By Sara Lubbes, CQ Staff

April 4, 2008 -- As health care costs rise across the country, members of Congress are struggling with whether the government should force the health care industry to test the outcomes of different therapies for the same condition against each other to see what method really does work best for patients.

But at a forum on Friday sponsored by the Alliance for Health Reform, private health care professionals and industry academics said that they, too, believe that so-called comparative effectiveness is the best way to allow providers and patients to avoid ineffective or wasteful treatments and to make sure people get the best care.

However, the experts disagreed whether insurance companies should be allowed to base their health care coverage on the effectiveness of one drug compared to another.

"Comparative effectiveness should not be used to deny coverage for a safe and effective treatment," said David Nexon, a spokesman for the medical device industry group Advanced Medical Technology Association (AdvaMed) and former health advisor to Edward M. Kennedy, D-Mass.

"Making blanket coverage denials is wrong," he said.

Announced at the forum were the results of a January 2008 Institute of Medicine committee review of comparative effectiveness methods.

The report calls on Congress to create a semi-private government agency that would conduct reviews comparing existing and new medical treatments to determine the treatments that work best for various conditions.

The agency would allow insurance companies and non-profit agencies from duplicating each other's work. The committee reviewed seven organizations—including health insurers UnitedHealthCare and Kaiser Permanente—and found that all seven separately reviewed the same 14 drugs or treatments independently.

Under the congressionally mandated agency, that drug-evaluating work would be done at one central location.

The Agency for Healthcare Research and Quality (AHRQ) is already doing some comparative effectiveness work and could serve as a model for the new agency, said Wilhelmine Miller, an associate research professor at George Washington University who directed the IOM study.

The IOM study did not include an investigation of whether comparative effectiveness can cut health care costs. But Karen Ignagni, president and CEO of America's Health Insurance Plans, a trade association representing 1,300 health insurance firms, said to ignore the idea of using comparative effectiveness to cut health care expenses is "like putting our heads in the sand." "Not to look at comparative effectiveness as a basis for [insurance coverage] determinations makes no sense to us," Ignagni said.

AdvaMed's Nexon disputed the notion that insurers would bar a patient from a treatment because it had failed a comparative effectiveness test. He said the tests are based on what works best for a 'normal' patient, but not all patients are the same.

Carolyn Clancy, director of AHRQ, noted that the results of a comparative effectiveness review are rarely cut and dry—instead of finding out that one drug is far superior to another similar product, the agency more often than not finds that every drug works, but some are better in certain circumstances.

Clancy said the most important thing to do as the government and private companies work together to expand comparative effectiveness efforts is to make sure the process is as open to public review as possible.

"If everyone can see and understand the work, then there will not be a 'black box," she said.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

April 4, 2008 -- The increasingly frequent ritual of trying to prevent a scheduled cut to Medicare physician payments is starting again, with Senate Finance Committee Chairman Max Baucus, D-Mont., working to put together a package that would prevent a 10.6 percent cut in Medicare physician payments scheduled for July 1.

Baucus favors an 18-month fix and he has invited physician specialty and other clinician groups to meet with him April 11 "to relay his priorities" for the Medicare package. While rumors abound that the legislation is shrinking due to difficulty finding payment offsets, a statement Friday from Baucus's office outlines several priorities for the bill.

"Chairman Baucus is working with his colleagues on the Finance Committee and in the Senate to move an 18-month fix to the Medicare Physician payment system. He intends to move a package that does more than extend current law, though, and is calling on Congress and the White House to join him," said a Baucus aide. "Senator Baucus' priorities include reducing existing barriers to the subsidy programs for low-income seniors, increasing access to preventive and mental health services, bringing assistance to providers in rural areas, and expanding value-based purchasing programs to increase quality and reduce costs. He hopes to move the package quickly." Money, of course, will be the problem. With Bush administration officials and some members of Congress strongly opposed to any reductions in payments to Medicare Advantage plans, Baucus will have to look elsewhere for funding. According to the Congressional Budget Office (CBO), keeping Medicare physician payment rates the same for 2008 with a zero percent update—but cutting payments by 20 percent in 2010—would cost $8.1 billion over the next five years. Keeping payments the same for 2008 but giving doctors a payment increase of 1 percent next year and reducing payments by 21 percent in 2010 would cost $8.7 billion.

An AMA spokeswoman said Friday that the physicians' group remains concerned about financing arrangements that may spare docs pain now but promise a bigger financial hit later. But as a practical matter, physician organizations may have no alternative but to go along with that approach in the near term in the absence of consensus on a more permanent solution to the Medicare payment formula calling for many years of sharp cuts.

Managed care organizations aren't assuming they are off the hook for payment cuts to pay for the measure. "We're not taking that for granted," an industry executive said. The industry is determined to resist cuts while it has the support to block them, knowing that next year could be a different story with Democratic gains in the November elections. "A bigger storm is going to break," the executive said.

