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April 11, 2011

Washington Health Policy Week in Review Archive 7eb8b1d7-6a5c-4822-b631-258e6db32fc4

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Private Plans Under Ryan Budget Plan Would Cost More Than Current Medicare

By Rebecca Adams, CQ HealthBeat Associate Editor

April 6, 2011 -- When House Budget Chairman Paul D. Ryan unveiled his budget proposal, he said it fulfills a "moral imperative" to lower Medicare-related costs. But it would actually drive up overall health expenses by requiring people to get care through private plans, which cost more than the current system, said the Congressional Budget Office. Seniors would essentially pick up the extra costs.

The House Budget Committee was expected to approve the fiscal 2012 budget resolution that Ryan, a Wisconsin Republican, introduced the day before. As the committee debated the plan, policy experts and Democratic critics took a closer look at its impact on seniors and people with disabilities.

Ryan has proposed converting the current fee-for-service system—in which patients go to any doctor that takes Medicare—to one in which beneficiaries would get a capped annual subsidy to help them buy private insurance. Democrats say that the proposed system, which is known as a "premium support" model, is akin to providing vouchers to elderly and disabled people for private plans. Ryan says that the annual allotments are not vouchers in part because people would get higher amounts if they are sick.

Because seniors would pay higher costs under the proposed system, the federal government's share of Medicare spending would be the same in 2022 under Ryan's plan as it would under current law. The nonpartisan CBO analysis said that out-of-pocket costs for Medicare beneficiaries would more than double in 2022 when compared with the current system.

The average costs for Medicare enrollees would rise from $5,538 in 2022 under current law projections to $12,513 that year under Ryan's plan, said Democrats on the House Energy and Commerce Committee.

"All of that extra spending by seniors and people with disabilities would go to private plans," said House Energy and Commerce top Democrat Henry A. Waxman of California.

"These vouchers won't cover what Medicare covers," Waxman said in an interview.

Ryan's proposal also would increase spending each year under Medicare at a lower inflation rate than under the current system starting in 2022, so over time, the federal government's share of expenses would decline. The CBO said that by 2030, the government would pay about 32 percent of costs under Ryan's proposal, compared with 35 percent of costs under current law—while the costs for seniors and people with disabilities would nearly triple.

"A private health insurance plan covering the standardized benefit would, CBO estimates, be more expensive currently than traditional Medicare," said the CBO explanation. "Both administrative costs (including profits) and payment rates to providers are higher for private plans than for Medicare."

The CBO said that "those higher costs would be offset partly but not fully" by lower spending by patients in private plans because insurers have tighter oversight of patients' medical utilization of services than traditional Medicare, and because plans sometimes prevent seniors from buying Medicare supplemental plans. If seniors don't have supplemental Medigap coverage, they might be less likely to get some medical services.

The gap between costs for the private plan coverage and the current fee-for-system Medicare system would grow over time. In 2022, the costs for the traditional Medicare program would be less than two-thirds of those under Ryan's new private plan model, the CBO found. By 2030, the fee-for-service program would be 60 percent of the costs under the new program. Seniors and people with disabilities would pay significantly more in cost-sharing such as coinsurance or premiums.

A spokesman for Ryan did not return calls asking why the fiscally conservative congressman would choose to create a new system that costs more than the current one.

To be sure, the CBO analysis presumed that current law would continue without any changes to Congress—a scenario that may be unrealistic. That would mean that Medicare payments to physicians would fall below current rates and Medicare payments to other providers would grow more slowly than the annual increase in their costs.

The analysts also provided a second scenario that assumes that provider rates would go up more than under current law. Under that estimate, the costs for the fee-for-service Medicare program would still be considerably lower than the expenses for the private plans in Ryan's proposal—about 72 percent of the cost for private plans in 2022 and about 71 percent of private plan costs in 2030.

In the Budget Committee markup, Democrats offered a sense of Congress amendment that Congress should reject legislation that shifts health care costs onto seniors, servicemembers and veterans while maintaining tax cuts for high-income taxpayers. It would have changed the committee report to say that health care programs for seniors, veterans and servicemembers and their families should not be eliminated or replaced with vouchers to buy private insurance or set spending caps for these programs.

