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April 24, 2006

Washington Health Policy Week in Review Archive e6534dcf-7109-45c5-a1c1-edf05c169aa1

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Administration Says 30 Million Beneficiaries Receive Medicare Drug Coverage

APRIL 20, 2006 -- More than 30 million Medicare beneficiaries are receiving drug coverage, exceeding administration projections with less than a month to go before the May 15 enrollment deadline, officials said Thursday.

If current enrollment trends continue—1.7 million beneficiaries enrolled in stand-alone drug plans within the last month—"we have a shot" at enrolling 90 percent of the 43 million Medicare beneficiaries eligible for drug coverage, Department of Health and Human Services Secretary Michael O. Leavitt told reporters.

Leavitt and Centers for Medicare and Medicaid Services Administrator Mark B. McClellan said there were no plans to extend the May 15 deadline, though 47 senators have asked Senate Majority Leader Bill Frist, R-Tenn., to bring up legislation when the Senate returns next week that would do just that. Seniors who enroll beyond that point face a financial penalty.

"The deadline is a very important part of this. It helps seniors focus on this, and it's working," Leavitt said. McClellan said Medicare actuaries have projected that 2 million fewer beneficiaries would sign up for the benefit by May if the deadline were extended.

About 8 million Medicare beneficiaries have enrolled in stand-alone prescription drug plans and about 1 million have enrolled with Medicare Advantage health plans that offer prescription drug coverage.

The remaining beneficiaries in the drug plan either were Medicaid beneficiaries automatically enrolled into the Medicare drug plan as a "dual eligible," were rolled into the drug benefit as part of their Medicare Advantage plan, are in a former employer's retiree plan that receives the Medicare subsidy, or receive federal retiree coverage, according to CMS figures.

And when prescription drug coverage from other sources, such as the nearly 6 million Medicare beneficiaries who receive coverage through the Department of Veterans Affairs or beneficiaries who are still working and receive drug coverage through their employer, the total number of Medicare beneficiaries with drug coverage is about 36 million, Leavitt said.

Critics of the program said the administration's report proves it is not doing as well as hoped.

Robert M. Hayes, president of the Medicare Rights Center, said Thursday's announcement "reveals that less than 20 percent of people with Medicare have new drug coverage" and that more than 80 percent of the poorest seniors have not been enrolled. Just 1.6 million of the 8.2 million Americans eligible for the low-income subsidy have been approved, Hayes said.

"Any honest analysis will lead to reform and improvement: there should be a straightforward, comprehensive, and affordable Medicare drug benefit. We do not have that now," he said.

Rep. Pete Stark, D-Calif., said the drug enrollment numbers show that the benefit is failing. In a statement, Stark also said that the administration has lowered its enrollment estimates from December 2003 when it projected that 40.7 million Medicare beneficiaries would enroll in the benefit.

"Despite President Bush's cross-country dog and pony show, millions of seniors have yet to sign up for a prescription drug plan," said Stark, who is advocating a one-time extension of the May 15 enrollment deadline.

Leavitt said the toughest groups of beneficiaries to reach are low-income individuals who could qualify for financial subsidies under the benefit, adding that some seniors who have not enrolled mistakenly believe the drug benefit is for low-income seniors only.

Another group of beneficiaries who have not enrolled are relatively healthy, use few drugs, and think they do not need coverage. "Those are really the people you have to worry about," said Dan Mendelson, president of Avalere Health, a health care consulting firm. Some seniors in that group, he said, may not realize there is a drug benefit or may have determined that it is not worth the cost.

Leavitt encouraged seniors with few drug expenses to enroll in the lowest-cost plan, a step that would help them avoid any late enrollment penalties and have coverage if their drug costs increased later.

Leavitt, McClellan, and a variety of seniors groups, such as AARP, said they will continue to conduct enrollment events all over the country in an effort to persuade beneficiaries to sign up for the benefit before the May 15 deadline.

