By Drew Armstrong, CQ Staff

February 15, 2008 -- The administration pulled the Medicare "trigger" Friday, sending Congress legislation to reduce Medicare spending through medical liability caps, information technology improvements, and increased drug benefit premiums for higher income Medicare beneficiaries.

Health and Human Services Secretary Michael O. Leavitt outlined the legislation in a conference call with reporters. The centerpiece—and the only proposal whose savings have been estimated—would require Medicare enrollees with higher incomes to pay higher monthly premiums for prescription drug coverage, known as Part D, than other beneficiaries.

Individuals with incomes of more than $82,000, or $164,000 for couples, would pay higher Part D premiums. According to Leavitt, that provision would save $900 million in 2009, when it would go into effect, and $3.2 billion over five years.

The administration was required to send legislation to Congress by what is commonly known as the Medicare funding "trigger." That is a warning system put in place as part of the 2003 Medicare overhaul law. The law says that if for two years in a row Medicare is projected to draw 45 percent of its funding from general tax revenues in any of the next seven years, the president must propose legislation to solve the problem. The 45 percent threshold will be crossed in 2013, according to a warning issued by Medicare trustees in April.

Other parts of the proposal have yet to be calculated for savings. One title would cap non-economic damages in medical malpractice lawsuits at $250,000 and limit the share of damage awards that plaintiffs' attorneys could collect.

Another title would have the HHS secretary encourage adoption of health information technology such as electronic prescribing and medical records. That same title would authorize the secretary to both publicize the prices charged by providers and disseminate information on the quality of care, in order to spur competition that might yield higher value for the Medicare dollar.

"As those become more specific we'll be able to provide scoring and effects on those," said Kerry Weems, acting administrator of the Center for Medicare and Medicaid Services.

Leavitt delivered the legislation in a letter to House Speaker Nancy Pelosi, D-Calif.

Democrats Dismissive

Privately, aides to both parties' leaders had previously declared the bill more or less dead on arrival, but Leavitt disagreed.

"We broadly consulted with members of both the Senate and the House, and we anticipate that [the proposal] will be met, at least by Republicans, with broad acceptance and interest," he said.

Two of the three titles in the legislation—on medical malpractice caps and on means-testing of Part D premiums—come from past Republican proposals. The recycled provisions generated scorn from Democrats.

Edward M. Kennedy, D-Mass, chairman of the Senate Health, Education, Labor and Pensions Committee, said the administration had "trumped up a phony crisis in Medicare to justify proposing deep cuts in quality health care for seniors while giving massive subsidies to HMOs and other insurance companies."

Rep. John D. Dingell, D-Mich., chairman of the House Committee on Energy and Commerce, termed the Medicare trigger "little more than a scare tactic to promote cuts to the most successful program of our time."

Senate Finance Committee Chairman Max Baucus, D-Mont., didn't slam the door on the entire proposal, however. Although Baucus called the malpractice provisions a non-starter and said he would not include Part D means-testing in his own Medicare revisions package this year, he said that "there is room to work together. Value-based purchasing and health information technology are both smart targets for reforms in Medicare right now."

The law requires the majority and minority leaders in both houses—or a designee—to introduce the bills. In the House, they must discharge them from committee by June 30; another provision allows any House member to call a point of order to force a vote on passage.

In the Senate, Judd Gregg, R-N.H., will introduce the legislation. Gregg said he would do so after the Presidents Day recess. "This proposal absolutely must be considered, and as quickly as possible," Gregg said in a statement.

The other principals will have three legislative days to introduce the bill, after Congress returns from recess Feb. 25.

By John Reichard, CQ HealthBeat Editor

February 13, 2008 -- Many lobbyists and analysts see Congress moving only a slim Medicare package this year that does little more than protect doctors against payment cuts with offsetting reductions elsewhere in Medicare to pay for that protection. Maybe Senate Finance Committee Chairman Max Baucus and House Ways and Means Health Subcommittee Chairman Pete Stark think so too, but they weren't talking that way on Thursday.

Among the goals they outlined for the year: adding mental health parity provisions to Medicare, expanding preventive benefits, launching more comparative effectiveness research, and widening access to the comprehensive prescription drug benefits available to the lowest-income Medicare beneficiaries.

In a speech to the senior lobby AARP, Baucus said that, "with your help," he intends to move a Medicare package this spring to increase access to preventive benefits and primary care, improve quality, and "extend crucial rural health provisions." The package will also include provisions to improve quality of care and to make the prescription drug benefit offered to seniors under Part D of the Medicare program "work better," the Montana Democrat said. He also reiterated his intention to cut payments to private health plans in Medicare to help pay for the physician patch.

