By Jane Norman, CQ HealthBeat Associate Editor

March 25, 2010 -- Health and Human Services officials plan to issue a regulation that specifically states that health insurance companies must offer coverage to children with pre-existing conditions.

But the insurance industry has a different view of the language about health status that was written into the health care overhaul measure, and the clash has produced tensions over a law that's barely 48 hours old.

The HHS move came after questions emerged about whether the health care overhaul law (PL 111-148) is clear enough when it comes to insurance company denials of coverage to children with medical conditions.

Democrats and President Obama repeatedly have said children with medical conditions will be among the prime beneficiaries of the new law. "This year, tens of thousands of uninsured Americans with a pre-existing condition and parents whose children have a pre-existing condition will finally be able to purchase the coverage they need," the president said Tuesday.

At a rally with House Democrats on Saturday, he said "those same parents who are worried about getting coverage for their children with preexisting conditions now are assured that insurance companies have to give them coverage, this year."

Insurers, however, say that the law clearly states that so-called "guaranteed issue" does not kick in until 2014, meaning that companies at that time will have to accept all applicants regardless of their health status. They will be unable to refuse coverage because of any person's pre-existing condition. That's why an individual mandate also is included in the law, so that insurance company risk pools are made up of healthy people as well as sick people.

What's required this year is that if companies decide to offer new coverage to families with children, or if the family already is covered, the children's pre-existing conditions can't be excluded from a policy, said Robert Zirkelbach, a spokesman for America's Health Insurance Plans (AHIP), which represents the industry. "Starting in six months, if health plans are going to offer coverage to somebody, they can't impose any exclusions on pre-existing conditions for that person," he said.

Zirkelbach said he couldn't quantify the impact if insurers instead have to accept all children for coverage regardless of their health status. There would be costs associated with it, he said.

The insurers' perspective is not the intent of the law, Democrats responded, and they'll seek regulations to specify that children with medical conditions will be able to obtain health insurance.

Nicholas Papas, a spokesman for HHS Secretary Kathleen Sebelius, said the law is clear. "Insurance plans that cover children cannot deny coverage to a child because he or she has a pre-existing condition," he said. "To ensure that there is no ambiguity on this point, the secretary of HHS is preparing to issue regulations next month making it clear that the term "pre-existing exclusion" applies to both a child's access to a plan and to his or her benefits once he or she is in the plan."

The three committee chairmen who oversaw the writing of the law also issued a joint statement saying that the intent of the law is to offer coverage to children right away.

"Under the legislation that Congress passed and the president signed yesterday, plans that include coverage of children cannot deny coverage to a child based upon a pre-existing condition. We have been assured by the Department of Health and Human Services that any possible ambiguity in the underlying bill can be addressed by the secretary with regulation," said George Miller of California, Sander Levin of Michigan and Henry Waxman of California.

"We fully expect that this legislation will prevent insurance companies from denying coverage. The concept that insurance companies would even seek to deny children coverage exemplifies why we fought for this reform effort and will continue fighting to ensure all Americans have access to high quality, affordable care."

Advocates for children said that insurers are already trying to game the law. "It is disappointing that insurance companies continue to look for opportunities to deny coverage to this vulnerable population," said a joint statement from the advocacy groups First Focus and Family Voices.

"Instead of parsing the language of the law to deny coverage, we are hopeful that insurance practices will quickly be revised to meet the intent of Congress," they said.

Bruce Lesley, president of First Focus, said that the group has asked for a legal opinion on the language from a law school expert, and is urging the administration to move quickly on issuing a regulation, since the regulatory process can be time-consuming.

Lesley said that if the insurance industry's approach on the law is followed it could lead to all kinds of difficult situations, such as denial of care to a newborn with medical problems because the infant would be a new beneficiary under a family policy.

"The intent," he said, "is to protect kids with pre-existing conditions, period, not just in certain circumstances."

White House Press Secretary Robert Gibbs said the law is clear, although a regulation will be issued, just as regulations will be issued on other parts of the overhaul. "If there is any ambiguity," Gibbs said, the regulations "will clearly denote that somebody that offers a plan that covers children cannot deny anybody coverage based on a preexisting condition."

