By Jane Norman, CQ Healthbeat Associate Editor

May 4, 2012 -- House Republicans so detest the health care law's prevention fund that they recently moved to kill it twice in two days, voting in one measure to use the money to maintain a reduced interest rate for student loans.

It was one more sign of the way a fund designed for the seemingly benign purpose of keeping Americans from getting sick has become one of the most hotly debated pieces of the health care law. Senators could try to tap all or part of the fund when they take up the student loan bill this week. In the meantime, localities across the nation have received millions of federal dollars from the fund for everything from quit-smoking phone lines to children's immunizations.

The fund, however, has its protectors. The Obama administration threatened to veto a bill—(HR 4628), which the House approved, 215-195, on April 27—that would use $6 billion from the Prevention and Public Health Fund to pay to extend a break on student loan rates. In the Senate, Democratic Sen. Tom Harkin of Iowa, one of the health fund's authors and fiercest defenders, will oppose the measure. Majority Leader Harry Reid, D-Nev., has filed for cloture on a bill (S 2343) that would finance the student loan rate extension by ending a corporate tax break.

Advocates of prevention and public health efforts have now fought off more than a half-dozen attempts at repeal or cuts. They suffered a defeat when earlier this year $5 billion was taken from the fund to pay for Medicare physician reimbursements. Both Republicans and the Obama administration agreed to that deal.

Hundreds of public health groups have signed on to letters to Congress in support of the fund and its goal of keeping Americans from contracting chronic illnesses that rack up health care costs. "I think there's been more than a pound of flesh taken out of the fund," says Richard Hamburg, deputy director of the Trust for America's Health, a health prevention advocacy group.

Investment or 'Slush'?

The fund was designed as a consistent, mandatory and long-term mechanism to send federal money to states and communities with hard-hit public health budgets. "For the first time in history, we have decided not just to pay lip service to prevention and wellness, but actually invest in wellness and prevention in a very robust way," Harkin said in 2010. "By dedicating resources to preventing obesity, preventing diabetes, preventing heart disease, and other very costly conditions and diseases, we have a tremendous opportunity both to improve the health of the American people and to restrain health care spending."

But Republicans call it a "slush fund" because the Health and Human Services secretary controls how the money is spent. Congress could influence fund allocations through HHS appropriations bills, but that has not happened under the Republican-controlled House.

The health care law (PL 111-148, PL 111-152) provided for $15 billion over 10 years for the fund to pay for preventive care programs, with funding eventually rising $2 billion a year. However, to pay for the physician fix, Congress reduced the fund's automatic spending levels and delayed until fiscal 2022 the time when it would get $2 billion a year. In fiscal years 2012 through 2017, the fund will receive $1 billion a year.

Democrats have said that attempts to kill the fund amount to an attack on women's health because the administration proposes to use it to pay for breast cancer screenings in fiscal 2013. Other initiatives in the 2012 fiscal year budget include money for anti-smoking media campaigns, community projects to reduce cancer, stroke and diabetes, public awareness of Alzheimer's and promotion of healthful eating and physical activity. Hamburg says media campaigns to promote "quit lines" to help people stop smoking are particularly successful.

But Republicans say initiatives can go too far. The top Republican on the Senate Homeland Security and Governmental Affairs Committee on May 2 questioned whether Centers for Disease Control and Prevention grant guidelines require recipients to lobby states and localities for policy changes on food or tobacco. Sen. Susan Collins of Maine said she is worried about the "appearance of impropriety" in such actions. HHS officials say they're committed to the "proper use of appropriated funds."

Other Republicans say that they are concerned that previous CDC-funded prevention programs, such as urban gardens in Boston and bike trail signs in Pitt County, N.C., that they regard as wasteful will also be included in future prevention fund grants. That's why they want to kill the prevention fund now.

House Republicans also say the HHS Office of Inspector General is probing the prevention fund. The OIG's 2012 work plan, which covers many HHS programs, says that at least three audits will include the fund, a spokeswoman confirmed.

As the Senate wades in and Republicans possibly push for cuts in the fund, look to Harkin to try to ride to the rescue from his perch as chairman of the Senate Health, Education, Labor and Pensions Committee. "I don't know when we're going to learn that our mothers were right: An ounce of prevention's worth a pound of cure, and that's true in health care," Harkin said.

By Rebecca Adams, CQ HealthBeat Associate Editor

May 3, 2012 -- The United States spends "far more" on health care than a dozen other industrialized countries but provides superior care only for some conditions, according to a new study from The Commonwealth Fund.

U.S. patients who have breast and colorectal cancer tend to have higher survival rates than in many other nations, but those with asthma and diabetes tend to have higher rates of preventable death. Rates for deaths in the hospital due to heart attack or stroke are about average.

