By Whitney Blair Wyckoff, CQ Staff

June 11, 2008 -- Providing health care coverage to all Americans may help reduce health care disparities but even with universal coverage, inequities may remain, lawmakers said Tuesday.

"Universal coverage won't be able to end the disparities, but you won't be able to end the disparities without it," said Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif., after a subcommittee hearing on how health overhaul legislation could address health care disparities.

Statistically, women and racial and ethnic minorities receive poorer access to care, poorer quality of care, and have poorer health outcomes. Studies also have shown that there is a higher prevalence of certain diseases among some populations. A host of socioeconomic factors such as place of residence, income, education, and insurance status also contribute to health care disparities, according to the subcommittee.

Panel members and witnesses said that even with health care coverage, disparities exist for several reasons, including income, education, environment, and geography. People who live in rural areas also face higher levels of disparities in care, said Rep. Dave Camp of Michigan, the panel's ranking Republican.

Language barriers also contribute to the problem, medical experts told the panel.

When working with limited English proficiency patients, "three-quarters of physicians use family members as interpreters and less than half of physicians use trained interpreters," said physician Michael A. Rodriguez of the University of California-Los Angeles Department of Family Medicine. Rodriguez said that interpreters can be costly, inconvenient and not readily available.

"There is a need to develop programs and policies to promote the provision of adequate language services to the rapidly growing population" of limited-English speaking families, Rodriguez said.

Another witness, Marsha Lillie-Blanton of the Kaiser Family Foundation, said that of the 47 million non-elderly Americans who were uninsured in 2006, about half were minorities. She said insurance could be a stepping-stone to addressing disparities, however she called for more research to be done so that the issue could be addressed.

Witnesses said to get a true picture of the task at hand, there needs to be more comprehensive data on health care access.

"To improve quality, you need good policy informed by good research and data," Rodriguez said. Without the data, he said it is difficult to target the issue.

By John Reichard, CQ HealthBeat Editor

June 13, 2008 -- For those who follow the twists and turns of Medicare payment policy, MedPAC reports are an imperfect guide to the future—nevertheless, they may be the best roadmap available. The latest report out of the Medicare Payment Advisory Commission points to a future in which Medicare payment spurs doctors and hospitals to team up to deliver large packages of services efficiently—instead of operating independently and being individually reimbursed for many separately billable services.

The annual "June report" to Congress by the Medicare Payment Advisory Commission also suggests that changes lie ahead for the Medicare hospice benefit, and that the payments doctors receive from drug and medical device companies will increasingly come into public view. And it points to the rising prominence of "comparative effectiveness" research in determining coverage policy.

Many MedPAC recommendations are never followed, but many are—and with lawmakers increasingly anxious about controlling health costs, the panel's advice for improving the efficiency of health care will likely get a serious look from congressional aides and the lawmakers they advise.

"The commission continues to be very concerned that underlying payment systems in Medicare do things wrong," MedPAC Executive Director Mark Miller said in a press briefing on the report. "They reward volume, they discourage coordination, they are indifferent to quality. And they have been on this path of trying every year to make recommendations to push the system in a better direction."

Teamwork, Please
Spurring teamwork and promoting more careful oversight of the overall care of Medicare patients, particularly those with chronic illnesses, are major themes of the report.

One way commissioners aim to focus those efforts is to target hospitals more likely to readmit patients—a sign that the care they received wasn't good in the first place. The panel is calling for reduced payments to facilities with high readmission rates for selected conditions. This change would be coupled with a change in law allowing hospitals and doctors to share in savings from treating patients more efficiently—a goad to avoiding sloppy care that leads to readmissions.

The panel also would have the secretary of Health and Human Services report readmission rates publicly after two years. In the first two years, information about readmission rates would be provided to doctors and hospitals on a confidential basis, as would data on the level of health care resources they consume in delivering care. Hospitals and doctors could use the information to compare their performance to that of other hospitals and doctors, and make improvements accordingly.