"In connection with this Medicare bill, let me address a couple of items that I know are of particular concern to you: rising Part B premiums and the president's proposal to implement means-testing of Part D premiums," Baucus said. Typically deducted from Social Security checks to pay for doctor care and other forms of care given outside the hospital, Part B premiums are rising "higher and higher," he said. To help more seniors pay for those premiums, as well as qualify for low-income subsidies that eliminate or lower premium costs in Part D, he said he wants to ease the asset tests for those programs.

Baucus said "the law imposes egregiously low limits on the assets that seniors can own and still qualify for the Part D low-income subsidy and for the 'Medicare Savings Programs,'" which lower part B premiums for seniors of modest means. "We must raise the asset levels allowed for all of these programs," Baucus said. "And we must index them to keep pace with health care inflation. Seniors should not have to go into poverty to benefit from these Medicare programs.

"Where justified by sound policy, we must find savings within the Medicare outpatient benefit and Medicare Advantage to offset the cost of blocking the scheduled cut in physician payments," Baucus added. Medicare Advantage is the private health plan side of Medicare.

Baucus also suggested that he would be pursuing other cuts. The Medicare Payment Advisory Commission (MedPAC) has recommended spending reductions compared to current law for skilled nursing and home health providers, and Baucus said he would be looking to the commission for guidance. "We also must acknowledge that sometimes Medicare payments do not reflect true costs," he said. "With the help of MedPAC and other experts, we must identify areas of overspending. We must see that our Medicare dollars are being used wisely."

Baucus didn't close the door on a proposal by the Bush administration to make higher-income Americans pay higher premiums for their drug coverage, but said the trade-off would have to be an improvement in drug coverage.

"The president's budget includes a proposal to means-test premiums for the Medicare Part D drug benefit," he noted. "The president's proposal would raise more than $3 billion over five years. Most Republicans support this proposal, including many on the Finance Committee. Some Democrats support the idea too."

"The rationale is that higher-income beneficiaries should pay higher premiums for Medicare prescription drug benefits, just as they do now for Medicare Part B services. In a tough pay-go environment, it's hard not to look at proposals like this to help to pay for other spending priorities. But means-testing would be a significant change to Part D. We should not make changes like this unless we are taking a broader look at the drug benefit," Baucus said.

"We also need to think carefully about whether it makes sense to expand means-testing for Medicare benefits," he said. "People with higher incomes already contribute more to Medicare because the payroll tax is a percentage of income. The Medicare payroll tax does not have a cap like the Social Security payroll tax. Means-testing the premiums reaches into the same pockets again. In my view, we should contemplate means-testing only in the context of broader improvements to the Medicare drug benefit."

Baucus also outlined his plans to advance an overhaul of the health care system generally.

"I am optimistic. I see consensus forming on the horizon," he said.

Baucus outlined five principles for thoroughgoing change, including: universal coverage; "sharing the burden" by establishing purchasing pools bringing together individuals and small businesses to make coverage more affordable; controlling costs through higher quality care and more research comparing the effectiveness of various types of treatments; greater emphasis on preventive care; and "shared responsibility" for funding such a system by having business, individuals, government and other "stakeholders" pay to fund it.

Baucus said specifically he will introduce a bill to "create a new entity responsible for the essential work of generating better information on the effectiveness of health care treatments. We will invest more money in this research."

Meanwhile, at a brief hearing on Thursday on the Medicare budget, Stark, D-Calif., emphasized potential areas of common ground with Republicans after attacking the White House Wednesday for proposing $183 billion in cuts to Medicare.

Acting Centers for Medicare and Medicaid Services Administrator Kerry Weems said the administration was in agreement with Stark that Medicare could move to bundled payments for kidney dialysis services without first conducting a demonstration program. Eliminating the step of first doing a demo might speed the adoption of payments combining those for drugs with other types of care given to dialysis patients.

Stark suggested after the hearing that the change in dialysis payment might be something that could be accomplished through administrative action by CMS rather than requiring legislation. But he also suggested there might be areas of common ground on legislation. "If we can find some stuff we may be able to do a suspension or two," he said. Areas of potential agreement include mental health parity, both in insurance plans generally and in Medicare, and comparative-effectiveness research, he added. Such action would have to occur in the spring with election campaigns coming up, according to Stark.

Stark said he thinks too that Baucus and Sen. Charles E. Grassley, R-Iowa, agree with him on the need to curb specialty hospitals, which Stark estimated could save $2 billion to $3 billion to pay for other Medicare provisions. "That's a nice little piece for something else we want." But Stark also noted that a member of the Senate could put a hold on such a provision, effectively stalling it.

