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August 13, 2007

Washington Health Policy Week in Review Archive 32459189-bca3-49d0-b93e-28c6a57bd243

Newsletter Article


Centers Claim Big Savings from Delivering Primary Care

By John Reichard, CQ HealthBeat Editor

August 6, 2007 – The lobby that represents community health centers made a pitch Monday for legislation sharply increasing federal funding for those facilities, saying they offer a brand of health care far less costly than what's given in traditional doctors' offices. Primary care services provided by the centers result in per-patient medical expenses 41 percent lower than for patients seen in other settings, said a study released by the National Association of Community Health Centers.

"These savings occur despite the fact that health center patients are more likely to be poor and uninsured or publicly insured than patients relying on other health care providers," said the authors of the study, which included the Robert Graham Center, a research arm of the American Academy of Family Physicians, and Capital Link, a Washington, D.C. consulting firm.

Per-patient costs averaged $2,569 in 2004 compared with $4,379 for patients treated elsewhere—a difference of $1,810. The figures included expenditures for office visits, drugs, emergency care, other hospital care, and out-of-pocket health care spending, said the authors of the study.

Community health centers are typically located in poor areas and take patients regardless of their ability to pay. They treat a mix of uninsured patients, Medicaid patients, and other patients who have coverage, which is often meager.

In a telephone press briefing, Virgilio Licona, a physician with a community health center in Colorado, gave an example of the type of care delivered by the facilities. He described an obese patient he began treating last week who has diabetes, high blood pressure, high cholesterol, and who "is somewhat depressed." It's likely that over the next six to nine months, because of the diabetes education program, behavioral health services, and medications provided by the facility, the patient will lose weight, have her blood pressure under control, and have lower cholesterol levels, Licona said. The mix of primary care services heads off costly complications leading to emergency room and other expensive hospital-based treatment, according to the study.

Americans often are without such a "family-centered medical home," which if applied widely, would save tens of billions of dollars annually, the association said.

The federal government now spends some $2 billion a year on community health centers that treat about 16 million people; if funding were increased to $5 billion a year by 2015, the health care system would save between $23 billion and $40 billion annually, said Dan Hawkins, senior vice president for policy at that association.

According to the study, the number of jobs produced by community health centers would increase from 143,000 now to 460,000 in 2015 if annual funding were boosted to $5 billion. The figures take into account direct employment as well as indirect economic effects, such as goods and services purchased by centers from local businesses and the jobs those acquisitions help to fund.

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House Lawmakers Introduce Long-Term Care Insurance Bill

By CQ Staff

August 8, 2007 – A bipartisan group of House lawmakers has introduced legislation (HR 3363) that would permit long-term care insurance to be included in employer-sponsored cafeteria plans and flexible spending accounts, allowing people to pay long-term care insurance premiums with pre-tax dollars.

Backers of the measure said it would help millions of baby boomers save for long-term care costs. Among Americans who are now 65, nursing homes will provide care for 44 percent of them, according to a news release from Rep. Earl Pomeroy, D-N.D., the bill's chief sponsor. The average cost for a one-year stay in a nursing home is $75,000, and by 2030, the cost will rise to nearly $207,000, according to the release. Medicare does not generally pay for long-term care and Medicaid covers costs for those who meet the program's income requirements.

According to the Pomeroy release, if three-quarters of individuals between the ages of 40 and 65, who can afford long-term care insurance, were to purchase and maintain policies throughout their senior years, the annual savings in Medicaid nursing home expenses would total $19 billion, and annual savings in out-of-pocket expenses would total $41 billion by 2030.

Cosponsors of the bill include Jim Ramstad, R-Minn., Allyson Y. Schwartz, D-Pa., and Kenny Hulshof, R-Mo.

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Medicare Quality Improvement Stagnating, Senators Complain

By John Reichard, CQ HealthBeat Editor

August 7, 2007 – Max Baucus, D-Mont., was soothing in his assessment while Charles E. Grassley, R-Iowa, was gruff, but the Senate Finance Committee leaders agreed on one thing in the marks they handed out last week to Medicare's Quality Improvement Organizations: "QIOs" need to be shaken up to live up to their names. A bill they introduced last week aims to do that by prescribing a heavy dose of competition and splitting up their functions to improve QIO performance.