By John Reichard, CQ HealthBeat Editor

March 28, 2010 -- With the expected nomination this week of Donald M. Berwick to become the new administrator of the Centers for Medicare and Medicaid Services (CMS), the Harvard professor and quality improvement expert begins the new phase of a career marked by ever more ambitious goals and a level of enthusiasm to match.

"Just can't wait to get on the road again" is the fitting closing quotation of the 2009 annual report of Berwick's Institute for Healthcare Quality and Improvement, a reference to a line from a song written by country singer Willie Nelson.

Well, now Berwick's taking his quality improvement ideas south from the ivory tower of Cambridge, Massachusetts to the gritty world of Medicare, Medicaid and the 531 members of Congress who make up its "board of directors."

Berwick has a passion for setting measurable goals and for partnering with a wide array of organizations that make him far more than an impractical academic, however. A clinical professor of pediatrics and health policy at Harvard Medical School, Berwick founded the Institute for Healthcare Improvement (IHI) in 1991 to identify and foster best practices in medicine that would save lives and reduce suffering.

If confirmed he would take over the long vacant CMS post with just the right message for an agency on the threshold of hundreds of billions of dollars of Medicare cuts that will stir anxiety about resulting harm to patients and quality of care.

Berwick preaches that imbuing health care organizations with a culture of thinking through how to deliver care more safely and efficiently not only saves lives but reduces wasteful spending.

Berwick predicts in IHI's annual report that wasteful practices in health care "will become even less tolerable" and says "we can't whistle in the dark about this any more. That's not going to work. We have to bring total spending on health care down . . . way down."

Berwick is perhaps best known for his "100,000 Lives" campaign built around the idea that certain specific practices can eliminate that number of deaths — which is the estimated number of deaths from medical errors that occur in the hospital each year.

According to information on the IHI site, more than 3,000 hospitals representing more than 90 percent of the hospital beds in America have signed on to the campaign, savings tens of thousands of lives.

Hospitals in the campaign commit to deploying rapid-response teams; delivering evidence-based care for heart attacks; preventing medication errors by following specific practices; preventing surgical site infections; implementing the "ventilator bundle," a series of specific practices to prevent pneumonia in patients on ventilators; and implementing the "central line bundle," specific steps to prevent infections associated with intravenous tubing kept in the patient's body to deliver drugs.

The rapid response teams, for example, deploy on a moment's notice when patients show early signs of trouble. They work with bedside nurses to stabilize patients and intervene before deterioration become irreversible.

In running the campaign Berwick has convinced hospitals to report deaths from medical errors. Among other participating organizations recruited by Berwick are the American Medical Association and the American Nurses Association.

The campaign has since spread to other parts of the world, and Berwick also has formed partnerships with health systems in Britain and Africa to improve quality of care.

Berwick speaks of the "globalization of our shared health problems" including common responses to disease outbreaks and sees parallels between creating a more efficient and effective health system "and what we need to do to save the planet" from global warming.

Berwick also speaks of an emerging era that entails not "caring for patients" but "caring with patients." In other words, patients will be much more involved with designing their care and doctors will support them in that, Berwick predicts.

How much opportunity he would have as CMS administrator to pursue such goals and even to further some of the more specific goals he has set is unclear given the many challenges he will face dealing with Congress on health overhaul implementation issues.

Sen. Charles E. Grassley of Iowa, the top Republican on the Senate Finance Committee, clarified Sunday that Berwick is going to get a lot of scrutiny.

"This is always a big job, but the administration of health care reform, which includes implementing the hundreds of billions of dollars in Medicare cuts and the biggest expansion of Medicaid in its history, will make it more challenging than ever," Grassley said in a statement. "The Finance Committee vetting will need to explore the nominee's preparedness for the enormous challenges that face the agency."

But as much as any recent CMS administrator, Berwick would come to the position with good relationships and the good will of many of the various health care organizations whose members are the key constituents of the agency.

The Medical Group Management Association, which represents big medical groups, said that as "health care organizations and professionals shape a reformed health care delivery system, [Berwick's] knowledge and proven leadership will be critical to success. His knowledge of quality improvement also offers great opportunities for improving the efficiency of CMS' internal operations – a critical factor in reducing administrative costs."

