By John Reichard, CQ HealthBeat Editor

November 1, 2012 -- With Medicaid set to expand dramatically 14 months from now, federal officials announced a final rule last week they hope will make doctors more willing to treat patients in that program because it increases Medicaid's payment rate for primary care doctors to that of Medicare's.

The payment increase is for primary care services delivered by a physician in family medicine, general internal medicine, or pediatric medicine. It also goes to "related sub specialists," according to a Centers for Medicare and Medicaid Services (CMS) summary, including pediatric cardiologists who are board certified in their specialty.

The rule also says the higher payments will be made for primary care services delivered by other medical professionals, such as nurse practitioners, working under the personal supervision of a qualifying physician.

There is a big catch though. These higher payments, to be made under a provision of the health law (PL 111-148, PL 111-152), only apply in calendar years 2013 and 2014. The provision is viewed skeptically by some doctors who say the fact that the increase is only temporary will prevent any appreciable increases in the number of physicians willing to treat Medicaid patients.

Republicans for their part have said the provision would be hard to eliminate because of physician lobbying, further driving up the cost of the health care law.

The rule says states "will receive 100 percent federal financial participation for the difference between the Medicaid State plan payment amount as of July 1, 2009 and the applicable Medicare rate."

In addition, CMS said the rule "provides multiple options for states to allow for flexible implementation in fee-for-service and managed care settings. The rule permits states to either lock rates at the level of the Medicare physician fee schedule in effect at the beginning of 2013 and 2014 or modify the rates in alignment with all updates by Medicare."

The rule will be published in the Federal Register Nov. 6.

By Rebecca Adams, CQ HealthBeat Associate Editor

October 30, 2012 -- The type and amount of care that the top 23 academic medical centers give Medicare patients, particularly at the end of their lives, varies significantly, according to a new Dartmouth Atlas Project study.

The 24-page report used Dartmouth Atlas of Health Care data to analyze the differences in services that Medicare patients received at teaching hospitals, including academic medical centers rated by U.S. News and World Report as the best hospitals for clinical excellence in 2012-13. The hospitals are responsible for about 17 percent of all primary residency slots in 2012. The Dartmouth Atlas of Health Care uses Medicare data to understand variations in medical care across U.S. hospitals and regions.

"I was very surprised to see such dramatic variation," study co-author Anita Arora, a recent graduate of the Geisel School of Medicine at Dartmouth, said on a call with reporters. She said given that the institutions are considered among the best teaching hospitals in the country, she expected that they all would use evidence-based practices and would not show major differences in the way they treat patients.

The report includes information on care provided in the last six months of life, regional surgical procedure rates and quality measures on patients' experience that each hospital sends to the Department of Health and Human Services.

A main goal of the report, which was supported by the Robert Wood Johnson Foundation, was to inform medical students about the practices at academic centers where they plan to get further training. But officials who worked on the project told reporters that patients also might be interested in learning which institutions tend to provide more aggressive treatment.

Coauthor Alicia True told reporters that most patients would prefer to spend their final days in a home-like setting. But for many, True said, what happens isn't necessarily their preference but rather the practice style of the hospital where they receive their care. For instance, about half of chronically ill patients at Johns Hopkins Hospital in Baltimore were enrolled in hospice in their last six months of life, compared to about 23 percent of patients at Mount Sinai Medical Center in New York City. True said that a resident at Mount Sinai might see more aggressive care as the norm, with hospice a last resort, while a Johns Hopkins resident might be better trained in having discussions with patients about what they really want.

Another example the study authors cited is that patients are twice as likely to get knee replacement surgery in Salt Lake City, which had 11.9 per 1,000 discharges, than in Manhattan, which had 4.5 per 1,000 discharges. In New York, residents might be more likely to recommend physical therapy, the authors said.

The study authors said that more care is often not better care, and that residents who are trained at facilities that encourage more intensive care may adopt that style regardless of whether it leads to better outcomes.

"These variations in the way care is delivered are not trivial, as they may very well affect the future practice of medicine," said John R. Lumpkin, director of the Health Care Group at the Robert Wood Johnson Foundation, a longtime funder of the Dartmouth Atlas Project. "During their residency training, young physicians learn by observing faculty, making decisions on how aggressively to treat chronically ill patients at the end of life, and whether to recommend surgery when other treatment options exist."

David C. Goodman, co-principal investigator for the Dartmouth Atlas Project and director of the Center for Health Policy Research at the Dartmouth Institute for Health Policy and Clinical Practice, said in a written statement that "These findings challenge the assumption that clinical science alone drives medical practice at these prestigious institutions and thus raise a serious issue for academic medicine. With such drastic variations from one institution to the next, they clearly cannot all be right."