The United States spent almost $8,000 per person in 2009 on health care services. Japan and New Zealand spent one-third as much, while Norway and Switzerland spent two-thirds as much. Of the 13 countries studied, Japan had the lowest spending, which the report said is due to stringent price regulation.

Higher spending here is probably due to higher U.S. prices, the study said. A greater use of high-tech care also played a role, according to the report. Americans also have higher obesity rates than some other nations.

The study, which updated previous analyses by the group, used data from the Organization for Economic Cooperation and Development and other sources to compare health care spending, quality and other factors in 13 industrialized countries: Australia, Canada, Denmark, France, Germany, Japan, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom and the United States. The analysis found that the big bucks spent on health care is not due to higher income in the U.S., an older population, or greater supply or use of hospitals and doctors.

Democrats have often cited studies with similar findings to explain why Congress needed to pass the 2010 health care law (PL 111-148, PL 111-152).

• Commonwealth Fund study (pdf)

By John Reichard, CQ HealthBeat Editor

May 3, 2012 -- Oregon state officials recently announced that they've received tentative federal approval for a plan that would save $11 billion over five years by setting a "global budget" for the state's Medicaid program and lowering the percentage it will grow each year.
Bruce Goldberg, director of the Oregon Health Authority, said that by "global budget" he means all the various funding streams that make up Medicaid outlays will be combined and paid to local "coordinated care organizations."

"Now, certainly in our state and in many states, there are a variety of different streams of Medicaid funding," Goldberg said. "There's physical health care, mental health care, dental health care. There's a variety of other specialized wraparound funding, all of which comes to states somewhat separately."

Goldberg explained that "the goal is to put all of the Medicaid funding for the Medicaid population together, to give that to communities and to give them the flexibility to be able to use those dollars in ways that are tied more to [treatment] outcomes than to volume" of services delivered by providers.

"Global budgets, quite frankly, look much like a capitation rate. It's a dollar-per-person amount per month that's risk-adjusted for that community." In other words, communities with a greater number of sick people would receive more, while healthier communities would receive less, Goldberg said.

The global budget will no longer grow at medical inflation but will be held to a fiscally sustainable rate, he added.

That the Obama administration is touting the plan is noteworthy in light of the call by Republicans for turning Medicaid into a block grant program where fixed sums of money go to the states, giving them flexibility to determine how the money is used. One apparent difference, however, is that in the case of the Oregon plan, it was subject to federal review and approval.

Goldberg said Oregon officials are committed to lowering the historical cost trend by 2 percentage points. "So over the last five years or so, our historical trend has averaged about 6 percent a year, and we'll lower it to 4 percent," Goldberg said as an example of how outlays would change. "And we'll do that while improving outcomes" of treatment.

Community care organizations in some instances would include locally run managed care organizations, such as the Kaiser health plan. But their governance will have to be expanded, Goldberg said. "We have in some communities managed care organizations that are run primarily by the local physicians. And, in other communities, we have managed care organizations that are run by hospital systems. What this does is really have a community demonstrate that they're bringing together doctors and hospitals and consumers and others in the health care delivery sector to work together and problem-solve so that they're not just fighting for a bigger piece of the pie but they are actually tied together and have to work together to improve the health of the population."

Oregon's Democratic Gov. John Kitzhaber said that "with unprecedented collaboration between local communities, health care providers and our federal partners, Oregon is on the right track to create a system that will both improve care and reduce costs."

And Health and Human Services Secretary Kathleen Sebelius said Oregon's efforts to "coordinate care, which mirror our efforts at the national level thanks to the Affordable Care Act, will mean better care for those on Medicaid, better health outcomes and lower costs."

By John Reichard, CQ HealthBeat Editor

May 2, 2012 -- The enforcement of federal rules written to prod doctors and hospitals to adopt health information technology (IT) is attracting wide scrutiny, with congressional auditors worried that Centers for Medicare and Medicaid  (CMS) officials are too lax and providers and their allies saying the requirements are too tough.

A Government Accountability Office report released this week says that the rules create a complex system of financial rewards and penalties for using the technology. That complexity increases the risk that CMS will make improper Medicare and Medicaid payments relating to health IT.

"CMS could take steps, beyond those already taken, to assess and mitigate the risk of improper payments and to improve program efficiency," said the report. GAO said, for example, it is "encouraging" that CMS has awarded contracts to evaluate how well states are adopting electronic health records in Medicaid. But the report complains about the lack of a CMS timeline to review the agency's audit strategy for the Medicare electronic health records program.

Temperature Rising

Meanwhile, hospitals and doctors are objecting to a CMS proposal that aims to increase the use of health IT to make care more efficient. But IT vendors and consumer groups are pushing back against provider objections. IT's promise won't be realized if CMS caves, they assert.

At issue is the CMS "stage two" proposal for "meaningful use" requirements, whose comment period ends May 7.

