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April 28, 2008

Washington Health Policy Week in Review Archive 7e6d4a7b-e100-4019-8d4e-661e4c5706e5

Newsletter Article


Administration Eyes Concessions on Medicaid Regs, Hill Sources Say

By John Reichard, CQ HealthBeat Editor

April 24, 2008 -- On the heels of House passage of a measure that would suspend seven cost-cutting Medicaid regulations until next year, the Bush administration is mulling a strategy that would accept a limited moratorium on two of them, Capitol Hill sources say.

Kerry Weems, acting administrator of the Centers for Medicare and Medicaid Services, acknowledged the possibility that the administration might be open to discussions about changes in individual regulations. "We're always willing to talk, and if that looked like a fruitful route we might be willing to do that," Weems told reporters after a speech Thursday to the National Conference of State Legislatures.

Weems declined to discuss which of the seven regulations the administration might be willing to change. In his speech, he stoutly defended all seven as essential to protecting the financial integrity of a program that can ill afford wasteful spending in light of the overwhelming financial challenges it faces with the retirement of the baby boomer population.

But according to Capitol Hill sources, one of the regulations deals with ending Medicaid payments for graduate medical education and the other addresses "intergovernmental transfer" payments, which the administration and outside analysts say states have used to draw down federal Medicaid dollars to which they are not entitled.

Hospitals have been pressuring lawmakers to place a moratorium on the graduate medical education regulation. The intergovernmental payments are extremely sensitive politically because they in part have funded safety net programs for poor patients. Many reports by the Government Accountability Office and the inspector general of the Health and Human Services Department say these "IGT" payments are tantamount to fraud because they falsely suggest that they go to certain health care facilities which in fact do not get to keep them.

The House passed the legislation (HR 5613) by a vote of 349–62 on April 23. It would place a moratorium on all seven regulations until March 31, 2009. Under the strategy the administration is considering, moratoria on the two regulations would extend until the end of August while the other five regulations would go into effect as scheduled.

The limited moratoria would give lawmakers time to try to address the policy issues underlying the two regulations. It's those two regulations that are driving the votes on Capitol Hill, a congressional aide said. If lawmakers were unable to come up with a policy solution, the moratoria would continue through March 31, 2009.

The Senate Republican leadership is circulating a letter that defends the regulations as necessary to ensure the financial integrity of Medicaid, and urges rejection of the House measure. If the draft letter attracts enough signatures to show supporters of the House bill that they couldn't override a veto in the Senate, the administration will offer the limited moratorium strategy, the congressional aide said.

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Bill to Block Medicaid Regulations Readied for Senate Action

By Drew Armstrong, CQ Staff

April 25, 2008 -- A House-passed bill to block seven Bush administration Medicaid regulations has been fast-tracked for Senate floor action next week, but supporters will have to deal with mounting GOP opposition to the bill.

Senate Majority Leader Harry Reid, D-Nev., on Thursday put the legislation (HR 5613) directly on the Senate floor calendar through the "Rule 14" parliamentary procedure, bypassing the Finance Committee, which has jurisdiction over Medicaid.

An aide to Finance Chairman Max Baucus, D-Mont., said Friday that the chairman had agreed with Reid's maneuver to expedite Senate consideration of the bill.

Regan Lachapelle, a spokeswoman Reid, said the majority leader and Baucus were still working out final details on the legislation.

The House passed the bill two days ago by 349–62, more than the two-thirds majority needed override a veto already threatened by the Bush administration.

It remains to be seen whether supporters have enough votes in the Senate, however. Charles E. Grassley, R-Iowa, top Republican on the Finance Committee, has argued that the regulations should be implemented. Minority Leader Mitch McConnell, R-Ky., supports Grassley's position, which means Democrats could have their work cut out for them luring away enough Republicans to override a veto.

During Bush's two terms as president, Congress has overridden only one of his vetoes. That action came last year on a popular water resources bill (HR 1495).

The seven Medicaid regulations that the bill would block are designed to cut down on federal Medicaid dollars going to the states. The House bill would block their implementation until March 31, 2009.

The federal government now pays 57 percent of the Medicaid's costs—an estimated $204 billion in fiscal 2008. There has long been tension over who should bear more of the burden.

The administration contends that states are unfairly gaming the system to wring extra dollars out of the federal government and, in some cases, using the money for non-Medicaid purposes.

