By Mary Agnes Carey, CQ HealthBeat Associate Editor

July 8, 2008 -- Bipartisan legislation that would make sweeping changes to the current system of employer-sponsored health insurance would cause major disruptions for millions of Americans and make it more difficult to provide health insurance to the 47 million Americans who currently are without it, according to a coalition of insurers, manufacturers, and other business groups.

In a letter sent Monday to Sen. Ron Wyden, D-Ore., and Sen. Robert F. Bennett, R-Utah, the coalition said the senators' "Healthy Americans Act" (S 334) "would cause large-scale disruption in the source, financing, and regulation of the employer-sponsored health coverage that now serves most Americans." The measure also would undermine the ability of employers to offer uniform benefits plans across state and local lines under the Employee Retirement Income Security Act (ERISA), the groups wrote.

Members of the National Coalition on Benefits, which sent the letter, include America's Health Insurance Plans, Blue Cross and Blue Shield Association, Business Roundtable, General Electric Company, and the U.S. Chamber of Commerce. The coalition of more than 150 employers and trade associations said it provides health, retirement, and other benefits to more than 130 million Americans who are covered by employer-sponsored health plans.

Wyden said Tuesday he had not seen the letter. "I'll have to take a look at it," he said. Bennett spokeswoman Tara Hendershott said the senator was in North Carolina Tuesday attending the funeral service of former North Carolina Sen. Jesse Helms and had not had a chance to review the letter.

Wyden's bill, which is cosponsored by Bennett and a bipartisan group of 14 other senators, aims to achieve universal coverage by shifting away from the employer-based system of health care coverage. Instead of companies helping to buy insurance for their workers, Wyden proposes that private insurers offer coverage directly to consumers. Employers would transfer money they now spend on employee health insurance to workers' wages. State-based "Health Help Agencies" would offer information and guidance, and the proposal would encourage plans with low-cost preventive care and chronic disease management—all with an eye toward reducing future health care costs. In April, Wyden amended his measure to clarify that employers can continue to offer employees health care coverage.

Wyden has steadily built bipartisan support for the measure in hopes that it will play a major role in congressional debate over how to fix the nation's ailing health care system. "Providing a sensible and affordable market-driven health care plan for every American is no longer just an idea; it is a goal within our reach," Wyden said in a statement Monday announcing the bill's most recent co-sponsor, Sen. Maria Cantwell, D-Wash. Separately, Rep. Debbie Wasserman Schultz, D-Fla., has scheduled on Wednesday a news conference to reintroduce the amended version of the Wyden bill in the House.

In their letter, the coalition members said while the bill would continue to allow employers to offer health coverage to workers, "we expect that the source for most health coverage would soon be under the new system of state-sponsored health insurance choices, not through employers" and that employers that chose to continue to offer health coverage would not be able to offer uniform benefit plans or administer them "under a consistent regulatory framework" because the legislation would allow states to obtain waivers of any federal laws or regulations related to health coverage. "This would lead to state-by-state, or even county or city, regulation of employer-sponsored plans. This is unworkable for employers with a nationwide or multi-sate workforce," the groups wrote.

The coalition also noted that the bill's changes in tax treatment of health benefits would penalize employer-sponsored coverage and cause most employers to cease sponsoring health plans. In May, a joint analysis from the Congressional Budget Office and Joint Tax Committee said that the plan would be "budget-neutral" when it was fully implemented and would begin to produce surpluses in future years, thanks to changes the plan would make in the tax code.

By Danielle Parnass, CQ Staff

July 8, 2008 -- The efforts of Indian and Chinese political leaders to promote a health care overhaul have been central to both countries' recent advancements in health coverage and disease prevention—and the United States should take note, said experts Tuesday.

The structure of the U.S. political system makes it hard to do something revolutionary in terms of health care, said Tsung-Mei Cheng, host and executive editor of the International Forum at Princeton University's Davis International Center. China, for example, has increased its spending to expand its health care coverage and provide equal access to everyone, she said.

"Leadership at the top does make a huge difference," Cheng said during Tuesday's Health Affairs briefing on global health care change. Currently, around 1 billion out of 1.3 billion Chinese are covered by some form of public insurance, she said.

The Chinese government has put "livelihood of the people" at the top of the national agenda, Cheng said, and the current administration views health care not only as a right but also as a means to social and economic development. China plans to reach universal coverage by 2020, she said.

