By Jane Norman, CQ HealthBeat Associate Editor

February 3, 2012 -- The Rhode Island insurance commissioner predicted last week that many states may opt to use existing small-business plans in their states as models for their essential benefits packages under the health care law.

In addition, Christopher Koller said that the approach adopted by the Department of Health and Human Services to allow states to use flexibility in determining their approach will put them on track toward getting exchange packages and benefits up and running by 2014. "As an implementer in the states, what they have done is give me a road map so we can at least put this in place in the next year and a half," he said.

States are expected by Jan. 1, 2013, to demonstrate that they can run their exchanges, and the exchanges are supposed to be up and running by the beginning of 2014. They also must adopt plans for essential health benefits.

Rhode Island, under Gov. Lincoln Chafee, an independent, is one of the states considered to have made the most progress in constructing its exchange. Rhode Island received a $58.5 million Level Two exchange grant in November from HHS. Koller was also a member of an Institute of Medicine panel that made recommendations last year on how the benefits should be structured.

Koller's remarks came during a discussion on essential health benefits sponsored by the nonpartisan Alliance for Health Reform and The Commonwealth Fund. The Department of Health and Humans Services (HHS) in December issued a bulletin outlining how these minimum coverage standards will be defined when individual or small-business plans are sold inside or outside state-run exchanges when the health law is fully in force in 2014.

Instead of laying out one standard package that would be used in all states, HHS said it would give states the leeway to pick a benchmark plan that covers 10 categories of care defined in the health care law (PL 111-148, PL 111-152). States can select among four options—any of the three largest small-group plans by enrollment, any of the three largest state employee health plans, any of the largest federal employee plans or the largest commercial non-Medicaid HMO.

States where lawmakers have added required benefits beyond those packages will have to add them to their benchmark plans.

Many questions are swirling around this essential benefits issue, participants in the discussion acknowledged. And HHS officials have said they will be offering additional guidance and rulemaking at some point. Criticism of the bulletin has centered around the idea that there may be wide variation among states rather than a single national benefit package.

Koller, though, said he thinks the government struck a balance between affordability and a comprehensive package. "I think they threaded that needle very carefully," Koller said. While he said he might wish they had "set the bar higher" and relied more on the recommendations in the Institute of Medicine report, momentum has to be maintained, Koller said.

"I don't pretend to speak for all the states" but there will be a "strong impetus to default to the small-group options because they are the ones commercial regulators know the best," Koller said. Those are plans state regulators have already approved.

There also needs to be clarification on who will make the final decision about which benchmark plan will be used, he noted. "Is it the legislators? Can the executive branch do it?" he asked. "We need to work on that."

Another panelist, Janet Trautwein of the National Association of Health Underwriters, said the vast majority of insured people today are covered by large and small employers. And she said that coverage in both markets is "extremely comprehensive" despite fears by some that the small-business model won't be adequate. Trautwein, who represents insurance brokers, said that a December survey by her group found people with employer-sponsored coverage, for example, receive emergency care and hospital care under every health plan.

Using the benchmark idea may allow states to move more quickly to create their packages. But mandates for coverage do differ from state to state, she said.

One of the most common questions surrounding the benefits packages is affordability, and employers are worried about whether they will be able to continue to offer coverage to their workers, Trautwein said. Workers are worried about whether they can foot the bill for their share. If cost is not taken into account, it will make affordable coverage difficult for both sides, sending workers into the exchanges, she said.

By Dena Bunis, CQ HealthBeat Managing Editor

February 1, 2012 -- Medicare Advantage premiums have fallen 7 percent on average and enrollment in these managed care plans has gone up about 10 percent over the past year, Health and Human Services Secretary (HHS) Kathleen Sebelius announced last week.

This is the second time in two months that HHS officials have trumpeted the decrease in premiums and increase enrollment for these plans.