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Brailer Resigns as Administration Point Man for Health Care IT

APRIL 20, 2006 -- In an announcement that surprised Hill aides and other health policy analysts, the Department of Health and Human Services (HHS) confirmed Thursday that National Coordinator for Health Information Technology David J. Brailer has resigned.

A statement by HHS Secretary Michael O. Leavitt gave no reason for the resignation, and Brailer himself could not be reached for comment. But Brailer told the Financial Times on Thursday that "it's been a huge personal agony" to leave his family in San Francisco each week to commute to Washington.

Leavitt said he accepted the resignation "with regret," adding that "over the past two years, David has made significant progress in advancing the president's health IT agenda and laying the building blocks for future progress."

Brailer tendered his resignation with no successor in place. Leavitt said Brailer will continue to serve as a consultant to HHS on health care IT. In addition, Leavitt said Brailer has agreed to serve as a vice chairman of the American Health Information Community, the public–private advisory group charged with making recommendations to Leavitt on IT standards.

Leavitt said the work of the Office of the National Coordinator will continue under the four directors below Brailer on the organization chart.

During his tenure, Brailer had to struggle to retain funding for his office at a time when the administration promoted health care IT as a top priority.

Brailer generally drew good marks on the Hill for his efforts, though Rep. Pete Stark, D-Calif., has been strongly critical of the administration's failure to promote widespread use of an electronic health record system developed by the Department of Veterans Affairs.

"He's really shaped the field," said Michael Zamore, policy adviser to Rep. Patrick J. Kennedy, D-R.I., who has championed IT legislation in the House. "Brailer has coalesced government and private sector activities in the field. There's more of a road map than there was before."

Zamore added that "there's no particularly good time to leave" given the various pending administration initiatives to move ahead on IT. "I'm sure it's exhausting to operate on a shoestring and fight internal battles to coordinate federal efforts on IT."

The eHealth Initiative, an industry group, praised Brailer for effectively communicating the importance of information technology. "Much groundwork has been laid through his leadership, the creation of the office, and the many contracts that were issued to support the development and adoption of standards for interoperability," said the group's CEO, Janet Marchibroda.

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Can Tommy Thompson Do for Health Care What He Did for Welfare?

APRIL 17, 2006 -- Tommy Thompson for president? The former Department of Health and Human Services (HHS) secretary doesn't figure in the early speculation about which Republicans will run for president in 2008. But ask Thompson directly and he says he is "absolutely" considering the possibility.

Thompson said after an appearance Monday with former HHS Secretary Donna Shalala that he wants to get his ideas on health care out in front of the country and indicated that a run for the presidency is a way to do it.

Most of the speculation about Thompson's political future centers on whether he will run again for governor of Wisconsin, a post he held for 14 years before becoming HHS secretary in 2001. He's expected to make his mind up by May 15 on whether he'll run for that position; after that decision is made, Thompson said he'll decide whether to make a run for the White House.

A run by the 63-year-old Thompson at this stage of his 38-year political career might sound far-fetched given the organizational and fundraising demands. But signaling that he has wider ambitions than running for governor yet again might help him reach a wider audience on health care issues, a former aide said.

Regardless of whether Thompson ultimately decides to run for higher office, "I think he wants to try to influence policy and this is the best way to do it," the aide said.

Thompson's appearance Monday illustrated the attributes that could build the case for a White House bid—an independent streak, a pragmatic bent, an ability to form working relationships with Democrats, and an itch to tackle big social problems.

Having worked with Democrats to adopt welfare revisions in Wisconsin that helped pave the way for a national overhaul of the welfare system, Thompson displayed similar passion Monday about tackling health care. He appeared at an event in Washington, D.C., that was part of an ongoing series of forums moderated by former Louisiana Democratic Sen. John Breaux on finding common political ground on health care.

Despite skepticism on the part of Shalala that health care would decide the 2008 presidential election, Thompson insisted that health care would dominate that campaign, saying it has been a paramount concern of audiences he's talked to over the past year in delivering some 100 speeches.

Rattling off statistics about various problems with the health care system, Thompson chided Congress for failing to take on health care and took a swipe at the White House as well.