MedPAC also advises Medicare to establish a pilot program to test the use of a single payment for a large package of services involved in treating a patient with a specific condition. The idea is to pay based on an "episode of care"—for example, for all the services that hospitals and doctors provide in treating a heart attack, not to continue paying separately for all the tests and procedures and appointments that go into delivering that care.

Bundling Medicare payment "to cover all services associated with an episode of care has the potential to improve incentives for providers to deliver the right mix of services at the right time," the report says. Medicare recently announced an "Acute Care Episode" demonstration program that appears similar to the test MedPAC has in mind.

The panel also is pitching "medical homes" for the chronically ill. That's not a nursing home; rather it's a doctor's office that would be paid a monthly fee per patient in return for overseeing his or her various preventive, maintenance, and acute care needs. The physician's practice would "maintain 24-hour patient communication" with beneficiaries, among other services. The panel is calling for a pilot program testing whether the concept can improve the efficiency of care.

Another recommendation calls for higher payment of primary care doctors, who coordinate the overall care of individuals.

Spotlighting Conflicts of Interest
Physicians have great influence over the volume of health care services in the nation and over the types of procedures performed and drugs and other medical products patients use. Financial entanglements with hospitals and drug and device companies raise the specter of unnecessary referrals and prescriptions. "Payers, plans, patients, and the general public are often not aware of these potential conflicts of interest," the report observes.

"A federal law that would require drug and device companies to publicly report their financial ties to physicians could encourage physicians to reflect on the propriety of those relationships, perhaps discouraging inappropriate relationships. A public reporting system also would help the media and researchers shed light on physician-industry relationships and explore potential conflicts of interest."

The study explores various options for disclosing these financial relationships, including the type and size of payments that could be disclosed and how they would best be publicized. "Under the approaches we describe, the responsibility for public reporting would rest with pharmaceutical and device manufacturers, hospitals, and ambulatory surgery centers, rather than with physicians," the report notes.

The report also explores issues involved in the creation of an independent entity to produce and publicize information about the comparative effectiveness of health care services and products, a step it urged a year ago. The report weighs pros and cons of different options for funding the entity and for the makeup of its board, but does not make specific recommendations.

Closer Scrutiny of Hospice, Drug Benefits
The report also examines a trend in Medicare toward longer periods of hospice treatment for patients nearing the end of their lives and the growth of for-profit providers in the hospice sector. The growing number of providers in the program "certainly doesn't imply providers are being paid too little," Miller said.

The report may lay the groundwork for recommendations to change the payment system, which pays providers based on the number of days of care they provide, Miller said. He predicted that people will say of the report's examination of hospice, "these guys were pointing out the direction this benefit was going before anybody was paying attention to it." The aim of future recommendations may be to "be more judicious about how we pay so we send the right signals," Miller said.

Miller also addressed a recommendation from a year ago that researchers be given greater access to drug claims data in Part D of the Medicare, the prescription drug benefit. He reserved judgment about a rule recently issued by the Centers for Medicare and Medicaid Services to open up access to the claims, saying it's unclear how the access provisions will work.

According to Miller, MedPAC is considering a number of possible studies of the data, including whether the use of prescription drugs lowers the hospitalization rate. Another topic that may be of strong interest is the number of Medicare beneficiaries that fall into the so-called donut hole in the drug benefit, a level of expenditure at which beneficiaries must pay 100 percent of their drug costs. Questions of interest also include whether patients with certain types of medical conditions are more likely to hit the gap and what impact that has on the rate at which they continue to fill prescriptions and their subsequent use of hospital care, Miller said.

Another area of potential MedPAC interest is the degree to which Medicare is making use of generic drug alternatives when available and the degree to which drug plan formularies cover brand name drugs that are treatment breakthroughs. Another possible focus is usage levels of biologics for which there are no generic alternatives. "We can't do them all" right away, Miller said of the studies.

June 12, 2008 -- Senate Republicans defeated an effort by Democrats to bring up a Medicare bill for debate on Thursday, and Democratic leaders conceded they will have to negotiate with the GOP on compromise legislation.

