By Reed Cooley, CQ Staff

July 25, 2008 -- Medicare should include a benefit for long-term care financed by a premium, said nearly four of five health care "opinion leaders"—including professors, researchers, and health industry professionals—participating in a new Commonwealth Fund study.

The report, released Monday, found that 79 percent of health care experts "strongly favored" such a benefit, and 69 percent said that it is either important (28 percent) or very important (41 percent) that presidential candidates address quality and cost of long-term care in their health overhaul proposals.

"Although health care leaders say long-term care is important to include in health care reform plans, the presidential candidates have not yet addressed this issue, which is certain to become an increasing concern for American families," Commonwealth Fund President Karen Davis said in a press release.

Public coverage of long-term care services such as nursing homes currently exists only under Medicaid, the entitlement program for impoverished individuals. Medicare includes a benefit for post-acute care services such as those provided by skilled nursing facilities, but not for services that aid seniors in permanent need of assistance in their day to day lives.

But other analysts believe that a shift to Medicare-covered long-term care would significantly drive up costs.

"Federalizing the cost on long-term care is going to be much more expensive than the current system," Heritage Foundation senior fellow Dennis Smith said in an interview. Smith recently stepped down as the director of the federal Medicaid program.

Robert Helms, a researcher at the American Enterprise Institute, expressed a similar concern but seemed less distressed by the idea that the benefit would be paid for by a premium.

"The extent that you could actually make the premiums pay for it would be far better than putting it on trust funds," he said.

Smith noted progress toward lower costs in existing public long-term care coverage programs as another strike against the Medicare idea. "We're making huge strides in Medicaid by moving long-term care away from institutions. We would lose that momentum if the federal government took it over," he said.

A recent report by the senior lobby AARP found that, although some states are making strides toward replacing more expensive institutional care models such as nursing homes with home- or community-based models, progress in this area is still limited.

Seventy-six percent of respondents to the Commonwealth Fund study said it was urgent or very urgent to develop a "sufficient supply" of home- or community-based models, as opposed to more expensive institutional care models like nursing homes.

By John Reichard, CQ HealthBeat Editor

Switching the poorest Medicare beneficiaries from Medicaid drug coverage to the Medicare prescription drug program that began in 2006 has added $2 billion a year to drug industry revenues, a "windfall" that Congress should end, California Democrat Henry A. Waxman said Thursday.

Waxman, chairman of the House Oversight and Government Reform Committee, released a report from majority staff examining outlays for 6 million "dual eligibles"—Medicare beneficiaries whose incomes are so low that they also qualify for Medicaid benefits.

In 2006, the Medicare prescription drug program, called Part D, paid drugmakers $1.7 billion more for the 100 drugs prescribed most often for the "duals" than would have been the case had they remained in Medicaid, the analysis said. "The higher prices produced an even larger windfall of $2 billion for the drug manufacturers in 2007," the report added.

On average, Medicaid gets discounts of about 30 percent on prescription drugs while the plans that offer drug coverage through Part D get discounts averaging 8 percent, according to testimony at a committee hearing. Waxman said he will soon introduce a bill that "will guarantee that federal taxpayers cannot be charged higher prices for the dual eligible beneficiaries under Medicare Part D than under Medicaid."

The legislation "could save the taxpayer almost $90 billion over the next 10 years," said Waxman. The staff report estimated that duals are expected to use $432 billion worth of drugs over the next decade. "If drug manufacturers provided the Medicare Part D program with the same prices that Medicaid receives, these drug costs could be reduced by as much as $86 billion," the report said.

"Johnson & Johnson received the largest windfall: $615 million in 2006 and 2007, including over $500 million in additional revenue from sales of just one drug, the anti-psychotic Risperidal. Bristol-Myers Squibb received a windfall of $400 million, including over $200 million in additional revenue from sales of its heart attack and stroke medication Plavix," the report said.

The hearing was a fresh reminder that the 2003 Medicare overhaul law (PL 108-173), championed by the Bush White House for bringing more private plans into Medicare as well as prescription drug security to seniors, may face revisions if Democrats make big gains in the November elections.

Democrats have chipped away at the law in recent days. Congress overrode a veto of legislation (HR 6331) that is expected to trim increased spending for private fee-for-service plans in Medicare Advantage, the private plan side of Medicare. A House vote Thursday effectively blocks a vote in that chamber on a spending control plan proposed by the White House in response the 2003 law's "trigger" provision—requiring consideration of such a plan if projected Medicare spending exceeded a certain threshold.

