By John Reichard, CQ HealthBeat Editor

October 6, 2010 -- Doctor groups are warning congressional leaders that a series of short-term measures lawmakers passed earlier this year to block Medicare payment cuts were too disruptive to medical practices. To keep doctors from bailing out of the program, Congress should pass a longer-term fix that lasts through 2011, they say.

It won't be easy for Congress to kick its habit of short-term fixes, however. Billions of dollars in offsets elsewhere in the federal budget will be needed to cover the costs of future payment patches. And the cost climbs astronomically the longer the fix.

The talk among committees on the Hill is that Congress will pass a 31-day fix before Thanksgiving and a subsequent one of six months to 13 months when lawmakers wind up the lame duck session in December, says Julius Hobson, senior policy adviser with Polsinelli Shughart's Washington law office.

Lawmakers are scheduled to return to Capitol Hill the week of Nov. 15 for just one week and return after Thanksgiving.

The current payment patch expires Nov. 30. If Congress doesn't act, Medicare payments to doctors are scheduled to be cut by 23 percent on Dec. 1, and by another 6.5 percent on Jan. 1.

In theory, that means Congress has to act before its Thanksgiving break to head off the first cut, although lawmakers have missed such deadlines before and Medicare has used its administrative authority to delay the cuts for a brief periods.

Tired of Short Fixes

But in a Sept. 29 letter to House leaders, the American Medical Association (AMA) and 65 other national medical organizations said they're tired of that drill.

When Congress failed to enact fixes on time earlier this year, the Medicare program "reacted by ordering carriers to hold payments until legislation was passed," the letter says.

These "payment uncertainties and delays were highly disruptive,'' the groups said. "Many practices were forced to seek loans to meet payroll expenses, lay off staff, or cancel capital improvements and investments in electronic health records and other technology. Furthermore, when payments resumed, many physicians experienced long delays in receiving retroactive reimbursements. This is not the way to manage a program that seniors and the disabled rely on."

The letter noted that the next cut is scheduled to occur "during the period when physicians may change their status from a Medicare participating physician, who accepts Medicare's allowance as payment in full, to a non-participating physician who may bill patients more than the Medicare allowance.

"We can anticipate that many physicians will be examining whether it makes any sense to continue their current relationship with Medicare given the severe disruptions of the past year," the letter said.

AMA and other groups have not given up on their insistence that Congress permanently overhaul the formula, which lines up doctors for cuts for a number of years to come. But a fix through 2011 "will provide time for Congress and the physician community to develop a long term solution," the groups said.

The extension of the current fix would require budgetary offsets of between $1.4 billion and $1.6 billion a month, Hobson said. In this year's congressional campaigns, Republicans have blamed the federal deficit on Democrats, creating a legislative environment in which the GOP faces much pressure to pay for any "doc fix" legislation. "Republicans insist on offsets," Hobson said, but given the cost of this year's health overhaul, there may not be enough offsets left that both parties can agree on.

Hobson also said that Senate Finance Committee Chairman Max Baucus, D-Mont., has talked about passing a 13-month fix once the current patch is extended through the end of the year. But, Hobson added, "I also know that Republicans don't want to go that far and have talked about six months" as the length of a fix.

A Finance Committee aide said "Chairman Baucus supports a permanent physician payment fix and will work toward passing the longest fix possible in a 60-vote environment."

Democrats and independents have 59 votes in the Senate. But after the November elections, that majority could drop to as low as 56 or 57 because the new senators from Delaware, West Virginia and Illinois will be seated during the lame-duck session. That would make it more difficult for Democrats to enact their desired payment fix.

All of that could mean that part two of the fix in the lame duck probably won't last long either, he says. "We're probably somewhere in the two-to-six month category," Hobson said.

By John Reichard, CQ HealthBeat Editor

October 8, 2010 -- The federal office overseeing national efforts to spread the use of health information technology announced this week that it has begun publishing a list of products certified as eligible for Medicare and Medicaid bonus payments.

Publication of the list should help spur IT purchases by doctors and hospitals because only products certified as "interoperable"—compatible with other IT systems—will qualify for billions of dollars in Medicare and Medicaid bonus payments appropriated under the economic stimulus law (PL 111-5).

In addition to using certified products, providers also must demonstrate "meaningful use" of the technology to qualify for the bonus payments. What that means in concrete terms was spelled out by the Centers for Medicare and Medicaid Services (CMS) in a final rule issued in July.

