By Jane Norman, CQ HealthBeat Associate Editor

January 19, 2011 -- Beyond the repeal vote in the House and a somewhat more civil tone to the debate lies a new challenge for Republicans and Democrats when it comes to the health care law. Is it possible the two sides are interested in stretching that civility even further and finding some middle ground for changes in the law as Republican committees begin digging into it?

As remote as that may seem judging from the heated rhetoric on the floor and from advocates on both sides, the words do crop up—though as yet there's no indication that a middle ground is actually in sight. "No one will negotiate on our side until they're ready to negotiate on theirs," said Rep.Robert E. Andrews, D-N.J., a top member of the House Education and Labor Committee.

Republicans fresh from their vote on repeal—something they'd campaigned on and promised to voters—will offer a resolution instructing committees to begin work on changing the law, though the changes are not yet specified and there's no timeline. House Speaker John A. Boehner, R-Ohio, described the changes as "common-sense reforms that will bring down the cost of health insurance for the American people and expand access."

It's widely expected they will include extending access to insurance across state lines and strengthening health savings accounts, neither of which have historically garnered much Democratic support.

Andrews said he does have a list of what he sees as middle-ground fixes he'd like to see in the law, some of which majority Republicans already back, such as a repeal of the highly unpopular requirement that businesses file a 1099 form with the IRS. Lawmakers in both parties would like to do away with that provision but have been unable to agree on how to pay for it.

Andrews said he'd also like to see the small business tax credit changed to allow mom-and-pop businesses to qualify, some easing of calculations for the employer mandate and examination of technical issues brought up by states struggling to implement the health insurance exchanges.

"The consensus of the public is we should assess areas of the bill to be fixed," said Andrews, but he also predicted that not much will happen until Republicans resolve how they will proceed on any plans to withhold funding for implementation of the law and what legislative vehicle to use.

Democrats eager to be seen as bipartisan regularly point to President Obama's willingness to deal with the GOP, though Republicans say their earlier attempts to have a voice when they were in the minority were rebuffed. Obama in a statement about the repeal vote cited the law's new consumer protections, added benefits for senior citizens and reductions in deficits—and repeated a pledge he has made in the past to consider changes.

"So I'm willing and eager to work with both Democrats and Republicans to improve the Affordable Care Act," Obama said. "But we can't go backward."

Democrats continued to fight back hard against the repeal vote, bringing Health and Human Services Secretary Kathleen Sebelius to the Hill to meet with their caucus for a pep talk in the morning, along with Agriculture Secretary Tom Vilsack and Small Business Administrator Karen Mills. "Repeal, repeal, repeal is not a plan, nor is it a solution," said Connecticut Rep. John B. Larson, chairman of the Democratic Caucus.

But Larson also raised the possibility of the parties reaching out and working together in response to a greater public desire for bipartisanship, though he didn't offer specifics. He did say Obama would lead the charge. "I believe as we look out across America there is that great hope for us," he said. "Our president continues to reach out to the other side."

But there's a canyon in between. On MSNBC, Tennessee Rep. Phil Roe, a Republican, and Ohio Rep. Dennis J. Kucinich, a Democrat, sat together and discussed a tempering of the tone in Congress in the wake of the shooting in Tucson, Ariz., of Democratic Rep. Gabrielle Giffords.

"I see members of Congress, Democrat and Republican, making an effort to go across the aisle and talk with each other," said Kucinich. "There really is a feeling that . . . we may not close ranks on an issue, but we understand that we need to try to proceed in a way that is civil."

The two then listened to a replay of remarks by former Sen. Bill Frist, a Republican, about the health care law made at a forum encouraging bipartisanship on health care. "It's not the bill that I would have drafted," Frist said. "But it is the law of the land, and it is the platform, the fundamental platform upon which all future efforts to make this system better for that patient, for that family, for that community will be based."

Responded Roe: "I just respectfully disagree." He said that a dozen members of the House GOP Doctors' Caucus were never consulted on the health care law or about problems they could see about how it would be implemented.