But the change proposed by Waxman would strike at the heart of the 2003 law, which relies on competition between private plans rather than government-mandated discounts, the tool used to keep Medicaid prices down, to control prescription drug spending in Medicare.

Republicans at the hearing warned that Democrats in effect want price controls that would gut innovation by slashing industry spending on research and development of new drugs.

"I'm not convinced there's much constructive to be learned simply by comparing controlled prices under Medicaid and market prices under Part D, and labeling the entire difference a 'windfall,' " said the panel's ranking Republican, Thomas M. Davis III of Virginia.

Davis said Waxman's proposal of requiring that prices for the duals be no higher than that in Medicaid would be a "short-lived and painful" way to capture savings. "It would come at a far higher cost as other segments of the health care delivery system—employer and union plans, payments for the uninsured—absorbed the cost shifts inevitably generated by price controls."

The committee's minority staff countered Democrats with its own analysis, saying that providing duals with drug coverage through Part D gives them a better benefit.

The analysis noted that moving the duals back to Medicaid drug coverage "would likely be opposed by advocates of low-income seniors, dual-eligible seniors, and states. While the Medicaid program is required to cover a broad array of drugs, states have responded to budgetary concerns by using a number of tools that effectively limit access to certain prescription drugs or quantities of drugs."

Waxman replied to GOP warnings about the impact on research and development by saying the industry had plenty of money to innovate when the duals were getting big discounts on Medicaid.

A panel of academics at the hearing basically agreed when Rep. John F. Tierney, D-Mass, dismissed the idea that Medicaid level prices for the duals would undermine innovation.

The nation "could certainly go back to the Medicaid prices and not affect R&D dramatically," added University of Minnesota professor Stephen Schondelmeyer. Fiona M. Scott Morton, an economics professor at the Yale School of Management, said "I more or less agree" but suggested that a shift back for the duals would send a signal to venture capital firms that investing in pharmaceutical innovation might not be as inviting.

Morton also alluded to larger Democratic ambitions to lower prices in Medicare beyond the duals by having Medicaid prices for everyone in the Medicare program. That, she indicated, would have too big an impact on innovation. The question is "are we making a small shift for duals or are we making a big shift for everybody who's eligible for Medicare?"

Kerry Weems, acting chief the Centers for Medicare and Medicaid Services, responded to Democratic arguments about overspending on Part D by noting that it is spending almost 40 percent less than was originally projected when Congress debated the creation of the prescription drug benefit.

Weems added that the duals face fewer restrictions on quantities of drugs and have the "dignity" of having a choice of plans under Part D. Waxman countered that spending isn't as high as projected because enrollment in Part D isn't as high as projected.

By Drew Armstrong and Leah Nylen, CQ Staff

July 23, 2008 -- The House Energy and Commerce Committee, racing a rapidly shrinking legislative calendar, cleared one more obstacle for a floor vote on legislation designed to promote faster adoption of electronic medical records.

After considering amendments from members of both parties, the committee approved the bill (HR 6357) by voice vote. The measure seeks to spur a shift to electronic records by hospitals, doctors, and other health care providers through loans and grants. It also would set up privacy protections for patient data.

Before the bill was approved, the committee adopted, by voice vote, a substitute amendment by Chairman John D. Dingell, D-Mich., that embodied a bipartisan compromise between committee leaders.

Committee ranking Republican Joe L. Barton of Texas called the bill "a good faith effort by all parties."

Committee members debated a series of amendments, largely dealing with patient privacy issues. Most were withdrawn with a promise from Dingell to work with their authors, including one from Rep. Mike Rogers, R-Mich., that Rogers said would make sure health care providers could share records within their organization, for business purposes.

Rogers argued that if the privacy considerations were important, so too were the large dollar savings and increased patient safety that could result from a comprehensive health information technology system.

Dingell and other Democrats were skeptical of Rogers' amendment's actual effect, however, but promised to work on the language with him.

"What we're trying to do here is balance out the protection of privacy but also make sure the system moves," Dingell said.

The House bill would authorize grants and loans to help hospitals and doctors—especially small practices—buy health information technology equipment. It also would require the government to settle on a standard for electronic health records and start using them in its health programs as it replaces existing equipment. Lawmakers hope those standards would spread to the private health industry.