The growing uninsured population is "a real emergency" Congress isn't addressing, Thompson said, noting predictions that the size of that population will climb to 54 million in the next five or six years. According to the Census Bureau, 45.8 million U.S. residents currently do not have health insurance.

Thompson said he sought to make health care a leading priority of President Bush's second term but was rebuffed; the White House "palace guard," Thompson said sarcastically, told him Social Security would be the leading domestic priority instead.

Breaux offered the possibility that the public–private approach taken by Congress to offering Medicare prescription drug benefits might be a model for covering the uninsured and Thompson agreed.

Last week marked a "tipping point" on the Medicare drug issue, Thompson said, noting new poll findings showing that the public is warming up to the benefit and that favorable press coverage is starting to emerge as well.

Thompson said the architects of the Medicare drug law (PL 108-173) thought its provisions would work effectively if they attracted at least three private plans to deliver the benefit nationally. Instead they got 10, Thompson said, helping to bring down the costs of the benefit.

That shows a strong interest on the part of insurers in bidding for government health care business, he suggested. To cover the uninsured, each state should pool together residents without coverage and invite insurers to make bids on coverage, he said.

"The private sector really wants to bid on this," Thompson said. As a result, there would be low bids and affordable coverage, he added. Pools would have to be tied to reinsurance mechanisms limiting the losses of insurers on providing coverage, he added. A reinsurance mechanism also would help reverse the decline in the percentage of employers offering coverage, he added.

The private sector would have to be given the freedom to develop types of coverage suited to the particular groups the government is trying to cover, he said.

Thompson praised the new law in Massachusetts requiring the uninsured to obtain coverage. "I think Massachusetts is sort of the tipping point," he said. "I think other states are going to follow" the lead of Massachusetts.

Thompson called for tax credits to help the uninsured purchase insurance policies, saying the Bush administration has proposed such credits.

Shalala agreed with Thompson that an individual mandate with a statewide pool of the uninsured and subsidies to buy coverage could work. But having the statewide pool would be essential for keeping coverage affordable, she emphasized.

Neither Thompson nor Shalala thought the nation would be ready to adopt an individual mandate within the next few years. Shalala suggested that experience developed through widespread state experimentation with widening coverage could help develop a consensus leading to an eventual national solution. The federal government should encourage those state experiments, she said.

Shalala agreed with Thompson that having private plans deliver benefits is what is politically feasible, but said the jury is out on whether that approach saves money. Right now private plans cost Medicare more, not less, she said.

She warned that plans might begin dropping coverage of certain drugs over time to save money. "The test is not today—the test is two years from now," she said.

Breaux concluded the event by asking what Thompson and Shalala would do first if they could dictate how Congress addresses the health care issue. Thompson said adopting electronic medical records would be his first move. If the nation decided it wanted to have electronic health records for everyone in two years, "we could have it," Thompson said. Shalala said she would start with experiments of the kind occurring in Massachusetts but voiced concern that subsidies would harm care given to the poorest residents, including through charity care hospitals. State experiments should not come at the expense of care given to the poor, she said.

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CMS Says It Doesn't Know When Guidance Will Be Ready on Documenting Medicaid Eligibility

APRIL 17, 2006 -- A little understood provision of the Deficit Reduction Act (PL 109-171) requires that U.S. citizens with Medicaid coverage document their eligibility for the program the next time they renew their enrollment, according to the draft version of a federal advisory to be issued to the states.

Critics of the provision predict that if left unchanged, it would cause many current Medicaid beneficiaries to lose their coverage.

Leighton Ku, an analyst with the liberal Center on Budget and Policy Priorities, said Monday there is a widespread misconception that the provision requiring documentation of citizenship and identity does not apply to existing beneficiaries. But since beneficiaries must re-certify their eligibility at least once a year and in many cases every six months, it will affect current beneficiaries as well at renewal time, he noted.

In a story Sunday calling attention to the impact of the requirement on current beneficiaries, the New York Times noted an estimate by the center that up to 5 million of the nation's 50 million Medicaid beneficiaries could lose coverage.