The enrollment numbers confirm projections from last September that enrollment in Medicare Advantage plans would continue to rise and average premiums would continue to fall, HHS officials said in a statement. Average monthly premiums have gone from $33.97 in 2011, to $31.54 in 2012, while enrollment has risen from 11.7 million in 2011 to 12.8 million in 2012, they said.

"For more than 12 million Medicare beneficiaries who rely on Medicare Advantage, the program is stronger than ever with improved benefits and lower costs,'' Sebelius told reporters on a conference call. "Even as beneficiaries see their premiums fall, they continue to have robust choices no matter where they live." She said 99.7 percent of beneficiaries have access to a Medicare Advantage plan if they want one.

The health care law (PL 111-148, PL 111-152) reduces payments to Medicare Advantage plans over time. That has led the Congressional Budget Office and industry analysts to project that Medicare Advantage enrollment will drop.

So far that hasn't happened. But, a March, 2011 CBO analysis projected that enrollment would peak 2012 and then start a rapid decline, leading to an enrollment of 7.8 million by 2019.

Asked about that during a conference call with reporters, Jonathan Blum, the Center for Medicare an Medicaid Services' director of Medicare, said that the agency continues to see more plans wanting to enter the Medicare Advantage market.

"The schedule of future payment changes are well laid out,'' Blum said. "It's a very competitive marketplace. Blum added that "we're confident that the program will continue to grow over the next several years."

A March Government Accountability Office report in December did find that the number of Medicare Advantage plans available to seniors was falling.

Blum's response to that report was that the number of plans available has declined because his agency has whittled out duplicative plans. The number of insurers offering Medicare Advantage plans has not decreased, he said.

HHS officials cited other evidence that the program remains strong:

• Regardless of the total number of plans available, HHS officials said there are 26 Medicare Advantage plans to choose from in nearly every county across the country.
• Since the 2010 law was enacted, Medicare Advantage premiums have fallen by 16 percent and enrollment has climbed by 17 percent.

"Not only are average premiums lower, but plans are better, with more beneficiaries enrolled in 4 and 5 star plans," Center for Medicare an Medicaid Services Acting Administrator Marilyn Tavenner said in a statement.

By Jane Norman, CQ HealthBeat Associate Editor

February 2, 2012 -- The Obama administration recently touted the success of the health care law when it comes to prescription drugs for Medicare beneficiaries, saying that seniors who hit the doughnut hole saved $604 on average in 2011 compared to what their costs would have been without the overhaul.

In addition, the Department of Health and Human Services (HHS) released a report predicting that Medicare recipients will save close to $4,200 in total on health care spending between 2011 and 2021.

Under the health care law (PL 111-148, PL 111-152), manufacturers must provide a discount on brand name drugs for seniors in the doughnut hole—those who exceed certain spending limits for their prescription medicines but don't yet qualify for catastrophic assistance. While in the doughnut hole, beneficiaries have had to pay 100 percent of their drug costs.

In 2011, the discount is 50 percent for brand name drugs and 7 percent for generic drugs. And the discounts will rise as the years go on. Subsidies will be provided later as well, and eventually the doughnut hole will be eliminated.

HHS officials said that 3.6 million seniors saved $2.1 billion in 2011 compared with what they would have paid for prescription drugs otherwise. That group included more than 2 million women.

Of the money saved, $300 million was on drugs that lower blood sugar levels, $263 million on those that lower cholesterol and $228 million on those that treat asthma.

Projecting out over the next 10 years, officials said they believe all seniors will save money, not only because of the drug discounts and subsidies but also due to the effect of free preventive services like mammograms, slower growth in Part B premiums and slower growth in cost sharing for both Part A and Part B services.

House Republicans shot back, saying that the reason Medicare spending might go down is because hospitals and clinics may be forced to close and seniors may have to wait to see physicians, citing an analysis by actuaries for the Centers for Medicare and Medicaid Services.

By Jane Norman, CQ HealthBeat Associate Editor

January 31, 2012 -- Advocates of telemedicine said last week that they're mounting a new push to allow doctors to more easily practice medicine across state lines. And an aide to Sen. Tom Udall said the New Mexico Democrat is drafting legislation to create a national physician licensing system to operate in tandem with state boards.