On April 23, Michael O. Leavitt, the secretary of Health and Human Services, said he was "quite confident there will be significant resistance in the Senate" to the measure.

Governors say the states have addressed the problems and the new rules would unfairly deprive them of funds.

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Change Health Care Fundamentally, Experts Say

By Emily Ethridge, CQ Staff

April 21, 2008 -- The health care delivery system needs sweeping changes to improve its quality and efficiency, experts polled in a Commonwealth Fund survey said.

The current system for providing care access, coordinating treatment by hospitals and other types of providers, delivering health care services, and sharing information does not provide patients with the highest-quality treatment, respondents said. None of the 1,087 health policy opinion leaders surveyed said no changes to the health care delivery system were needed and just 8 percent said only modest fixes were necessary. However, 89 percent of respondents called for fundamental and systematic changes.

"The majority of health care opinion leaders believe that our delivery system is broken," said Commonwealth Fund President Karen Davis.

Improving primary care, encouraging care coordination, and advancing care management for patients with complex medical conditions were cited as most important factors for improving the health care system.

In addition, new payment systems for doctors and other providers would improve the delivery system, seven of 10 surveyed said. The typical fee-for-service scheme encourages doctors to provide more services instead of offering higher-quality solutions, they said.

Nearly eight of 10 respondents said it was important or very important to reform current payment schemes. Eighty-four percent of those surveyed said primary care providers should receive supplemental payments for offering comprehensive, coordinated care. The same percentage also supported providing incentives for avoiding unnecessary hospitalizations. Most respondents also supported capitation, in which a provider is paid according to the number of patients he treats instead of the number of services he performs.

Sixty-three percent of those surveyed called for the government to provide infrastructure support to areas lacking organized health care delivery systems. Most of those respondents said information technology services should be prioritized for government-funded programs.

Half of the respondents said retail health clinics add to the organizational split, although 75 percent said those clinics are more convenient for patients and many said they provide services at a lower cost.

The Commonwealth Fund surveyed health policy opinion leaders in academic and research organizations, health care delivery, business and insurance industry, and government and advocacy groups.

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Presidential Candidates' Health Care Advisors Face Off on Plans' Cost, Coverage

By Reed Cooley, CQ Staff

April 25, 2008 -- Which comes first, cost or coverage? Health care advisors representing the Clinton, McCain, and Obama campaigns all offered different approaches at a recent National Federation of Independent Business forum.

Doug Holtz-Eakin, policy advisor for the McCain campaign, expressed concern that while a comprehensive effort to extend insurance coverage to all Americans would pump more money into the system and spread risk, it would only delay the problems of failing to address the issue of cost.

"Rising spending on health care has been the biggest threat to the system . . . . It is the reason we find employers dropping coverage," he said at Thursday's event.

But the Clinton and Obama camps seem more focused on the coverage angle. "It's really hard to get a handle on cost without addressing coverage," said Katherine Hayes of Clinton's campaign.

Obama advisor Kavita Patel agreed. "Our plans are very similar," she said, introducing another of the forum's themes—the many parallels between the health care proposals of the two remaining Democratic hopefuls.

Both senators have highlighted the need for choice, that if you like what you have you keep it, even in the new system; both have emphasized the importance of comparative effectiveness and quality measures; and both would support some form of a mandate to ensure that all Americans are insured, although the nature of the mandate is the root of the major difference between the plans.

Clinton would require all individuals not covered by federal or employer programs to purchase health insurance to prevent people who can afford insurance from opting out and distorting premium levels.

"You can't open up the door [to tell] insurance companies that they have to take everybody . . . if some people can wait until they're sick to enter the health care system," said Hayes.

Obama would extend the mandate to employers, giving individuals the choice of whether or not to buy a private plan. Clinton's plan also includes an employer mandate, but with an exemption for small businesses. She has not specified what will constitute a small business, or at what level of income federal programs will kick in for individuals.

Hayes believes the New York senator has intentionally left out these details in order that they might be part of the debate after the election. "There's not a desire to be intentionally vague," she said.

The lynchpin of the McCain plan, on the other hand, has been a tax credit of up to $5,000 for all Americans covered by a private insurance plan whether individually or through their employer.

According to Holtz-Eakin this both allows for easier individual access and covers the $4,200 average tax liability for employer-based coverage.

