By John Reichard, CQ HealthBeat Editor

May 12, 2012 -- Witnesses at an afternoon hearing registered varying degrees of disapproval with the current Medicare fee-for-service physician payment system and urged a House subcommittee to consider such alternatives as five-year, per-patient global budgets and "capitation" under which providers get a fixed, per-patient sum over a span of time regardless of the amount of care a patient gets.

A spirit of bipartisan determination to replace the controversial "sustainable growth rate" (SGR) payment formula characterized the hearing by the House Ways and Means Health Subcommittee. A similar spirit marked a hearing last week by the House Energy and Commerce Health Subcommittee.

Fueling the discontent of lawmakers is that they've had to pass an increasingly expensive set of payment patches in recent years to block cuts under the SGR, a complicated formula under which payment cuts grow larger each year. In January, doctors are in line to receive a 30 percent decrease under the SGR.

"Republicans and Democrats alike have kicked the can down the road long enough" to postpone action on replacing the SGR, Ways and Means Health Subcommittee Chairman Wally Herger, R-Calif., said. He promised to hold a series of hearings on replacing the physician payment formula, saying "it is my hope, that by starting early, we will arrive at a payment system overhaul that can pass the House."

"Reforming the Medicare physician payment system is not a partisan issue," added Pete Stark of California, the top Democrat on the panel. Stark thanked Herger and his staff "for working corroboratively with us to put together this first hearing on SGR reform." Neither mentioned the enormous spending cuts or tax increases that would be required to offset the cost of replacing the SGR, choosing instead to pursue agreement on an alternative form of payment before tackling the issue of "pay fors."

Witnesses said they do not favor outlawing fee-for-service payments, in which doctors are paid a fee each time they see a patient or perform a test or procedure. But they said the current fee for service system of paying doctors in Medicare fails to provide proper incentives to deliver quality care and to coordinate with other providers in an efficient way.

Lisa Dulsky Watkins, a Vermont state official, said the current fee-for-service payment system has been "severely detrimental" to primary care. She said that doctors have to see large numbers of patients to generate enough income and can't spend enough time with each to properly meet their medical needs.

She said Vermont has dealt with the problem through its "Blueprint" initiative in which insurers pay for "community health teams" to provide services such as behavioral counseling, weight loss support and improved coordination of treatment. Freed of such burdens, doctors are better able to focus on other medical needs of patients, she said. The program has resulted in decreased use of emergency rooms and less use of hospital inpatient services, she said.

Dana Safran, an official with Blue Cross Blue Shield of Massachusetts, touted a form of payment called the Alternative Quality Contract (AQC). Under this approach, a physician practice negotiates a per-patient "global" payment with the insurer. The payment is global in that it covers all services received by a patient, including primary, specialty, and hospital care. The contract is for five years and provides for relatively small yearly increases close to the rate of general inflation. If the practice delivers care at a cost below the contracted figure, it gets to keep all or some of the savings. To prevent stinting on care, providers are subject to 64 quality measures, Safran said.

After the first year of the contracts, "each and every AQC organization was successful in managing the global budget and significantly improving quality and clinical outcomes," Safran testified.
Keith Wilson, an executive with the California Association of Physician Groups, urged Congress to adopt capitation, saying that nearly one-third of California residents are covered under capitated agreements. The fixed, per-patient payments are made directly to medical groups. The groups in turn might contract with other providers under "subcapitation" or even use fee for service if they want to encourage utilization of services such as childhood immunizations.

"Our member groups have been able to use the flexibility within their payment models to establish programs of care that have the effects of reducing unnecessary hospital admissions, reducing unnecessary emergency department visits, and caring for patients with chronic illnesses," Wilson said. Paying more for higher quality care guards against stinting on care, he said.

Stuart Guterman of the Commonwealth Fund testified that "we need to start paying for what we want."A new payment system must recognize a diverse array of organizational models for delivering care, he said. "The right incentives can encourage providers to work together," Guterman observed.

