By Alex Wayne, CQ Staff

October 3, 2007—President Bush on Wednesday vetoed legislation to expand a children's health insurance program, drawing immediate fire from congressional Democrats and setting up an override showdown that could be politically perilous for some Republicans.

The bill Bush vetoed (HR 976) would expand the State Children's Health Insurance Program, or SCHIP, by $35 billion over the next five years, to $60 billion. That would be enough, Democrats say, to provide health coverage to 10 million children whose families are low-income but not poor enough to qualify for Medicaid—about 4 million more than the program now covers.

Expanding the program has been a major priority for congressional Democrats, who have talked of legislative measures to assist middle-class families stressed by stagnant wages, a deteriorating housing market and rapidly growing health care costs."

This bill would shift SCHIP away from its original purpose and turn it into a program that would cover children from some families of four earning almost $83,000 a year," said Bush, who had threatened to veto the bill for months.

"In addition, under this bill, government coverage would displace private health insurance for many children. If this bill were enacted, one out of every three children moving onto government coverage would be moving from private coverage."

About 2 million people who have health insurance or could obtain it would instead join SCHIP, according to the Congressional Budget Office.

"It is a shame that the president did not step away from his threats against this children's health bill," said Senate Finance Chairman Max Baucus, D-Mont. "Let us be clear about what this veto means. The president is saying that millions of low-income, uninsured American children must continue to live with no health coverage while he presses his ideological concerns. He is willing to put the health of children in jeopardy just to get his way."

Bush has an unspoken reason for vetoing the bill, lawmakers say: Congress has not considered his health proposals, including new tax breaks to help families without employer-provided health insurance buy coverage on the open market. Democrats say the proposal is impractical and too costly.

The fight over SCHIP next returns to the House, where Democrats are working to round up enough votes to override Bush's veto. The Senate cleared the bill last week on a 67-29 vote, with two Democrats absent—a margin sufficient to override Bush. But the House vote last week was 265–159 with one "present" vote, 19 votes shy of the two-thirds majority needed to override.

House Speaker Nancy Pelosi, D-Calif., said the House will try to override Bush's veto the week of Oct. 15, using the time before the vote to lobby Republicans to reverse course.

Democrats say they believe they can persuade a majority of the nine
members of their party who did not support the bill to vote to override Bush. But they would still need to win over some Republicans—estimates range from 15 to 19—to prevail.

"It's going to be a hard vote for Republicans to take. I know that no matter which way they vote, they're worried about it," Pelosi said.

The Democratic Congressional Campaign Committee, the House Democrats' political arm, has launched an advertising campaign against eight Republicans seen as politically vulnerable and potential vote-switchers.

But a House GOP aide said Republican leaders have already met with all eight. "My message to those Democrats in succeeding is, 'good luck,'" the aide said.

By Mary Agnes Carey and John Reichard, CQ Staff

October 1, 2007—Medicare beneficiaries will pay more for their hospital and outpatient services in 2008, the Centers for Medicare and Medicaid Services (CMS) announced Monday.

The deductible for Part A, which covers hospital inpatient services, will be $1,024 in 2008, a $32 increase from the $992 deductible in 2007. Beneficiaries must pay the deductible when admitted as a hospital inpatient and then are covered for up to 60 days of inpatient care.

The Part B monthly premium, which covers an array of services including visits to physician offices, home health services, and ambulatory surgical center services, will increase to $96.40 in 2008, up $2.90 or 3.1 percent from the $93.50 premium in 2007. CMS said the 2008 rise is the smallest percentage increase in the Part B premium since 2000. Higher income beneficiaries will pay a greater share of their monthly premiums, as prescribed by the 2003 Medicare drug law (PL 108-173).

David Sloane, director of Government Relations at AARP, said "the CMS estimate is artificially low," and fails to factor in a likely "payment fix" by Congress to block a sharp scheduled cut in payments. "This year CMS' estimate assumes that next year Congress will not override a 10 percent reduction in payment rates, defying history." Beneficiaries' Part B premiums will increase in future years if Medicare physician payments rise.

CMS said several factors account for the 3.1 percent increase in Part B premiums, including growth in certain areas of Medicare's fee-for-service program, including home health services, physician-administered drugs and durable medical equipment. In the Medicare Advantage program, increases in the average risk of enrolled beneficiaries, as well as the impact of fee-for-service cost growth on Medicare Advantage county benchmarks, also contributed to the rise. Beneficiary "risk" refers to their likelihood of requiring care and "county benchmarks" refer to standard Medicare payment rates.

