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April 23, 2007

Washington Health Policy Week in Review Archive 8bb86822-80d9-45af-90b8-397c7dbec526

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AARP Flexing Muscle to Remold Health Care—Including Medicare Advantage

By John Reichard, CQ HealthBeat Editor

April 2007 -- Boasting that its 38 million members are the "strongest force for improving health care in America," AARP announced Tuesday that it will use pumped-up revenues from new agreements with insurers to lobby for an overhaul of the U.S. health care system.

The new agreements—which will net AARP $4.4 billion over seven years from the insurance giants United Healthcare and Aetna—include the entry January 1 of an HMO carrying the AARP brand into the private health plan side of Medicare, Medicare Advantage.

That product will be the largest Medicare Advantage plan on its very first day in that market, totaling some one million enrollees, AARP officials said. Nevertheless, they insisted they won't drop their support for sharp payment cuts to Medicare Advantage plans totaling $54 billion over five years and $149 billion over 10 years.

That's how much the Congressional Budget Office estimates would be saved from trimming payments to Medicare Advantage plans from 112 percent of payment rates in traditional Medicare to 100 percent. AARP is on record as favoring such equalization of payment rates.

AARP said that under the new agreements, the money it takes in from United and Aetna for joint products sold to the 50 and older population will total $628 million a year, or $4.4 billion over the 2008–2014 period.

AARP is in effect trading on its reputation for delivering helpful social services to millions of older Americans to pump up the revenues of its insurer-partners—and to use funds it gets as a result from those partners to pursue a number of social aims.

The arrangement is sure to spark criticism that AARP is creating conflicts of interest that will erode the bond of trust it now enjoys with many older Americans, while exposing it to new and potent political pressures.

AARP's support for the Medicare overhaul law (PL 108-173) was key to its approval by Congress in 2003 and led to charges it was feathering its own nest because it intended to sponsor a prescription drug plan in the Part D program created by the law. Now offered for AARP by United, that plan is the largest in Part D.

But to AARP the new insurer agreements are a bold stroke to improve the quality and efficiency of treatment, expand access to affordable health care for diverse populations, and better educate consumers where to find value in the health care system.

AARP President William Novelli told reporters that over $400 million of the $628 million per year will go to fund a huge lobbying and educational campaign expanding its "Divided We Fail" campaign. Among the aims of that effort will be obtaining universal health care coverage in the U.S. and strengthening "long-term financial security," including strengthening Social Security.

At least $50 million per year—and $500 million over the next decade—will go for a second program called "AARP Health AID." The program will be free to "anyone, anytime, anywhere," who is seeking information on health care, ranging from the cost and quality of health care services to arranging for long term care services in distant cities—a frequent need among baby boomers trying to care for failing parents who live far away.

"People are frustrated when they need health information, assistance, or services quickly and they can't get a live voice on the phone or find the right site on the Web," AARP said in a fact sheet explaining the service. "This initiative will be designed to solve that problem." It will include training volunteers "to deliver local, personalized information."

AARP said it will drive its insurer-partners to improve the quality of their care by rewarding them for adhering to recommended treatment practices for conditions such as diabetes and hip fracture and penalizing them financially if they don't. It promises to publicly report the performance of the health plans and to vary its year-to-year payments to them depending on how they perform on quality measures.

"Our responsibility is to our members and society, which is why AARP will measure and continuously improve the clinical performance and efficiency of its health plans," the lobby said.

Insurers and their contracting doctors and hospitals will be pressured to reach out to underserved ethnic and minority populations and to offer services and materials available in multiple languages, AARP said.

And insurers will be required to provide easily understood materials in communicating with their members. "We will help people and their families navigate the choices of competing drugs and medical technologies by establishing simple drug and health product assessment tools," AARP said.

AARP and United currently are partners in offering health plans to supplement traditional Medicare, provide prescription drug coverage in the Medicare Part D program, and to sell coverage to Americans of ages 50 to 64. The new agreement calls for United to offer its market-leading Medicare Advantage plans under the AARP brand name, a step the lobby projects will increase the plans' current enrollment of one million members to three million members in seven years.