But for all his quality improvement expertise, Berwick will have to prove himself in dealing with the many different types of Medicare and Medicaid issues that come before the agency, and in managing relationships with Capitol Hill while keeping his eye on the lofty quality and safety goals for which he is best known.

By Jane Norman, CQ HealthBeat Associate Editor

March 26, 2010 -- Physicians reacted with anger on Friday after Congress left town without voting to block a scheduled 21 percent pay cut in Medicare reimbursement rates set to go into effect on April 1.

While it's highly unlikely the cuts would ever actually kick in, the reimbursement issue is key for the powerful doctor group, which endorsed the health care overhaul (PL 111-148) and was a prominent player in negotiations over its provisions.

"It is unconscionable for elected officials to play politics with seniors and military families who rely on them to preserve their ability to see the physician of their choice," said J. James Rohack, president of the American Medical Association, in a blistering statement issued shortly after the Senate adjourned for a two-week spring recess. Reimbursement rates under the military's Tricare program are tied to Medicare rates.

Rohack said Medicare beneficiaries should let their members of Congress know that "decisions made in Washington have real-world consequences and that their inability to take permanent action on this critical issue is unacceptable." This marks the second month in a row lawmakers have failed to agree on how to postpone the cut and it's causing "severe instability" for doctors and their patients, Rohack said.

Peter Ashkenaz, a spokesman for the Center for Medicare and Medicaid Services (CMS), said the government will do as much as it can under the law to avert the mandated payment cut, hanging on to Medicare claims until Congress comes back and can act.

"CMS is instructing its contractors to hold the payment of claims submitted for services delivered after April 1 for 10 business days — the maximum amount of time it is able to hold claims," Ashkenaz said. "This will ensure that if Congress acts when it returns, providers will not be hit by a payment reduction."

Cecil Wilson, president-elect of the AMA, appeared at a news conference celebrating the health care overhaul earlier this week and said afterward that the association is demanding a permanent solution for the payment problem rather than a continuing series of short-term postponements — though Republicans and moderate Democrats have rebelled at the cost of a long-term resolution. "No more patches and no more temporary fixes," Wilson said.

The reductions are mandated by what's called the sustainable growth rate formula, or SGR, which sets overall targets in order to hold down spending on Part B physician services. Payment rates are adjusted every year to reflect differences between actual spending and the target. Since 2002, spending has exceeded the target but Congress beginning in 2003 has raced to the rescue to avert the cuts.

The latest stalemate arose when the Senate was unable to complete action prior to the recess on HR 4851, a short-term extensions bill that would block the physician pay cut until May 1. The $9.2 billion bill also includes items such as extensions of long-term unemployment benefits and health insurance subsidies for the jobless. Democrats say it's emergency spending but Republicans, led by Sen. Tom Coburn, R-Okla., want the spending to be offset.

Senate Majority Leader Harry Reid, D-Nev., scheduled a vote on cloture on HR 4851 for April 12 at 5:30 p.m., when the Senate will have returned from its break.

Republicans and Democrats blamed each other in separate news conferences after the decision to put off action on HR 4851 or other solutions until mid-April. Coburn said senators agreed on a short-term extension that was fully offset by other spending, but it was rejected by Democrats.

"I think it would be a good idea for us to stay here and work this out," said Coburn. "Unfortunately, we chose not to do that. We chose not to work it out, not solve the problem because we didn't want to make difficult choices about where we cut spending and eliminate additions to the debt."

But Sen. Jack Reed, D-R.I., said unemployment in the United States constitutes an emergency situation. "Now, we all have to be concerned with the deficit, but selective attention to it is I think something we have to be a bit skeptical about," he said. "I mean, we have a decade of unfunded Republican proposals to cut taxes, provide entitlements under Part D of Medicare, fund two wars."

Reed said there was no point in attempting a cloture vote prior to the recess. "Doing the math, it was not going to be 60 votes there. And that is regrettable," he said. Lawmakers separately have been working on HR 4213, which would prevent the physician pay cut through Oct. 1 along with authorizing many other extenders, but differing House and Senate versions need to be resolved.