The bill (S 3101), by Senate Finance Chairman Max Baucus, D-Mont., is aimed at reversing a 10.6 percent cut in physician payments under Medicare that is scheduled to take effect on July 1. Doctors say the cut is unaffordable. They say they might refuse new Medicare patients if it takes effect, making the issue of paramount importance to Congress.

But Democrats and Republicans have been unable to agree on how to pay for averting the cut, the main issue in Thursday's 54–39 vote. Democrats needed 60 votes to win cloture—or end filibusters—on a motion to begin debate on the bill.

Under Baucus' bill, reversing the cut and providing doctors a 1.1 percent pay increase in 2009 instead would cost $9.9 billion through 2010, according to the Congressional Budget Office. Baucus would pay for the additional physician pay and other Medicare changes in his $19.8 billion bill primarily by cutting costs from Medicare Advantage, a program in which insurers provide seniors their health benefits in place of the government.

Medicare Advantage was created in the Republican Medicare overhaul of 2003 (PL 108-173) and remains strongly supported by many Republicans, including President Bush, who threatened to veto Baucus' bill on Thursday. But the Government Accountability Office, Congressional Budget Office, and Medicare Payment Advisory Commission have all said that Medicare Advantage plans are overpaid, compared with traditional Medicare, making them a target for Democrats.

Baucus defended his bill, arguing that it would not have a great effect on most Medicare Advantage plans. It would gradually eliminate bonus payments some plans receive for being located in areas with teaching hospitals. It also would limit the growth of one type of Medicare Advantage plan, called "private fee-for-service." Such plans are the most overpaid, according to the congressional advisory agencies.

"By far, the best option for getting a Medicare bill done this year is the bill on which we will vote today," Baucus said.

He said that if the cloture vote had succeeded he would have offered an amendment to the bill to delay for 18 months the Bush administration's plan to force providers of home medical equipment to bid for Medicare business.

Baucus said his amendment would have been identical to a bipartisan bill introduced by House members on Thursday to delay the bidding process.

Many lawmakers are concerned about the bidding process because suppliers of the equipment—known as durable medical equipment, or DME—have complained that they were unfairly prevented from bidding or that companies unfamiliar with the business won bids. Some seniors have said they worry that the confusing process could result in them losing access to needed medical equipment, like oxygen, walkers, and hospital beds.

DME suppliers contribute thousands of dollars to congressional campaigns; people associated with one large Ohio DME company, Invacare, have contributed more than $116,000 to congressional and presidential candidates in 2007–2008, according to CQ MoneyLine, which tracks campaign contributions.

Before the vote, Senate Majority Leader Harry Reid, D-Nev., refused to agree to a request from Republicans that he allow a cloture vote on an alternative Medicare bill written by the senior Republican on the Finance Committee, Charles E. Grassley of Iowa.

"We want to legislate on this important piece of legislation," Reid said of Baucus' bill. "It's not only a doctor's fix, it's a fix to our health care system."

Reid changed his vote from yes to no before the vote on the motion ended so he would have the ability to call the bill back up for a vote under parliamentary rules.

Democrats might have reached the 60-vote threshold if all members of their caucus had voted. Five missed the vote: Hillary Rodham Clinton of New York, Daniel K. Inouye of Hawaii, Mary L. Landrieu of Louisiana, Edward M. Kennedy of Massachusetts, and Barack Obama of Illinois.

The GOP Alternative
Grassley's bill would have provided doctors the same pay increase as Baucus' legislation, but without changes to Medicare Advantage private fee-for-service plans. To pay for his bill, Grassley would have eliminated the same bonus payments related to teaching hospitals that Baucus cut, and he would have made two small changes in Medicaid, the health entitlement for the poor, that together yield about $2.8 billion in savings, according to the CBO.

With the failure of the Baucus bill, Baucus and Grassley are widely expected to re-start stalled negotiations on a compromise bill.

"I hope we can pass what we have on the floor today," Senate Democratic Whip Richard J. Durbin of Illinois said, prior to the vote. "If we don't, we're going to have to consider reworking the package."