In a statement, the American Medical Association said the growth in Medicare Advantage plans "is solely responsible" for the 2008 increase in Medicare's Part B premiums. "It is outrageous that all Medicare patients are helping subsidize overpayments to private insurance companies, while only one in five Medicare patients participates in a private Medicare plan," AMA Board Chairman Edward Langston said in a statement.

CMS said a portion of the Part B premium increase results from a need to raise contingency reserves in the Part B trust fund in anticipation of congressional action to avert a scheduled 10 percent reduction in Medicare physician payments.

CMS also said the increase in contingency reserves is somewhat offset by the correction of an accounting error. Beginning in May 2005, the agency said expenditures for certain Part A hospice benefits "were inadvertently drawn" from the Part B account of the Supplemental Medical Insurance (SMI) trust fund, rather than the Hospital Insurance (HI) trust fund. Fixing that error will reduce Part B outlays in 2008 and later years, CMS said. It also will result in a transfer of assets from the HI trust fund to the SMI trust fund, reimbursing the latter account for the misallocated hospice expenditures during fiscal years 2005 through 2007.

By John Reichard, CQ HealthBeat Editor

October 5, 2007—Acting Centers for Medicare and Medicaid Services (CMS) Administrator Kerry Weems made good this week on his promise to publicly post the names of private plans in Medicare that violate agency rules governing marketing, drug coverage, appeals, and other aspects of plan operations.

By posting hundreds of pages of information on rules violations by dozens of plans, the data fulfills a "transparency" pledge made by Weems when he first took over at CMS to be more open about the agency's dealings with the health care industry.

But consumer representatives complain the information posted by CMS requires too much computer power and patience with both downloading and poring through legalese in the massive files to be of practical value to seniors trying to pick a prescription drug or private health plan in Medicare.

The information posted by CMS on its Web site is presented in the form of "corrective action plans" telling a total of 39 companies what actions they must take to comply with agency regulations. The companies include some of the biggest names in Medicare's private plan market, ranging from United HealthGroup to Humana to Michigan Blue Cross-Blue Shield.

Violations include managed care companies breaking rules to prevent misleading marketing practices, to ensure beneficiaries access to prescription drugs and to establish grievance and appeals procedures, among other areas, according to the corrective action plans. Many of the violations appear to have been identified by going through the written materials of companies and finding gaps in their policies and procedures governing those areas of plan operations.

However, the information is not arranged in a way that is consumer friendly, consumer advocates say. "To say it's now "public" is not exactly meaningful," said Deane Beebe, a spokeswoman for the Medicare Rights Center, a consumer advocacy group. "It's not accessible or understandable."

Beneficiaries may not have computers that allow them to easily open the files—presuming they know such information exists in the first place, she said. While a CMS report about a nursing home's violations may be placed in the lobby of the facility for all to see, in many cases seniors in the managed care or drug-only plans affected by the violations, or those interested in enrolling, may not know about the corrective actions posted on the CMS Web site.

To guide consumers in their selection of a plan, Beebe said the information should be incorporated in the CMS Web-based "Medicare Plan Finder" that helps beneficiaries compare plans, and in report cards that the agency plans to issue later this year on Medicare prescription drug plans and health plans in the Medicare Advantage program.

"It's CMS' job to monitor and report problems with the private health and drug plans," Beebe said. “But unless consumers know there is information available on the plans' failings and what, if anything, is being done to address these problems, consumers will continue to be harmed by plan violations.”

Weems said recently there are no immediate plans to incorporate the information in the corrective action plans into the Plan Finder.

A CMS spokesman had no immediate comment on whether the information would affect ratings on the plan report cards to be issued by CMS later this year. "The Web site posting of this substantial amount of information is a work in progress and indeed, we welcome comments and suggestions that would make the corrective action plans more user friendly."

By CQ Staff

October 3, 2007—About 17 million uninsured Americans have gone without coverage for at least four years, according to an analysis released Wednesday by the Agency for Health Care Research and Quality.

Almost one-third of that group was middle income, meaning they had household incomes between two and four times the federal poverty level under the definition used in the study. That meant a household income between $38,614 and $77,228, or a family of four in 2004, the "base year" of the data examined in the study.