By John Reichard, CQ HealthBeat Editor

March 25, 2010 -- The new overhaul law combined with the package of fixes that may be finally cleared by Congress this evening would essentially level the playing field payment-wise between private health plans in Medicare and the traditional fee-for-service side of the program, according to a George Washington University study.

As such, it would fulfill the goal set by set by Barack Obama as a presidential candidate and the recommendation of the Medicare Payment Advisory Commission, said the study by GW researchers Brian Biles and Grace Arnold.

Private health plans in Medicare are known as Medicare Advantage, or "MA" plans.

"The total effect of this new MA payment policy would be to reduce payments to MA plans from a national average of 113 percent of fee-for-service costs in 2009 to an average of 101 percent of fee-for-service costs when fully phased in in 2016," the study said.

Medicare payments to MA plans totaled an estimated $98.9 billion. "If the new payment policy had been fully implemented in 2009, we estimate that MA payments would have been $88.2 billion," the authors said. That's a savings of $10.7 billion.

Under the new policy, all 3,140 counties in the nation would be ranked from lowest to highest by average fee-for-service costs and divided into four "cohorts" of 785 counties. Payments to MA plans would be set at different percentages of fee-for-service costs depending on the cohort. Thus payments would be set at 115 percent, 107.5 percent, 100 percent, and 95 percent of fee-for-service costs, depending on the cohort.

Plans that performed well on quality ratings would see a boost of five percentage points in their payments relative to fee-for-service costs. So if, for example, they were in the 100 percent cohort, they would receive 105 percent of fee-for-service costs.

The new payment policy also reduces the amount the government gives back to a plan if it bids to offer services at a level below its payment benchmark relative to fee-for-service costs. Now those "rebates" (to be used by the plan to add to benefits or lower out of pocket costs for beneficiaries) total 75 percent of the sum bid below the benchmark, with the other 25 percent going to the Treasury. Most plans would see the rebate fall to 50 percent, with more going to the Treasury. Plans with higher quality ratings would see rebates up to 70 percent.

Plans that will receive 95 percent of fee-for-service costs are overwhelmingly located in urban counties. Ninety-three percent of the enrollment in plans in the 95 percent cohort is in urban counties. Forty percent of the enrollment in plans in the 115 percent cohort are in rural areas.

By Edward Epstein, CQ Staff

March 25, 2010 -- Weary but excited Democrats wrote the final chapter Thursday night in their long effort to overhaul the nation's health care system, sending President Obama the final piece of their package.

The final act came on a 220–207 House vote, largely along party lines, that put in place the final piece of what had become a legislative jigsaw puzzle. The vote cleared the final version of a package of changes (HR 4872), considered under budget reconciliation rules, to the health care overhaul President Obama signed into law (PL 111-148) March 23. Thirty-two Democrats joined all participating House Republicans in voting no.

The final House action was required after Senate Republicans leveled a successful budget law challenge that deleted two provisions from a section of the reconciliation bill dealing with student loans.

The Senate passed the reconciliation bill earlier Thursday, 56–43. The House passed the initial version of the bill on March 21 by a 220–212 vote.

For Democrats, the package means that health insurance benefits will be extended to about 32 million Americans who now lack them. For Republicans — who plan to run this fall on a platform calling for a repeal of the new law — the overhaul represents a dangerous expansion of government control over the health care system.

"Just about everything has been said and everyone has said it," said Jim McGovern, D-Mass., as the House prepared for the final vote.

Unlike late on March 21, when the visitor galleries were packed and House members filled the chamber's seats, the final debate was a low-key event. The galleries were almost empty and members straggled in for the vote, which followed 10 minutes of debate.

"What we're doing today is historic," McGovern said. "I am proud to cast my vote, again, for the reconciliation bill."

But David Dreier, R-Calif., said Democrats had succeeded only in leading the country in the wrong direction.

"Wasting precious time while the American people wait for real health care reform is a tragic waste. This is a missed opportunity," he said.