"That was very frustrating to me to bring 30 years of experience in health care and never be asked," he said. "We couldn't even get a vote on the House floor in 80 amendments."

At least that lack of input will change when House Judiciary Committee Chairman Lamar Smith, R-Texas, convenes a hearing on an overhaul of medical malpractice laws titled "Medical Liability Reform—Cutting Costs, Spurring Investment, Creating Jobs."

While doctors traditionally have lined up on the side of Republicans and trial lawyers with Democrats, it's an issue that could possibly present a middle ground. The health care law included funding for demonstration grants aimed at reducing legal claims against physicians, though Republicans say they didn't go far enough.

The witnesses will be Ardis Hoven, chairwoman of the Board of Trustees of the American Medical Association; Stuart L. Weinstein of the Health Coalition on Liability and Access, a group made up of doctors, hospitals, and insurers; and Joanne Doroshow, executive director and founder of the Center for Justice and Democracy, which describes itself as "the only national consumer organization in the country exclusively dedicated to protecting our civil justice system."

By John Reichard, CQ HealthBeat Editor

January 19, 2011 -- Oregon, Washington, California, Maryland, Massachusetts, and other states—a dozen or so in total—will be able to apply later this month for relatively large federal grants to establish insurance exchanges under the health law, said the lead federal official in charge of the new marketplace implementation effort.

Because they are moving faster and on a larger scale to create exchanges, these "pace car" states initially will be eligible for larger grants than other states, explained Joel Ario, director of the Office of Exchanges in the Center for Consumer Information and Insurance Oversight. The center is now an office within the Centers for Medicare and Medicaid Services (CMS).

The "funding opportunity announcement" expected later this month will invite all states to apply for "establishment" grants, another HHS official said; it's just that a dozen or so will be able to get more money initially.

Ario suggested that other states falling into the pace car category are clustered in New England and might also include Minnesota.

The health law (PL 111-148, PL 111-152) provides that states get grants to plan exchanges and establishment grants to get them up and running to meet the January 2014 deadline requiring them to offer coverage to the uninsured and small businesses.

Forty-eight states and the District of Columbia have received million-dollar planning grants. Federal officials previously indicated that they would begin offering establishment grants to states in February or March.

Ario said Minnesota likely will apply this week for a planning grant, leaving Alaska as the only state not to do so. Minnesota also is likely to fall into the pace car category, he said. Former Gov. Tim Pawlenty is staking a possible presidential bid on his opposition to the overhaul, but Minnesota's new governor, Democrat Mark Dayton, is a supporter of the measure.

Ario said other states are moving more incrementally on exchanges. "Frankly, that is where most states are today," he said. They will receive more money later as the costs of creating exchanges become larger, Ario suggested. In the end all the states are supposed to have their costs of establishing exchanges covered by the federal government, provided that those costs meet certain federal benchmarks, he said.

His remarks on exchanges came in a speech to the National Congress on Health Insurance Reform, sponsored by the health policy research publication Health Affairs. Ario elaborated on his statements in an interview with HealthBeat.

The official said states will have to decide in about a year whether they will create their own exchanges or let the federal government do it. States moving more incrementally seem the likeliest candidates for letting the federal government run the show, but Ario gave no indication of how many states might choose to do that.

He said governors with the biggest concerns about the law are motivated to set up their exchanges to avoid the involvement of the federal government. Mississippi Gov. Haley Barbour, a staunch Republican, is working on state legislation to authorize Mississippi to create its own exchange, Ario said. "I think that is the way this is going to play out," he said.

A Taste for Cost Control

Some state exchanges appear on track toward becoming more active purchasers of health care in order to bring down health costs.

An audience member from Rhode Island asked whether state exchanges could get involved in cost control from the start rather than waiting to get other functions operating smoothly first; Ario said the health law allows that flexibility. Maryland, Oregon, and Rhode Island are interested in that route, he said. "They are looking more aggressively from the get-go on the exchange potential" for controlling costs, he said.