Goodman told reporters that the data "reflect irrational differences" and that prestigious teaching hospitals in many places "fall short."

By John Reichard, CQ HealthBeat Editor

October 30, 2012 -- So often the strategies that policy wonks prescribe to get better value for the health care dollar prove disappointing. But health plan quality measures and pay-for-performance systems might be a different story.

A study released last week by the leading national group that evaluates health plans draws two main conclusions: that Medicare's program for making higher payments to health plans based on performance is reaping dividends, and that, prodded by quality measures, doctors are stepping up efforts to identify and counsel obese patients.

Medicare's bonus payment program for health plans that rank higher on quality measures is mired in controversy, with Republicans saying Democrats are using it to hide the eventual sharp cuts the health care law (PL 111-148, PL 111-152) makes to the plans.

Nevertheless, the study by the National Committee for Quality Assurance (NCQA) concludes that there is a payoff from those bonus payments. Originally established by the insurance industry, NCQA has won a reputation for independence and promoting quality measurement that improves health care.

Plans have shown big improvements on measures in the star rating system, NCQA President Margaret O'Kane said in an interview. "Colorectal screening was one," she said. It showed "a huge jump" in 2011, with plan improvements that year determining whether or not plans received the bonus payments for higher performance, which began in 2012.

On average, PPOs in the Medicare Advantage program screened 55 percent of their enrollees for colorectal cancer in 2011, up from 41 percent in 2012. Medicare HMOs improved from 57.6 percent to 60 percent.

Similarly, plans did a much better job of lowering the use of high-risk medications among the elderly, O'Kane said.

Progress on Medicare Use
The NCQA report said one measure identified the share of Medicare beneficiaries 65 and older who use two or more medications that experts agree should usually be avoided in the elderly. Examples of such drugs include benzodiazepines for insomnia and the chronic use of painkillers like Naproxen.

After several years of almost no change, the usage rate of those drugs among the Medicare Advantage 65 and older population has dropped by a third, from about 6 percent to 3.6 percent, the report said. "This is a beautiful example of stopping the health care system from doing harm," O'Kane said. Such measures help avoid injury from falls and car crashes.

The report also showed that caregivers in health plans are more likely to screen enrollees for obesity, not only among the elderly but also among the young.

The report said that calculating body mass index—the ratio of body fat determined by height and weight—is the first step toward developing a plan for weight management.

In 2009, NCQA introduced adult BMI assessment to its quality measures. In 2011, "we have seen major jumps in improvement on this measure across commercial, Medicaid and Medicare lines of business and for HMOs and PPOs," the report said. "The greatest gains are among Medicare plans—with an increase of 18 percentage points for HMOs and almost 26 percentage points for PPOs."

O'Kane said of the measure that "partly it's making sure everyone has a reminder system for the doctor." Measuring BMI "naturally leads to counseling."

NCQA begins with such a measure and later might begin asking a plan about whether its doctors provide counseling on nutrition and exercise.

The report said "we also see significant gains in three measures of care related to obesity in children 3 to 17 years of age. One measure calls for clinicians to counsel on physical activity, another to counsel on nutrition and another to assess BMI."

The NCQA system does have its shortcomings. For example, plans may choose not to be evaluated. That means it's likely that the rating system does not identify the poorest-quality plans, which have an incentive not to be rated and found wanting.

Some Shortcomings Identified
Plans also deteriorated on some measures. Use of appropriate medications for asthma in Medicaid patients declined. In 2010, NCQA reported a significant drop in immunizations for children. And in 2011 "the rate made no recovery in either the commercial or the Medicaid product line," the report said.

O'Kane attributed the falloff to the "urban legend" that vaccines are tied to autism. "What we're not seeing, that we hoped to see, was a rebound" she said in a press briefing on the report, "We're starting to have outbreaks of preventable childhood disease" as a result. "It's very distressing."

Another challenge, O'Kane said, is to get doctors in health plans to prevent patients from overusing antibiotics. "We really do overuse antibiotics," she said. "That's a tough one." Doctors simply don't take the time to explain to patients who demand antibiotics why they shouldn't be used, she said.

The study was notable in other respects, O'Kane said. For many years HMOs with their seemingly tighter control over providers have outperformed PPOs on quality measures. Now, "I think what you see with the PPOs is kind of a catch-up effect," O'Kane said. "You're seeing these very great leaps in performance."