Medicare Advantage plans in states such as Massachusetts and Pennsylvania that would be hard hit by removal from their payment rates of adjustments meant to compensate for the higher cost of care in teaching hospitals are spending an "enormous" amount of time trying to block such a change in their payments, the executive added.

Potential offsets for the Finance package include no payment update for durable medical equipment providers in exchange for delaying the first round of competitive bidding program set to begin July 1, a health care lobbyist said. Some equipment providers have opposed the program, saying it will drive many companies out of business and hurt product innovation because prices will be set too low to justify research and development. Administration officials have said that competitive bidding will save Medicare and beneficiaries money on items such as diabetes supplies, walkers, hospital equipment and other medical equipment.

Adding in payment incentives for rural providers, as Baucus suggests, and including language on "comparative effectiveness," research that compares treatment outcomes and analyzes the clinical effectiveness of alternative therapies for the same condition, may also help attract support. CBO, many lawmakers and health care analysts have embraced the idea as a way to improve health care quality and reduce costs.

Finding ways to finance the doc fix remains the big issue. "We have other packages," Finance Committee ranking Republican Charles E. Grassley of Iowa responded Thursday when asked how the panel would find money other than from Medicare Advantage. "We're going to have to do something in a bipartisan way or we're not going to get anything done." Some health care analysts have suggested that the final outcome will be something less than an 18-month payment fix, perhaps finding a Medicare physician payment solution that would last through next March when the extension of funding for the State Children's Health Insurance Program (SCHIP) is set to expire.

No matter what the size of the Finance bill, proceeding straight to the Senate floor may be the fastest route for action. "If we bring it through committee it won't just be the doc fix," said one Senate Democratic aide. "This thing could die a slow, painful death in committee with any number of things." John Reichard and Alex Wayne contributed to this report.

By Alex Wayne, CQ Staff

April 3, 2008 -- Educators, public health officials, and hospital administrators told lawmakers Thursday that new Medicaid regulations prepared by the Bush administration would reduce health care for poor schoolchildren, nursing home residents, and pregnant women, among others.

At a House Energy and Commerce Subcommittee on Health hearing, Democrats blasted the regulations, promising to pass legislation (HR 5613) by committee Chairman John D. Dingell, D-Mich., that would block the new rules.

Administration officials, Republicans, and politically conservative health analysts described the regulations as a reasonable response to improper Medicaid spending by some states, and said the rules would not affect "medically necessary" care for any Medicaid patient.

Medicaid is a joint state–federal health program for the poor in which the federal government pays about 57 percent of the costs–an estimated $204 billion in fiscal 2008. For years, the relationship has been punctuated by tension between states and Washington over who should bear more of the burden. That conflict has escalated this year, as the administration seeks to implement at least seven new regulations that states complain would shift billions in costs to them.

Governors and state health officials are lobbying Democratic congressional leaders to halt the regulations. Democrats are eager to help, but have not yet managed this year to enact any obstacles to the rules, the first of which took effect March 3.

"These regulations go beyond any justifiable point to curb any abuses in the system and instead would shift costs to the states and prohibit federal support for legitimate expenditures on behalf of Medicaid beneficiaries," said Dingell.

A bipartisan group of senators announced Thursday that they had introduced their own bill (S 2819) to block the new rules.

The seven regulations at issue would together save Medicaid about $17.8 billion over five years, according to the Congressional Budget Office. The new rules are intended to:

• Limit state Medicaid payments to public hospitals.
• Narrow the services the government would pay for under case management plans some states provide patients.
• Prohibit federal reimbursement for the costs of transporting Medicaid-eligible children to school and administering Medicaid services at schools.
• Narrows the types of "rehabilitative" services that the federal government would pay for.
• End federal Medicaid reimbursement for students at teaching hospitals.
• Narrow outpatient hospital services that would be eligible for federal reimbursement.
• Limit taxes that some states charge health providers as a way to reduce Medicaid's draw on their budgets.

State officials described most of the rules as overly broad, and complained they had little opportunity to discuss them in advance with the administration. Dingell said that of thousands of comments the Centers for Medicare and Medicaid Services (CMS) received on the rules, only a handful were identified as "positive" by the agency.

"These proposals appear to have unintended consequences on good programs and will limit legitimate services to vulnerable people," said Barbara Coulter Edwards, interim director of the National Association of State Medicaid Directors.

But Dennis G. Smith, Medicaid director at CMS, criticized Dingell's bill, which he said would have a broader effect than simply blocking the new rules and might hamper ongoing efforts to monitor waste and abuse in Medicaid.