Americans with incomes below the poverty line—$19,307 for a family of four in 2004&#8212lmade up about 25 percent, or four million people, in the group, termed by AHRQ researchers as "continuously uninsured."

Seventeen percent of Hispanics were continuously uninsured, compared to 7 percent of blacks and 4 percent of whites. According to the most recent U.S. Census figures, 47 million Americans were uninsured in 2006.

By John Reichard, CQ HealthBeat Editor

October 3, 2007—Health policy leaders announced a watershed development Wednesday in the effort to compare how doctors stack up against each other—a new program that combines Medicare claims data with commercial health insurers to give a more complete and accurate picture of the quality and cost of care that doctors deliver.

The program aims to address a shortcoming of existing quality measurement efforts: that too often they are based only on limited claims data, not data from the full range of insurers that cover patients treated by an individual doctor or medical practice.

"Data will be aggregated by physicians from many health plans and from Medicare to develop a more comprehensive picture of patterns of care across the physician's entire practice," said the Robert Wood Johnson Foundation (RWJF), which announced $16 million in grants to fund the program for 30 months. "This work represents the first time that data have been aggregated nationally in this way, overcoming one of the major barriers to effective measurement and reporting," the foundation said in a news release.

The data pooling effort builds on the success of the quality improvement movement in developing consensus among doctors, hospitals, consumers and insurers on specific measures of quality. Without agreement on uniform measures, data pooling would not be possible, noted Karen Ignagni, president of America's Health Insurance Plans (AHIP), in a telephone press briefing on the grants. The program will rely on quality measures that already have been vetted by a consensus-setting process led by a public-private organization known as the National Quality Forum (NQF).

However, the project aims to eventually go beyond an initial "starter set" of quality measures, organizers said. It also aims to develop measures allowing consumers to compare providers on the cost of care they provide for 20 common medical conditions, such as diabetes and congestive heart failure. "Measures for cost generally do not exist, but cost information is important for consumers to make good health care decisions," the foundation said. The project will work with the NQF to develop consensus on the cost measures.

The information on how well doctors provide a specific type of care will be distributed through public-private "Value Exchanges" that initially will be established in 20 to 25 communities, said RWJF Senior Vice President John Lumpkin. Doctors will be able to use the data to compare their performance to their peers and to make improvements, project organizers said. Consumers will be able to use it to compare providers, but organizers were vague about how soon the public would be able to compare individual doctors, saying that initial comparisons would be of group practices.

Leaders of the program did not specify what quality measures would be used, but did offer one specific example: a consumer might be able to compare medical practices on how well they control the blood sugar of diabetics and how often they order cholesterol tests to help ward off complications, such as heart disease.

The grants will assist the efforts of the Quality Alliance Steering Committee, which represents a wide range of players in health care and says its mission is to spur the adoption of consistent, clear performance measures across the health care system. The Engelberg Center for Health Care Reform at the Brookings Institution will receive $8.7 million and America's Health Insurance Plans Foundation will receive $4.2 million. Another $3 million in grants will be made to identify cost measures, and to fund other activities.

Leading the program will be Mark B. McClellan, the head of the Engelberg Center and the former administrator of the Centers for Medicare and Medicaid Services. McClellan emphasized that the data also will be used to reduce disparities in the quality of health care based on race and ethnicity. "We're seeing big differences in quality of care across racial and ethnic groups," McClellan said. "A critical aspect of this project will include identification and measurement of these gaps in order to help practitioners develop specific interventions that attempt to minimize these differences," the foundation noted in its news release.

Project participants said the data-pooling effort and the chartering of Value Exchanges will start this year. All aspects of the project—gathering data on measures, reporting it to doctors and consumers through Value Exchanges, developing cost measures and analyzing disparities—will be completed by 2010, they said.

Ignagni described the new program as "transformational," and having McClellan, with his top-level connections, in charge means it will get high-level attention from major players. But organizers said the program is not mandatory. Asked whether a group practice could arrange to exclude its claims data from the data-pooling project, Carolyn Clancy, who co-chairs the Quality Alliance Steering Committee with McClellan, said that at bottom, the program is voluntary. But she also noted the possibility that payers will pay doctors lower rates if they don't submit the data.