The amendment, which was offered by New York Democrat Paul Tonko, was voted down 16-22. The committee was expected to continue debating the resolution late into the night.

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Commonwealth Fund Poll Finds Widespread Unhappiness with Health Care

By Jane Norman, CQ HealthBeat Associate Editor

April 6, 2011 -- U.S. adults surveyed in a Commonwealth Fund poll say they have problems with access to health care, including timely doctors' appointments, advice from physicians on the phone or after-hours care outside an emergency room.

The finding that 71 percent can't get needed help is unsurprising and points to persistent underlying problems in the nation's health care system, said Cathy Schoen, a vice president of the nonpartisan fund and a coauthor of a report analyzing the poll results. She said the new health care law is intended to provide coordinated care that should begin to address these issues.

For example, the Obama administration last week announced regulations for accountable care organizations within Medicare that are supposed to produce better results by creating teams of health care providers working together. The health care law also provides funds for training additional primary care doctors.

The poll also found that seven out of 10 adults think the health care system needs to be completely changed. Only 22 percent said it works relatively well with little change needed.

And 21 percent said they or a family member experienced an infection or complication because of medical care, because a provider made a mistake or both.

The desire for change accompanies an unease about the health care law (PL 111-148, PL 111-152) detected in other polls. "Although recent public opinion surveys have found the public is often ambivalent or unaware of the content of reforms, patients' and families' experiences attest to the need for action to ensure a safer, more responsive, better coordinated, and less wasteful health care system," the report says.

The poll was done by Harris Interactive Inc. by telephone between Feb. 7 and Feb. 11 with a representative sample of 1,011 adults. The margin of error was plus or minus three percentage points.

The survey also found:

  • Electronic access to health care information is not very good, though interest is strong. Among people with Internet access, just 14 percent said they are able to access their medical records online, while 22 percent said they can schedule medical appointments, 21 percent said they can e-mail their physicians and 34 percent said they can order a prescription refill.
  • Nearly half of those polled said they had problems paying medical bills in the past year, and 33 percent said they had a payment denied or were paid less than expected by a health insurer during the past two years.
  • Even Americans with relatively high incomes worry about paying for medical care; the survey found that's a concern among 55 percent of those with incomes above $75,000 a year.

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Mostashari Named Health IT Czar

By John Reichard, CQ HealthBeat Editor

April 8, 2011 -- Farzad Mostashari, who led an effort in New York City to foster the adoption of health information technology (IT) by primary care doctors serving low-income populations, has been named the new national coordinator for health IT. Mostashari succeeds David Blumenthal.

A graduate of Harvard College, the Harvard School of Public Health, and the Yale School of Medicine, Mostashari started the job last week. Since July 2009, he had been working under Blumenthal as deputy national coordinator for programs and policy.

"I look forward to continuing to work with him in this new capacity as he builds on the incredible progress made in the adoption and meaningful use of health information technology during David Blumenthal's tenure," Health and Human Services Secretary Kathleen Sebelius said in an e-mail to senior staff.

Although many providers are moving to adopt health information technology, they face a number of challenges in order to qualify as "meaningful users." That's the status required under HHS rulemaking to get Medicare bonus payments. Mostashari will have to navigate demands from providers for greater flexibility in striving for meaningful use.

"We are hopeful that as the future stages of the incentive program are developed, the government will take into account the difficulties medical groups currently face in meeting the meaningful use requirements," Medical Group Management Association President William F. Jessee said this week.

Doctors' offices have struggled to absorb use of the new technology in their work routines. Initially, many physicians struggle to record data on computers and often find themselves putting in extra hours to input patient information. Over time, however, practices that stick with it show gains in productivity and lower costs. But the transition can be daunting.

"It is difficult; there is no question about it," Mostashari said in an interview with CQ HealthBeat last year. The process does not simply entail learning to use the technology but also involves redesigning the way tasks are performed in the medical office, he noted.

But "the wind is, in a sense, at our backs," he said. "EHR systems are getting better and better and better." Along with rising Medicare and Medicaid payments to encourage IT use, he added, expectations are building within the medical profession that the technology should be used. "This is not just about getting checks from the government, it's about professional standards," he said.

