By Leah Nylen, CQ Staff

October 9, 2008 --Increasing funding for comparative effectiveness projects could save money and improve the safety and quality of the health care system, according to a panel of consumer advocates at an AARP and Consumers Union briefing.

"Comparative effectiveness research should be a building block for health care reform," said Gail Shearer, the director of health policy analysis for the Consumers Union. "We have to improve health care outcomes and get better value for our health care dollar."

Comparative effectiveness initiatives look at various treatments for a particular disorder and compare the options to determine which ones work best for various patient groups.

If instituted, advocates argue that comparative effectiveness initiatives could help reduce health care costs by encouraging doctors to use the best value treatments and medicines. They also would provide greater information to patients about options so they can better participate in making health care decisions.

Marge Ginsburg, the executive director of Sacramento Healthcare Decisions, said any comparative effectiveness initiatives should include the perspective of the average citizen in deciding how health care resources are allotted. Ginsburg conducts research by having focus groups take the position of an insurance company and decide whether, in a given scenario, a patient should receive various treatment options.

When asked if it was legitimate for cost to be considered, 80 percent of participants said it should be a factor in most situations, Ginsburg found.

"Health care is just a quagmire of conflicting values," Ginsburg said. "We need more tools to allow [consumers] to make decisions."

Perry Payne, an assistant research professor of health policy at George Washington University, also emphasized the importance of receiving input from the general community in any comparative effectiveness initiatives.

As an example, Payne cited the example of BiDil, a heart failure drug aimed at African Americans. Because the African American community was generally not aware of the research and development of the drug, many African Americans are reluctant to use the drug, despite the fact that it has shown great results in reducing cardiac deaths, Payne said.

Comparative effectiveness also can help patients make informed decisions about their health, said Jack Fowler, the president of the Foundation for Informed Decision Making. Despite the increased availability of information on the Web, today doctors remain the primary source of medical information for patients, he said.

"Delegating the decision to the doctor is not the best way to make a [health care] decision," Fowler said. "The evidence doesn't tell you what the decision should be. The job of the doctor is in laying out the options."

By Jesse Stanchak, CQ Staff

October 7, 2008 -- With increased medical costs putting a strain on household finances, Americans say they are unhappy with their health care system and want to see major changes, according to the Employee Benefit Research Institute's 11th annual Health Confidence Survey.

A majority of Americans, 51 percent, want a "major change," says the survey, while 20 percent say that a complete overhaul of the health care system is necessary. Thirty-one percent would rate the American health care system as poor and 29 percent would rate it as fair.

Survey respondents appeared content with the quality of care—49 percent say they're very or extremely satisfied with quality of care—but not as content with the cost of care. Only 17 percent say they're satisfied with the costs of insurance and just 15 percent say they're satisfied with the cost of treatments insurance doesn't cover.

Overall, 55 percent of Americans with insurance report having increased costs in the past year. While that figure is down from 63 percent in 2007, increased costs are still taking a toll on American finances. According to the survey, 27 percent say they have trouble affording basic necessities because of increased health spending, while 34 percent report trouble paying other bills. At the same time 29 percent say they're saving less for retirement and 54 percent say they're saving less overall.

Yet just 13 percent of Americans think health care is the biggest crisis facing America today, behind the economy (33 percent) and rising fuel costs (24 percent). They're also of two minds about how to solve the problem. The study shows 87 percent favor health tax credits, similar to the health plan of Republican presidential nominee Sen. John McCain of Arizona, while 83 percent favor letting people buy into the same health care system government employees get, an option some would have under the health plan of Democratic presidential nominee Sen. Barack Obama of Illinois.

The survey shows that Americans who have seen their costs go up aren't waiting for the health care system to change. Instead, many are changing the ways they use health care. Patients with insurance who experienced an increase in health care costs over the last year are looking to cut costs themselves, with 63 percent saying they discuss treatment options more thoroughly with their doctor and 62 percent saying they go to the doctor only for more serious problems and 47 percent saying they had delayed a doctor visit. Generic drugs are also a popular cost-cutter, with 74 percent saying they choose them more often, while 39 percent say they're switching to over-the-counter medicines. Only 33 percent of insured patients with higher costs are looking at cheaper providers or cheaper insurance.

The survey finds that those with health insurance who haven't seen an increased cost are less likely to economize. Among insured patients who hadn't seen higher costs, just 52 percent were having more thorough discussions with their doctors, 48 percent were more likely to see a doctor only for serious problems, and just 33 percent had delayed a doctor visit. They were also less likely to use generic drugs (60 percent) or shop for cheaper health care providers or insurance (12 percent), according to the survey.