At a forum, supporters of an increased use of long-distance medicine—using everything, from telephones to Skype—said the time has come for health policy to catch up with technology and allow doctors to treat patients no matter where they are located.

Jonathan Linkous, CEO of the American Telemedicine Association, said the circumstances can range from traveling businesspeople who want to consult with their doctors at home to elderly people who winter in the South but prefer to continue seeing their hometown providers. In rural areas, telemedicine can link multiple providers, including specialists, with far flung patients in numerous states.

As it stands now, doctors must apply separately to every state in which they practice remotely, said Bernard Harris, president of the association and a physician. Otherwise, "you can't prescribe, you can't treat, you can't read X-rays," he said.

The nation's 70 state medical and osteopathic licensing boards have the power to issue medical licenses and they charge from $110 to $1,300 for application fees. Fern Goodhart, a Udall aide, said the time it takes to complete the application process can range from three months to a year, though there is little variation in the standards each state uses.

Goodhart said Udall is concerned about the lack of coordination and cost of duplicative credentialing processes. He decided to act after hearing reports of problems in New Mexico. She said the bill he is drafting would set up a voluntary system in which doctors would be licensed by their state boards, who would retain control over disciplinary issues. At the same time, doctors could sign up for a national license that would allow them to practice any medicine—not just telemedicine—in any cooperating state.

Some incentives may be included in the bill to bring along states that might be "dragging their feet," Goodhart said.

All states use the United States Medical Licensing Examination and recognize credentials from nationally accredited medical schools and residency programs regardless of location, says the telemedicine group. Advocates say states differ only on such issues as how many times a physician candidate can take the exam.

Linkous said that advocates are not prescribing any one way to change the traditional system of state-by-state licensure but "we want to resolve it." The association has created a website called FixLicensure.org, where a petition is posted to be signed. It says that "the patchwork of state-by-state licensing creates a mire of costly red tape and has become an untenable barrier for both providers and patients."

Craig Sable, director of echocardiography and telemedicine at Children's National Medical Center, said a national system based on state standards, like a driver's license, is an option.

"I'm sure many of us have driven across state lines recently and we don't carry 50 licenses," he said.

Sable also said "there are two types of physicians—those who use telemedicine and those who don't like it." He said he believes it is effective and safe, and evidence-based studies have found that it works.

The Federation of State Medical Boards in March 2011 held a conference to discuss telemedicine's future. Freda Bush, the organization's immediate past president, said in a report on the event that the potential benefits are vast but at the same time questions are raised about patient safety, privacy of medical information and regulatory and licensing standards.

The federation "believes strongly in the potential of telemedicine to lower costs, provide health care to under served populations, facilitate health care delivery and enhance health," she wrote. "But it must be shaped in a way that ensures patient safety and medical quality, core concerns of the nation's state medical and osteopathic boards. The fundamental professional, ethical and scientific underpinnings of medicine must be preserved as telemedicine grows."

Goodhart said Udall had hoped that states would make faster progress on moving toward a better system but now believes Congress needs to legislate. She said his bill likely will be introduced this spring.

By Jane Norman, CQ HealthBeat Associate Editor

January 31, 2012 – A recent Institute of Medicine report on chronic illness warns that an epidemic of debilitating conditions is "steadily moving toward crisis proportions," but nobody's paying much attention. The rising tide of aging baby boomers will only make it worse, the report cautions.

So there's a need for action by the public health community to come up with better ways to help Americans burdened with chronic illness to "live well"—to come up with ways to have a better quality of life despite their health problems. That can help not just them but their family members, friends, caregivers and society.

An IOM committee that did the study said in a series of recommendations that federal and state policy makers must do better in tracking chronic disease, preventing it and finding ways for people to live better while coping with their conditions. Chronic illnesses generally are slow to develop, last a long time, require medical treatment and have great potential to harm people's quality of life.