QIOs, which work with doctors, hospitals, nursing homes, and others to improve the quality of care they deliver to Medicare patients, say the added competition is okay. But the overhaul of QIOs under the bill is overkill, they contend.

QIOs enjoyed a solid reputation in the health policy community for many years for their work to improve the quality of care. Each renewal of the three-year contract the organizations sign with Medicare contained added responsibilities to improve the quality of treatment received by Medicare beneficiaries.

But Grassley said in remarks on the Senate floor Aug. 2 that an investigation he launched two years ago of QIOs "revealed a program in desperate need of reform. This program was running with little or no oversight, and it was expending more than one billion dollars every three years with little measurable results." He added "one QIO leased residential properties for board members and a CEO. That same QIO also used federal funds to lease automobiles for its top executives. I also found that other QIOs who had board members and staff attend conferences, many at lavish resorts."

Grassley also said that while QIOs investigate complaints of poor quality care, they often do not share the findings with those who file the complaints. In one case, the husband of a nursing home patient who died filed a complaint about the care she received, but had to take legal action to learn the findings of the QIO investigation, Grassley said.

The bill (S 1947) introduced by the pair would strip out the complaint investigation role of QIOs and give it to new organizations called Medicare Provider Review Organizations (MPROs). The new entities would be required to report on the findings of their investigations to those who file complaints. QIOs would have to provide technical assistance in improving quality to facilities "that need help the most," the senators said.

Grassley pointed to June 29 findings by the Government Accountability Office that QIOs that work intensively with nursing homes to reduce cases of bed sores or lessen the use of physical restraints to keep residents from wandering do not target their assistance to facilities with the most quality of care problems.

"Most QIOs' primary consideration in selecting homes was their commitment to working with the QIO," the GAO analysis found. Problems with measures used to assess quality make it hard to evaluate the performance of QIOs, GAO added. However, it reported that "staff at most of the nursing homes GAO contacted attributed some improvements in the quality of resident care to their work with the QIOs."

Baucus said QIOs have done good work and provided valuable services but need a sharper focus. "It seems there is a consensus that the QIO program could be doing more to help improve the quality of care," he said.

Under the bill, priority would be given to helping providers in rural or underserved areas, those in financial need, those that perform poorly on quality measures and those that have many beneficiary complaints. The bill would allow other types of organizations to compete with existing QIOs to perform their services and eliminate the renewal of contracts that are not competitive. QIOs would be evaluated on consistent measures allowing their performance to be compared. Good performers would get financial rewards while poor performers would receive financial penalties.

The American Health Quality Association, which represents 42 QIOs nationwide, said it is seeking "middle ground" on the measure. "It's both costly and unnecessary" to create MPROs, said David Schulke, the association's executive vice president. Beneficiaries should receive the results of complaint investigations but all that's needed to make that happen is a change in regulations, he said. The bill also lacks sufficient safeguards to keep Medicare dollars from going to projects unrelated to the QIO program, he said.

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Norwalk Weighs in on SCHIP, Potential Medicare Advantage Cuts

By Mary Agnes Carey, CQ HealthBeat Associate Editor

August 9, 2007 – The reauthorization of the State Children's Health Insurance Program (SCHIP) may be less than the five years envisioned by House and Senate legislation, and the reduction in Medicare payments to managed care plans lower than those proposed in the House package, former acting Centers for Medicare and Medicaid Services (CMS) administrator Leslie V. Norwalk said this week.

In a speech Monday in New York City to Citigroup investors and in an interview Thursday, Norwalk said there were many scenarios that could unfold on SCHIP. President Bush has threatened to veto both the House (HR 3162) and Senate (S1893) bills, which he views as too expensive. Norwalk said Thursday she finds it hard to believe that Democrats and Bush will be able to reach agreement on a five-year extension of the program, and that a shorter extension—perhaps of two years—would cost less money and might be more acceptable to the president.

"Whether it's two years or one year or five years, a lot of that will just depend on amounts. I don't know how they're going to get to five years ... Something shorter, that is less money—the president will have a harder time vetoing it," Norwalk said. "It wouldn't surprise me if they did something less than full authorization for five years."