House Energy and Commerce Health Subcommittee Chairman Nathan Deal and Rep. Charlie Norwood, Republicans from Georgia, both championed the documentation requirements as a way to keep illegal immigrants from getting Medicaid coverage.

But the draft "guidance" letter prepared by the Centers for Medicare and Medicaid Services (CMS) for state Medicaid directors emphasizes that, effective July 1, "states must obtain documents establishing identity and citizenship from all Medicaid applicants." For current Medicaid beneficiaries, "states also must obtain documents establishing identity and citizenship at the time of the first redetermination of eligibility that occurs after July 1, 2006," the letter says.

Presentation of documentation should ordinarily be a one-time activity, the letter adds.

Critics of the provision say that in many cases Medicaid applicants or beneficiaries legitimately entitled to enroll in the program do not have birth certificates establishing citizenship. They note for example that elderly African Americans may have been born outside of hospitals and never had birth certificates, and that certain American Indians might not have such documentation. Similarly, applicants or beneficiaries may not have driver's licenses.

Although there are provisions for alternate forms of documentation, CMS has not yet clarified what those are, and the July 1 deadline is fast approaching, Ku said.

A CMS spokeswoman said the agency doesn't yet know when the final version of the guidance letter will be mailed to the states. The agency aims to apply the documentation requirement in a way that ensures deserving beneficiaries do not lose their coverage, she said. But the spokeswoman added that the law is "fairly prescriptive."

The draft letter notes that under the law, the Department of Health and Human Services (HHS) secretary must conduct an "outreach" campaign to notify beneficiaries and applicants of the documentation requirements. The letter says HHS has determined that states are in the best position to carry out those educational efforts.

To help, HHS will conduct teleconferences to train state agencies in conducting outreach programs and provide them with sample documents to send to Medicaid applicants and recipients, the letter adds. Those activities will begin in mid-April, according to the letter, but the spokeswoman said they have not yet begun.

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Instant Message from MedPAC: Don't Delay Improvements in Hospital Payment Accuracy

APRIL 21, 2006 -- Reacting swiftly to signals that Medicare might phase in key parts of a proposal to improve the accuracy of inpatient hospital payments, the Medicare Payment Advisory Commission wasted no time commenting on the controversial plan. Six days before the proposal was even set to be published in the Federal Register—and almost eight weeks before the June 12 deadline for comments—MedPAC sent a letter to federal officials saying the improvements should all begin this fall.

"The hospitals that treat cases that are now relatively underpaid should receive an increase in payments while hospitals treating cases that are currently overpaid should receive a decrease in payments," MedPAC Chairman Glenn Hackbarth said in the April 19 letter to Mark B. McClellan, administrator of the Centers for Medicare and Medicaid Services (CMS).

Hackbarth emphasized that CMS should not wait until fiscal 2008 to adjust hospital payments for the severity of illness of the patient involved, the time frame proposed by CMS. The commission is anxious to put an end to hospital "cherry picking"—or focusing on treatment of the healthiest patients to maximize profits—and says severity adjustments and other accuracy improvements should start Oct. 1, 2006, the start of fiscal 2007, not Oct. 1, 2007, the start of fiscal 2008, as CMS has proposed.

"Concerns about giving hospitals time to adapt to the changes may be better managed by implementing all" the payment changes recommended by MedPAC in 2007 "and then giving hospitals a transition period," Hackbarth advised.

"Clearly, current payment policies benefit hospitals that focus on less severely ill patients," he wrote.

In addition to severity adjustments, CMS has proposed basing inpatient rates on a hospital's actual costs rather than on what it charges for a patient with a particular type of diagnosis. Those changes would start Oct. 1 under the CMS proposal, a schedule MedPAC endorses.

But Hackbarth said, "it is important to correct for differences in patients' severity concurrently with the corrections for charging distortions."

In total, MedPAC has recommended four major changes to the inpatient payment method, all of which it says should start this fall. CMS has proposed making three of the four recommended changes, but not all at the same time.

Adhering to all four of the recommendations would change payments for most categories of hospitals, such as urban, rural, and major teaching facilities, by only 1 percent or 2 percent, the MedPAC letter said.

