't we write it?"

Hatch said he thinks the issue is the most significant remaining obstacle to a deal.

"I think we can get it done if Democrats will not try to expand Medicaid above the 300 percent solid cap," he said. "If not, that will blow up the bill."

Baucus said that talks on the legislation would resume after Congress returns from its two-week Thanksgiving break. Authorization for SCHIP funding will continue at current levels through Dec. 14 under a continuing appropriations resolution President Bush signed Nov. 13 (PL 110-116).

By John Reichard, CQ HealthBeat Editor

November 13, 2007 -- Relying on a new method of analysis, the Congressional Budget Office (CBO) estimated Tuesday that federal spending on Medicare 75 years from now will be 50 percent higher than previously projected in an already grim forecast released in April by Medicare Trustees. Without changes in current law, federal spending on Medicare and Medicaid combined will balloon to 19 percent of the Gross Domestic Product by 2082, up from 4 percent now, the CBO report added. Total U.S. health care spending will rise to 49 percent of GDP, compared with 16 percent now.

CBO Director Peter Orszag cautioned that media coverage of unsustainable health care spending growth focuses policy makers too much on the aging of the U.S. population. Instead, it should illuminate a more fundamental cause: rising per capita health care expenses for Americans in general that too often go toward paying for unproven treatments.

"The nature of our long-term fiscal problems has largely been misdiagnosed," Orszag said. "It is often referred to or described as being caused mostly by the coming retirement of the baby boomers and the aging of the population. That fact that the population is getting older does affect the federal budget and is a factor in our overall long term fiscal problems. But it is not by any means the main factor." By far the main factor is the rate of cost growth per beneficiary, not the number of beneficiaries, he said.

"The first step is to get the long-term fiscal picture right, and not emphasize aging so much," Orszag told health reporters. The report specifically identifies "excess cost growth" as the main culprit, defining that term as "the extent to which the increase in health care spending for an average individual exceeds the growth in per capita gross domestic product." Too little attention has been paid to what could bend the excess cost growth curve downward, he said.

Excess cost growth accounts for about 90 percent of the projected growth in federal Medicare and Medicaid spending by 2082 and the aging population by only 10 percent. Aging accounts for higher proportions of spending growth in the shorter term, however—around 20 percent in 2050 and about 25 percent through 2030.

It's not news that long-term Medicare and Medicaid spending growth is unsustainable, but CBO's grimmer numbers are likely to call greater attention to the issue. Senate Finance Committee Chairman Max Baucus, D-Mont., issued a statement Tuesday saying he will announce in January an extensive series of hearings on health care costs and a health system overhaul. "Finding ways to make the health care system more efficient and cost-effective will reduce costs for all health care users, public and private, and that will pave the way toward getting federal spending truly under control," Baucus said. "The Finance Committee will dedicate a great amount of time next year toward finding real solutions."

Orszag is ramping up CBO efforts to help lawmakers do that. Starting in December, CBO will start releasing long-term budget projections every year, rather than every two years, and health spending will be a component of those estimates, Orszag said. Tuesday's report represents the health care portion of the December analysis. In coming months, CBO will release a series of reports evaluating "levers and options" for controlling cost growth, Orszag said. The agency also plans to hire 20 to 25 more health analysts during the current fiscal year, beefing up its current health care staff of about 35.

CBO's estimate of Medicare spending is similar to that of the Medicare trustees for the first 25 years of the 75 years, but assumes higher growth rates in the last 50 years projection window. The trustees assume growth rates of one percent in excess of GDP during that period, while CBO estimates a higher growth rate.

At the same time, however, the CBO assumes that Medicare and Medicaid spending won't grow at historical rates. Instead, it relies on an alternative method of estimating future spending that assumes "the rising share of national income devoted to health care creates pressure on households and employers to take potentially painful steps to reduce the growth in health care spending." The projections assume that "to avoid a reduction in real consumption of items besides health care, employers, households and insurance firms will change their behavior in a variety of ways." These include reduced coverage, higher out-of-pocket costs, greater "utilization management" to reduce access to covered services, and greater scrutiny of new technologies.

These changes will spill over from the private sector to Medicare and Medicaid, but under current law won't reduce excess cost growth in those programs as much as they do in the private economy, the report said.

The good news is that there is "significant opportunity . . . to remove costs from the system without harming health outcomes," Orszag said. "Comparative effectiveness" research comparing the cost and medical outcomes of various treatments for the same medical condition is the key to that opportunity. Broader use of health information technology will create the "infrastructure" to allow such comparisons on a large scale. Tying the findings to payment changes will lead to greater use of services and products that provide the greatest value, he said.

Orszag said he regularly asks health care economists and other analysts what share of health care spending could be eliminated without harming medical outcomes. Their estimates range from 5 and 50 percent with 30 percent a common assumption. Thirty percent would amount to five percent of the economy — a huge potential savings, he said. He also pointed to studies by Dartmouth College researchers showing that lower cost areas in the United States, such as the upper Midwest and Northwest, have quality of care at least as good as that of more expensive "interventionist" parts of the country in which far more health care resources are used.