Aetna will offer new coverage on behalf of AARP targeting Americans of ages 50 to 64 who often struggle to find affordable coverage if they lose access to job-based health benefits. Officials said for example that Aetna will reduce the "look-back period" insurers use when asking potential customers about prior medical conditions. AARP projects that the Aetna plan will have an enrollment of several hundred thousand Americans seven years from now.

AARP's name will draw enrollees from existing Medicare Advantage plans while attracting new members from the traditional side of Medicare, said a managed care executive. But the executive questioned how widely the AARP plan could be offered if Congress slashes payments in Medicare Advantage. And in the long run AARP will expose itself to criticism from its members as its affiliated plans inevitably deny coverage or dispute the medical necessity of some services, the executive added.

One of the loudest voices in Congress warning about pressures to privatize Medicare is that of Rep. Pete Stark, but the California Democrat said in an interview that he wishes AARP "Godspeed" with its entry if its sticks to its position that Medicare Advantage and fee-for-service rates should be equal. "I'd sure rather be working with them than against them," Stark said.

But a veteran health policy analyst who cautioned that he had not yet seen the details of the plan said that it appears to create "a remarkable conflict of interest" undermining AARP's credibility in lobbying on Medicare issues. "How can you possibly claim that you bring objective views on other Medicare policies when you have a major stake" financially in Medicare Advantage, he said.

In addition, the insurer-affiliations and the money involved appear to make AARP vulnerable to threats by lawmakers that they will go after Medicare Advantage rates if the lobby doesn't agree to support their positions on given issues, the analyst said. "It makes them susceptible to being blackmailed essentially," the analyst said.

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Frank Pallone's Busy, Busy Spring

By John Reichard, CQ HealthBeat Editor

April 20, 2007 -- With a fine spring day in the offing, New Jersey House Democrat Frank Pallone began his remarks to executives at an industry conference Friday morning by joking they all ought to really be outside rather than meeting in a dimly lit conference room.

But given the busy legislative schedule he outlined, the House Energy and Commerce Health Subcommittee chairman may soon find himself repeatedly daydreaming about a soothing outdoor break, especially since the schedule may mean knocking heads with many of the industry's most powerful lobbies.

Pallone emphasized the need to mark up two measures by early summer that would expand coverage of uninsured children and improve drug safety. But the plan puts Pallone and his fellow House Democrats on a collision course with not only America's Health Insurance Plans and the Blue Cross-Blue Shield Association of America, but also possibly with the Biotechnology Industry Association—and perhaps other lobbies as well—in light of the concerns those groups have relating to the bills.

To reauthorize the State Children's Health Insurance Program (SCHIP), Democrats will need to come up with $50 billion over five years to meet their goal of covering millions more uninsured children. In an interview Friday, Pallone said he'd like to have a plan for coming up with the $50 billion in time for his panel's SCHIP mark up.

Pallone said at the American Clinical Lab Association industry conference that he doesn't expect Medicare cuts to the clinical lab sector will be part of that plan. The prime target, he suggested, are payments to the private health plans in the Medicare Advantage program.

But there are growing signs that Democrats will be able to save much less than they hope to that way, which suggests that they'll have to trim Medicare payments to other health care sectors as well to meet their $50 billion goal.

The Bush administration has proposed cutting Medicare payments to hospitals, another possible source of SCHIP funding, although the White House proposed to do so for deficit reduction, not to expand SCHIP. And the Medicare Payment Advisory Commission has recommended payment cuts to home health agencies and skilled nursing facilities, among other sectors.

But Medicare cuts typically occur in the crush of legislative business at the end of the year when they are more difficult to block. Specifying what those cuts are early in the year gives health care sectors plenty of time to mobilize lobbying campaigns to kill them.

Preparing a package of planned cuts in time for the SCHIP markup may prove too difficult—and may not be necessary. An aide to Pallone said Friday that procedurally, the panel doesn't have to come up with a payment plan at the time of the markup.

Pallone and his fellow Democrats also must find a way to come up with another $20 billion or more to prevent cuts in Medicare payments to doctors next year. But Pallone said that won't be part of the SCHIP reauthorization. Measures that have to be reauthorized by October, including SCHIP and a drug safety plan (which also includes user fees for FDA review of marketing applications) take precedence, Pallone said.