The widest discrepancies at Thursday's meeting over what each plan would cost.

Clinton has estimated that her plan will cost $110 billion a year, to be paid for by savings from system modernization, bringing all eligible beneficiaries into Medicaid and Medicare, and rolling back the Bush tax cuts for individuals with incomes greater than $250,000 a year.

Obama's plan will cost $50–60 billion a year, and McCain's tax credit plan is budget neutral, according to their respective advisors.

"I don't think anyone has done an independent estimate," said Hayes.

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Special Needs Plans Push to Get Moratorium Lifted

By Mary Agnes Carey, CQ HealthBeat Associate Editor

April 24, 2008 -- Facing criticism that they have not yet proven their worth in the Medicare prescription drug program, sponsors of so-called special needs plans said Thursday they are willing to give Congress more data to show how they provide additional services to beneficiaries with severe chronic medical conditions.

"I don't think you can set the bar high enough for us," John Mach, chief executive officer of Evercare, a special needs plan based in Minneapolis, said at a Capitol Hill briefing. Robb Cohen, chief government affairs officer for XL Health, based in Baltimore, concurred. "The industry at large absolutely supports that requirement," he said.

Medicare special needs plans were added to the private health plan side of Medicare under the 2003 Medicare overhaul law (PL 108-173) and account for much of the surge in overall Medicare Advantage enrollment since then. Created to improve the quality and efficiency of care for Medicare's sickest and poorest enrollees, the plans haven't convinced some policy analysts that they are developing real expertise in managing care for Medicare's neediest enrollees in spite of the higher payment rates they receive.

In Medicare legislation (S 2499) President Bush signed into law in December, the plans, also known as SNPs, face a moratorium. The agreement bars the plans from expanding their service areas through Dec. 31, 2009, and prevents new special needs plans from entering the program until that time. As of 2007, more than 470 SNPs were operating in the Medicare program, serving more than one million enrollees, and more than 760 SNPs will be available in 2008, according to the Centers for Medicare and Medicaid Services. Proponents of special needs plans are hoping to get those restrictions lifted in Medicare legislation now being developed on Capitol Hill.

The plans serve "dual eligibles"—Medicare beneficiaries who qualify for both Medicare and Medicaid—Medicare beneficiaries with severe or disabling chronic conditions, and Medicare beneficiaries who live in nursing homes and other long-term care settings. Additional services the plans provide include dental and vision and benefits, reduced cost-sharing for prescription drugs, tailored case management, and other specialized services, according to America's Health Insurance Plans, a trade group representing health insurers.

At its December meeting, the Medicare Payment Advisory Commission approved several recommendations regarding SNPs, including that Congress extend the authority to limit SNP enrollment, now set to expire in December 2008, and that Congress should require the secretary of the Department of Health and Human Services to establish additional tailored performance measures for the plans and evaluate their performance on those measures every three years.

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Study: Premiums Increased in the Individual Market, Older Policyholders Pay More

By Miriam Straus, CQ Staff

April 25, 2008 -- The average premium for individual health insurance increased by 17.8 percent between 2002 and 2005, according to a recent study by the Agency for Healthcare Research and Quality (AHRQ).

About 12 million Americans were covered by individual health insurance in 2005, said the authors of the study. They noted that individual health, or non-group, insurance is the primary source of coverage for people who are not eligible for employer-based or public health insurance.

The researchers found that in the individual market, the average premium for family policies increased 25.3 percent over the three-year period, from $4,442 to $5,568. The authors said that the increase in average premiums for single policies was not statistically significant, and that costs are adjusted for inflation.

In both 2002 and 2007, family policies constituted 30 percent of the individual insurance market, and single policies accounted for the remaining 70 percent, the authors said.

Older policyholders in the individual market paid higher premiums, the study found. In 2005, single policyholders aged 55–64 years paid an average premium of $4,288, while their counterparts under 40 paid an average premium of $1,580.

Employer-based health insurance increased by 34.4 during the period of study, the authors said, with the average out-of-pocket premium for such coverage rose from $1,231 to $1,655.

The authors noted that the study did not control for differences in benefits between individual and employer-based coverage. "For example, percentage of total expenditures paid out of pocket is higher among people with individual coverage than people with employer-sponsored coverage," they wrote.

In 2005, 174 million Americans were covered by employer-based health insurance at some point during the year, the authors said.

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