By Dena Bunis, CQ HealthBeat Managing Editor

May 11, 2012 -- Women are not only struggling to afford health insurance, but nearly half of them don't go to the doctor when they are sick, according to the results of a new Commonwealth Fund survey.

"Women with health problems and women with low incomes find it particularly difficult to get health coverage,'' said Commonwealth Fund Vice President Sara Collins, who co-authored the report.

Collins and Commonwealth Fund President Karen Davis told reporters in a conference call previewing the study that the findings underscore the need for the health overhaul law (PL 111-148, PL 111-152), which they said is already beginning to help women in such areas as coverage of preventive services, such as mammograms.

Using data from the Commonwealth Fund's 2010 Biennial Health Insurance Survey, the report also found that 48 percent of women either didn't go to the doctor when they were ill, didn't fill a prescription, or skipped a test, treatment or follow-up visit because they couldn't afford it. That finding is up from 34 percent in 2001.

The report determined that an estimated 27 million women ages 19-64 were uninsured for all or part of 2010, with women in low and moderate income families most likely to go without insurance. Most estimates are that 50 million Americans are uninsured. Commonwealth also found that medical costs are taking a greater share of women's incomes: 33 percent of women reported they spent 10 percent or more of their incomes on health care costs in 2010 compared with 25 percent who said that a decade ago.

According to the report, 46 percent of women were up to date on a set of recommended preventive health care services, and women who were uninsured or had low or moderate incomes were the least likely to have received recommended preventive care. For example, only 31 percent of uninsured women ages 50-64 reported having a mammogram in the past two years, compared to 79 percent of women with health insurance.

"The Affordable Care Act couldn't come at a better time for women whose health and financial security has been increasingly in jeopardy over the past ten years," Davis said. "Moving forward it will be crucial for the health reform law to be implemented quickly and effectively so the millions of uninsured women and those with poor health insurance in the United States can finally afford the health insurance and health care they need."

Data for the Commonwealth study came from the Commonwealth Fund 2010 Biennial Health Insurance Survey, conducted by Princeton Survey Research Associations International from July 14 to Nov. 30, 2010. A random national sample of 4,005 adults age 19 older were interviewed for 25 minutes by phone. The survey has a margin of error of plus or minus 1.9 percentage points.

By Dena Bunis, CQ HealthBeat Managing Editor

May 10, 2012 -- Tens of millions of Americans would be thrown off Medicaid if the House-passed budget plan to convert the program to a block grant became law and the health care overhaul was repealed. But how many would be cut from the plan for the poor and disabled would vary greatly depending on the state, according to a new report released by the Kaiser Family Foundation's Commission on Medicaid and the Uninsured.

The report, prepared for Kaiser by the Urban Institute, suggests three ways that states could deal with such a fundamental change in the Medicaid program as well as the elimination of the program's expansion, something that would occur if the health law (PL 111-148, PL 111-152) was repealed.

Although the House adopted Budget Committee Chairman Paul D. Ryan's blueprint to make Medicaid a block grant program and voted to repeal the health law, neither move is expected to have any traction in the Senate. Even if that chamber approved such measures, President Obama has promised to veto them. Senate Budget Chairman Kent Conrad, D-N.D., is expected to soon release his proposal to cut spending. He's talking about some "modest" cuts to Medicare and hasn't mentioned eating into the Medicaid program at all.

The enrollment impact of the House plan and repeal of the health law would depend, the Kaiser report says, on how states decide to adjust their spending and what they do in terms of enrollment eligibility requirements. The report estimates that under the House plan, between 31 million and 44 million people nationally who, based on current law, would be on Medicaid in 2021 would not be. Of those, between 14 million and 27 million would have lost coverage solely because Medicaid was transformed into a block grant program.