Following an April 25 hearing in Pallone's subcommittee highlighting state efforts to cover the uninsured, Pallone said his panel will hold a hearing in early May on easing the market entry of cheaper generic versions of biotech drugs.

Pallone said he may try to include, within his prescription drug safety and user fee plan, a provision that would ease marketing of generic biotech drugs. "We want to have our hearing... and look at it and make a decision."

But even if the delicate matter of negotiating a compromise between the biotech and generic drug industry over the terms of market entry isn't a part of the larger prescription drug safety and user fee package, Pallone and his committee will have their hands full with the latter proposal.

Drug companies are making the argument that new drug safety measures favored by Democrats not only will slow down drug approvals, but also so choke the Food and Drug Administration with paperwork that it would act slower to protect the public against the hazards of marketed drugs.

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From the CQ Newsroom: Senate Republicans Reject Cloture to Proceed to Medicare Drug Price Bill

By Drew Armstrong, CQ Staff

April 18, 2007 -- Senate Republicans successfully blocked Democrats' Medicare drug price negotiation bill Wednesday morning, holding fast against a motion to proceed to consideration of the measure by a vote of 55–42.

Democrats worked for days to find enough support to reach the 60 votes needed to invoke cloture, or limit debate, to proceed to the bill (S 3).

The legislation would remove a prohibition in current law (PL 108-173) that bars the government from negotiating drug prices on behalf of the private plans that administer the Medicare prescription drug benefit.

After the vote, Max Baucus, D-Mont., who managed the bill on the floor, criticized Republican opponents.

"It's beyond me why the Senate would not choose to stand up for seniors," Baucus said in a statement. "Concerns about a bill from the House should not frighten Senators into silence on an issue this important."

Baucus was referring to a tougher House bill (HR 4) that would require the government to negotiate Medicare drug prices. If the Senate bill had passed, the plan was to move it into conference with the House legislation and end up with a stronger measure.

After the failed cloture vote, Republicans were quick to slam Democrats for not offering to work toward consensus on the bill in the closely divided Senate.

"The pattern continues," said Minority Whip Trent Lott, R-Miss. "When are the Democrats and their leadership . . . going to start working with us?"

Democrats were not giving up, however. Ron Wyden, D-Ore., one of the Senate's most vocal proponents of overhauling health care, said bill supporters would be back. "The fight is going to go on after today's vote," he said.

Options for resurrecting the Medicare prescription drug price proposal include attaching it to piece of moving legislation, or modifying the current version with more specific negotiating authority limited to just a few types of drugs.

Six Republicans voted to invoke cloture on the motion to proceed to the bill: Norm Coleman of Minnesota, Susan Collins of Maine, Chuck Hagel of Nebraska, Gordon H. Smith of Oregon, Olympia J. Snowe of Maine, and Arlen Specter of Pennsylvania.

Matthew Spieler contributed to this report.

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Gonzalez, Gingrey Introduce Health IT Bill

By CQ Staff

April 20, 2007 -- Reps. Charlie Gonzalez, D-Texas, and Phil Gingrey, R-Ga., have introduced legislation aimed at helping small physician practices adopt health information technology.

The measure (HR 1952) would offer grants, loans, and tax incentives to help offset the costs of implementing health information technology, or health IT, the lawmakers said in a news release.

"Just as government investment has catalyzed research in other industries, the incentives provided in this legislation will spark adoption of these technologies, resulting in vast public health benefits," Gonzalez said in a news release.

Gingrey, a physician, said that by providing financial incentives, "this bill will get lifesaving technology into physician offices and into the lives of American patients."

The measure builds on a House Small Business subcommittee hearing from last month where financial incentives were discussed as a way to help more physicians adopt health IT.

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Report: Top Medicare Part D Drug Prices on the Rise

By Mary Agnes Carey, CQ HealthBeat Associate Editor

April 18, 2007 -- As Senate Republicans defeated a proposal (S 3) to allow the government to negotiate Medicare prescription drug prices, a leading consumer group said Wednesday that prices are climbing rapidly for some of the drugs beneficiaries use most often.

Study findings from Families USA found that the median Part D drug price increased 9.2 percent last year for the top 15 drugs prescribed to seniors.