To prevent and control India's HIV epidemic, its government has launched a $2.5 billion, five-year plan that stems largely from a high level of political commitment and evidence-based, targeted intervention, said Kees Kostermans, lead public health specialist for the World Bank's South Asia region. Research has shown that these prevention programs have been successful in promoting safe sexual behavior among high-risk groups in India, he said.

While data shows that better health in terms of life expectancy and infant mortality correlates to increased health spending in China and India, spending in the United States doesn't improve health as much, said Health Affairs Deputy Editor Philip Musgrove.

In addition, increased spending in China and India still does not address all the issues surrounding health care, such as decreasing out of pocket spending, solving internal inequalities, and focusing more attention to adult health and chronic disease in general, he said.

But perhaps most effective to health care overhaul is refocusing incentives, Musgrove said.

"If you get the incentives right, that's just about the best you can do," Musgrove said.

Although the United States differs from India and China on increasing health care spending to promote a health care overhaul, other challenges exist that are "surprisingly familiar to our own," said Health Affairs Editor-in-Chief Susan Dentzer. Such challenges include an aging population and increased obesity rates, as well as inequalities among different populations.

In China, the "pace of aging has been much greater than economic growth," said Somnath Chatterji, team leader for multi-country studies in the World Health Organization's Department of Health Statistics and Informatics. "Basically, they're getting older before they're getting richer," he said.

India and China will account for almost 40 percent of the world's older population by 2050, Chatterji said.

By John Reichard, CQ HealthBeat Editor

July 9, 2008 --A panel of Wall Street analysts said Wednesday that the days are numbered for Medicare's private fee-for-service plans, at least in their current form—an assessment made even before a dramatic Senate vote later in the day approving a House-passed Medicare bill (HR 6331) imposing new restrictions on the plans.

The White House has said it will veto the measure, but supporters, at least for the time being, have the votes needed to override the veto.

The analysts, who appeared at a Washington, D.C., forum, also weighed in on a potential overhaul next year of the health care system, warning that the shift away from employer-based coverage proposed by presumptive GOP nominee Sen. John McCain of Arizona is fraught with peril but nevertheless could work if McCain dropped his loose regulatory approach to overseeing insurance.

Washington may be full of people wedded to pet ideas and wishful thinking about health policy proposals, but New York offers an unsentimental antidote—financial analysts who have to be realistic about what is actually likely to happen in health care if they want to keep their jobs advising people how to invest money. They also offer another form of reality therapy—a perspective on what is actually happening in the health care market that often is at odds with the notions of policy wonks about how to cure the ills of the health care system.

Goldman Sachs analyst Matthew Borsch said that Humana, a major player in the market for private fee-for-service plans, is beginning to organize networks on the assumption that the plans will no longer be permitted in their current form. Robert Laszewski, a health care market analyst with the firm Health Policy and Strategy Associates, said at the forum sponsored by the Center for Studying Health System Change that the plans "were never intended to be a permanent product. It was intended to be a transition product."

Under current law, the plans need not form networks of providers. Doctors are "deemed" to be part of the plans merely by treating a patient. The Medicare bill passed by the House and Senate would end this deeming mechanism and require the plans to form networks.

Critics complain that the plans are paid more than any other type of plan in the Medicare Advantage program, the private plan side of Medicare, but lack any of the fundamental elements of managed care, such as networks of providers and measures of the quality of care they provide.

Panelist Christine Arnold, who until recently was an analyst with the investment firm Morgan Stanley, said, "we're paying 19 percent more for a senior that's enrolled in a private fee-for-service plan relative to what we would have paid had they stayed in regular Medicare . . . The issue here is, is it fair that we're depleting the Medicare Trust Fund by overpaying for this small portion of seniors presuming they're getting better benefits and potentially overpaying the managed care plans?"

"I would agree that private fee-for-service is not the answer," said Lehman Brothers analyst Joshua R. Raskin. But he noted that Medicare HMOs have been able to deliver Medicare benefits for 95 cents on the dollar, showing that private plans can save the program money. That suggests the long-term viability of the Medicare Advantage program, he said.

Laszewski noted that HR 6331 does not actually propose to cut the rates paid to private fee-for-service plans. The measure says that by 2011 the plans have to have networks. "That's a pretty reasonable thing for Democrats to be expecting. They're not cutting the rates, they're simply saying, 'Gee whiz, guys, you've been doing this since 2004 now, you get to 2011, seven years later, maybe we can kind of take the training wheels off.' "

"Private fee-for-service is not sustainable because it was never intended to be sustainable." The idea was to launch the plans in areas without Medicare alternatives and to allow them to build up a block of enrollment that would create leverage to form networks, he said.