By John Reichard, CQ HealthBeat Editor

October 6, 2008 -- Wrestling with what to say that might help Congress address fast-growing health care outlays, the Medicare Payment Advisory Commission (MedPAC) took a look last week at some of the factors driving that growth: construction outlays growing at a faster clip than in other sectors of the economy; more rapid wage growth; and bigger gains in employment, for example.

But after poring over charts and statistics on the issue at a meeting last Friday, commissioners were stumped: Are these factors a good thing or a bad thing? To what extent are they worth mentioning? And if they are worth highlighting, how should they be addressed?

A panel on the issue noted that the commission has already gone over the familiar ground of health care gobbling up an ever larger share of Gross Domestic Product. This time, the idea was to look at some of the aspects of that growth, and whether it is sewing the seeds for additional future spending growth at a time when many policy makers are focusing on the need to trim the increase in the nation's health care tab.

A presentation by staffers Zachary Gaumer and David Glass went over the numbers. "Health care sector spending increased at twice the rate of all other sectors combined," they noted in a set of briefing papers. "Health care sector construction spending grew faster than the rest of the economy." And "health care sector employment grew faster than non-health care sectors."

Between 1999 and 2008, health sector spending grew 50 percent, while that of other sectors grew about 20 percent, they noted. Construction spending in the health sector grew a little over 50 percent while construction spending in the rest of the economy rose less than 20 percent. Employment grew 25 percent in health care, but only 5 percent elsewhere. Employment growth was greatest for imaging centers and the home health sector, in each case rising about 50 percent compared with the 25 percent growth for health care generally and the 5 percent growth in other sectors.

The staffers also noted U.S. Department of Labor projections that health care occupations will grow twice as fast as all other occupations by 2016: 27 percent in the case of health care support staff and 20 percent in the case of health care practitioners, compared with 10 percent for all occupations in the economy.

From 2003 to 2007, wages at hospitals and nursing facilities increased faster for non-clinical occupations than in the U.S. labor market overall.

The staffers posed the questions whether these growth rates are sustainable over time and what added value is the nation getting for these growing outlays for labor and capital.
The general tenor of the debate over rising outlays is that they are a bad thing but commissioners were leery about reaching such conclusions based on the data presented.

Commissioner Nancy Kane sought to add "balance" to such statistics in an upcoming report by MedPAC to Congress. "What are the projections of demand for hospital and nursing home care," she wondered.

Mitra Behroozi suggested that higher wage growth might be in the service of worthwhile investments in health care. As the sector tries to reap the rewards of adopting health information technology, it might have to pay more to draw experts in that field from other parts of the economy, she noted.

Vice Chairman Robert Reischauer described the data as "very interesting facts and figures" but said, "it tells us absolutely nothing about whether this is good or bad, whether it's too much or too little, whether it's growing too fast or about the right amount, or whether it's sustainable or unsustainable. I could have taken the agriculture sector and flipped the diagrams over ... because employment, capital costs have been going down and you wouldn't say 'Oh god, we must be starving at this point.'"

Reischauer added that he was worried about how the statistics were presented to Congress and the public and whether the data might distract from a more careful focus on underlying health care policies that need changing.

"Economies change all the time. Some sectors grow, others shrink," he said. "It has to do with the demand of individuals and the policies of government and we want to focus on those and why we believe those are distorted and this [the statistics] is really the result of that. You have to make that very clear," he said.

Peter W. Butler warned against concluding from the construction figures that lots of additional inpatient beds are being added to the system that will not be used and will needlessly drive up costs. Much of hospital capacity is shifting to outpatient services, he said. Much of current construction is "really almost reconfiguring the institutions to do something totally different from what they used to be doing."

But Arnold Milstein said it would be a big mistake not to highlight the issue of rising spending on capital and labor. "As tough as this area is going to be to navigate, it's worth navigating," he said.

Commissioners agreed, however, that one thing they could usefully do in talking about the issue is focus on aspects of health care spending that are wasteful and focus on their elimination. "The greatest contribution we can make is helping to devise systems which change the structure of our current delivery system in ways that it produces the same or better outputs for a third less inputs," Reischauer said.

MedPAC Executive Mark Miller sought to focus the commissioners on the need to better understand the value of spending on health care construction and whether it is going to meet objectives prized by policy analysts. "Thirty billion was spent last year on construction—how much of that went to mental health, how much of that went to manage diabetes, how much of that went for IT?" he asked. Answers to those kinds of questions need to be widely known to better shape policy, he suggested.