Their compromise bill likely would not make substantial changes to Medicare Advantage and will probably be more limited in scope than Baucus's bill, which included some improvements to Medicare benefits in addition to the increased physician payments.

"They will do what they should have done in the first place, which is to continue negotiations and bring a bipartisan bill to the floor," said Don Stewart, a spokesman for Senate Republican Leader Mitch McConnell of Kentucky.

By John Reichard, CQ HealthBeat Editor

June 11, 2008 -- Eleven members of the Senate Finance Committee have written a letter to federal officials faulting their handling of money to improve the quality of care in the Medicare program.

The senators complain that the Centers for Medicare and Medicaid Services (CMS) is "dramatically" reducing the number of hospitals, nursing homes, and doctor's offices it will assist through quality improvement organizations, known as "QIOs." They also express concern about "a pattern of diversion of monies" and an absence of funding to educate Medicare beneficiaries about their rights to file complaints about quality of care.

CMS issued a statement saying it could not comment on specific questions raised by the letter because it is in the middle of procuring contracts with QIOs.

"QIOs" contract with Medicare to improve care in a variety of ways, including by working with providers to spur their use of treatment techniques that reduce bed sores and surgical complications, for example. QIOs also handle individual complaints by Medicare beneficiaries about coverage decisions and about quality of care.

QIOs have enjoyed a reputation of doing solid work but have been buffeted by criticism in recent years. Iowa Sen. Charles E. Grassley in particular, the top Republican on the Finance Committee, has questioned their management and spending practices. In 2006, the Institute of Medicine released a study saying QIOs should devote more effort to working with providers on processes of care that promote quality and less time on handling beneficiary complaints.

In February, CMS proposed a new set of duties for QIOs that involve tightening their management and focusing their efforts on the worst performers on specific quality measures. Known as the "9th Statement of Work," the duties pertain to three-year contracts QIOs will sign for the period starting Aug. 1.

In their letter June 9 to CMS, the senators questioned an agency directive that QIOs not include costs in their contract proposals for educating beneficiaries about their rights to file complaints about quality of care. In that category, the directive says QIOs should only include costs relating to producing an annual report. "In our view, CMS has failed to fund outreach to beneficiaries, and, as a result, Medicare beneficiaries are not aware of their right to complain about the quality of care they have received," the letter said.

The letter was signed by Democrats John D. Rockefeller IV of West Virginia, Kent Conrad of North Dakota, Ron Wyden of Oregon, Maria Cantwell of Washington, Ken Salazar of Colorado, and Debbie Stabenow of Michigan, along with Republicans Orrin G. Hatch of Utah, Pat Roberts of Kansas, Michael D. Crapo of Idaho, Jim Bunning of Kentucky, and Gordon H. Smith of Oregon.

CMS also "appears to be imposing dramatic funding cuts of as much as 70 percent on the core work of QIOs aimed at protecting Medicare beneficiaries, improving patient safety, and preventing illness," the letter added. "We cannot understand the justification for funding cuts of this magnitude, particularly when the fiscal year 2009 Health and Human Services Budget in Brief lists funding for the 9th Statement or Work at a level similar to the 8th Statement of Work.

"The unprecedented reduction in funding levels that CMS is now implementing through the contracting process will dramatically reduce the number of hospitals, nursing homes, and physician offices that QIOs may assist. It also will decimate the critical, local infrastructure in many states that has been developed through this important program over the last two decades," the letter continued. "Finally, we have been troubled by a pattern of diversion of monies, which were allocated from the Medicare Trust Fund for QIO contract administration, to other initiatives unrelated to the QIO program."

A CMS spokesman declined to answer a series of questions about the allegedly diverted money, the size of the cuts involved, and the reasons for them, except to say that "the President's fiscal year 2009 budget shows the budget for the QIO Program as $1.099 billion over the 3-year contract cycle. During our last contract cycle the Program's budget was $1.23 billion. This constitutes a $130 million or 10.67 percent funding reduction.