The new list is the product of a temporary certification program established under the auspices of the HHS Office of the National Coordinator for Health Information Technology. David Blumenthal, the national coordinator, told lawmakers last week that his office is preparing a final rule due out later this year establishing a permanent, more rigorous certification program.

Blumenthal told a House subcommittee hearing Sept. 30 that the permanent program, which will be "fully operational" in 2012, will do more to incorporate international standards to make sure that IT systems work together well.

The entire health IT standard-setting effort, seen as key to adoption of the technology, came under review at the hearing by the Technology and Innovation Subcommittee of the House Science and Technology Committee.

More Work Needed

Testimony at the hearing made clear that while much progress has been made, an enormous amount of work remains before IT use is as routine in health care as elsewhere in the economy. The availability of systems meeting federal standards should help, though the standard-setting process has a long way to go.

"Many physicians, particularly those in small practices where most Americans get their health care, are hesitant to take on the considerable expense of a health IT system that, without common standards, may not work with the systems of a neighboring health care provider or may become prematurely obsolete," subcommittee Chairman David Wu, D-Ore., said at the hearing.

Wu said Blumenthal "has done an admirable job meeting tight deadlines and navigating the needs of many stakeholders" in developing standards, but "we still have a ways to go in promoting interoperability, coordinating the many health IT projects under way, governing the standards development process, and providing direction on privacy and security."

Witnesses at the hearing outlined additional areas in which standards are needed. Kamie Roberts, an official with the National Institute of Standards and Technology, which is part of the Commerce Department, is working with academia and the private sector to develop standards in telemedicine to make it easier for doctors to diagnose, treat, and monitor patients from many miles away.

Another focus is on developing standards so that "medical records can be retrieved regardless of the format and medium in which they were first created or stored," Roberts testified. "This preservation will allow doctors to create the medical records of children today, and enable access to those same medical records when those children are adults."

Standards Needed

Roberts added that standards are needed to encourage advances in medical image quality and to promote development of technology to allow doctors to more easily retrieve physician notes from electronic health records.

Richard Gibson, president of the Oregon Health Network, credited Blumenthal's office for "making rules as straightforward and pragmatic as possible." Gibson said vendors of electronic health records "now have a clear road map for the next two years of what will be required of their software as a minimum for clinician adoption."

But "we need to acknowledge that standards have relatively little application unless individual health care providers have electronic health records in the first place," Gibson said. Most of the 400,000 health care professionals eligible for bonus payments still need to acquire electronic health records for their medical practices, he said, estimating that bonus payments will only cover 47 to 67 percent of that cost.

Experts say electronic health records will prevent the prescribing of inappropriate drugs or dosages, head off medical errors stemming from hard-to-read handwriting, and reduce duplicative testing by providing a permanent place to store medical data, among other benefits.

But Gibson said use of the systems right now is very time-consuming for many doctors. In general, electronic health records are not yet at a point where they "allow providers to see more patients in a day, spend more quality time with their patients, or guarantee better or more consistent health outcomes for their patients," he said.

By John Reichard, CQ HealthBeat Editor

October 4, 2010 -- It's what Health and Human Services Secretary (HHS) Kathleen Sebelius calls "the other health reform"—the overshadowed elements of the health care law that are designed to help government and business get better value for the health care dollar.

Early in the implementation of the law, the focus has been on adding new consumer protections for health plan enrollees, but the measure will also help spur a redesign of the health care system, she said.

Sebelius kicked off a daylong conference Monday, sponsored by her department and several lawmakers, by showcasing what she said is the fact that employers, hospitals, insurers and other groups have been working at the community level for years to build their services' value, with a number of successes. And she believes the law will help implement these successes more widely.

In her remarks Sebelius noted the recent appointment of Peter Lee as director of delivery system reform in the HHS Office of Health Reform. For many years Lee helped lead efforts by the Pacific Business Group on Health to help employers in California get better value for the health care dollar by putting pressure on local providers and health plans to report data on quality and efficiency of care to purchasers.

Sebelius wants to have Medicare and Medicaid become better "value purchasers," and she asserted that the law will help accomplish that goal with Lee playing a major part.

At the Pacific Business Group on Health, Lee "worked at systems changes along the way, and I think [he] is in the perfect place at the Department of Health and Human Services to help us figure out how to be good collaborators and partners and how to use the resources we have to help encourage the innovation that's taking place across the country," Sebelius told the forum, called the National Summit on Health Care Quality and Value.

"Our responsibility is to be guided by science, to look at what works and what doesn't—but also to closely examine those pockets of innovation across the country where we've seen great success and give support to bring those experiences to scale," Sebelius said.