And while some plans choose not to be measured by NCQA, the new study reported its highest ever total enrollment of people in plans subject to NCQA measures. The tally: 125 million people, or 7 million more than last year. Another finding: NCQA-Accredited Medicare Advantage plans outperform non-accredited plans on more than 75 percent of quality measures. All Medicare Advantage plans are required to report data on NCQA measures but they are not required to become accredited by NCQA.

Assessing the Impact of Measures
Many observers seem to agree that quality measures truly do make a difference in goading providers and plans to make improvements. But in the press briefing, Tom Miller of the American Enterprise Institute expressed considerable uncertainty about their impact.

"The question is are we measuring what matters," he said. "We have the problem of looking at the long string of causation"—from looking at the measures on which a plan performs well—"to assuming that that equates to high quality care, and the bigger assumption that that equates to better health in the final analysis," he said.

Miller also said that the jury is out on whether the measures lead to lower costs, saying that to the extent they make care more efficient, people may want more of it. But at least then they would be getting better value for their health care dollars, he acknowledged.

Miller also expressed uncertainty about the impact of bonus payments to Medicare Advantage plans. He said "the analyses thus far have indicated that the magnitude of the pay for performance amount has been small and not enough to make a difference. It hasn't moved the needle that strongly," he said, though experience with such systems is at an early stage. He also questioned how effective payments are in boosting quality with more average performers also getting bonuses. "I think that the strength of that signal was diluted," he said.

O'Kane responded that NCQA believes strongly that when systems work well the result is not only higher quality but also more affordable care. "You can see that plans are really paying attention" to the measures that lead to higher payments," she added, citing for example higher levels of colon cancer screening. "As a result, people are going to be walking around well and alive years from now," she said.

By Rebecca Adams, CQ HealthBeat Associate Editor

November 2, 2112 -- The Medicare Payment Advisory Commission on Friday appeared divided over the idea of whether to reduce payments to hospital outpatient departments so that the rates better reflect the fees that independent physicians receive for similar services.

The volume of the concerns that commissioners expressed raised questions about whether the panel would be ready to vote next month on a recommendation for its next report to Congress in March.

Commissioners seemed to have a range of opinions on the issue. A few advocated for a more aggressive move toward equalizing payments between outpatient departments and physicians' offices than what the commission has discussed up to now. Others voiced fears that hospitals would suffer too much financially because of the potential reductions in services to vulnerable populations of patients.

The panel also discussed the controversial issue at last month's meeting. In March, MedPAC recommended that rates for evaluation and management services paid to outpatient departments be lowered so they are equal to payments to doctor's offices. While Congress hasn't yet acted on that idea, it is drawing notice from lawmakers who are actively searching for Medicare savings to pay for a long list of issues this year, including a so-called doc fix that would stave off a nearly 27 percent payment cut for Medicare physicians in January.

Now MedPAC is considering whether to add recommendations to set equal or similar payments for more categories of services, beyond just evaluation and management, which refers to a doctor visit where the location of the visit doesn't affect the care.

The issue is cropping up as more hospitals buy up physician practices. When the hospital owns and operates a physician practice, even if it's not physically located in the hospital, the Medicare system allows an extra reimbursement that can boost payments much higher in hospital settings for similar procedures done in a doctor's office. 

One statistic that received a lot of attention was a staff estimate that among the 100 hospitals that would be most affected by policy changes, the average loss would be 7.7 percent of Medicare revenues. Hospital lobbyists in the audience said that would be a major blow to hospitals that are already expecting some reductions called for in the 2010 health care overhaul (PL 111-148, PL 111-152). The average loss to all hospitals was a less dramatic 1.2 percent reduction.

Under this recommendation, major teaching hospitals could be disproportionately affected, according to a staff analysis.

That caused commissioner Alice Coombs of the Milton Hospital and South Shore Hospital in South Weymouth, Mass., to wonder whether some vulnerable patients might lose access to care, particularly at inner city teaching hospitals that provide a safety net for the community. She also said that there may be legitimate safety-related reasons why some patients get treatment in an outpatient hospital setting rather than a clinic.

"The issues you're raising are valid ones that we're trying to wrestle with," responded MedPAC Chairman Glenn Hackbarth.

One point raised both by commissioners and hospital lobbyists during the public comment period was that hospitals should be paid more because they provide other services not available in a doctor's office, such as the ability to handle a large influx of patients during an emergency.