"These rules will help ensure that Medicaid is paying providers appropriately for services delivered to Medicaid recipients; that those services are effective; and that taxpayers are receiving the full value of the dollars spent through Medicaid," Smith said. He said that the administration "strongly opposes" the bill, an indication that President Bush would veto it.

A CMS spokesman said the agency would respond to all comments received on the proposed rules, and might alter them before issuing final regulations.

Smith provided the committee a list of dozens of reports by the Department of Health and Human Services' inspector general that he said had helped inspire the regulations.

James Cosgrove, the acting director of the Government Accountability Office's health care division, also told the committee that the GAO had for years documented improper schemes by states to collect additional Medicaid reimbursements from the federal government.

But Smith was largely without allies in the hearing. Only two Republicans asked questions–the subcommittee's senior Republican, Nathan Deal of Georgia, and Michael C. Burgess of Texas, both of whom expressed support for the regulations.

And under questioning from Dingell, Cosgrove admitted that GAO had not studied the specific regulations at issue or the abuses that Smith alleged had inspired them.
Dingell's bill would postpone the seven regulations until April of next year, when a new president will be in office. He urged the subcommittee's chairman, Frank Pallone, Jr., D-N.J., to have his panel approve the bill soon.

A Pallone spokesman said that the subcommittee plans a markup "in the coming weeks." CBO estimates that Dingell's bill would cost about $1.65 billion, because the budget office has already assumed the savings from the regulations in its "baseline" financial projections. Dingell aides say the expense will be balanced with a cost-cutting measure that would require electronic verification of assets of people applying for Medicaid.

The Senate bill—by Edward M. Kennedy, D-Mass., John D. Rockefeller IV Jr., D-W.Va., and Olympia J. Snowe, R-Maine—would postpone the seven regulations targeted by the Dingell bill, plus two others, one regarding a board that hears appeals of HHS policies and another concerning the State Children's Health Insurance Program.

The Senate bill also would provide states $12 billion in emergency aid to cover budget shortfalls, including $6 billion for Medicaid. The aid would be targeted to states that have experienced job losses and increases in food stamp participation and home foreclosures.

By John Reichard, CQ HealthBeat Editor

March 31, 2008 -- The Medicare program has launched a new era in which the public can readily compare local hospitals on how patients rate them in terms of the courtesy of nurses, how quickly they got help when they pressed the call button, how quiet their room was at night, and more than a dozen other aspects of their care.

On Medicare's "Hospital Compare" Web site, Washington, D.C.–area residents can learn that 48 percent of patients at Holy Cross Hospital in Silver Spring, Md., rated their rooms as always quiet at night and that 55 percent of patients said that their room and bathroom were always clean. By comparison, 60 percent of patients at Washington, D.C.'s Sibley Memorial Hospital said their room and bathroom were always clean and 42 percent said the areas around their room was always quiet at night.

Other comparisons look at "how often was your pain well controlled," and "how often did doctors listen carefully to you." About 2,500 hospitals agreed to participate in the survey, which was developed by the Agency for Healthcare Research and Quality and is known as the "Consumer Assessment of Healthcare Providers and Systems Hospital Survey," known as "HCAHPS." The new information added to the site also states how many of certain types of procedures the facility performed and what Medicare paid it for doing so. For example, the site says that at Holy Cross, 20 Medicare patients were treated from October 2005 through September 2006 for a heart attack without complications, with Medicare paying an average of $5,541. The facility treated 61 patients for heart attacks with complications with the payment averaging $13,373.

"Collectively, the quality, patient satisfaction, volume, and pricing information will help us assure patients and their families that they have the information they need about the care they are receiving while serving as a catalyst to continue to improve the care delivered in our nation's hospitals," said Kerry Weems, acting administrator of the Centers for Medicare and Medicaid Services.

Chip Kahn, president of the Federation of American Hospitals, predicted that "the new HCAHPS data may become the most helpful aspect of the Hospital Compare Web site because it's easily understandable and reflects the very tangible experience of patients." Representatives of senior groups, labor unions, and health care purchasers praised the new ratings. AARP Policy Director John Rother said his organization would encourage its members to use the site. "We also hope physicians and health plans will consider it when they make decisions about hospital referrals and contracting," he said.

By Alex Wayne, CQ Staff

April 1, 2008 -- If Democrats want to block new Medicaid regulations that states complain would cost them too much, they might need to come up with a lot of money.

Legislation (HR 5613) that would postpone all or part of seven Medicaid regulations the Bush administration plans to implement would cost $1.65 billion in fiscal 2008 and 2009, according to a preliminary analysis by the Congressional Budget Office (CBO).

House Energy and Commerce Chairman John D. Dingell, D-Mich., introduced the bill March 13. CBO's cost score could complicate the bill's advancement. Under pay-as-you-go budget rules Democrats implemented last year, lawmakers must couple proposals that cost money with legislation that would save or raise an equal amount.