"Because we are in an active procurement state with the QIOs in securing their next statement of work contracts with us, CMS cannot comment publicly any more than that. It's the procurement process rules," the spokesman said.

By Reed Cooley, CQ Staff

June 10, 2008 -- While the number of uninsured Americans has risen only marginally in the past several years, the number of individuals "insured but poorly protected" has spiked, rising 60 percent since 2003 to total 25 million people in 2007, according to a new Commonwealth Fund study.

Commonwealth Fund president, Karen Davis, called insurance a "ticket into the health care system" but joined researchers in cautioning that the "underinsured" can face the same challenges as those without coverage.

"Today you can have health insurance and still go bankrupt if you get sick. This puts individuals, families, and the nation's health and economic security at risk," said Cathy Schoen, Commonwealth senior vice president and the report's lead author.

The study found that the health care choices of the underinsured mirror those of the uninsured on a slightly smaller scale: while 68 percent of those without insurance reported foregoing "needed" care because of cost, 53 percent of those insufficiently insured did so as well. Among Americans deemed appropriately covered by the study, 31 percent demonstrated this type of behavior.

The authors defined the underinsured population as spending between 5 and 10 percent of total income on out of pocket medical expenses or those whose health insurance deductibles amounted to 5 percent of their income.

The spike, which researchers said hit middle-income Americans the hardest and nearly tripling for those above 200 percent of the federal poverty level, resulted from increased limitations on benefits and a rise in cost-sharing for consumers that is consistently higher than inflation rates.

The highest erosion of what a given plan can buy occurred among small group plans such as those provided by small firms and among individual private plans, Schoen said. The press release indicates that the underinsured tend to face higher deductibles than those more sufficiently covered, and the report's authors noted that deductible rates have gone up across the board: for employer-based plans in both small and large firms and for individuals.

While researchers blamed cost-sharing, insurance representatives blamed costs. "I think the survey highlights the need to address the underlying costs of health services," Robert Zirkelbach, a spokesman for the insurance lobby America's Health Insurance Plans (AHIP), said, adding "Our members are trying to provide the most affordable health care coverage they can to consumers."

Sara Collins, assistant vice president at the Commonwealth Fund and a co-author of the study, praised the Massachusetts health care overhaul of the past year as an example for policy makers on a wider scale. The Massachusetts program eliminates deductibles for low-income residents and instates a minimum standard for what all health plans need to cover.

Zirkelbach declined to say whether AHIP would support a minimum standard benefits package for all Americans. "Health insurance plans should be given the flexibility to provide a variety of coverage options that meet the individual needs of consumers. The focus needs to be on addressing the cost-drivers," he said.

While Commonwealth representatives were optimistic that the advent of a new administration in 2009 would be an opportunity to spur change in health care that would drive down rates of both un- and underinsured, Collins expressed concern about the overhaul plan of Republican hopeful Sen. John McCain of Arizona. She called the value of McCain's proposal to replace the tax exemption for employer-based coverage with a $5,000 tax credit "highly variable," depending on income and premium levels.

Karen L. Pollitz, project director at the Health Policy Institute at Georgetown University, agreed that McCain's plan would be ineffective in the realm of underinsurance. She noted that his proposal to allow insurers to operate in all 50 states based on the regulation policies of a single state of their choosing would potentially heighten an opaqueness that she considers to be the root of the problem. "Part of what will determine how much this trend will continue will be the extent to which insurers have the ability to hide policy features that make people underinsured," she said.

"It's hard for a lot of people to know whether they have good coverage or not," she added.

The plan of Sen. Barack Obama, D-Ill., which Collins said has a "similar framework" to the project in Massachusetts, is more closely aligned with another proposal released by the Commonwealth Fund in May. Both involve a "pay-or-play" mandate for businesses to work toward universal coverage and a countrywide minimum standard benefits package.

Pollitz agreed that the standard benefits package would work to reduce the number of underinsured. She asked, "Do you know what the government definition of health insurance is?

"Any policy sold by a licensed health insurance company—that's not much of a definition," she said.