For example, states can set up exchanges to require that at least 20 percent of participating insurers' payments to doctors and hospitals be made on a basis other than fee-for-service, he said. In other words, states can begin experimenting with requiring insurers to pay based on the outcomes of treatment rather than on the volume of services – to start using some of the cost-control tools large private employers do, Ario said.

States under the law can choose to be "market organizers" that stick to telling the public about available plans without excluding plans that aren't a good deal. But Ario said that in the long run he thinks exchanges will play a role like Medicare and Medicaid in adopting cost-control strategies.

Minimum Standards

The law also provides for basic minimum standards that exchanges must meet, a website to pick plans, ratings of the quality plans and regulations on quality improvement. "Risk adjustment" also will be part of the regulatory scheme—in other words, adjustments to pay plans more if they have sicker enrollees and plans less if their enrollees are relatively healthy.

Risk adjustment is no panacea, Ario cautioned. "The more you know about risk adjustment, the less confident you are" that it can prevent insurers from competing by avoiding risks, he said. But "it can make a big difference," Ario added. He predicted that the federal government will develop a model of risk adjustment and that a debate will ensue with insurers over whether the model is a "floor" that sets a minimum that states can go beyond, or whether it should be a uniform requirement for all exchanges.

Weaning insurers away from their longtime tactic of avoiding bad risks is going to be a huge challenge.

"Some people say it's within the carriers' DNA, it's not going to be easy to remove it but we're going to do everything we need to make if difficult" for carriers to compete by cherry-picking good insurance risks, Ario said.

It's an open question how many states will be up to the complex tasks of operating insurance exchanges. A number of states have said they need much more guidance from the federal government on how to establish exchanges. Ario said a proposed rule will be out in late spring "with all the details on how this will be regulated from the federal side."

By Jane Norman, CQ HealthBeat Associate Editor

January 18, 2011 -- Hours before the beginning of the repeal debate in the House, the Department of Health and Human Services (HHS) issued a new report zeroing in on one of the most popular elements of the health care law—its ban on insurance denials in the individual market for people with preexisting conditions.

It's one in a barrage of studies, press releases and other information rolled out by the Obama administration and allies to champion a law that's not likely to be undone in Congress but could suffer further in public opinion if no defense is mounted. "We need to keep our country moving forward, not going back," HHS Secretary Kathleen Sebelius said in a conference call with reporters that also featured people who were denied health insurance.

Sebelius characterized the repeal debate as an "opportunity" to explain the law anew to the country. And the secretary took a shot at House Republicans, saying the Congressional Budget Office (CBO) has found that repeal would increase the deficit.

"Yet the leadership has chosen to exempt themselves from their own rules that any vote taken needs to be paid for," she said. "The vote is going forward in spite of the fact this same group of leaders has declared the deficit to be one of their priorities."

Republicans have rejected the CBO estimate as founded on double-counting and incorrect assumptions.

Also, the influential seniors lobby AARP issued a letter saying its members and their families often are "unclear" on what's in the law but support provisions such as the ban on pre-existing conditions. "While we respect that there are those who do not support the ACA [Affordable Health Care Act], AARP opposes repeal because the new law includes many vital provisions important to older Americans and their children," AARP CEO A. Barry Rand said in the letter to Congress.

And two House Democratic authors of the law, Henry A. Waxman of California and Frank Pallone of New Jersey, issued their own detailed report showing how repeal would affect localities.

The HHS report warns that many Americans too young for Medicare have preexisting medical conditions that could limit their access to insurance if they have to buy it on their own. If the report's wider definition of "preexisting condition" is adopted—one that includes common ailments such as diabetes, asthma, high cholesterol and obesity—129 million people would be affected, or half of all non-elderly Americans, the report says.

"If you've ever been told by your doctor that you have a health condition, the last thing you want to hear is that your insurance company is limiting or denying your health coverage," Richard Sorian, assistant secretary at HHS for public affairs, wrote in a blog post about the report.

Who's Really Affected

But the HHS report also says 59 percent of Americans received health care coverage through their employer-sponsored group plans in 2009. Those plans generally cover preexisting conditions. While that's down from 68 percent in 2000 and includes plans that have lifetime limits or higher rates due to preexisting conditions, it still leaves a large number of workers for whom this issue is not entirely relevant.