But other commissioners, such as Vice Chair Michael Chernew of the Harvard Medical School, said that it is not a good idea to indirectly subsidize those services and in the process inflate prices. It would be better to target funding in a way that directly achieves desired outcomes.

Some commissioners wanted a more ambitious approach than MedPAC has considered up to now.

"I would argue it hasn't gone far enough," said Jack Hoadley of the Georgetown University Health Policy Institute.

Commissioner Scott Armstrong of the Group Health Cooperative in Seattle noted that the revenues for outpatient departments has increased in recent years.

"While we'd be taking revenues out, those are brand new revenues," he said.

Hospital officials stood up during the comment period to criticize the plan. They noted that in 2010, the year that the commission used in its March analysis, hospital inpatient and outpatient margins were both negative and that the equalization proposals would drive hospital revenues lower. They asked the staff to conduct additional analyses and release additional details, such as the identities of the hospitals that would be affected, so that they could provide more feedback. They asked for more protections that would prevent losses from compromising care.

Chantal Worzala, the American Hospital Association's director of policy, said that the devastation caused by hurricane Sandy was evidence of the need to provide sufficient resources to hospitals. She noted that hospitals accepted a large number of patients who had to be evacuated out of skilled nursing facilities.

"We as a society really need this kind of response capacity," Worzala said.

She said that funding for hospital preparedness has declined by 12.5 percent between fiscal years 2010 and 2012, and "come nowhere close to the cost of actually responding to a disaster."

Special Needs Recommendations

Earlier in the day the commission considered four draft recommendations affecting special needs plans (SNPs), which are Medicare Advantage health plans that are open only to people with certain health needs. Plans known as D-SNPs are open to people who are eligible both for Medicare and Medicaid. C-SNPs are available for patients with chronic conditions. I-SNPs are for institutionalized people or patients in the community who need intense care.

The authority for the plans to operate in these particularly enrollment categories expires at the end of 2013. If a plan's executives wanted to fold these plans into their larger Medicare Advantage plan for the general Medicare population, they could do so.

The suggestions that MedPAC is considering include a plan to permanently reauthorize the institutional special needs plans. Another recommendation is to permanently reauthorize dual-eligible special needs plans (D-SNPs) if they assume clinical and financial responsibility for integrated Medicare and Medicaid benefits. The authority for D-SNPs that did not take on that responsibility would expire, under that proposal.

MedPAC also is considering aligning the appeals processes for Medicare and Medicaid for the D-SNPs that accept clinical and financial responsibility for the benefits in both programs. The panel would recommend that Congress direct Health and Human Services officials to tell the D-SNPs to market the Medicare and Medicaid benefits that they cover as a combined benefit package.

In addition, MedPAC is considering a recommendation to allow the authority for the SNPs for people with chronic conditions to expire, a proposal that later drew concerned comments from the audience. The proposal would direct HHS officials to act within three years to permit Medicare Advantage plans to enhance their benefit designs so that coverage can vary based on the medical needs of people with specific chronic or disabling conditions. The recommendation would allow current C-SNPs "to continue operating during the transition period as the [HHS] secretary develops standards but impose a moratorium on new enrollment in those plans" as of Jan. 1, 2014.

The idea behind allowing C-SNPs to expire is that many beneficiaries have at least one chronic condition.

Armstrong of the Group Health Cooperative in Seattle said his company had a C-SNP but it never grew to more than 1500 patients so the company plans to stop offering it. Armstrong said he likes the idea of folding the role that the C-SNP plans are intended to play into the overall Medicare Advantage program because the entire program is going to have to care for the needs of people with chronic needs.

Some other commissioners agreed with Armstrong.

Commissioner Thomas Dean of Horizon Health Care in South Dakota said that narrowing the pool of beneficiaries to those with chronic conditions could be detrimental and that chronic care services should be incorporated into the entire Medicare Advantage program.

"For the most part, I think a specific program focused quote-unquote on "chronic disease" is probably not appropriate," Dean said.

MedPAC staff said they are working with officials from the Congressional Budget Office to get a better sense of the fiscal impact.

But Tom Myers, the general counsel and chief of public affairs at the AIDS Healthcare Foundation, said that throwing out the C-SNPs is unnecessary. He said that there is no incentive for a regular Medicare Advantage plan to set up the type of networks and services that HIV-AIDS patients need. He recommended that the panel more closely examine the populations served and consider which groups facing different diseases might benefit from keeping the C-SNP program.

By CQ Staff

November 2, 2112 -- Finding a Medicare drug plan that covers the particular mix of drugs an individual senior needs at the lowest out-of-pocket cost means looking beyond the monthly premium charges.