The Reality of Incomplete Plans, High Deductibles
Lisa Kelly, a former grocery store clerk and cancer patient from Lake Jackson, Texas, who testified before the Senate Finance Committee Tuesday, described experiences that appeared to reflect the symptoms of underinsurance outlined in the study.

When she was diagnosed with acute leukemia in 2006, M.D. Anderson Cancer Center refused her UnitedHealthcare insurance policy, and told her she would have to procure $45,000 to start treatment, Kelly said. Since then she has paid $82,000 out of her own pocket and owes another $137,000 to the Center, she said.

Testimony from Raymond Arth discussed the small business difficulties of providing health insurance. In the past five years Arth, president and CEO of Phoenix Faucets, a company of nearly 100 employees in Avon Lake, Ohio, has seen a more than tenfold deductible rise on his employees' health insurance plans, from $250 for individuals and $500 for families in 2003 to $3,000 and $5,900 in 2007, he said. A looming potential 22 percent premium increase in the last year forced the company to switch to policies with much higher deductibles.

Wage rates at Phoenix have been frozen since 2001 and assembly line workers earn an average of $19,000 a year, Arth said.

His company self-insures part of each plan so that employees are only exposed to about half of the deductibles, but with premium levels expected to rise another 35 percent in the next year, amounting to a $40,000 increase, Arth said he has "no more rabbits to pull out of the hat," adding that he may have to start dipping into paid vacation days and other benefits.

Arth, a past chairman of the National Small Business Association, said he would support the "notion of a bare bones policy" or something in line with a minimum standard benefits package.

By Danielle Parnass, CQ Staff

June 12, 2008 -- Most states' oversight of health care provides little protection for consumers seeking coverage in the individual health insurance market, according to a recent 50-state survey by Families USA, a nonprofit health care advocacy group.

Speakers at a press conference Thursday at the National Press Club discussed inadequacies in the individual health care market and called for federal intervention to establish nationwide protections for consumers. That ability is currently under the jurisdiction of individual states.

Findings from the survey of all 50 states and the District of Columbia show that regulatory efforts in most states do not prohibit insurance companies from granting coverage to only the healthiest applicants, raising premiums based on health status, limiting coverage for pre-existing conditions and performing medical underwriting and revoking policies after coverage was already issued.

In 2006, 27 million people with health care coverage received it in the individual health insurance market. That number is growing each year as employer-sponsored insurance declines, said Ron Pollack, executive director of Families USA.

"The individual health insurance market is still the wild, wild west for America's health care consumers," Pollack said. "It is a market with many abuses and with far too few state-level consumer protections."

For each state, the survey examined 14 areas based on key questions such as: whether an individual can get coverage, especially if there's a family history of health problems or pre-existing conditions; how much would consumers have to pay for coverage; can insurance companies deny coverage for pre-existing problems; and what rights are there to appeal when coverage is revoked.

Daniel Smith, president of the American Cancer Society Cancer Action Network (ACS CAN), said the individual insurance market regularly fails people battling cancer and those with a history of cancer, both in gaining access to life-saving cancer screenings as well as treatment.

"There needs to be a floor set of standards that nobody can fall under," Pollack said, adding that these standards should be established nationwide and not based on one's state of residence.

The Health Insurance Portability and Accountability Act of 1996 provides protection for consumers who had coverage and then changed or lost their jobs. Pollack said there are still limitations to this law, such as in the areas of premiums and affordability.

Smith said it is not just about being covered, but about getting adequate standards. Those standards—availability, affordability, adequacy, and administrative simplicity—were part of a nationwide public education campaign that ACS and ACS CAN began last fall.

Connecticut Attorney General Richard Blumenthal, who joined Thursday's press conference by phone, said he has "zero tolerance for health insurance abuses" and has worked closely with health care advocates against it.

Connecticut is one of the few states that received the most number of full and partial credit scores for various categories on the survey's scorecard, including coverage revocation, affordable coverage alternatives for uninsurables, advance review of proposed premium rates, and objective standards to define pre-existing conditions. Other states with high scores include Washington, New York, Oregon, and New Hampshire.