Several amendments were adopted by voice vote, including those offered by:

• Mike Rogers, R-Mich., clarifying that any graduate professional school would be eligible for grants for demonstration projects to develop academic curricula integrating health IT into clinical education.
• Anna G. Eshoo, D-Calif., to require the secretary of Health and Human Services to conduct a study on the use of technology for care of seniors and the disabled.
• Eshoo, to clarify language in the bill to ensure that it is technology-neutral.
• Edward J. Markey, D-Mass., to require the secretary to create a model informed- consent agreement in plain language that is easily understandable.

The House Ways and Means Committee has partial jurisdiction over the bill, and will hold a hearing Thursday on the topic. The bill's supporters on the Energy and Commerce have been optimistic about their bill's chances this year, despite the few remaining legislative days.

But others have been less sunny about getting the bill through this year, including Rep. Michael C. Burgess, R-Texas, who has said the bill will provide too large a burden on health care providers, and who doubts the bill can be finished this year. "If we're going to have a little more time, we ought to get it right," Burgess said Wednesday.

In the Senate, Massachusetts Democrat Edward M. Kennedy and Wyoming Republican Michael B. Enzi, the chairman and ranking member of the Health, Education, Labor and Pensions Committee, have been working on their own health IT bill (S 1693). However, Kennedy has been largely absent from the Senate since undergoing brain surgery on June 2.

By John Reichard, CQ HealthBeat Editor

July 23, 2008 -- The air was thick with buzzwords at a Senate Aging Committee hearing Wednesday on improving care for the elderly but the message delivered by witnesses testifying about "person-centered care" was nevertheless clear—it's possible to deliver long-term care in a place where residents love to live and where staff wants to work.

A recent survey by the senior lobby AARP "found that fewer than 1 percent of individuals over 50 with a disability want to move to a nursing home," noted Sen. Bob Casey, D-Pa., who was invited by Chairman Herb Kohl, D-Wis., to wield the gavel because of his nursing home oversight work as Pennsylvania's Auditor General. "There has to be a better way and in fact there is," Casey declared.

Casey used the hearing to give a big shout out to a type of care for the frail and disabled known as "the Green House model," described by Robert Jenkens, director of the Arlington, Virginia–based Green House Project as simply an approach that "reinvents nursing homes to make them real homes." The project is a nonprofit entity that works with financial assistance from the Robert Wood Johnson Foundation to spread the model.

"Picture elders waking up when they choose, to a breakfast of their choice, made fresh and hot just for them," Jenkens said in his testimony. "They spend their day according to their choices and preferences, with staff who know them very well. Their family and friends are welcome and feel comfortable visiting a place that is truly mom's, dad's or grandma's home."

The approach "combines small houses with the full range of personal care and clinical services needed by elders typically served in skilled nursing facilities." A Green House home "is a small, flexible environment, typically of 10 elders, organized around the central common area called the hearth. The hearth includes the kitchen, living area and dining area in an open plan and is intended to support . . . community and strong relationships.

"A core feature of the Green House home is a private bedroom and bath for each elder, to provide sanctuary and privacy. The open kitchen becomes a hub for elder and staff activity and normal social life. The aroma of fresh, home-cooked food stimulates appetite and makes meals comfortable and familiar again.

"The design creates a therapeutic environment, encouraging self-reliance through short distances and a safe environment for elders," Jenkens said.

The Green House home uses various tactics to shatter the stereotype of nursing home work as being low in prestige and heavy in subservience, witnesses said.

"The model reorganizes the staff and flattens the hierarchy," Jenkens said. Staffers involved in direct care are called "Shahbazim," a Persian word that means "royal falcon." Trained as certified nursing assistants, they handle all the duties of running the household—working in teams to cook the meals, do the laundry, and managing personal care "in partnership with elders."

Each house functions independently, with a "guide" acting as a "coach" and "mentor" to help the Shahbazim make decisions and solve problems about the running of the home.

Edna Hess, a Shabaz at Lebanon Valley Brethren Home in Palmyra, Penn., said that since beginning work in a Green Home "the most noticeable improvement I have witnessed is in the amount of socialization that occurs in our house. Several of my elders were hardly ever out of their rooms in the traditional nursing units; now they are frequently seen chatting in the living room, out on the patio, or lingering at the dinner table.

"Even the elders who have dementia are engaged in the activities and conversations around them, though they clearly don't understand everything that is going on. The second biggest improvement is in the dining experience. Every meal is home-cooked in our open kitchen, and the elders experience all the smells and sights of the meal preparation; they really chow down by the time the meal is served.

"The working life we now enjoy is very demanding, because we do cooking, cleaning, and activities in addition to nursing care, but it is so much more fulfilling. I no longer feel like I am working on an assembly line," Hess said.