For instance, from April 2006 to April 2007, a year's supply of Celebrex, an anti-inflammatory drug, rose from $946.44 to $1033.32, an increase of 9.2 percent, while the price for Fosamax, used to treat osteoporosis, climbed from $727.92 to $806.16, or 10.7 percent. And Lexapro, a drug used to treat depression, rose from $706.20 to $812.16, or 15 percent, according to the report.

"Contrary to promises made last year by the administration, Medicare Part D drug prices skyrocketed last year," Families USA Executive Director Ron Pollack said in a news release. "Those fast-rising prices are making drugs increasingly unaffordable for seniors and are fleecing America's taxpayers."

The report, released at Wednesday's news conference, examined changes in the lowest drug prices charged to seniors among plans offered by the five largest insurers: United Healthcare, Humana, WellPoint-Unicare, Member Health, and WellCare. Combined, the groups enrolled almost two-thirds of all Part D beneficiaries. "Since these plans have the largest enrollment, they are in the best position, among Part D plans, to secure optimal prices," Families USA said in a news release.

The findings are based on prices that insurers reported to the Centers for Medicare and Medicaid Services (CMS). The consumer group compared the lowest available Part D price for each drug in April 2006 with the lowest available price for the same drug in April 2007.

CMS Spokesman Jeff Nelligan said the report "neglects the generous cost-sharing assistance provided by the Part D benefit and contradicts other analyses which suggest that Part D has insulated Medicare beneficiaries from real increases in drug prices. The fact is, 90 percent of beneficiaries are enrolled in Part D plans with flat co-pays that are locked in for the year. "

Nelligan added that "prices change as a result of market fluctuations—just as they do in Federal employees' health plans, Medigap coverage, and every other health insurance plan in which beneficiaries are required to enroll for a year or even longer."

The Families USA report was released just hours after Senate Republicans successfully blocked Democrats' efforts to pass legislation that would have allowed the Secretary of Health and Human Services to negotiate drug prices on behalf of Medicare beneficiaries.
Sen. Debbie Stabenow, D-Mich., said she and other proponents of the measure would try again.

"We're going to keep fighting and keep bringing this bill back until we can overcome the Republican-slash-industry filibuster that has been going on in the United States Senate," Stabenow said at the news conference. "We are gaining votes every time we bring this up."

Drew Armstrong contributed to this story.

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Study Finds Wide Variation in Medicaid Programs

By Mary Agnes Carey, CQ HealthBeat Associate Editor

April 18, 2007 -- State Medicaid programs vary widely in terms of eligibility requirements, benefits, and performance, according to a report released Wednesday by the group Public Citizen.

The 10 worst programs—ranked in order from 50 to 41—are Mississippi, Texas, Idaho, Oklahoma, South Dakota, Indiana, South Carolina, Colorado, Alabama, and Missouri, the report concluded.

The top states—ranked from 1 to 10—are Massachusetts, Nebraska, Vermont, Alaska, Wisconsin, Rhode Island, Minnesota, New York, Washington, and New Hampshire.

The report, which Public Citizen said is the most extensive analysis and ranking of state Medicaid programs, ranked states on the extent to which they surpass federal coverage mandates, and then divided the scores into four categories: eligibility, scope of services, quality of care, and provider reimbursement. The report updates a 1987 Public Citizen analysis and uses 2004 and 2005 Medicaid data compiled by the Kaiser Family Foundation's Commission on Medicaid and the Uninsured and other data gathered by Public Citizen.

Sidney Wolfe, a co-author of the report and director of Public Citizen's Health Research Group, said it is "inexcusable" to have such wide variances between state Medicaid programs and Congress should act to correct inequities.

"Unless this gets done the program will keep getting worse and worse . . . disparities will worsen," he said during a telephone briefing with reporters.

Dennis Smith, director of the Centers for Medicare and Medicaid Services' Center for Medicaid and State Operations, said Wednesday the report "misses the fundamental nature of Medicaid and 40-year history that states have authority to administer program within [a] federal framework." Smith also said that all of the Medicaid changes included within a budget-savings bill (PL 109-171) that became law last year "have been fully realized" and once implemented will allow states to "create programs that are more aligned with today's Medicaid populations and the health care environment."

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