Overall, the report finds that total federal Medicaid spending reductions over the next decade would range from a 26 percent drop by 2021 in Washington, Vermont and Minnesota to 41 percent declines in Georgia and Colorado and a 44 percent decrease in Florida.

The impact would also be felt by hospitals, which would see their Medicaid payments fall by as much as 38 percent in 2021, the report said.

"The repeal of the [Affordable Care Act] combined with the adoption of the Medicaid block grant would add millions more to the number of uninsured Americans and compromise Medicaid's role as the health safety net in the next recession,'' Diane Rowland, executive vice president of the foundation and executive director of the Kaiser Commission on Medicaid and the Uninsured, said in a written release announcing the report.

Under the first scenario the study envisions, Medicaid spending per enrollee would grow 6.1 percent between 2012 and 2021. That's equal to the increase in the gross domestic product plus 1.4 percentage points. Under this assumption, were the House plan and repeal of the health law in effect, all the savings would come from cuts in enrollment. The result from this example would be a cut of 36.4 million Medicaid enrollees, a 46 percent reduction.

Scenario two is based on the states reducing the rate of growth in Medicaid spending per enrollee as well as achieving substantial efficiencies as a way of decreasing the number of people who would be cut from the program. This assumes keeping the Medicaid rate of growth in spending per enrollee to the GDP, 1.4 percentage points less than the first scenario. Under this example, Medicaid enrollment would fall by 30.8 million, a reduction of 41 percent.

In Kaiser's third scenario, states would basically protect the aged and disabled on the program, with children and adults bearing the brunt of enrollment cuts. This example would result in a 58 percent reduction in enrollment—44 million people. Enrollment for children and adults would drop by 71 percent. This scenario also assumes that spending growth would be kept to the rate of the GDP.

"We cannot predict how these cuts would be distributed across adults and children but the cuts are so large that a typically state would have to eliminate almost all coverage for adults to avoid any cuts for children,'' the report says.

By Jane Norman, CQ HealthBeat Associate Editor

May 12, 2012 -- Health and Human Services Secretary Kathleen Sebelius acknowledged that a high-profile proposed rule on Medicare accountable care organizations is drawing intense criticism among health care providers who say it needs substantial revision.

"We will take the comments very seriously," Sebelius said during a conference call on Medicare with Rep. Kathy Castor, D-Fla. "As you know, it is a proposed rule, so we're listening closely to health care providers, to hospital groups."

Asked if the negative reaction means it will take longer for the final rule to be developed by the Obama administration, Sebelius didn't rule it out. "It depends, really, on how many comments we get," she said. HHS remains "anxious" to launch its first ACOs by the end of the year, which "has been the goal all along," she added.

The ACO program is a key part of the health care law when it comes to Medicare, and officials with the Centers for Medicare and Medicaid Services (CMS) were so sensitive to the rule's reception that even before it was unveiled in March they produced memos anticipating the volleys that might come its way.

ACOs are regarded by the Obama administration as a key way to increase Medicare quality while lowering costs. The ACOs are networks of providers within Medicare that include physicians, hospitals and health systems. A report CMS released says the voluntary organizations "have the potential to generate significant savings for the Medicare trust fund and allow providers themselves to share in the savings."

CMS released its proposed rule for ACOs in March and opened a public comment period that ends June 6. CMS officials have emphasized they want to work with providers so the ACO program lives up to its potential, and that they want feedback.

That they've gotten, and more is likely on the way since many providers have not yet weighed in. One that has is the American Medical Group Association, a trade association for big multi-specialty medical groups like the Mayo Clinic, which warned Medicare earlier this week that 93 percent of the organization's members say they would not participate under the proposed regulatory framework.

And some of the nation's highest-profile health centers that are considered candidates for the proposal—the Mayo Clinic and Geisinger Health System—doubt they will sign up either. They approve of the principles but say that the regulations are too restrictive and systems are not given enough incentives to participate.
Sebelius said ACOs are an innovative concept designed to encourage patient-centered care, and she said health leaders are receptive to the idea.