That point was made by health insurers. "We have long agreed that the individual insurance market needs to be reformed, but this report significantly exaggerates the number of people whose coverage is impacted by pre-existing conditions," said Robert Zirkelbach of America's Health Insurance Plans (AHIP).

Zirkeblach said most people get their coverage through their employers, who do not take into account pre-existing conditions. And, he said, nine out of 10 Americans who apply for coverage in the individual market are offered a policy while many others are eligible for public programs such as Medicaid.

Nonetheless, knowing there's plenty of support in the polls for the ban and that many people fear losing their jobs and their coverage, it's likely Republicans will find a way to preserve the preexisting coverage protection in their own health care approach or risk a backlash from voters.

Sorian said in his blog post that by repealing the law, Republicans would be taking away Americans' peace of mind as well when it comes to health insurance. "Under the full range of policies in the Affordable Care Act to be in place by 2014, Americans living with preexisting conditions are free from discrimination and can get the health coverage they need at a price they can afford," he wrote. "And families are free from the worry of having their insurance cancelled or capped when a family member gets sick, or going broke because of the medical costs of an accident or disease."

Estimates Range from 50 Million to 129 Million

The report constructs two estimates of the number of individuals who would be affected by taking away the ban on preexisting conditions included in the law, effective in 2014 when a broad array of changes will take place in the insurance market.

If the only people included are those who have conditions that would commonly lead them to be rejected or forced to get policies with high premium rates from insurers in the individual market, about 50 million people are estimated to have with preexisting conditions. Those people are eligible for the state high-risk pools.

The second group, estimated to be 129 million, also takes in common health and mental health conditions such as arthritis, asthma, high cholesterol, hypertension and obesity that likely would result in automatic denials of coverage, an exclusion of the condition or higher premiums, according to insurer guidelines posted on the Internet, the report says.

Sebelius acknowledged in the call that it might have been confusing to include both widely variant numbers in a press release and "unfortunately the release is not as well written as it should have been."

Those with employer coverage are at risk as well, the report warns. It says that "as many as 82 million" people with employer-based coverage have preexisting conditions under the wider definition. That limits their ability to obtain coverage if they become self-employed, take a job with a company that doesn't offer insurance or get divorced or retire or move to a different state.

Even those currently in good health could face problems over time, the report adds. It cites a survey that found among people reporting very good or excellent health with no chronic conditions, 15 percent to 30 percent will develop a preexisting condition within the next eight years, depending on their age.

And the report takes aim at the large baby boomer population, reporting that 86 percent of those between the ages of 55 and 64 would fall into the wider definition of a preexisting condition.

By Rebecca Adams, CQ HealthBeat Associate Editor

January 21, 2011 -- The new nonprofit institute assigned by the health care law to fund comparative effectiveness research gave a sign that it is gearing up: It announced the members of a key committee that will shape the way the studies will be conducted.

The Patient-Centered Outcomes Research Institute (PCORI) also held its second board meeting in Los Angeles and made plans for a March 7-8 meeting in St. Louis. Although the organization doesn't yet have an executive director, chairman Eugene Washington of the University of California at Los Angeles Geffen School of Medicine is busy discussing priorities with board members. PCORI officials are expected to create a list of research priorities and start handing out funding for studies in the coming months.

PCORI was created in the health care law (PL 111-148, PL 111-152) as a way to coordinate research comparing medicines, devices or methods of delivering care for patients to figure out what works best. The federal government has funded comparative effectiveness research for decades, and some government-funded research will continue on a separate track through the National Institutes of Health and the Agency for Healthcare Research and Quality (ARHQ).

But PCORI will serve as a centralized source of funding for comparative studies. Comparative effectiveness studies became somewhat controversial in the health care debate because some critics feared that federal officials at Medicare or other health programs might decide to limit coverage for treatments that are shown in studies to be less effective than alternatives.