The exception would be physician-owned heart hospitals, whose payments would drop 9.6 percent, and doctor-owned orthopedic hospitals, whose payments would fall 8.2 percent, according to the letter. "These hospitals have specialized in types of patients for which Medicare tends to overpay and should receive a significant reduction in their inpatient payments," Hackbarth said.

MedPAC said it would comment more extensively on the inpatient payment proposal "at a later date," adding that it wanted to provide some "initial reactions."

The American Hospital Association has voiced concerns about even the CMS timetable for implementation.

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Owning Up to the 'M' Word in Massachusetts

APRIL 19, 2006 -- The "individual mandate" requiring uninsured residents of Massachusetts to obtain health coverage is widely perceived as the key to the political breakthrough that led the state last week to adopt a plan for virtually universal health care coverage. But the truth is that an employer mandate also is a key part of the mix, state policymakers said at a Washington forum Tuesday.

Massachusetts House Speaker Salvatore F. DiMasi, a Democrat, told the forum that come Monday or Tuesday of next week, Massachusetts lawmakers intend to vote overwhelmingly to override Republican Gov. Mitt Romney's veto of the law's employer mandate. Under the mandate, employers with 11 or more full-time workers would be required to pay $295 per year for each worker without coverage.

Boosters of the Massachusetts law note that its mandate is far milder than employer mandates that doomed past attempts to provide universal or near universal coverage in the U.S.

And universal coverage just won't happen without some form of mandate, said another speaker at the event, John McDonough, executive director of Health Care for All, a Massachusetts advocacy group funded by various foundations.

The liberal advocacy group, Families USA, sponsored the event.

In the debate over the Massachusetts law, the "default" position of advocates of either type of mandate was to do nothing at all if their own approach did not prevail, McDonough recalled. But he said DiMasi helped save the day by saying, "Wait a minute, let's do both."

Critics of the individual mandate who thought it was unfair to penalize individuals without coverage rallied around the plan once it was revised to also penalize employers who fail to provide coverage, McDonough said.

Had employers not been also asked to contribute, a backlash against the individual mandate would have doomed the plan politically, DiMasi said.

Fees collected through the employer mandate would go to help pay for subsidies to low-income residents to buy coverage. Romney has said there is enough money to make the plan work without the penalty on employers.

If individual mandates by themselves are non-starters politically, Urban Institute researcher John Holohan emphasized that that is definitely the case for employer mandates alone.

Veterans of past campaigns to cover the uninsured have failed repeatedly with that approach and in Massachusetts wanted to at least fail in a different way by also trying an individual mandate, he said.

DiMasi said the key politically for other states that want to follow his state's lead is not only having both mandates but also avoiding new taxes. Holohan opined, however, that taxes in the state may have to be raised at some point to assure adequate subsidies for low-income residents to buy coverage, but only modestly.

Phil Edmondson of Health Care Today, a coalition of religious, consumer, provider, and union groups in Massachusetts seeking wider coverage, said businesses were willing to go along with the plan because they were tired of paying the costs of caring for the uninsured through cost-shifting. Hospitals charge higher rates to employer health plans because of costly emergency room care given to uninsured patients.

Those rates should come down if the uninsured have coverage and get primary care at the doctor's office instead of waiting until their medical condition gets bad enough to require costly emergency room care, boosters of universal coverage contend.

Although the relatively low penalty Massachusetts employers must pay for failing to provide coverage helped the plan get through the Massachusetts Legislature, some analysts wonder whether it will lead employers to drop health coverage. One attendee at the event asked why employers wouldn't just pay the penalty to avoid the much higher costs of providing health coverage.

Edmondson responded that employers could avoid coverage costs completely now by dropping coverage altogether but offer it to attract good employees—a dynamic he suggested will remain under the law.

Speakers at the event were all boosters of the law and of its employer mandate. Romney will weigh in next week in Washington at a "Policy Insiders" breakfast April 25 sponsored by the U.S. Chamber of Commerce.

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