The reconciliation legislation was designed to revise provisions in the Senate's version of the health care overhaul law that House members found objectionable.

For Republicans bitterly opposed to the Democrats' health care effort, Thursday night's House debate was their last opportunity to delay, if not kill, the final piece of the package.

Republicans used a meeting of the Rules Committee on the bill to try anew to put off passage. "I would just as soon go home for two weeks and listen to people and come back and vote on this," said Joe L. Barton, R-Texas.

"I don't see any evidence that anyone, including the great American people, want to see us debate this again," said Rules Chairwoman Louise M. Slaughter, D-N.Y.

Still, rehash old arguments is exactly what committee members did, with Republicans attacking Democrats' approach to health care and chiding them for sloppy legislative drafting.

"Its hasty construction resulted in errors that were bound to emerge," said John Kline of Minnesota, the top Republican on the Education and Labor Committee. "Who's to say that new glitches won't emerge?"

Frank Pallone Jr., D-N.J., said Republicans should vote for the reconciliation bill. "To not move forward with reconciliation at this point would be a huge mistake because we all agree it corrects a lot of the problems we saw in the Senate bill," he said. "We should all vote for it."

The reconciliation legislation increases federal subsidies in the new law to help low- and moderate-income families purchase health insurance starting in 2014. It also speeds the phase-out of the coverage gap, or "doughnut hole," in the Medicare Part D prescription drug program and revises the formula for providing federal matching funds to help states cover the law's expansion of Medicaid eligibility.

The bill also modifies the law's tax provisions, delaying and reducing the reach of a new excise tax on high-cost health insurance plans, increasing the Medicare payroll tax on high-income taxpayers, making investment income subject to taxation, and adjusting industry fees and taxes.

In an unrelated section, largely overshadowed by the contentious health care debate, the reconciliation bill makes the federal government the sole originator of college student loans and increases the maximum Pell grant for low-income students.

Senate Republicans successfully raised budgetary points of order against two minor provisions relating to the Pell grants, and they were removed from the bill.

Those changes sent the bill back to the House, which had to act again in order to send it to the president.

By John Reichard, CQ HealthBeat Editor

March 23, 2010 -- Last week, America's Health Insurance Plans said that cuts under the House Democratic health care overhaul package would "pull the plug" on the Medicare Advantage program. As it turns out, the Congressional Budget Office doesn't agree.

CBO estimates that by 2019 some 9.1 million people will be enrolled in Medicare Advantage, the private health plan side of Medicare. That's down from 11 million people now, but the 9 million would still a fairly big chunk of the Medicare population as a whole.

And while insurers warn that the cuts will erode benefits now received by Medicare Advantage enrollees, they'll still get more in benefits than enrollees in the traditional Medicare program.

But the program won't be nearly as big as it otherwise would be without the overhaul measure. CBO had projected enrollment would reach 13.9 million in 2019; the estimate means enrollment will be 4.8 million less than without the overhaul provisions.

CBO specifically analyzed the Senate-passed health care overhaul bill (HR 3590) as modified by the so-called reconciliation package (HR 4872) making changes needed to make the Senate measure acceptable to House Democrats. The House passed both proposals March 21, with President Obama signing HR 3590 into law Tuesday. Senate action is pending on the reconciliation package of modifications.

CBO projected that without the overhaul changes the value of extra Medicare Advantage benefits not covered by traditional Medicare would rise from $87 per month in 2009 to $135 per month in 2019. With the overhaul changes the 2019 figure would be $67 per month.

Medicare Advantage plans now deliver the $87 in extra benefits in the form of vision or dental care or lower premiums for Part B, the doctor care part of Medicare, or Part D, which covers prescription drug benefits.

CBO's analysis notes that under the overhaul revisions plans could no longer use Medicare subsidies for extra Medicare Advantage benefits to lower Part B or Part D premiums.

While declining enrollment wouldn't mean an end to Medicare Advantage, the disruption to seniors is traumatic. When dozens of private health plans pulled out of Medicare following cuts in 1997 balanced budget legislation, enrollees were forced to find other plans or return to traditional Medicare. A return to traditional Medicare would mean higher out of pocket costs for many seniors with modest incomes.