A two-year study by the University of Minnesota of four Green House homes found fewer declines in independence on the part of patients, with less depression and fewer patients who were bedfast or otherwise inactive, Jenkens said.

He added that the Green House model is spreading, with 41 homes on 15 campuses in 10 states. "There are 120 additional houses in planning on 19 campuses, expanding Green House homes to 22 states. In time, the model is expected to spread to all 50 states."

But the concept faces funding obstacles. "Issue like Medicaid reimbursement rates, debt load, and the capital expense of constructing new homes impact the ability of a provider to build successful Green House homes," he said. "Economies of scale—where several homes can share costs and systems—are also critical to the model.

"Currently, Green House homes are serving elders receiving Medicaid funding only in states with higher reimbursement rates," he said. The model requires "slightly more direct care staff than the industry average." And "many state Medicaid reimbursement rates cover only a small percentage of the actual capital costs of constructing a new skilled nursing facility."

Jenkens urged lawmakers to spur creation of the homes through tax credits, targeted grants and interest rate reductions to make capital costs more manageable. He also urged fast-track federal review of state-based Medicaid payment revisions to increase the number of Green House homes.

Casey said he plans to introduce legislation to provide loan funding to long-term care nursing facilities that commit to the principles of person-centered care shown in the Green House model.

"Person-centered care" had another dimension explored by the hearing—the concept of a "medical home."

Melinda Abrams, assistant vice president at the Commonwealth Fund, explained the concept, which involves treatment of patients who aren't hospitalized or in nursing homes who typically have various chronic medical conditions. The home isn't actually a facility but a doctor's office that takes responsibility for all of the patient's health care needs or arranges care to be provided by other doctors and nurses.

"In a medical home, a patient could expect to obtain care from the physician practice on holidays, evenings, and weekends without going to the emergency room," Abrams said. "The patient could have medical questions answered by telephone or e-mail [message] on the same day that she contacts the office. Non-urgent care appointments could be scheduled one or two days ahead of time, instead of weeks or months."

"In a medical home, care coordination is vastly improved," Abrams added. "The primary care clinician helps the patient select a specialist and with support from staff proactively follows up with both the providers and the patient about test or examination results. In a medical home, the personal physician reviews treatment options with the patient and her family to help understand or resolve conflicting advice received from multiple providers."

Abrams said there is preliminary evidence that the approach reduces medical costs by preventing hospital admissions and lower readmission rates. But she said that the approach requires "fundamental payment reform that is intended to strengthen and reward primary care."

By John Reichard, CQ HealthBeat Editor

July 22, 2008 -- Health policy analysts see many opportunities for eliminating wasteful spending on health care and improving quality at the same time, but lament a lack of funding for organizing these efforts. Now under a little-noticed provision of the new Medicare law (PL 110-275) blocking physician payment cuts, efforts to set national priorities for quality and efficiency gains will accelerate, those analysts say.

The legislation provides $10 million a year in fiscal years 2009 through 2012 from the Medicare trust funds to fund a process for setting priorities for improving quality and efficiency of health care and for endorsing specific measures to meet those priorities.

The law provides "a clear, steady funding source," said Richard Sorian, vice president for public policy at the National Committee for Quality Assurance (NCQA), a private group that develops specific quality performance measures used by public and private health insurance programs. With the law "you have a pot of money to really drive the process forward."

Section 183 of the law directs the secretary for Health and Human Services "as soon as is practicable" to sign a contract with an organization "such as the National Quality Forum" (NQF) to undertake the effort. Practically that means the money will go to NQF, insiders in the health quality improvement field say.

NQF is the flower of years of voluntary efforts to figure out ways to measure and improve the quality of care not only to help doctors, nurses, hospitals, and health plans focus their internal efforts but also to help consumers and other health care payers decide which plans and providers to use. The forum has brought together a wide cross-section of health care players including purchasers, health plans, providers, and consumers to achieve consensus on more than 300 specific measures of quality of care.

NQF President Janet Corrigan said that the priority setting process is meant to focus consensus-setting efforts on areas with the biggest potential payoff for gains in the quality and affordability of care.

The forum has already brought 27 health-related organizations into a process of setting national priorities for improving quality and affordability of care. Once those priorities are set, the forum would bring health care players together to endorse specific measures to achieve the priorities.