The Pacific Business Group has led efforts to have private employers and government come to agreement on measures on quality care. For example, it helped developed instruments to rate the quality of individual doctors. "Approximately 17,000 physicians receive individual performance results based on 15 quality measures, using combined Medicare and commercial PPO data," the group notes on its website.

Pacific also boasts what it calls the first study of cost efficiency at California hospitals. Sebelius predicted that the work of appointees such as Lee and Donald M. Berwick, director of Centers for Medicare and Medicaid Services (CMS), would reap big dividends for system redesign efforts at HHS aimed at financially rewarding providers who deliver better quality and greater efficiency. Berwick "is always four or five steps ahead of everyone else" in seeing how the system can be redesigned and has the ability to clearly explain the system and how to achieve needed changes, Sebelius said.

Berwick was expected to address the event at the Capitol Visitor Center on Capitol Hill later in the day.

Conference participants were expected to hear about success stories in lowering costs by improving quality in systems such as Geisinger Health System in Pennsylvania; new models for improving the coordination of care at places such as the Everett Clinic in the state of Washington, and measurement of variations in the quality of care intended to find inefficient types of treatment.

By Jane Norman, CQ HealthBeat Associate Editor

October 7, 2010 -- A federal judge in Michigan on Thursday handed the Obama administration its first clear victory in the legal battles against the new health care law.

U.S. District Judge George Caram Steeh denied a request for a preliminary injunction brought by the Thomas More Law Center of Ann Arbor, Mich., and dismissed claims the center made against the individual mandate included in the law and penalties for not complying. Steeh said that Congress had the power under the Commerce Clause of the Constitution to enact the health care law.

This is the first judge who has dismissed a challenge to the law. But it is far from the only legal action. Suits against the law are pending in Florida, where 20 state attorneys general have joined together, and in Virginia.

The group that brought the Michigan suit is a national public interest law center with headquarters in Ann Arbor, Mich. It says its mission is to defend "America's Christian heritage and moral values." The center filed the suit on March 23 on its own behalf and that of four uninsured citizens.

Steeh wrote that Congress did not exceed its power in requiring that every American have insurance. "The minimum coverage provision, which addresses economic decisions regarding health care services that everyone eventually, and inevitably, will need, is a reasonable means of effectuating Congress' goal," he wrote.

Lawyers for the law center argued that it is not possible to regulate a lack of action—not buying insurance—but Steeh disagreed. He sided with the argument made by Justice Department attorneys that not purchasing insurance means other people will eventually have to pick up the bill when the uninsured fall ill and need services.

"Far from 'inactivity, by choosing to forgo insurance plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now through the purchase of insurance, collectively shifting billions of dollars, $43 billion in 2008, onto other market participants," Steeh wrote.

Steeh was appointed to his seat in 1998 by President Clinton.

By John Reichard, CQ HealthBeat Editor

October 4, 2010 -- Almost 3,000 employers and unions have been accepted by the program created by the health care overhaul law to help pay the medical costs of early retirees, the Department of Health and Human Services (HHS) announced Monday.

That's up from 2,000 in August, when the first round of acceptances were announced for applications to the Early Retiree Reinsurance Program. Payments begin this fall under the program, which will pick up a significant portion of the costs of the medical expenses of early retirees, who often have difficulty finding affordable coverage outside the workplace.

"I am incredibly pleased to see so many employers embrace this important new program to maintain coverage for people who often have a difficult time finding affordable coverage," HHS Secretary Kathleen Sebelius said in a news release. Sebelius was scheduled to appear Monday afternoon at the Mine Safety Appliances Co. in Cranberry Township, Pa., to announce the new approvals.

"Savings may be used to reduce employer or union health care costs, provide premium or out-of-pocket relief to workers, retirees, and their families, or both," the release said.

The announcement came the same day the Wall Street Journal reported that 3M has told its workers and retirees that it plans to stop offering a company-sponsored health plan to early retirees in 2013. Instead, the company will offer unspecified sums of money to help retirees pay for other health coverage. A 3M spokeswoman confirmed the changes.

According to a 3M memo, "the recently enacted health care reform law has fundamentally changed the health care insurance market. Health care options in the marketplace have improved, and readily available individual insurance plans in the Medicare marketplace provide benefits more tailored to retirees' personal needs often at lower costs than what they pay for retiree medical coverage through 3M."

The 3M announcement comes amid reports that the new law has led a number of health insurers to exit the market.