"I think there is a lot of enthusiasm throughout the industry and the health care delivery system in finding new ways to deliver care and taking advantage of what people have learned over the years and really capturing the best practices," she said.

Sebelius also said she anticipates developing ACO proposals for different provider categories. One would be for groups that are ready to immediately become ACOs. A second would be for groups interested in becoming ACOs but not are quite ready to go down the path and who would need strategies and technical assistance. A third would be for those who are more than ready and want to move at an accelerated pace.

The CMS report documented how the health care law (PL 111-148, PL 111-152), as well as other CMS initiatives, would strengthen Medicare, lower costs and improve the quality of care received by enrollees.

The report said $120 billion will be saved in Medicare during the next five years, including $55 billion by rewarding quality and efficiency in provider payments, $10 billion through better patient safety, $1.8 billion fighting fraud, waste and abuse, $2.9 billion in tighter standards for durable medical equipment payments and $50 billion in reduced payments to Medicare Advantage plans.

By David Harrison, CQ Staff

May 13, 2011 -- The Medicare trust fund will run out of money by 2024, five years sooner than projected a year ago, according to the annual report released by the program's trustees.

The projection—and, to a lesser extent, a separate report on Social Security that predicted that program's insolvency by 2036 under current conditions—immediately became fodder in the debate over federal spending and the national debt.

Despite last year's enactment of the health care law, which added several years to the program's solvency, the continuing economic downturn has depressed payroll tax collections, which replenish the trust fund, according to the trustees.

The Social Security trustees said that program's fund is expected to take in $46 billion less than it will pay out in 2011, and if current trends continue it will be insolvent by 2036, a year earlier than previously anticipated.

"The trustees' reports underscore the need to act sooner rather than later to make reforms to our entitlement programs," Treasury Secretary Timothy F. Geithner, the managing trustee, said in a prepared statement. "Last year, the president and Congress took a timely, first step by enacting the most significant entitlement reform in decades. But we must go beyond The Affordable Care Act and identify additional reforms. Americans are living longer and health-care costs are continuing to rise. And if we do not do more to contain health-care costs, our commitments will become unsustainable."

The Medicare trust fund covers hospital care for seniors in the program, known as Part A. Other services, like outpatient care and doctor visits, are funded by premiums and taxes and thus are not in danger.

STAKING CLAIMS
Republican lawmakers seized on the report as a validation of their demands to overhaul Medicare and reduce spending on the program. Medicare has emerged as a key issue in the debate over raising the nation's debt ceiling, which currently stands at $14.3 trillion, a level that is expected to be reached by August.

Some lawmakers are also urging changes to Social Security to shore up its finances.

"Today's report makes it clearer than ever that doing nothing is not an option," House Ways and Means Chairman Dave Camp, R-Mich., Health Subcommittee Chairman Wally Herger, R-Calif., and Social Security Subcommittee Chairman Sam Johnson, R-Texas, said in a joint statement.

"The failure to act means current, as well as future, beneficiaries will face significant cuts even sooner than previously estimated. We call on the president and all of our colleagues in the House and Senate to act now and take the long overdue steps to strengthen these vital programs."

Health and Human Services Secretary Kathleen Sebelius said the administration had already taken significant steps to shore up Medicare through the health care overhaul and noted that President Obama recently proposed a "fiscal framework" designed to save at least $200 billion more for the program over the next 10 years.

"Some in Congress want to take us backwards and have proposed a plan that would end Medicare as we know it and shift costs to seniors and the most vulnerable. That's the wrong way to reform Medicare," Sebelius said in a White House blog post. "The right way to reform Medicare is to improve it so people get better care at a lower cost."

Last month, the House passed a budget resolution (H Con Res 34) authored by Budget Chairman Paul D. Ryan, R-Wis., that would transform Medicare beginning in 2022. Republicans say the plan to give seniors a set sum every year to purchase private insurance would cap taxpayers' liability and curb the program's growth, while Democrats counter that it would transfer costs to seniors and raise their out-of-pocket medical costs.