By Claire Leavitt, CQ Staff

October 10, 2008 -- Republican presidential candidate Sen. John McCain's proposal to allow individuals to buy insurance across state lines would decrease access to health insurance, according to a new report issued by the New America Foundation, a think tank that bills itself as non-partisan.

The proposal, which the report calls "devastating," would permit private insurers to abide only by health care regulations mandated by the state in which the insurance company is based, not the state where the customer lives.

The thrust of McCain's plan is to eliminate the "exclusion"—a provision of tax law that keeps employees from having to count as taxable income the yearly sum their employer pays toward their health insurance premiums (premiums would still be excluded in calculating payroll taxes, however). Instead, the plans offers families up to $5,000 and individuals up to $2,500 in tax credits, which they can use to buy individual coverage from across state lines if they so choose.

Most critics of the across-state-lines proposal argue that getting rid of the exclusion will lead to fewer employers offering health benefits and previously insured Americans getting thrown head first into the individual insurance marketplace, which is "virtually unregulated," according to the report. It contends that coverage sold across state lines will not succeed unless insurers are subject to federal regulations.

The McCain plan would drive up premiums and eliminate certain care guarantees, the report said. The expanded customer market would provide more incentives for insurers to "deny people coverage or charge people more based on their health history," and access to health care nationwide would then decline, it said.

Supporters of the McCain proposal say that, thanks to the expanded insurance market suddenly available to customers, premium costs will actually decrease as people gain additional incentives to opt out of plans that include expensive benefit mandates.

The report dismissed the idea that "high-risk pools," state-run associations that provide health coverage to people who have preexisting conditions or who are deemed likely to need care in the near future, will help mitigate the negative effects of sales across state lines, unless the pools are "exceptionally well-funded." McCain has voiced support for federal funding for state-run high-risk pools, which he claims will make it easier for the sickest Americans to receive coverage.

Elizabeth Carpenter, a senior associate for the New America Foundation's Health Policy Program, says high-risk pools "are a step" towards solving the premium problem for at-risk Americans but "the [financial] commitment has to be there, and at a higher level than it has been to date." Success would depend on the actual level of federal financial support McCain would provide if he were elected.

While the National Association of Health Underwriters (NAHU) has not taken a position on McCain's proposal, senior vice president of Government Affairs Jessica Waltman maintained there is "lots of evidence that differences in state regulations can have a profound effect on price," and sometimes "that difference is just astounding."

According to a NAHU fact sheet, the cost difference for a healthy male of an insurance plan with a $1,000 deductible in neighboring states Pennsylvania and New Jersey can run as much as $5,750. "The main issue here is, health care is expensive," Waltman said, "and anything we can do to contain costs" is worth considering.

By Annie Shuppy, CQ Staff

October 10, 2008 -- A new study in the American Journal of Managed Care on primary care physicians' knowledge of consumer-directed health plans found that many doctors do not understand the financial implications of these plans for their patients.

The Treasury Department estimates that enrollment in consumer-directed health plans (CDHPs), which are patient-focused plans intended to make consumers more cost-conscious about their health care, will reach 25 million by the next decade. At the same time, the study found that 40 percent of primary care physicians are providing care to CDHP enrollees—and a quarter of those physicians said they didn't know much about the plans.

Craig Pollack, a physician researcher at the University of Pennsylvania who co-authored the study with Giridhar Mallya and Daniel Polsky, said even more patients have enrolled in CDHPs since the survey was fielded in the summer of 2007. It is a "positive sign" that physicians who had patients enrolled in CDHPs were more likely to be educated about how they work than those that didn't, he said.

"As more patients continue to enroll in these plans, it will be even more important for physicians to be educated about cost-sharing under CDHPs," Pollack said.

Prior to the study, 43 percent of physicians surveyed reported having heard "a little" or "not at all" about CDHPs. The same number indicated low knowledge of out-of-pocket costs faced by CDHP enrollees. Approximately one-third had low knowledge of how money is contributed to and spent from medical savings accounts.

While almost three-quarters of physicians were ready to discuss issues of cost and cost-effectiveness, less than half were ready to discuss medical budgeting with patients. In terms of specific services, more than two-thirds of physicians were ready to advise patients on office visits, medications, and laboratory testing. Half or less, however, were ready to advise on the costs of radiologic studies, specialist consultation, and hospitalizations.

"I think that patients who are planning to be enrolled or are already enrolled in CDHPs should bear in mind that physicians may not understand certain aspects must be paid for out of pocket until a deductible is reached," Pollack said.