Stage one got many providers to buy IT systems and begin using them to record patient information and some data on clinical performance measures. But CMS wants providers to report data on more measures in stage two. It also wants to spur the ability of hospitals to exchange medical information with unaffiliated doctors' offices that use different IT systems. The idea is to create an "interoperable" system where different computer systems talk to one another and providers throughout a wide area can easily share medical data.

But stage two goals "may be too ambitious for some small or solo practice physicians to meet," said Rep. Renee Ellmers, R-N.C., chairwoman of the Small Business Subcommittee on Healthcare and Technology. She said that doctors are worried about Medicare payments reductions scheduled for 2015 for physicians who don't demonstrate meaningful use of health IT. "I urge you to allow hardship exemptions for very small practices," Ellmers said in a May l letter to CMS Acting Administrator Marilyn Tavenner.

Hospitals argue that the stage two rules imperil widespread adoption of health IT. "Taken as a whole, the proposed requirements for meeting stage two raise the bar too high and are not feasible for the majority of hospitals to achieve," the American Hospital Association (AHA) said in an April 30 letter to CMS.

The 68-page comment letter says when it comes to complying with meaningful use requirements, "the rushed timelines and complex regulatory requirements make the process difficult." Costs are large, it adds, estimating that "hospitals spent $57,000 a year per bed on IT in 2010."

However, patient advocacy groups are worried about AHA's power to pressure CMS to water down the regulations. "With the deadline looming, one of the powerhouses in the health care provider community has made public its displeasure with a number of the most robust and important patient-engagement criteria," said Christine Bechtel of the National Partnership for Women and Families, referring to the AHA letter. "In fact, leaders of this organization made their views known with such vehemence that their views should be characterized as hostility," Bechtel added.

She chided AHA for urging that hospitals be given more time to give patients web access to medical information relating to a hospital stay.
The stage two proposal says patients should have access to that information within 36 hours of being discharged. But Bechtel says AHA wants hospitals to have up to 30 days "for access to such basic, crucial and highly time-sensitive information as discharge instructions, medication lists, lab test results and care transition summaries."

She adds that "this is the very information that can help keep patients from being readmitted unnecessarily. No patient in this day and age should have to wait a full month for access to their own health information, which is vital to their ability to get and stay well."

Another concern relates to a proposed requirement that hospitals to be able to transmit electronically a summary-of-care record when a patient is transferred or referred to another provider that has an electronic health record system from a different vendor. At least 10 percent of summary-of-care record transmissions in these cases should be performed electronically with outside organizations that use different electronic health record systems, CMS is proposing.

AHA says this requirement would create an unreasonable burden because providers "would need to count transitions, track the organizational affiliations of the recipients, and track the vendors used by the recipients."

The Health IT Now coalition says this is one of the few provisions in the stage two proposal that would begin laying the groundwork for the widespread sharing of medical information, which is critical to achieving IT's potential for making care safer and more efficient, it adds.

"We believe these standards are achievable and that more must be done to promote the exchange of information to better coordinate patient care," said Joel White, executive director of the coalition. "We will encourage HHS to take steps in that direction."

By Rebecca Adams, CQ HealthBeat Associate Editor

May 1, 2012 -- The federal official who oversees care for those eligible for both Medicare and Medicaid faced tough questions last week about an Obama administration plan to allow states to move up to 2 million patients into managed care.

States are eager to try the program because if it saves money, they get to keep part of it. So far, 27 states have asked to participate. The program, which will affect 2 million of the 9 million beneficiaries who are dually eligible for Medicare and Medicaid, will start in January.

But critics told Melanie Bella, director of the federal Medicare-Medicaid Coordination Office, that she is moving too quickly to shift this population into managed care. Bella spoke at a panel discussion at the American Enterprise Institute.

"These people have rights," Federation of American Hospitals president and CEO Chip Kahn told Bella. The beneficiaries have paid payroll taxes into Medicare, Kahn said, and should be able to choose how to get their care just as other Medicare seniors do. In Medicare, beneficiaries typically can choose whether to stay in the traditional fee-for-service Medicare program or enroll in a Medicare Advantage managed care plan.

"This is really a version of premium support," Kahn said, referring to a contentious plan to cap spending for Medicare beneficiaries. House Budget Committee Chairman Paul D. Ryan, R-Wis., has proposed a particularly controversial version of the idea that critics say would significantly cut future beneficiaries' benefits.

Kahn's argument was backed by an unlikely ally, panelist Judy Feder, a Democrat who doesn't always agree with Kahn.
"Chip's point—that this low-income population is being treated differently because it is a low-income population—is without dispute," said Feder, a Georgetown Public Policy Institute professor.