The Medicaid regulations have been a subject of dispute since last year, when the administration proposed them. Generally, they are aimed at preventing states from claiming federal reimbursement for services the administration doesn't think should be covered under Medicaid.

CBO says Dingell's postponements will cost money because the budget office has already assumed in its "baseline" financial projections that the regulations take effect, a routine practice for the agency.

It is not clear how Democrats might overcome the problem. They have struggled since taking control of Congress to find spending offsets for many of their legislative priorities. Right now, lawmakers are debating how to offset the cost of reversing a scheduled cut in Medicare reimbursements for physicians.

One Senate GOP aide speculated that Democrats might include language in must-pass legislation, such as a supplemental spending bill for the wars in Iraq and Afghanistan, allowing them to postpone the Medicaid regulations without offsetting the cost. But that could upset conservative Democrats in the House who have been sticklers for the pay-as-you-go budget rules, and it could open the party to criticism from Republicans.

An Energy and Commerce spokesperson said: "The cost of providing critical Medicaid services pales in comparison to what we'd see if the administration's new rules are implemented and these services are cut. An increasing number of low-income and disabled Americans would be forced to seek health care services in emergency rooms, the most expensive option available."

Whose Dime?
The health entitlement for the poor is a joint state—federal program, and the two areas of government have long argued over who should bear more of the burden for the program's cost.

Those arguments have intensified in the waning years of the Bush administration, as the federal government has tried to crack down on states that have used creative schemes to draw extra federal Medicaid dollars.

The federal government pays about 57 percent of the program's costs, a sum that is expected to total about $204 billion in fiscal 2008.

The regulations the administration has proposed would limit or bar federal reimbursement for a number of Medicaid services. CBO says that all of the Medicaid regulations planned for 2008 would together save the government about $19.6 billion over five years.

Congress postponed four of the regulations last year, but those moratoriums will begin expiring in May. Dingell's bill, which he introduced March 13, would extend the moratoriums until April 2009—when a new president will be in office—and would postpone all or parts of three other regulations until next spring, as well.

The four regulations postponed last year would limit Medicaid payments to public hospitals, eliminate federal reimbursement of hospital interns' and residents' salaries, narrow federal reimbursement for rehabilitative services, and eliminate federal reimbursement for transporting Medicaid-eligible children to school and administering Medicaid services at schools.

Dingell also seeks to postpone all or part of three other regulations. Those would limit federal reimbursement for case management services that some states offer Medicaid patients, narrow reimbursement for outpatient hospital services, and limit taxes some states levy on health providers to help pay the state share of Medicaid costs.

By Christine Grimaldi, CQ Staff

April 4, 2008 -- Physicians, insurers, and others have agreed this week on a set of national standards for evaluating and reporting physicians' performance.

Developed by the Consumer-Purchaser Disclosure Project, a coalition of consumer, labor, and business organizations funded by the Robert Wood Johnson Foundation and its participants, the standards are outlined in a "patient charter" and comprise four main criteria:

• measures should be meaningful to consumers and reflect a diverse array of physician clinical activities;
• those being measured should be actively involved;
• measures and methodology should be transparent and valid; and
• measures should be based on national standards to the greatest extent possible.

The patient charter also encompasses a number of subcriteria. Providing both quality and cost-efficiency information are listed as meaningful measures to consumers. The charter also says that active involvement would give physicians notice and a chance to request to review and correct potential inaccuracies in their performance reports before release.

"By signing on, [health plans are] going to retain an independent organization to look over their shoulder," said Peter V. Lee, the co-chairman of the Project and executive director of national health policy for the Pacific Business Group on Health, a participating organization.

Potential reviewers include the National Committee for Quality Assurance and the Utilization Review and Accreditation Committee, Lee said.

The health plans will be able to choose their own oversight, but the Project will review the reviewers to ensure adherence to the patient charter standards, he said.

"The Patient Charter creates sound, uniform principles for the measurement and public reporting of physician performance," said America's Health Insurance Plans president and CEO Karen Ignagni in a news release. "These principles should be endorsed by all stakeholders as the nation moves toward a health care system that values quality and embraces transparency." American Medical Association President-Elect Nancy Nielsen also approved of the criteria. "Instead of tiered and narrow networks, the AMA believes that providing valid data to physicians and patients will better improve the quality and efficiency of care," she said in a statement.

Consumer, labor and employer groups endorsing the standards are AARP, AFL-CIO, the Leapfrog Group, the National Business Coalition on Health, the National Partnership for Women and Families, and the Pacific Business Group on Health, a news release said.

Physician groups include the American College of Physicians, the American Academy of Family Physicians, the American Medical Association, the American College of Cardiology, and the American College of Surgeons.

Insurers include the America's Health Insurance Plans, Aetna, Cigna, UnitedHealthcare, and WellPoint.