Asked about the prospects for Medicare Advantage cuts this year, Stark said if will be "a harder year because the lobbyists have had a year now ... to beat up on my members on not cutting Medicare Advantage." Companies have also done more to build up a constituency for Medicare Advantage by enrolling more seniors in the program, Stark added. He stopped short of saying Medicare Advantage cuts are wishful thinking this year but said "it gets more difficult."

"The stuff that's tough are the docs." What has to get done is a new system" replacing the current system that requires a series of temporary payment fixes to block sharp cuts. "It has to be done principally by the physicians. There are going to be big fights between the radiologists and the primary care guys, I mean I'm not going to resolve that."

A new system won't be legislated this year, but it can be done, Stark said. "We could put together some people who could sit down with MedPAC. It's a complex problem. I don't think we can have a reimbursement system without some adjustment for volume."

By Leah Nylen, CQ Staff

February 13, 2008 -- Investing in health information technology will improve the overall quality of health care and reduce medical errors and costs, health care experts told the Senate Budget Committee on Thursday.

"Health IT alone adds little to no value, and if developed in isolation from other critical reforms is likely to be . . . the next festival of waste," said Laura Adams, the president of the Rhode Island Quality Institute, a non-profit organization composed of health care professionals, insurance companies, and business leaders. "Health IT undergirds virtually every major health care reform initiative being advanced today."

Health IT includes electronic prescribing, paperless record keeping and billing, and integrated communication of health information between insurers and health providers. It has been a longtime priority for President Bush, and Congress has tried several times in recent years to pass more sweeping legislation. But those attempts have faltered amid concerns about patient privacy and the lack of a single standard for electronic record keeping.

Supporters of health IT hope to have more success in this Congress because of the growing interest in health care overhaul. Several senators have advocated for greater funding for health IT projects, including Sheldon Whitehouse, D-R.I., who helped establish the Rhode Island Quality Institute in 2001 when he was the state's attorney general.

Budget Chairman Kent Conrad, D-N.D., emphasized that health IT programs could help reduce the rising costs of health care.

"About one in every seven dollars in this economy is going to health care. . . . If we stay on this trend line, [health care costs] will grow from 16 percent of gross domestic product to more than 37 percent by 2050. Clearly we must make changes," Conrad said. "If we are going to address rising health care costs, we need to get started on some of these reforms."

One of the primary impediments to health IT is the lack of a national strategic plan for adoption and standardization, said Valerie C. Melvin, director of human capital and management information systems issue for the Government Accountability Office.

"Such a national strategy is essential," Melvin told the panel. "Until [the Department of Health and Human Services] develops a national strategy, it is difficult to effectively monitor progress toward achieving national goals for health IT."

Mary Grealy, president of the Healthcare Leadership Council, a non-profit comprised of health care executives, also emphasized the need for national standards to insure interoperability.

"Developing a multi-state, interoperable system depends on national technical standards as well as national uniform standards for confidentiality and security," Grealy said. Without interoperability standards that would allow electronic records to be moved between states, hospitals, and doctors, health IT would be significantly hampered, she said.

Whitehouse echoed the panel's assessment, emphasizing what he called the "siloization" of the industry that has kept health care providers from investing in health IT.

Providers and hospitals focus on their own 'silos,' or individual financial interests and problems, rather than the health care system as a whole, Whitehouse said. Companies are reluctant to buy in to health IT programs because it could be up to a decade before the investment produces any savings.

Members of the panel said they support legislation currently before the Senate, S 1693, which would promote the adoption of a nationwide interoperable health IT system.

The bill is sponsored by Senate Health, Education, Labor and Pensions Committee Chairman Edward M. Kennedy, D-Mass., and ranking Republican Michael B. Enzi of Wyoming.

The Kennedy-Enzi bill would authorize a total of $278 million in fiscal years 2008 and 2009 for competitive matching grants to regional and local health IT networks.

By Reed Cooley, CQ Staff

February 12, 2008 -- Reps. Jim Langevin, D-R.I., and Christopher Shays, R-Conn., proposed a bipartisan universal health plan on Tuesday that they hope will provide the same health coverage to all Americans that they receive as members of Congress.

Titled "The American Health Benefits Program," which the lawmakers also unveiled on Monday during joint press conferences in Rhode Island and Connecticut, the proposal would be based on the Federal Employees Health Benefits Program, which insures 8 million current and retired federal employees and their dependents.