ARHQ Director Carolyn Clancy, who serves on the PCORI board, acknowledged that there is "lots and lots of apprehension" about comparative studies, including questions about whether the research could somehow inhibit innovation. She argued that "we will actually accelerate the uptake of new innovations" by being able to rapidly identify which patients will benefit most from different types of care.

"Early on in CER [comparative effectiveness research], people were talking about winners and losers, and really it's about precision and how we apply the science," she told an audience at the Congress on Health Insurance Reform, a conference sponsored by the policy research publication Health Affairs. Studies can help guide physicians who are trying to tailor treatments to individual patients' needs.

Clancy also said that all of the federally funded efforts to improve quality—whether through PCORI, ARHQ or other entities—will need to be closely coordinated with the private sector. "It can't be top-down," she said in an interview after her speech. "It has to be collaborative."

The 15-member methodology committee will play a key role in determining how studies are conducted. Washington, as chair of the PCORI board, will select the chair of the committee. The new members of the methodology panel are largely physicians, academics, and representatives of groups that conduct comparative effectiveness studies, such as the executive director of the Blue Cross and Blue Shield Association Technology Evaluation Center.

"These committee members will play a critical role in shaping methodological standards for research, and, with their knowledge and qualifications, the experts who have been appointed to serve on the committee are well-positioned to achieve the committee's goals," said Robert Dubois, chief science officer of the National Pharmaceutical Council, whose members include major drug companies. "The work of this group is foundational to achieving PCORI's mission."

GAO Announcement

The members of the committee are:

• Naomi Aronson, Executive Director, Blue Cross and Blue Shield Association Technology Evaluation Center.
• Ethan Basch, medical oncologist and health services researcher, Department of Medicine and Department of Epidemiology, Memorial Sloan-Kettering Cancer Center.
• Alfred Berg, professor, Department of Family Medicine, University of Washington.
• David Flum, professor, Department of Surgery and Adjunct Professor, Department of Health Services, University of Washington Schools of Medicine and Public Health; Attending physician, General Surgery, University of Washington Medical Center.
• Sherine Gabriel, Professor of Medicine and of Epidemiology, and the William J. and Charles H. Mayo Professor, Mayo Clinic.
• Steven Goodman, Professor of Oncology, of Pediatrics, of Epidemiology and of Biostatistics, Johns Hopkins School of Medicine and Bloomberg School of Public Health.
• Mark Helfand, Professor of Medicine and of Medical Informatics and Clinical Epidemiology, Oregon Health & Science University; Staff physician, Portland VA Medical Center.
• John Ioannidis, the C.F. Rehnborg Professor in Disease Prevention, Professor of Medicine and Director, Stanford Prevention Research Center, Stanford University School of Medicine.
• David Meltzer, director, Center for Health and the Social Sciences, Chief of the Section of Hospital Medicine, and Associate Professor, Department of Medicine, Department of Economics, and Graduate School of Public Policy Studies, University of Chicago.
• Brian Mittman, director, VA Center for Implementation Practice and Research Support, Department of Veterans Affairs Greater Los Angeles Healthcare System.
• Robin Newhouse, Assistant Dean, Doctor of Nursing Practice Program and Associate Professor, Organizational Systems and Adult Health, University of Maryland School of Nursing.
• Sharon-Lise Normand, Professor of Health Care Policy, Harvard Medical School and Professor of Biostatistics, Harvard School of Public Health.
• Sebastian Schneeweiss, Associate Professor, Department of Medicine, Harvard Medical School and Associate Professor, Department of Epidemiology, Harvard School of Public Health; Vice Chief and Director, Drug Evaluation and Outcomes Research, Division of Pharmacoepidemiology and Pharmacoeconomics, Brigham and Women's Hospital.
• Mary Tinetti, Professor of Medicine, Epidemiology, and Public Health, Division of Geriatrics, Yale University School of Medicine; Director, Program on Aging, Yale University School of Medicine.
• Clyde Yancy, Chief, Cardiology, Northwestern University Feinberg School of Medicine; Associate Director, The Bluhm Cardiovascular Institute, Northwestern Memorial Hospital.