Clancy, who heads the Agency for Healthcare Research and Quality, indicated that doctors are likely to take part and predicted a big payoff from the program. "By bringing all stakeholders in the health care system together, this new project is an important step in accelerating the current slow pace of improvement in health care quality," she said.
CLARIFICATION
The Centers for Medicare and Medicaid Services has issued a statement clarifying how its data will be pooled with that of private insurers in a new program, funded by the Robert Wood Johnson Foundation, to compare the quality of care at individual medical practices.

Organizers of the program, which includes grants to the Engelberg Center for Health Reform at the Brookings Institution and to a foundation sponsored by America's Health Insurance Plans, said the comparisons will be based on medical claims data and be distributed publicly through "community values exchanges" in selected communities.

CMS Spokesman Jeff Nelligan said CMS will not provide Medicare claims data to the value exchanges, the Engelberg Center or AHIP. Rather, CMS will calculate quality comparisons based on Medicare claims and the value exchanges will be able to combine those results with results based on private sector claims to produce "all-payer performance results," Nelligan said. He added that CMS is not currently providing any data on cost comparisons to the value exchanges or to the Engelberg Center.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

October 5, 2007—Consumers who stay in their current Medicare prescription drug plans will see on average a 21 percent increase in their monthly premiums next year, according to an analysis released Friday by the firm Avalere Health.

Using newly released data from the Centers for Medicare and Medicaid Services (CMS) and Avalere's own analysis tools, the firm computed an "enrollment weighted" average premium for the Medicare Part D marketplace. Avalere said that under its method, premiums of plans with the most enrollees are assigned a heavier weight relative to plans with low enrollment. A premium increase for a prescription drug plan, or PDP, with three million enrollees would have a greater impact than a premium increase for a plan with 10,000 enrollees.

The top 10 PDP sponsors in Medicare have more than 80 percent of the people enrolled in stand-alone PDPs and all raised their premiums, with the exception of two: CVS Caremark's Silver Script plan, which will be 25 percent cheaper in 2008, and First Health's Part D premier plan, which will cost 4 percent less. Avalere's analysis also found that the Humana PDP Standard plan, which currently has the second-highest enrollment, raised its premium an average of 69 percent, while the largest increase, 89 percent, is United's Medicare Rx AARP Plan-Saver PDP, which as of July had more than 900,000 enrollees, according to Avalere.

"The reality of the Medicare experience is that beneficiaries have been very loyal thus far to their initial plan selections," Avalere President Dan Mendelson said in a statement. "If consumers stick to their choices again, they are likely to see a dramatic increase in their monthly premiums. But consumers who shop around may be able to find lower cost alternatives."

CMS Spokesman Jeff Nelligan reiterated Friday that beneficiaries have many choices for their prescription drug coverage. "More than 90 percent of Medicare beneficiaries in a stand-alone Part D prescription drug plan will have access to at least one plan in 2008 with premiums lower than they are paying this year," he said in a statement. In every state, beneficiaries will have access to at least one 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.

Chris Curran, Humana's director of corporate communications, said that Humana's 2008 member premiums, set by CMS after the company filed its bids in June 2007, "are largely the function of changes in the government's formula since last year, as well as overall medical trend." Curran added that Humana's premiums are below the government's national benchmark in 41 states and Puerto Rico. "In fact, 97 percent of our [Medicare managed care plans that offer prescription drug coverage] members have the same or lower premiums in 2008 than they had in 2007," Curran said.

Peter Ashkenaz, a spokesman for United, noted that since premiums vary by region, beneficiaries would see increases based on a regional basis rather than on a national average.

By John Reichard, CQ HealthBeat Editor

October 1, 2007—An analysis of private plans to be offered next year in Medicare shows a big increase in the number of private fee-for-service plans and "special needs plans," two types of plans in the Medicare Advantage program facing skepticism and scrutiny from Congress. But the fast-growing popularity of the plans could complicate efforts by lawmakers to trim their reimbursement.

The number of private fee-for-service plans in 2008 will jump to 506, nearly a 500 percent increase compared to 2006, said the analysis by the Washington consulting firm Avalere Health. Meanwhile, the number of Special Needs Plans (SNPs) will rise to 720 in 2008, up from 471 in 2006.