"The time has long passed to open a dialogue on reforming the nation's health care system," Langevin said in press release. Shays and Langevin said this is the first universal health coverage measure to originate in the House.

The program would apply to all U.S. citizens and legal immigrants and would require all individuals to buy insurance, enrolling those who do not choose a plan in the lowest cost plan for their region.

It also would require employers to either offer health insurance benefits to their employees or pay a payroll tax that would finance the government contribution to premiums. Under the program, the government would pay at least 72 percent of the premium for each enrollee.

The plan contrasts with a Senate bipartisan effort, headed by Ron Wyden, D-Ore., that proposes an end to employment-linked coverage. Robert F. Bennett of Utah has signed on as the lead Republican sponsor of that bill (S 334).

Neither Langevin nor Shays serves on the House Ways and Means or the Energy and Commerce committees, which would have jurisdiction over the proposal.

"It's surprising that we haven't seen a bill like this generate from one of those committees," Shays said. When asked if either committee had shown support for the proposal, he said, "Ask us in a month."

Both lawmakers emphasized the bipartisan nature of the measure and acknowledged that in a heated election year in which health care is the number one issue for many Americans, sweeping changes are unlikely to be fully realized.

"This proposal introduces a viable concept and leaves room for further discussion," Langevin said.

By Emily P. Walker, CQ Staff

February 11, 2008 -- The Department of Health and Human Services' Office of Minority Health and the National Business Group on Health on Monday announced a two-year, $300,000 initiative that would aim to combat racial and ethnic disparities among minorities receiving employer-sponsored health care.

The National Business Group on Health (NBGH) is a nonprofit organization that represents large employers' perspective on national health issues.

"Having coverage doesn't solve the problem" of minorities receiving lower-quality care and having worse outcomes than whites, said Helen Darling, president of NBGH.

Darling cited a 1999 Kaiser Family Foundation survey that found more than 35 percent of blacks and Latinos reported that they or someone they know was treated unfairly when getting medical care because of race. Fifteen percent of whites reported the same experience.

Ron Davis, the president of the American Medical Association (AMA), said that while access to care, language barriers, and other cultural barriers may hinder minority access to quality medical care, "social injustices" taking place in the medical setting are also skewing minority health outcomes.

He referenced a paper published recently in the Journal of the American Medical Association that said whites who visit the emergency room with pain are more likely to be prescribed an opiate—such as Tylenol with codeine—than their black counterparts.

The disparity suggests a prejudice among some physicians that black patients are more likely to exhibit "drug-seeking behavior," Davis said.

Since large employers provide care for two out of three Americans with health insurance, they are in a position to demand quality care for employees of all races and ethnicities, Darling said. In addition, improving health care quality across the board could reduce the time an employee spends away from work.

Employers pay an average of $9,300 per employee for health care costs, and most assume that cost provides equal coverage for all employees, regardless of race, Darling said.

"Most employers would be dismayed to learn that while their contribution is equal, the care is not," Darling said.

The partnership between the Office of Minority Health (OMH) and NBGH expands on the National Partnership for Action, a broader effort to end health disparities by Health and Human Services (HHS) and the OMH.

The new, employer-focused addition to the effort aims to inform employers of disparities in health care and give them action plans to improve the situation—such as guiding large employers toward plans that have ethnically representative health care providers, or providing on-site care for populations that are unlikely to visit a doctor.

"It's no longer enough to provide the same benefits and hope everything works out," Darling said.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

February 15, 2008 -- In the weeks following President Bush's second veto of Democrats' legislation to expand the State Children's Health Insurance Program (SCHIP), tensions continue to mount between administration officials, Democrats, and children's groups over funding for children's health care programs.

During a Feb. 13 Senate Finance Committee hearing on Medicare Advantage plans, Sen. John D. Rockefeller IV, D-W.Va., called an Aug. 17 SCHIP guidance the administration issued to state Medicaid offices "a really malevolent directive" because it sidestepped Congress and has placed "great distress" on state officials who cannot meet the requirements. Under the guidance, states have to show they are already insuring 95 percent of children from families earning less than twice the poverty level before expanding SCHIP or Medicaid to cover children from higher-income families.

"It was cynical because you know that it is not possible," Rockefeller complained to acting Centers for Medicare and Medicaid Services administrator Kerry Weems. Rockefeller and other lawmakers have said that CMS had no legal authority to issue the guidance without consulting Congress first. "You do it because no one stands up to you," Rockefeller said. "You cut the legs right out from underneath us."