Arnold opined that the plans could be made sustainable if they were reconfigured to serve only low-income beneficiaries and Medicare acquired the authority to audit the plans to ensure they deliver needy seniors additional benefits for the added money they receive.

On the issue of a health overhaul, analysts noted that firms like Aetna and Cigna were making some moves to target the individual, or non-group market. However, Raskin, the Lehman Brothers analyst, said the biggest efforts to prepare for an overhaul haven't been made in the market itself but in hiring lobbyists to try to influence legislation revamping the health care system.

"Leaders in the health insurance industry are firmly behind expansion though the employer-based system," Laszewski said, raising questions about shifting insurance coverage sharply to individual sales. "There is a discomfort in moving in the individual direction."

Analysts said that a shift to individual sales that would be encouraged by McCain would need to be accompanied with certain regulatory changes to be successful. Arnold said steps would be needed to attract healthy, low-cost individuals to the risk pool on which individual rates would be based.

Doing so is possible, Laszewski said, and need not involve mandating that people buy insurance coverage. As a potential model, he pointed to the Medicare Part D program governing prescription drug benefits. Part D participation is voluntary, he noted, and involves delivering benefits on a community-rated basis for large numbers of relatively sick people. The program is working quite well, he said. Arnold agreed that a mandate to buy health insurance wouldn't be needed if certain disincentives were to come into play if people didn't buy it, such as requiring "medical underwriting" for those who delayed participation. The term refers to charging people more if they have costly medical conditions or denying them coverage for those particular conditions while covering other ailments.

But Laszewski cautioned that "I don't think you tell the American people to give up their employer-based health insurance without giving them some assurances about how they make that transition."

By Reed Cooley, CQ Staff

July 11, 2008 -- The National Committee for Quality Assurance (NCQA) has announced it will update its standards for evaluating the way health plans measure and report on the cost and quality of health care providers.

NCQA first implemented the Physician and Hospital Quality (PHQ) program in 2006, but has decided to issue updates to the program due to "demand from employers, consumers, regulators, and physicians . . . and changes in the market," said an NCQA press release.

"Any effort to compare physicians and hospitals is only as good as its methods and its data . . . The updates to this program raise the bar," said NCQA President Margaret E. O'Kane.

Among other things, the updates, released late last month, would introduce a requirement that some physician quality measures be approved by third-party evaluators.

Insurance industry representatives said it was too early to tell what impact the updates would have on insurers but commended NCQA and other accreditation programs for holding providers accountable on measures of cost and quality.

"Our members certainly endorse the concept of having transparency in physician performance measurements," said Robert Zirkelbach, a spokesperson for America's Health Insurance Plans (AHIP).

He added that AHIP companies wishing to comply with the certification updates most likely would have to allocate new resources to make the required changes.

However, Greg Bury of Medica, an AHIP insurance company in Minnesota that is PHQ certified, said his company would have to change little to adjust to the updates.

"The changes are not going to have any impact for us and we're fine with the revisions," he said.

Consumer advocates, although supportive of NCQA and other quality reporting systems, warned that such programs will be limited if they continue to be voluntary.

"In general when we're looking at performance information there's a number of very good voluntary efforts underway . . . The overall impact of those efforts has been pretty modest," said John Santa, director of the Health Ratings Center at Consumer Reports, in an interview.

Santa said that only a requirement from a purchaser with "significant market clout" or a mandate from the federal government that all providers hold to particular set of standards could improve quality on a wider scale.

The updates would also open up the possibility for certification to independent Web sites and other information venues that assess the competency of insurers' quality reporting programs.

By Danielle Parnass, CQ Staff

July 10, 2008 -- Bush administration policies and a weak economy have hindered state initiatives to further expand Medicaid and the State Children's Health Insurance Program (SCHIP), analysts with Families USA said at a briefing Thursday.

Researchers noted a sharp change between 2007 and 2008. Many states last year sought to expand these programs but instead had to scale back their initiatives in 2008 and either make cuts or find other funds, said researchers, who said increased federal funding is necessary to help states provide needed coverage with these programs.

In addition, the possibility of a recession has negatively affected Medicaid such that many states are having trouble addressing budget shortfalls in fiscal 2008, said two new reports released by the group.

Still, states are finding creative ways to get around these roadblocks, said Jennifer Sullivan, Families USA senior health policy analyst. Four states—Indiana, Louisiana, Ohio, and Oklahoma—changed their proposed SCHIP eligibility expansion from 300 percent of poverty to 250 percent to meet an Aug. 17 directive issued by the White House that said states had to meet new standards to expand children's coverage.