But Paul Fronstin, director of health research programs at the Employee Benefits Research Institute, said that 3M's change of plans is "no surprise whatsoever."

"I think you're going to have a lot of employers lined up behind 3M to do the same thing," he added. That is not a knock on the new law, he said, but rather evidence that it is bringing about changes in the insurance market that will make it easier for early retirees to gain access to coverage. "Companies are saying, 'The insurance market is going to work now. What do we need to be doing this for?'"

Framers of the law expected this to happen when insurance exchanges opened up in 2014 and gave the uninsured access to subsidies to buy coverage, Fronstin said. He added that under the law, the financial assistance offered under the Early Retiree Reinsurance Program comes to an end in 2014 because uninsured early retirees will have access to exchanges.

By Rebecca Adams, CQ HealthBeat

October 5, 2010 -- Medicare officials should base medical service payments on whether research shows that what they are paying for is an effective treatment for a particular ailment, two policy experts write in the October issue of Health Affairs.

Steven Pearson and Peter Bach also suggest that Medicare could hold off for up to three years on reviewing any new service that is added to the benefit package for which there is no evidence that it is as good as current treatment. Pearson is the founder and president of the Institute for Clinical and Economic Review at Massachusetts General Hospital's Institute for Technology Assessment, which evaluates the comparative effectiveness of medical interventions. Bach, a former top adviser for the Centers for Medicare and Medicaid Services, is a pulmonary and critical care physician.

The authors acknowledge early in the article that their suggestion is volatile.

"Just mentioning Medicare and comparative effectiveness research in the same sentence is enough to raise temperatures in Washington health policy circles," they write. "Those who see this research as a threat to patient choice or provider profits do not want it applied to Medicare. Those who see it as a remedy for the nation's health care ills do not want a politically explosive link to Medicare that might bring down the whole comparative effectiveness initiative."

But Pearson and Bach say that because the growth in Medicare costs need to be controlled, "it seems inevitable that comparative effectiveness research will be considered an important potential tool in this effort."

Pearson's career is founded on using comparative effectiveness research (CER), which is defined in the health care overhaul (PL 111-148, PL 111-152) as "research evaluating and comparing health outcomes and the clinical effectiveness, risks, and benefits of two or more medical treatments, services, and items."

The pair say that even though Medicare does not typically use comparative effectiveness research now in deciding whether to cover a treatment, the agency should incorporate the work. They propose basing payments for a new treatment on whether it is superior, comparable, or inferior to the alternatives. The higher the treatment is rated, the more money Medicare would pay for it.

But they're not suggesting that Medicare apply the same benchmarks to new treatments for the first three years they are in use, unless there is enough evidence to rate them right away. After those treatments are used for three years, CMS would revisit the available evidence and decide whether to continue covering the service and at what rate.

The suggestions for tying Medicare rates to comparative effectiveness research comes despite restrictions in the health care law about how Medicare can use research funded by a new institute, the Patient-Centered Outcomes Research Institute (PCORI), and deep ambivalence among Americans about the use of the data.

The health care law tasks PCORI with ramping up the existing government-funded efforts to study and compare treatments. Within a few years, the institute will have more than $500 million per year to spend on the research. Federal officials are trying to figure out how to incorporate it into the delivery of health care and coverage decisions.

The federal law puts in place a number of restrictions about how U.S. government officials can use the research in coverage decisions for programs such as Medicare and Medicaid, as Stanford University professor Alan M. Garber pointed out in a separate Health Affairs article.

"This may seem like a paradox," Garber wrote. "Concern about the value of health care was one of the most important reasons to pursue health reform."

Garber went on to ask a central question: "How can congressionally-mandated restrictions on the use of such research be reconciled with the need to address issues of value in health care?"

He advocated for a balanced approach. Garber said that, on the one hand, PCORI should not routinely conduct cost effectiveness analyses itself. But on the other hand, he said, the institute "should demand" that the research "include data on use and costs," so that other analysts can use the data to do their own cost effectiveness comparisons. For instance, Garber envisioned that health insurance analysts may want to do so.

The public is generally supportive of the research but wary that government health programs or private insurers might use it to limit their treatment options, according to another article in the Health Affairs issue.

About 62 percent of people surveyed by Yale University political science professor Alan S. Gerber and Eric M. Patashnik, associate dean of politics and public-policy-supported government funding of comparative effectiveness research at the University of Virginia. But only 48 percent would support efforts to "determine whether Medicare and private insurance companies will cover old treatments that doctors have used for some time," and 49 percent would back analyses of whether a treatment is "worth its cost."