"We took this action believing we had the legal authority to do so," Weems responded, adding later that "we need to put the poorest children first." When Rockefeller asked later in the hearing if Weems knew how many children had lost coverage due to the Aug. 17 directive, Weems said he did not but added that SCHIP is not the only program where children can receive health care coverage.

Rockefeller then asked if Weems had ever been to West Virginia. When Weems said that he has driven through the state, Rockefeller quipped, "On the way to the Greenbrier?," referring to the resort in White Sulphur Springs. Weems responded that he has never been to the Greenbrier and added that he grew up in Southern New Mexico. In 2006, New Mexico and West Virginia experienced some of the nation's highest poverty rates. Rockefeller told Weems, "You ought to be seeing things differently."

The terse back-and-forth between Rockefeller and Weems shows the ongoing tension between Democrats and the administration in a variety of areas, including Bush's veto of SCHIP legislation. Last month, the House failed by a vote of 260–152 failed to override the veto but seek another vote on SCHIP legislation before the November elections. Bush signed a law late last year that keeps SCHIP running through the end of March 2009 with enough money to maintain coverage at current enrollment levels.

When Bush released his fiscal 2009 budget plan on Feb. 4, critics said the proposal would slash billions in funding from programs vital to children's health, such as Medicaid, graduate medical education for children's hospitals and emergency medical services.

"Sadly, 2009 marks another year where the president has failed to make children a priority in his federal budget," said Bruce Lesley, president of the children's advocacy group First Focus. "From education to health, child safety to child welfare, juvenile justice to tax cuts, the president has cut billions from programs that have direct impacts on America's children and their families."

While Bush's budget for fiscal 2009 contained billions more in SCHIP funding, Leslie and other critics of the White House plan said the money was still not enough to fund services for children currently enrolled in the program.

Office of Management and Budget Spokesman Sean Kevelighan said such criticism was "unsurprisingly misdirected" and that the budget redirects funding into programs that are more effective. On SCHIP, Kevelighan said the budget amount "is the precise funding for the program to continue meeting its original intent, to provide health care for children at 200 percent or below the federal poverty level."

By John Reichard, CQ HealthBeat Editor

February 15, 2008 -- The "trigger" proposal released Friday by the Bush administration fires lots of blanks as far as Democrats are concerned, but one of the three titles—"Principles of Value-Based Health Care"—drew some praise from a key Senate Democrat Friday.

"There is room here to work together," said Finance Committee Chairman Max Baucus, D-Mont. "Value-based purchasing and health information technology are both smart targets for reforms in Medicare right now."

A closer look at the title shows that it contains a number of elements widely favored at least in some form by policy analysts and a significant number of Democrats.

Embodied in Title 1 of the draft bill, the principles in some respects are similar to those advanced by the administration in its "value-based purchasing plan," but also appear to include additional elements and time frames.

The title requires the HHS secretary to develop and implement a system for encouraging nationwide adoption and use of electronic health records, a hallmark of Democratic and Republican overhaul plans. The records must be "interoperable," meaning they must meet common standards allowing different systems to function together efficiently. The system also would have to make personal health records available to Medicare beneficiaries.

The HHS secretary also would have to provide "price and cost information" to Medicare beneficiaries to help them choose not only among health plans, but also among providers and treatment options. The information would have to cover "episodes of care," a more comprehensive way of gauging cost than simply looking at a specific procedure. Costs could be compared for the various treatments and services that go into treating a bout of illness, say all the various services that go into treating a heart attack, for example.

A summary of the title says that it also requires the HHS secretary to "develop a plan for ensuring that by 2013, quality measures are available and reported with respect to at least 50 percent of the care provided under the Medicare program." The secretary would have to design and implement a system in which a portion of Medicare payments vary with the quality and efficiency of care.

"The system would also include incentives for reducing unwarranted geographic variation in quality and efficiency," the summary said. Dartmouth researchers say huge savings can be reaped if those variations are eliminated.

The system also would require the secretary to adopt incentives for Medicare beneficiaries to use more efficient providers and preventive services known to reduce costs, and to assure a transition into Medicare for those who own health savings accounts.

The secretary would be required to "use and release" Medicare data for quality improvement, performance measurement, public reporting, and other purposes relating to treatment.

The secretary would be authorized to implement these systems through regulation, as long as procedures were followed for public notice and comment.

The various requirements could only be adopted in a given year if they generated savings over the five- and 10-year periods that started on January 1 of the year in question. The regulations could not add to costs in the Medicaid and State Children Health Insurance Programs over those same periods.

Finally, the title provides for the public release of physician-specific measurements of quality and efficiency.