By Rebecca Adams, CQ HealthBeat Associate Editor

January 18, 2011 -- They're two former Senate Majority Leaders who may not agree on the ideal way to overhaul health care, but Tom Daschle and Bill Frist joined former Ohio Democratic Gov. Ted Strickland in launching a two-year project aimed at building bipartisan solutions to the implementation of the health care law.

Officials leading the project, sponsored by the Bipartisan Policy Center, plan to convene hearings in different sites around the country, issue white papers based on best practices that they can identify around a half-dozen health care issues, and perhaps issue a final report. The effort builds on the BPC's comprehensive health care overhaul plan, which was released in June 2009.

Democratic analyst Chris Jennings and Sheila Burke, who had served as chief of staff to former Senate Majority Leader Bob Dole, R-Kan., will lead the initiative.

The health care law "is not the bill I would've drafted but it is the law of land" and the platform upon which future changes to health care will be built, said Frist. "There are many strong elements" in the law that, as he put it, "need to be cuddled, need to be snuggled" and appreciated.

The former GOP majority leader applauded the deference that Congress gave to the states in implementing several features of the law (PL 111-148, PL 111-152).

"What we must find now are real bipartisan solutions," said Frist. That "doesn't mean abandoning principled leadership," he said, but it does mean talking in a "civil, respectful way" to people with different opinions.

However, Frist also said that challenges to the constitutionality of the law are "legitimate" and "totally separate" from efforts to implement the law. Attorneys general have filed lawsuits to the law, particularly targeting the requirement that most Americans buy health insurance starting in 2014.

Daschle said that he hopes that the administration will give states the maximum degree of flexibility in interpreting the law because states vary dramatically throughout the country. He also emphasized that government officials should do all they can to make sure health care dollars are being spent wisely.

Retired New Mexico Republican senator Pete V. Domenici, who was in the audience, cheered the new initiative.

"We need a melding of ideas from Democrats and Republicans," said Domenici.

By Rebecca Adams, CQ HealthBeat Associate Editor

January 20, 2011 -- Participation in high-risk pools created under the health care law doubled in the past month after HHS officials cut premiums, and those officials will begin a series of regional outreach events next week in an effort to build on that momentum.

The pools, known as the Pre-Existing Condition Insurance Plan, started this summer. Every state was required by the new health care law (PL 111-148, PL 111-152) to create a separate one funded by federal dollars for people who have not had insurance for at least six months because they have preexisting conditions. State officials can elect to run the pools themselves or allow the same company that runs the Federal Employment Health Benefits Program to operate them.

For months, state and federal officials were concerned because enrollment was lower than anticipated. Republicans criticized the lower-than-expected enrollment in the plans, saying that the new plans duplicate other existing state risk pools. While GOP lawmakers support the concept of high-risk pools, they say they would have structured them differently.

However, enrollment is growing now. Because the law requires that the premiums mirror standardized risk rates, HHS officials cut premiums this month and the number of applicants doubled.

Richard Popper, director of insurance programs at the HHS Office of Consumer Information and Insurance Oversight, said in an interview Thursday that he is pleased that collaborations with hospitals and patient organizations for certain diseases also are leading to higher enrollments in the risk pools. Some hospitals and disease groups are paying premiums for patients. (See related story.)

Popper said it was too early to tell how long federal funding for the pools will last. The new plans are financed through 2013 by about $5 billion in federal funds—an amount that the Congressional Budget Office has said previously would "not be sufficient to cover the costs of all applicants." Popper said that it would be hard to make predictions about funding because it is a new program and actuaries say that it's hard to project costs until there is a full year of experience to look back on.

Popper did say that some states were relieved when HHS officials wrote release valves into some state contracts, so that if a state hit an enrollment or cost threshold spelled out in the agreement, then the state would have a chance to change its policies for the pool.

That "triggers an immediate discussion where we either cap enrollment or take other steps, modify the benefits, to address that," Popper said. "That allayed a lot of concerns states had about money being exhausted."