Private fee-for-service plans got their start in the 1997 Balanced Budget Act, which was passed at a time when concerns were high that rising enrollment in HMOs and other managed care plans would lead to more rationing of care. The plans were depicted as a bulwark against the advance of HMOs, which had a reputation of forcing doctors and hospitals to accept low payment rates and restricting where enrollees could go for care.

In contrast, the words fee-for-service in the moniker private-fee-for-service-plan connoted the practice of traditional medicine, with its unfettered access to doctors and hospitals. The plans also were portrayed as entities that would pay doctors and hospitals more than penny-pinching HMOs would, easing the desire to ration care.

The SNPs are plans that primarily enroll low-income Medicare beneficiaries who also receive Medicaid benefits. The plans target specific types of illnesses and promise better coordinated care that improves treatment for those with serious chronic illnesses. They also offer a single, coordinated point of distribution of Medicare and Medicaid dollars, a feature that may bring more efficient use of federal dollars.

At first, private fee-for-service plans lacked a clear identity in the Medicare marketplace because of their seeming similarity to traditional Medicare, which doesn't restrict choice of provider or include the same curbs on access to specialty care that a managed care plan might. But with improving reimbursement rates, private fee-for-service plans spread to rural areas, offering seniors an alternative that claimed to sharply lower out-of-pocket costs and offer extra benefits compared to traditional Medicare.

But those much higher rates paid to private fee-for-service plans compared to managed care plans in Medicare, coupled with the rapid growth of enrollment in such plans, have drawn scrutiny from lawmakers and congressional budget analysts. Congressional Budget Office Director Peter R. Orszag told managed care executives last week that enrollment in private fee-for-service plans has climbed to 750,000 since the start of 2007. The Avalere analysis shows that enrollment in SNPs has shot up to more than one million Medicare beneficiaries.

Avalere President Dan Mendelson said Monday that state and municipal governments are among those fueling the rapid rise in private fee-for-service plan enrollment. Such "institutional sales," rather than growing enrollment of individuals, are causing the enrollment numbers to jump, he said. The ability of these employers to put all their retirees on a single plan, instead of having to choose a variety of managed care plans to fit the geographic distribution of retirees, helps explain the appeal of the plans to employers, he said.

The rising number of plans and enrollees would undoubtedly complicate efforts in Congress to trim their reimbursement, Mendelson said. There also are questions on the Hill about the level of reimbursement SNPs receive, he noted. But he predicted that when lawmakers take a look at the original policy arguments for the plans—offering rural beneficiaries options in the case of private fee-for-service plans and better coordinated care in the case of special needs plans—lawmakers may reconsider the extent to which they want to make cuts. Now that private fee-for-service plans are available in rural areas, they create an opportunity for lawmakers to tinker with the plans in other ways, such as by requiring that they offer more coordinated care, he said. One of the criticisms of the plans is that unlike HMOs and PPOs in Medicare, they do little to coordinate care.

Mendelson said the growing number of private fee-for-service plans and SNPs are key reasons for an increase in 2008 in the number of MA-PDs, the term for Medicare Advantage plans that offer prescription drug benefits. "On average, each state will see an increase of 52 MA-PD plans," the Avalere analysis said.

Some consumer advocates say the growing number of plans in some markets is an overall negative for the elderly because it makes picking the most appropriate plan more difficult. But the Bush administration claims that competition has helped to bring down premium charges and creates plan variation that allows a better match to the needs of the particular beneficiary involved. Virtually all beneficiaries will be able to switch next year to plans charging lower premiums, the Centers for Medicare and Medicaid Services added.

However, according to Avalere, average premiums in the Part D prescription drug program will rise an average of 8.7 percent in 2008, despite the availability of lower cost options. And an analysis by Consumers Union concludes that even careful shopping to compare plan premiums still leaves beneficiaries at risk for rising drug costs. In addition to paying premiums, beneficiaries pay other out-of-pocket costs for drugs, which go up as plans charge more for their products.

"Insurers hike the cost of their drugs during the year—in one extreme case, by 28 percent," Consumers Union said in a news release Monday. From February to September 2007, 95 percent of plans offered in sampled areas raised their drug costs, with one-quarter doing so by five percent or more, the consumer group said. "Medicare expects seniors to lock into a drug plan for 12 months, but it doesn't require the drug plan to lock in their prices for that same time. How is that logical?" asked Consumers Union Policy Analyst Bill Vaughan.