Earlier in the discussion, Bella addressed similar concerns that were raised at an April 5 Medicare Payment Advisory Commission (MedPAC) meeting. MedPAC commissioners suggested that later in the year they might send a letter to federal officials about their concerns.

"Wherever I go, I get a group of people telling me we're moving too slow and a group of people telling me we're moving too fast," Bella said. "We're not going nationwide in these next two years but we do feel some urgency," a sentiment that Bella said lawmakers share.

Bella said that in some states, seniors might be automatically enrolled. But, all of the beneficiaries will have a chance to opt out of the program if they wish.

She also said that it is clear that the current system isn't working well for the group that receives both Medicare and Medicaid. The population is the sickest, frailest population in the federal health programs. Their care accounts for a disproportionately large amount of spending, about 80 percent of which is paid by the federal government. Dual eligible beneficiaries include nursing home patients with several chronic conditions and younger people who have severe illnesses or are developmentally disabled.

Some of these patients have to navigate three separate systems, with different rules and even different identification cards: Medicare, Medicaid, and the Medicare Part D prescription drug program.

"It doesn't feel like there are very many protections in a fragmented fee-for-service system" that the patients use now, Bella said. Different medical providers who care for the same patient don't share information, she said, and the structure of the current system doesn't ensure that beneficiaries will have access to care.

The goal of the new program is to give patients more seamless and integrated care, she said. If the program succeeds in coordinating patients' care better, that could prevent medication errors or avoidable hospital admissions.

Bella also took issue with the idea that states are only interested in using the new program in order to reduce their Medicaid spending.
"I'd caution against assuming this is all being driven by savings," Bella said. "It really is about rebalancing the system."

States can use either capitated managed care or managed fee-for-service plans. This summer, Centers for Medicare and Medicaid Services officials will sign memos of understanding with the states, which will provide more details about how the programs will work in each area. Beneficiaries are expected to get information about their options in October.

• State Proposals (pdf)

By Nellie Bristol, CQ HealthBeat Associate Editor

April 30, 2012 -- Anywhere from 20 percent to 66 percent of American adults have a preexisting condition that could preclude them from insurance coverage or make their premiums escalate, particularly in the individual market, the Government Accountability Office said in a new report.

The wide range in the percentages stems from the variations in the way insurers classify what is a pre-existing condition for their underwriting procedures, the watchdog agency said. The low estimate, for example, comes from a study that includes eight possible preexisting conditions. The high estimate takes into account 417 separate conditions. Using four different studies, GAO estimated a midpoint of 32 percent of the adult population as having a preexisting condition based on 60 conditions commonly used to determine eligibility for state high-risk pools. "Each insurer separately determines which conditions will result in restricted coverage in the individual insurance market, so lists of conditions may not be consistent from insurer to insurer," the agency said. A preexisting condition is a health issue an individual had before he or she applies for or enrolls in a new health insurance policy.

The GAO listed hypertension as the most commonly reported medical condition in the study. The analysis found that 33.2 million adults age 19 to 64, about 18 percent, reported having hypertension in 2009. Mental health disorders and diabetes were the second and third most commonly reported medical conditions. About 10.3 percent of adults reported mental health conditions, and 6.4 percent reported diabetes. Preexisting conditions were more common among women, whites and those with public insurance, the study found.

About 2.3 percent of adults reported having cancer. But the GAO reports that that only takes into account the reporting year, not those who may have had the condition in the past. "Therefore, the number of adults who have ever had cancer is higher than the approximately 4.2 million reporting cancer in 2009," the agency says. "Health insurers commonly look at both current medical conditions and conditions an individual was treated for or diagnosed with in the past when making a decision whether and at what price to offer health insurance coverage." Cancer had the higher average annual treatment expenditures of all the conditions, about $9,000.

Senate Democratic leaders, including Majority Leader Harry Reid of Nevada and Finance Committee Chairman Max Baucus of Montana, requested the report. Starting on Jan. 1, 2014, the health care law (PL 111-148, PL 111-152) prohibits insurers in the individual market from denying coverage, raising premiums or restricting benefits because of a pre-existing condition. While group health plans are less likely to base coverage on preexisting medical conditions, individual plans often do, GAO said. In 2010, 14.6 million adults age 18 to 64 bought coverage directly through the individual market, it adds.

While the number of people with preexisting conditions varies by state, GAO says 88 to 89 percent of adults live in states without insurance protections enacted by the health care overhaul. GAO notes that 19 percent of applicants in the individual market were denied enrollment in the first quarter of 2010 and 25 percent of insurers had coverage denial rates of 40 percent or higher.

The health care law established a temporary national high-risk pool known as the Pre-Existing Condition Insurance Plan. It offers coverage to individuals with preexisting conditions who have been uninsured for six months. The program ends in 2014, when guaranteed issue and adjusted community rating requirements go into effect.