These inefficiencies fostered by greater numbers of providers and larger supplies of health care services thrive in an environment in which research is lacking comparing treatments, he said.

But with more such research, "tiers" could be created in which consumers pay lower co-payments for treatments of greater value and higher co-payments for those of lesser value. Medicare also could vary levels of payment to providers based on the value of treatments, the report said.

CBO plans to release reports in coming months analyzing the spending impact of changes in payment incentives, care coordination, disease management programs, and different types of delivery systems such at that operated by the Veterans Administration, Orszag said.

He acknowledged that creating a more efficient system will require many changes that won't be easy. But that's "all the more reason to be starting yesterday," he said.

By John Reichard, CQ HealthBeat Editor

November 15, 2007 -- The Centers for Medicare and Medicaid Services will propose new electronic prescribing standards for use in the Medicare program, leading lobbies that manage prescription drug benefits to call for a requirement for "e-prescribing" in Medicare.

The proposed standards aim to speed the use of handheld and other electronic prescribing technology to allow doctors to check a patient's prescription drug benefits, medication history, and formulary of covered drugs before prescribing a drug.

The standards would supplement those already adopted by the agency governing transactions between doctors and pharmacies to write and fill prescriptions, process refill requests, and change prescriptions, among other functions. These earlier standards took effect on Jan. 1, 2006. Medicare does not actually require doctors to prescribe electronically, but health and prescription drug-only plans that deliver the Medicare drug benefit must have the capacity to support e-prescribing and must abide by the CMS standards to do so.

The proposed regulation outlining the standards is scheduled to be published soon in the Federal Register. An estimated 530,000 "adverse events" occur yearly among Medicare patients because drugs interact badly or aren't appropriate given the patient's medication history, the Department of Health and Human Services said in a news release announcing the proposal. E-prescribing could not only reduce those errors but also save money by alerting doctors to the availability of lower-cost generic drugs, according to HHS.

Both the nation's Blue Cross–Blue Shield plans and the Pharmaceutical Care Management Association (PCMA) issued statements Wednesday saying it's time to take the next step and require doctors treating Medicare patients to prescribe electronically. Noting that the Institute of Medicine last year called for national adoption of e-prescribing by 2010, Blue Cross and Blue Shield Association President Scott P. Serota said physician adoption remains surprisingly low despite "concerted efforts" by his member plans and large employers to meet the 2010 deadline. "Seniors and disabled beneficiaries deserve to be protected from avoidable medication errors—and the solution starts with requiring e-prescribing in Medicare," Serota said.

Despite progress in developing standards that allow e-prescribing technology to function effectively, "fewer than one in 10 physicians have chosen to use it," said PCMA, which represents companies that make money by managing prescription drug benefits for insurers and employers. The lobby said the proposed standards announced by CMS "confirm that the time is now to require e-prescribing in Medicare." It added that "the only realistic way to rapidly accelerate adoption of e-prescribing is to require physicians to use the technology in Medicare."

Department of Health and Human Services officials said that adoption of e-prescribing would pave the way for adoption of other types of health information technology to reduce medical errors and duplicative testing and promote the use of the best clinical practices. Developing the e-prescribing standards "is one of the key action items in the federal government's effort to build a nationwide, interoperable electronic health information infrastructure in the United States," said CMS Acting Administrator Kerry Weems.

But Weems has said he does not support an e-prescribing requirement in Medicare. He asserted in September that the technology involved was not yet at a stage where a mandate would be appropriate. "I'm not yet to the point where we're going to use the payment system to coerce it," he said.

But groups representing consumers and senior citizens are joining with insurers and benefit managers to push hard to have a requirement for e-prescribing included in Medicare legislation to be considered later this year by Congress. AARP Policy Director John Rother said Thursday that a requirement offers an unusual opportunity to cut costs and improve quality at the same time. He predicted that such a requirement will be included in legislation under development by the Senate Finance Committee to block a scheduled 10 percent reduction in Medicare payments to physicians in 2008.

But doctors are balking at a mandate without higher Medicare payments and grant programs to help pay for the costs of the technology. In an Oct. 31 letter to Senate Finance Committee Chairman Max Baucus, D-Mont., AMA Executive Vice President Michael D. Maves outlined a legislative proposal calling for various steps to promote voluntary e-prescribing. The letter said that CMS has yet to adopt all the standards needed to promote e-prescribing, adding that such a step is necessary so that physician investments in the technology "will not be rendered obsolete overnight." Time also is needed to test e-prescribing systems to make sure they function well together. Maves predicted "more robust" adoption by doctors once those steps have been taken.

The CMS proposal takes the agency further down the road to a comprehensive set of national standards, but the AMA letter said one also is needed for "prior authorization." Such a standard would ease the use of e-prescribing to obtain health plan approval for drugs on a prior authorization list. The CMS proposal said that pilot testing "identified several issues that need to be addressed before this standard should be adopted."

Apart from the issue of standards, doctors and other providers also need greater computer bandwidth to use health information technology throughout the nation. Michael O. Leavitt also announced this week that HHS will work with the Federal Communications Commission on assuring broadband access in rural and urban areas.