Physicians with CDHP enrollees, who were less likely to be from the Northeast and less likely to care for a high percentage of patients with Medicaid coverage, were more ready to discuss the costs of medications, but were no more ready to discuss the costs of other services.

They were also more likely to have a favorable impression than physicians without CDHP-enrolled patients. Overall, 46 percent of the total physicians reported a favorable impression of CDHPs, 37 percent were neutral, and 17 percent reported an unfavorable impression.

Grace-Marie Turner, president of the Galen Institute and a supporter of CDHPs, said that while the study had good data, "the spin seems quite biased." She said some of the problems highlighted in the study are not just endemic among consumer-directed plans.

"Moving the health sector to a more patient-centered system is an evolutionary process. It does not happen suddenly overnight. You see physicians who are beginning to learn how to engage patients as partners," Turner said.

Another issue revealed by the study was the reliance on quality-of-care information. Less than one-quarter of physicians surveyed agreed that patients can generally trust the quality information provided by government Web sites, and just 8 percent agreed that patients can trust quality-of-care information from insurer Web sites.

Turner noted that this can be a problem under any type of health insurance plan and is a product of the varying levels of veracity of information found on the Internet.

"It speaks to need to really have better and have trusted sources of information that are endorsed by physicians," she said.

By John Reichard, CQ HealthBeat Editor

A segment of the Medicare population that includes many of its sickest enrollees has a declining number of prescription drug plans from which to choose, according to a consulting firm's analysis. The concern is that "they have a skinnier set of options to match up to their needs," said Lindsey Spindle, a spokeswoman for Avalere Health, the Washington, D.C.–based firm that conducted the study.

At issue are Medicare beneficiaries enrolled in the program's low-income drug benefit, which provides companies with an "LIS," or low-income subsidy, to offer more extensive prescription drug benefits to a population that can ill afford the out-of-pocket costs associated with Medicare's standard prescription drug benefit.

The population includes "dual-eligibles," who qualify for both Medicaid and Medicare and in many cases are extremely frail and suffer from multiple chronic conditions.

Avalere found that the number of plans willing to serve the population is on the decline, a trend that is forcing Medicare to switch the duals to remaining plans through an automatic reassignment process. To participate in the LIS program, plans must bid to offer benefits for a sum that matches what in Medicare lingo is known as "the benchmark," the amount of money Medicare is willing to pay plans for offering prescription drug benefits. If they bid above the benchmark the plan charges beneficiaries monthly premiums. Medicare "PDPs," or prescription drug plans, must charge no monthly premiums to serve the dual-eligible population.

Avalere found that 1.3 million low-income beneficiaries will be automatically reassigned into new plans at the end of the year because a growing number of plans are bidding above the benchmark and are no longer willing to serve the low-income population. The trend toward such automatic reassignments is on the upswing, Spindle said. "That number is up from 1.2 million individuals who CMS reassigned in 2008 and 250,000 individuals in 2007," Avalere said in a news release about the study.

A total of 308 PDPs qualified to serve low-income beneficiaries in 2009, 200 fewer than in 2008, Avalere said. Humana is continuing its withdrawal from the low-income market, while United Healthcare is expanding its presence in the market after losing nearly 600,000 low-income beneficiaries last year. Of the 10 PDPs with the largest enrollments, only one, United Healthcare's AARP MedicareRx Saver, will see an increase in the number of states for which it is eligible for auto-enrollment, Avalere said.

Six states will each have five or fewer PDPs available to automatically enroll low-income beneficiaries in 2009: Arizona, Florida, Hawaii, Maine, Nevada, and New Hampshire. In of the six states, Nevada, only one auto-enrollment PDP plan will be available.

"The fundamental question for Medicare is whether low-income beneficiaries are ending up in plans that do not fully meet their medical needs—especially given the fact that their choices are limited in many states," said Avalere Vice President Bonnie Washington.

Why the importance of having multiple plans when only a couple of years ago critics complained the program offered too many choices?

Spindle notes that because of the multiple medical conditions many low-income beneficiaries have finding a plan that covers the right mix of prescription drugs for them is a challenge.

But CMS spokesman Jeff Nelligan said that "beneficiaries with multiple chronic conditions will have access to medically necessary pharmaceuticals regardless of the plan to which they may be re-assigned. While plans may encourage use of certain drugs through co-pay structures, these utilization management tools will not affect the LIS beneficiaries." Nelligan added that with the exception of Nevada, the number of plans able to take reassignment by state ranges from two to 16.