It also means considering where one likes to go to fill prescriptions because a pharmacy may charge more if it's not part of a plan's network.

That's the conclusion of a new study that found major differences, not only in the drugs plans cover, but also in the cost-sharing amounts they charge. And out-of-pocket charges vary depending on whether or not a senior goes to a "preferred" pharmacy.

The analysis, by Avalere Health, looked at both stand-alone drug plans in the Medicare Part D prescription drug program and the drug coverage Medicare Advantage plans offered in 2013.

"Part D plans are increasingly using percentage cost sharing instead of fixed dollar copayments," the analysis says. That increases how much out-of-pocket charges vary.

Typically, drug coverage plans have five tiers of coverage. Tier one consists of preferred generics, which have the lowest out-of-of-pocket charges. Tier two is non-preferred generics that have higher out-of-pocket charges. Tier three includes preferred brand-name drugs, with even higher out of pocket charges but ones that are lower than in tier four, which consists of non-preferred brand-name drugs. Tier five is specialty drugs, which may include very costly biotech drugs, for example.

Plans typically give a drug preferred status if they can obtain a volume discount from the manufacturer.

All plans that include five tiers will use a cost-sharing percentage in the fifth tier, not fixed-dollar charges. Almost half of the five-tier plans will also rely on percentages in the fourth tier. And one-third will do so in tier three. In tiers one and two the copays will be a fixed-dollar amount.

"Many beneficiaries with serious illnesses may see higher cost sharing," said Bonnie Washington, a senior vice president at Avalere Health. "Beneficiaries need to look beyond premiums to really understand which drugs are covered and what their cost will be at the pharmacy counter."

The analysis also found wide variations in the percentages of drugs covered by the top ten stand-alone prescription drug plans.

For example, the Humana Enhanced plan will cover 76 percent of the drugs on the list of medicines that plans can cover in the Medicare Part D program. However, WellCare Classic will cover only 53 percent.

The two plans with the lowest premium charges each will cover 63 percent of the drugs. The two plans are Humana Walmart-Preferred Rx Plan and United AARP Saver Plus plan.

To further lower costs, low-premium plans affiliate with preferred pharmacies. If a plan member goes to a preferred pharmacy, he or she pays less out of pocket for a drug than if they go to a pharmacy that isn't preferred. The difference may not be small, the analysis said. Thus in the AARP Saver Plus Plan the out-of-pocket charge for a preferred brand-name drug at a preferred pharmacy is $45 but $70 at a pharmacy that isn't in the plan's network. And in the Humana Walmart plan, a preferred generic carries a $1 out-of-pocket charge at a preferred pharmacy but a $10 charge at a non-preferred pharmacy.

By Rebecca Adams, CQ HealthBeat Associate Editor

October 29, 2012 -- The number of patients in the high risk pool program authorized by the 2010 health care overhaul barely inched upward in August to 86,072 from 82,000 in July, according to the most recent estimates released this month.

The program is far below original enrollment expectations. About 9 million people in the United States have pre-existing conditions that might qualify them for the federal program if they meet other requirements. Actuaries had estimated that about 375,000 people would enroll during the first year of operation. The first pools started operating in July 2010.

The tiny uptick in enrollment in August was lower than it had been in some previous months. For a while—from August through November 2011—monthly enrollment rose to about 8,000 per month. But that didn't last.

On May 1, the Centers for Medicare and Medicaid Services (CMS) suspended an outreach program that provided $100 to insurance agents and brokers who referred patients to the program.

This summer, the number of patients did not dramatically increase. Enrollment through June 30 was 77,877 people.

Congress established the federally funded program—officially known as the Pre-Existing Condition Insurance Plan (PCIP)—in the 2010 health care law (PL 111-148, PL 111-152) as a way to help patients who couldn't find affordable coverage because of their medical conditions. Funding for the program is capped at $5 billion and expires on Dec. 31, 2013, just before the new insurance exchanges that will insure those people now covered in the pools are scheduled to open.

The federal government or states run the high risk program. The federal government runs pools in 23 states and the District of Columbia while 27 states have chosen to run their own programs.

The federally funded program sits alongside separate state-run programs that already existed in 35 states. But those existing state programs have different rules and are funded only by the states.

One reason why enrollment is lower than anticipated is that the federally authorized program requires people to be without insurance for six months. The per-patient costs of the program are also higher than expected however, because the program is attracting patients with very high medical costs. Federal officials had said in the past that on average, claims for the program have cost 2.5 times more than anticipated.