New York and Wisconsin have been using state funding to expand their programs, while others also have been responding with expansion plans or funding to work around these set backs, the reports found.

Rhode Island and California, on the other hand, are considering cuts to children's programs due to budget deficits in fiscal 2008 and a lack of federal funding that would have come with the SCHIP reauthorization.

"It's an encouraging time" but things are "cautiously optimistic," Sullivan said. "States are in a wait-and-see mode."

Medicaid is closely linked to state economies, said health policy analyst Rebecca Bruno. Cuts to Medicaid can cause states to lose federal funding as well as business activity and lead to increased demand for its services from unemployment.

All these factors combine to make a "perfect storm" for states, Bruno said.

"The only way for states to weather this storm is for the federal government to step in and provide relief," she said.

States do have options to avoid these cuts, such as tapping into tobacco or rainy day funds, but these are only short-term options and won't boost the state's economy, Bruno said.

Experts are looking for future federal government initiatives to deal with these cuts. Rachel Klein, Families USA deputy director of health policy, said there is talk of a possibility of a second stimulus package in Congress this fall, which may include funding for Medicaid.

The next administration also will be crucial in dealing with SCHIP funding, set to expire in March. Democratic presidential candidate Sen. Barack Obama of Illinois has proposed expansion of Medicaid and SCHIP. Republican presidential candidate Sen. John McCain of Arizona has not explicitly addressed expansion of either program in his health care proposals.

By John Reichard, CQ HealthBeat Editor

July 11, 2008 -- Even with a presidential veto in the offing, many health care lobbies around Washington remained jubilant Friday about the Senate's lopsided passage earlier in the week of Medicare legislation deceptively described as the "physician payment fix" that in fact would fulfill a host of goals long cherished by health care advocates.

Advocates for the poor celebrated expanded access to Medicare's comprehensive low-income drug benefit, while lobbyists for the mentally ill described the measure as an important contribution to expanded mental health care services in the United States. And the tantalizing promise of health information technology seemed close to fruition with a provision requiring electronic prescribing in the Medicare program.

Those unaccustomed to the taste of lobbying success in recent years could afford to be upbeat going into the weekend amid indications that President Bush might not be able to make his promised veto of the measure (HR 6331) stick in an override vote that could occur next week.

But all was not sweetness and light—and the comments of others were a reminder that lobbying victories in Washington come and go. America's Health Insurance Plans, which has seen big enrollment gains in Medicare's private plans in the Bush administration after years of struggle in the Clinton era, described the bill as stripping away seniors' health care choices. With Democrats possibly poised to make major gains in the November election, Medicare Advantage's roller coaster enrollment may be flattening or even heading downward again in coming years.

Iowa Senator Charles E. Grassley, the Senate Finance Committee's top Republican, warned that "the bill is riddled with problems and missed opportunities." Missing from the package were nursing home reforms and "sunshine" provisions to publicize drug company payments to doctors, Grassley lamented.

"This is desperately needed to highlight the relationship between drug and device companies and doctors, so everyone can see all financial inducements out in the open," he said in arguing against HR 6331 on the Senate floor July 9.

Also missing was language furthering "value based purchasing"—the term describing efforts long urged by many health policy experts to vary payment according to the quality and efficiency of care. Missing too was any funding for comparative effectiveness research, an approach to controlling health care spending increases urged in dozens of speeches by Congressional Budget Office Director Peter Orszag.

Grassley warned about a "little land mine" in the bill he said could do serious damage to Medicare's drug benefit by driving up its cost. He was referring to language that according to an Office of the Medicare Actuary analysis could drive up spending under the benefit by weakening the negotiating clout of drug plans and requiring coverage of more costly drugs.

"When we work together, we catch those little land mines tucked away in House-passed bills," Grassley said. But Democrats instead were "outrageously political," denying Republicans a chance to offer amendments to the bill.

Celebrating a 'Second Chance'
But the mood in lobbyland was more celebratory than not after supporters pushed the bill through to Senate passage by a 69 to 30 margin after failing in June to get the 60 votes needed to get it to the floor. "They say life doesn't give you second chances," observed Bill Novelli, chief executive officer of the senior lobby AARP. "The Senate got a big one this week, and AARP applauds the bipartisan majority" who passed the measure.