David Brailer, a Bush administration appointee who served as the first national coordinator for health information technology, said Mostashari "really blossomed" in his role as Blumenthal's deputy. While Blumenthal served more in the role of a visionary pulling together the policy elements of the federal health IT effort, Mostashari has "a real street feel" for the challenges of implementing the technology.

Owing to his experience in New York City spurring some 1,500 primary care providers to adopt IT to deliver better preventive care, Mostashari has "a street level view of the immensity of the problem and of the power of the solution," said Brailer.

Brailer also credits Mostashari with having a gift for compromise, saying that rulemaking over what constitutes meaningful use of health IT has pitted those who wanted few demands on doctors against those who saw a rare opportunity to really push the medical profession hard to exploit its potential. Mostashari "was one of the key people that talked dreamers back into reality," Brailer said.

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HHS Announces Plan to End Health Disparities

By Jane Norman, CQ HealthBeat Associate Editor

April 8, 2011 -- Public health officials recently rolled out an initiative aimed at improving the health of minorities and erasing disparities.

The first-ever action plan was put together by the Department of Health and Human Services (HHS) following extended meetings and discussions with people in communities across the country. Members of racial and ethnic minorities in the United States continue to have worse health outcomes and don't get the preventive care they need, HHS officials said.

They also are more likely to suffer illnesses like diabetes or heart disease and to have problems getting health care.

That needs to end for the entire nation to advance, officials said. The plan sets an ambitious goal of a nation "free of disparities in health and health care" in its vision and purpose.

"We know the health of the individual is almost inseparable from the health of the larger community," said Howard Koh, assistant secretary for health.

Garth Graham, deputy assistant secretary for minority health, said a cost estimate for the plan was not yet available, although he said some of it could be paid for with fiscal year 2011 funding.

In connection with the announcement of the plan, HHS Secretary Kathleen Sebelius went to East Harlem in New York City to meet with members of the community and discuss how to improve minority health.

The HHS action plan includes calls for expanding insurance coverage; setting up a new pipeline for recruiting minority undergraduates for public health careers; improving rates of childhood obesity and diseases such as asthma and cardiovascular disease; and better collection of data.

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MedPAC Commissioners on Cost of Ending Medicare's Doctor Payment Rate Formula: Write It Off?

By John Reichard, CQ HealthBeat Editor

April 7, 2011 -- The sustainable growth rate (SGR) formula—the mechanism used to set Medicare's yearly physician payment rates—must go, commissioner after commissioner said at a meeting of the Medicare Payment Advisory Commission (MedPAC).

And what about the $300 billion-plus cost over 10 years of getting rid of the SGR? "Write it off," declared commissioners Ronald D. Castellanos and Bruce C. Stuart.

"Write it off" translates into a recognition that Congress isn't going to come up with payment offsets to scrap the SGR formula; it isn't going to raise taxes to pay for it; and it surely isn't going to allow the huge payment cuts the formula now triggers. That's because seniors would lose access to physician care.

In effect it would mean that the cost would be added to the national debt, and to the debt service costs that Americans will have to pay in years to come. And it would be a statement that it's better to pay such costs than let the elderly be unable to find doctors to treat them.

As realistic as that advice might be, it wasn't clear from the meeting that writing it off is what MedPAC will recommend to Congress this fall when it issues a report to lawmakers on how to deal with the Medicare payment formula.

But what is clear is that commissioners do not see a way to come up with $300 billion in offsetting cuts in the Medicare program to pay for scrapping the SGR. And in the end, while the commission may be able to point to some recommendations to trim Medicare spending, it's unlikely that any set of suggestions they can agree on—if they can reach a consensus—would add up to more than a small chunk of the $300 billion cost.

A couple of commissioners mused about other ways to come up with the money—say, ending the war more quickly in Afghanistan or discontinuing the Bush tax cuts. But that isn't exactly within the purview of MedPAC, they quickly added.

Ending the formula once and for all would be less expensive than keeping it and continuing to enact temporary payment patches to block SGR-generated cuts, commissioners say. Such short-term fixes would add even more to the debt.

But physicians will have to accept trade-offs, judging from the discussion on replacing the SGR. One would be recognizing that in return for avoiding huge SGR-generated cuts, they will have to accept an extended period of payment increases that are at best very small. The commissioners also discussed finding other ways to restrain the growth in the volume of Medicare physician services.