Medical costs for those with chronic illness make up 75 percent of the $2 trillion in national health care spending and account for 70 percent of all deaths, says the IOM. While huge improvements in health have been made over the years, that's offset by increases in physical inactivity, unhealthy eating, obesity and tobacco use, says the report.

It picks out examples of nine conditions that carry a significant impact, including on health care spending: arthritis, cancer survivorship, chronic pain, dementia, depression, type 2 diabetes, post-traumatic conditions, schizophrenia, and vision and hearing loss.

It's up to public health agencies to come up with a comprehensive response to chronic illness, the report concludes. "Government public health agencies have the ability to take action to help people live better with chronic illness," says the report. "They have the expertise to assess a public health problem, develop an appropriate program or policy, and ensure that programs and policies are effectively delivered and implemented."

Recommendations include:

• The Centers for Disease Control and Prevention should select a variety of chronic illnesses for special consideration in its work, avoiding those for which public health programs already have been developed, such as cardiovascular disease.
• The Department of Health and Human Services should support states in developing plans with specific objectives that focus on managing chronic illness and reaching out to those who have problems in getting better particularly because of their income level, race or geographic location.
• Public and private funders should focus on research on the impact of healthy lifestyles and prevention for people with chronic illnesses.

Institute of Medicine Report 

By Nellie Bristol, CQ HealthBeat Associate Editor

January 30, 2012 -- The slow pace at which health care providers are adopting health information technology could limit the availability of more efficient, cost-effective models of care, according to a recent study by the Bipartisan Policy Center.

The ability to electronically track patient populations, move information easily among different health care providers and give patients better access to their own health data is critical to establishing more coordinated health care organizations, according to the report. But, it adds, expansion of health IT is hindered by payment systems based on volume of care and poor information exchange networks.

"Health IT plays a critical role in supporting patient-centered care, yet the use of electronic tools to coordinate care, drive provider-patient communication, and empower patients to manage their health and health care is not widespread," the report said. Movement toward digital health records is lagging as well, it said. "While EHRs are a necessary foundational component for new models of care, the level of EHR adoption ... among physicians, hospitals and provider organizations remains low."

Both President Obama and President George W. Bush made health IT a priority, calling for everyone to have electronic medical records by 2014, an achievement that seems unlikely.

The group recommends that health care payers align payments to encourage coordinated care with the use of health IT, that the federal government collaborate with the private sector to better enable the exchange of health information, that the public and private sectors develop education and training programs to increase consumer awareness of health-related electronic tools, and that state and federal officials continue to ensure patient privacy standards will continue to be at least as comprehensive as those in the health insurance portability law (PL 104-191).

Despite federal investments in helping providers get up to speed, many of the problems hobbling expanded health IT are longstanding, according to Jennifer Covich Bordenick, CEO of eHealth Initiative, a national organization of health care-related groups working on improved health IT. "The report re-emphasizes what a lot of us in the industry have been saying for years," she said.

She says the top two problems are standards and finances. "Doctors aren't necessarily paid to do any of this. Given the financial constraints and the environment we're in right now, it's really difficult to do anything you're not incentivized to do financially. That's a huge issue."

In addition, the federal government and other stakeholders have been trying to develop uniform standards for electronic communications, but that also remains unresolved. "That's something that really has not been determined yet, and until we all speak the same language, it's going to be difficult to do this," Covich Bordenick said. "Somebody needs to make some decisions about standards, and it just needs to happen."

Federal funding, authorized at $30 billion under language in a 2009 law (PL 111-5) designed to promote the adoption and use of health information technology, has done a lot to spur increased use of health IT, the report said. Covich Bordenick agreed. But, she said, the effort needs market forces in the form of better private sector economic incentives to finish the job. Where federal government action is critical, she added, is development of privacy standards that control who owns the information and who is allowed to look at it. Those policies, she said, are a task that now frequently occurs at the state level, resulting in myriad different policies. "It just makes it a lot rockier," she added.