"This bill would allow people in Medicare to maintain access to their doctors, improve benefits for low-income, prevention, and mental health programs, and boost quality through national e-prescribing."

Beyond the widely reported provision of erasing a 10.6 percent doctor payment cut in 2008 and a five percent cut in 2009, the bill would make it easier to qualify for the "low-income subsidy" in the Medicare Part D drug benefit. The value of life insurance policies and assistance provided by a family member or a church would be exempted in counting assets to determine eligibility for the benefit. The enrollment process would be simplified by having Social Security offices provide applications and assistance for the Rx low-income subsidy.

Similarly, the bill would ease the assets test for "Medicare Savings Programs," which help low-income beneficiaries pay various out-of-pocket costs not covered by Medicare. As of January 1, 2010, asset levels permitted under the program would be raised to those for people qualifying for the full low-income subsidy for the drug benefit.

The National Council on Aging, a network of some 14,000 organizations that deal with issues concerning aging, praised provisions increasing community resources to find and enroll low-income beneficiaries, translating low-income subsidy applications into other languages, and improving access to preventive benefits.

Preventive Services and Mental Health Care
The bill authorizes the HHS Secretary to cover new preventive services recommended by the U.S. Preventive Services Task Force, which reviews medical literature to determine which services have medical value. The bill also revises the "Welcome to Medicare" physical by waiving the deductible involved and giving seniors a full year after joining Medicare rather than six months to avail themselves of the benefit. Fewer than six percent of new beneficiaries actually use the benefit now.

The National Alliance on Mental Illness hailed provisions lowering out-of-pocket costs for outpatient mental health care as a "tremendous win." Medicare now requires a 50 percent co-payment for such services but the bill would reduce it over six years to the same 20 percent co-payment required for physical health care services. The bill also would expand the Medicare drug benefit to include coverage of benzodiazepines and barbiturates used for mental health treatment.

"The new Medicare provisions will make an important contribution to expanding mental healthcare in America," said Charles Ingoglia, vice president of the National Council for Community Behavioral Healthcare. In addition to its other mental health care provisions, the bill would make community mental health centers eligible for participation in Medicare's telehealth program, providing mental health services "in remote areas where people have little or no access," he said.

The bill also would ease tracking of medical outcomes to see how they vary by sex, race, and ethnicity, said Timothy Gardner, president of the American Heart Association. "This legislation breaks new ground by providing for the collection of Medicare quality data by sex, race, and ethnicity," he said.

Gardner said the bill would provide reassurance to stroke patients that they will continue to have access to rehab services exceeding Medicare dollar caps for outpatient physical, occupational, and speech therapy. The measure extends for 18 months an exceptions process to maintain access to such services for those exceeding the caps.

Drugs and Imaging Services
The bill also uses a carrot and stick approach to fostering adoption of electronic prescribing of drugs by physicians, which is widely expected to prevent many medication errors and save lives and treatment costs as a result. Doctors in Medicare must use e-prescribing systems starting in 2011, a provision enforced by docking their payments up to two percent if they don't comply. The bill creates exceptions for infrequent prescribers and cases of "hardship" in which doctors are unable to use a qualified e-prescribing system.

The e-prescribing language "will now lead to broader adoption of overall health information technology," the Pharmaceutical Care Management Association said in a statement.

Community pharmacists praised the bill for speeding payments for Part D claims and delaying cuts to Medicaid generic prescription drug reimbursement. Bruce Roberts, CEO of the National Community Pharmacists Association, said the bill would help maintain patient access to medications and pharmacy counseling. PCMA said, however, that the prompt payment provision for pharmacies would increase Medicare's costs.

The bill would delay for 18 months a competitive bidding program that just got underway in 10 cities limiting where Medicare patients could go for medical supplies such as wheelchairs and oxygen supplies.

The American Clinical Laboratory Association praised the bill for stopping another competitive bidding program, one for clinical laboratory services. The American College of Radiology, which represents radiologists, lauded provisions requiring accreditation of imaging providers in order to qualify for certain Medicare payments. It similarly praised the bill's requirement for a two-year program testing the use of physician-developed criteria to determine whether imaging services for various conditions are medically appropriate.

The Medical Imaging and Technology Alliance, which represents imaging suppliers, called the provisions "the best approach to addressing proper utilization" of imaging services.

America's Health Insurance Plans said the bill would reduce enrollment in the Medicare Advantage program "by about 2.3 million over the next five years." In fact, the Congressional Budget Office has estimated that the bill would not actually reduce current levels of enrollment but reduce enrollment gains.