MedPAC Vice Chairman Robert Berenson noted, for example, that limits could be set on the growth of certain services. And if that growth was exceeded, payments could be reduced in that particular treatment area. Another suggestion was setting spending targets in high-volume regions of the country and holding back a portion of payments that would be paid only if the targets were met.

Commissioners also recognized that another temporary payment patch would likely be needed while the fate of the SGR is resolved. They said that such a fix should last at least one year, if not considerably more.

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CMS Releases Data on Medical Conditions Acquired in Hospitals

By John Reichard, CQ HealthBeat Editor

April 6, 2011 -- Federal officials announced the release of data allowing consumers to learn how often patients in local hospitals acquire infections, develop bed sores, or are harmed by gas or air bubbles entering blood vessels.

The data on these and other "hospital-acquired conditions" will guide consumers in picking hospitals and prod facilities themselves to make improvements, officials said.

But hospitals said the data does not accurately reflect the safety and quality of care in their facilities, nor is it well-suited for making comparisons.

The Centers for Medicare and Medicaid Services (CMS) said that, thanks to the new data on the agency's Hospital Compare website, Medicare patients for the first time can see how often hospitals report serious conditions developed during an inpatient stay that possibly cause harm.

"Any potentially preventable complication of care is unacceptable," said CMS Administrator Donald M. Berwick in a news release announcing the data. "We at CMS are working together with the hospital and consumer community to bring hospital acquired conditions into the forefront and do all we can to eliminate harm from the very health care system intended to heal us."

Specifically, the data track blood and urinary tract infections from catheters placed in hospitalized patients; falls, burns electric shocks, broken bones, and other injuries received during hospital stays; blood transfusions with incompatible blood; bed sores that develop after patients are hospitalized; injuries and complications from air or gas bubbles entering blood vessels; sponges, surgical instruments or other objects left in patients after surgery; and poor control of blood sugar for patients with diabetes.

CMS says the conditions could have reasonably been prevented through the use of evidence-based guidelines for appropriate hospital inpatient care.

The most common condition reported was injury from a fall or some other type of trauma, which occurred once per 2,000 patients discharged. Over 70 percent of hospitals reported such cases of trauma.

Blood or urinary tract infections were reported once for every 3,300 discharges. Forty-five percent of hospitals reported at least one such infection during a hospital stay. By comparison, cases of blood incompatibility occurred only once in every 1,000,000 discharges.

Nancy Foster, vice president for quality and patient safety policy at the American Hospital Association, said the data do not allow valid comparisons of facilities.

"We have long been in support of transparency" concerning quality and patient safety, she said, but "unfortunately we think that the data ... derived from Medicare claims falls short of that mark."

The data stems from analyzing payment claims, Foster said. The claims forms are created for billing purposes, not gathering data on quality of care, she said. The data also fails to adjust for differences in how sick patients are in different hospitals, she said. For example, the data on infection rates from catheters is a percentage of all patients discharged from the hospital, not all patients who had a catheter inserted.

Thus it wouldn't be valid to compare rates at a hospital that had sicker patients with a relatively large number of catheter insertions to rates at a facility that had few such patients, Foster said. The names of facilities aren't easy to pick out in the data either, she added.

"It's a really kind of clunky display," she said. "I don't think it's really that useful to consumers at this point unless they are as data geeky as I am. You kind of have to be good at manipulating data on a spreadsheet."

CMS said it is working with the Hospital Quality Alliance, a coalition of hospitals, consumers, insurers and others, to make the data "accessible to the public in meaningful, relevant and easily understood ways."

CMS added that later this year it will work with the Alliance and directly with consumers on how to fold the data directly into a comparative framework on the Hospital Compare site. For now, it's only available in a big file that can be downloaded.

Foster said the data may give consumers the idea that hospital-acquired conditions are actually less frequent than they really are. She said that although data isn't risk-adjusted—meaning it doesn't account for differences in how sick patients are at hospitals being compared—the health law will financially penalize the poorest performing facilities on hospital-acquired conditions starting in 2015. At some point in the not-too-distant future CMS will have to risk-adjust the data to get ready for 2015, she said.

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