Senate Minority Leader Mitch McConnell, R-Ky., said he wanted spending caps on Medicare and Medicaid over the next 10 years in exchange for agreeing to raise the debt ceiling. But he said Social Security would not be part of the bipartisan negotiations with the White House.

The trustees project that Medicare costs will continue to grow from 3.6 percent of GDP in 2010 to 5.5 percent in 2035 and 6.2 percent in 2085. They base that on several assumptions, including that the health care overhaul law (PL 111-148, PL 111-152) will be implemented in full, although Republicans in Congress have made it their No. 1 goal to prevent its implementation. They also assumed payments to doctors would be cut almost 30 percent, as scheduled—reductions that Congress has repeatedly postponed through a regular series of "doc fix" bills.

SOCIAL SECURITY
As the economy improves, the trustees expect the Social Security trust fund shortfall to shrink to $20 billion from 2012 to 2014, when baby boom retirements push the fund further into insolvency.

Assets in the fund will be completely depleted by 2036, one year earlier than anticipated After that, payroll tax revenues will only pay for three-quarters of the costs of benefits through 2085. The Social Security disability insurance fund faces the greatest risk, the trustees found, anticipating that it will run out of money by 2018.

The report called on lawmakers to address the looming deficits in the program. But Congress is unlikely to take up Social Security changes as part of the debt discussion. McConnell acknowledged that Social Security would not be part of any bargain.

"Our assumption is they don't want to do it. I wish they did," he said, referring to congressional Democrats and the Obama administration. "I don't expect that, frankly, to be dealt with in the context of the debt ceiling.

Still, some Republicans are urging Obama to address the issue now. "Social Security has been once again treated as the third rail of politics," a frustrated Sen. Orrin G. Hatch, R-Utah, said at a hearing earlier this week. "Eventually, the financial electricity of that rail will run out if it is not reformed."

But Senate Finance Chairman Max Baucus, D-Mont., is trying to fend off calls for tackling Social Security as part of the current fiscal debate.

"Though we have high deficits and debt, Social Security is not the cause of those problems and shouldn't be a scapegoat in our answer to them," he said in a written statement. "Social Security's benefits are fully financed by contributions from future beneficiaries and they don't add a dime to the federal deficit. We should not try to use the Social Security benefits seniors have earned as an easy way out of this deficit crisis. Social Security needs a long term-answer, and we should develop a long-term solution, but the current situation does not necessitate rushed or severe action."

By Jane Norman, CQ HealthBeat Associate Editor

May 11, 2012 -- The Congressional Budget Office reported that a bill that would allow governors to scale back their Medicaid rolls would save $2.8 billion between 2012 and 2016 and leave 300,000 Americans without health insurance in 2013.

The legislation (HR 1683) is scheduled to be marked up in a House subcommittee and would lift so-called maintenance of effort requirements for states at a time when they are struggling to balance their budgets. The requirements would be ended for both Medicaid and the Children's Health Insurance Program (CHIP).

CBO and the staff of the Joint Committee on Taxation said enacting the bill would reduce enrollment and spending for both Medicaid and CHIP and increase enrollment in and spending for health insurance plans offered through the health insurance exchanges that will be created as part of the health care overhaul law (PL 111-148, PL 111-152).

The budget agency said the effects on the sources and extent of health coverage would vary from year to year. For example, in 2013, there would be a reduction in Medicaid and CHIP enrollment of about 400,000 people, two-thirds of them children. Of that group 300,000 would become uninsured and 100,000 would enroll in employment-based coverage, CBO said.

CBO estimated that CHIP enrollment would decline in 2016 by 1.7 million individuals and enrollment in exchanges and employment-based coverage would increase at the same time by 700,000. About 300,000 people more people would be uninsured in 2016 compared with current law, the report said.