One priority area could be overuse of services. Corrigan said the forum is likely to tackle the issue of geographic variations in the types and volumes of services used to treat specific medical conditions. That effort could involve developing measures to identify unnecessary or redundant services and to help bring health service usage levels down to more medically appropriate levels.

Congressional Budget Office Director Peter Orszag has identified geographic variation as an area ripe for health system changes that eliminate hundreds of billions of dollars in wasteful spending.

Corrigan said that in addition to setting "national priorities that identify reforms that yield the biggest results," the $10 million a year would help support efforts "to facilitate the development of electronic health records that capture the necessary data to measure quality and possess the key capabilities to support quality improvement and public reporting."

The priority setting effort has also already identified health care–associated infections, end-of-life care, and care coordination as areas ripe for measure-driven improvements.

The law means steady funding to move NQF efforts forward.

"It is refreshing to see longstanding grassroots commitment to 'quality' backed by funding and leadership at the highest levels of government," Corrigan said.

The idea of setting national priorities in the health care quality field "has been percolating for more than a decade," Sorian noted. Although NQF has begun the process, "a key part of this is to have resources to make it work."

Until now, "it's always been to some extent hand to mouth" when it comes to funding for NQF projects, he said.

By Alex Wayne, CQ Staff

July 24, 2008 -- A bill to encourage health providers to adopt electronic medical records could see substantial changes in the Ways and Means Committee before it goes to the House floor, panel members indicated Thursday.

The bill (HR 6357) was approved Wednesday by the Energy and Commerce Committee. It would authorize $560 million in grants and loans over five years to encourage hospitals and doctors to buy and install electronic systems for collecting and transmitting health records.

The bill also would require health providers using this health information technology, or "health IT," to take precautions to protect the privacy of the records.

The Ways and Means Committee shares jurisdiction over the bill, and several committee members suggested at a subcommittee hearing Thursday that they have concerns about the bill as now drafted.

Pete Stark, D-Calif., chairman of the Ways and Means Health Subcommittee, which held Thursday's hearing, said that any health IT bill must contain both generous incentives for health providers to adopt electronic record systems and penalties for those who don't.

The Energy and Commerce bill would not penalize providers who refuse to invest in health IT.

Carrots and Sticks May Be Necessary
Stark also questioned whether the $560 million the bill authorizes would be enough to provide a meaningful incentive for the thousands of providers still using paper records.

"I'm not sure that's sufficient," he said.

Peter R. Orszag, director of the Congressional Budget Office, told Stark's panel that estimates for the cost of implementing a nationwide health IT system that is interoperable—meaning all health providers could exchange electronic records—range from $50 billion to $70 billion, plus ongoing costs for maintenance.

"It seems unlikely, unless you're to have very, very large budget impacts, to get universal or near-universal implementation with only a 'carrot' approach," Orszag said.

Not Everyone Would Save
Health care experts largely agree that health IT could save the country billions of dollars every year by making the delivery of care more efficient and reducing medical errors.

But Orszag said that providers, who would have to purchase the necessary technology and implement the system, would likely not enjoy much of the savings. Instead, groups that pay for health care, like insurers and the government, would reap most of the benefit.

Rahm Emanuel, D-Ill., suggested that the government could pay for health IT implementation by selling some of its assets, such as property or radio spectrum.

Orszag called that a "very good" idea but said he could not think offhand of specific assets the government might sell. The government does a poor job of managing its assets in general, he said, and has many opportunities to sell some of them to raise money for other projects.

Dave Camp of Michigan, the senior Republican on the subcommittee, said he plans to introduce his own health IT bill that will include tax incentives for health providers to adopt the technology.

Stark said he would work with Camp on a Ways and Means bill, but he noted that tax incentives won't help the many health providers that are nonprofits, including many large hospitals.

Matters of Privacy
Lloyd Doggett, D-Texas, said he was concerned that the Energy and Commerce bill does not do enough to protect patient privacy.

For example, he said, the bill does not define "privacy" and does not give patients complete authority to consent to all uses of their records—provisions sought by some privacy advocates.

But Deven McGraw, health privacy project director of the Center for Democracy and Technology, told Doggett that her group supports the Energy and Commerce bill.

While she said they would not mind stronger privacy protections, she added that the group's support was "not qualified," and said that allowing patients to consent to all uses of their records could actually result in weaker protections.

"It puts all the burden on individuals to protect themselves," she said. "We'd much rather have a focus on creating rules on how providers can use data and penalties for misuse."

Health IT bills have been weighed down for years over privacy concerns; the issue has been a major obstacle for a Senate bill (S 1693) this year.