On Medicare Advantage, Norwalk said payment reductions may be more modest and targeted than the 9 percent to 10 percent cuts included in the House package. "It depends on how they do it. In talking about it when I was there, I suggested that they look at the scalpel approach relative to the axe approach ... They need to be a little more educated in what they do." The larger the cuts, the more likely the White House is to reject them, Norwalk said. The Medicare Advantage cuts in the House bill would raise $157 billion over 10 years.

Norwalk also told the Citigroup audience that CMS is unlikely to further limit coverage of Epogen for dialysis patients, although a Sept. 11 Food and Drug Administration advisory committee meeting may influence CMS policy if the panel calls for a more restrictive label. More CMS data on the issue also will influence how the agency pays for dialysis services and Epogen, Norwalk said. Congress also may give CMS the authority to create a bundled payment system that would pay a single rate for both services and products used for dialysis patients.

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Paper Urges Presidential Candidates to Make Tough Choices on Health Care

By Mary Agnes Carey, CQ HealthBeat Associate Editor

August 10, 2007 -- Candidates for the 2008 presidential election should prepare themselves and voters for the tough choices that must be made to control rising health care costs, urge a panel of political and budget experts in a new paper from the Brookings Institution.

"Presidential candidates will face enormous pressure to look the other way . . . campaign platforms will therefore burst with 'base'-pleasing pledges," the authors write. "If history is a guide, Democrats will tout plans to expand entitlement benefits, not just for those in need, but for middle- and upper middle-income people as well. They will be much less forthcoming about where the money will be found." Republicans will most likely insist that President Bush's tax cuts be made permanent and that more cuts would be even better, and "have little to say about the specific spending cuts that would be needed in order to accommodate the revenue loss."

The paper's authors strongly encourage the 2008 presidential candidates to avoid "politically convenient evasions" and instead embrace "the real choices," which include raising taxes and cutting spending, or confronting how much debt they plan to impose on future generations.

The document is part of Brookings' "Opportunity 08" budget series, which highlights various policy challenges as the 2008 elections approach. The document, written by four experts with plenty of knowledge of budgets and health care—Concord Coalition Co-Chairmen and former Sens. Warren Rudman and Robert Kerrey, as well as Robert Bixby, Concord Coalition's executive director and Peter Peterson, Concord Coalition's president and former Commerce secretary—examines health care in the context of the nation's long-term fiscal outlook.

"The next president will inherit a fiscally lethal combination of changing demographics, rising health care costs and falling national savings," the authors write. "The public should take care not to buy the proposals of presidential candidates that either ignore the magnitude of the long-term fiscal challenge or lock candidates into positions that make the problems insoluble."

Budgetary trouble spots include rising expenditures for Social Security, Medicare, and Medicaid, which will all face pressures as millions of baby boomers begin to retire. Those three programs now constitute 40 percent of the federal budget, and over the next 25 years the number of Americans ages 65 and older is expected to grow from 12 to 20 percent of the population, while the ratio of workers paying taxes to finance Social Security and Medicare relative to the number of beneficiaries will fall by roughly one-third.

Proposals to overhaul Medicare should "cover a level of care commensurate with the care available to working-age people," rather than expecting taxpayers to finance a "high option" insurance plan for all beneficiaries, the authors note. Medicare must operate within the resources available to finance it. "A program that assumes a perpetually open spigot from the Treasury is not fiscally responsible," they wrote. They also urge that Medicare premiums be based on income, with wealthier beneficiaries paying a higher share of their monthly premiums, and that Medicare should include incentives for both patients and health care providers to use resources cost-effectively.

"Political leaders like to pretend that there are simple fixes to Medicare that won't require anyone to give up anything," the authors warn. "Just clamp down on 'fraud and abuse,' or cut back on excessive paperwork, and the problem will be solved . . . The hard truth is that there are only two direct ways to reduce the growth in Medicare costs: pay health care providers less or reduce the amount of health care that patients consume."

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The SCHIP Challenge: Finding Funding

By Alex Wayne, CQ Staff

August 6, 2007 -- House and Senate Democrats brushed off a veto threat from President Bush and some fierce Republican opposition to pass ambitious expansions of children's health insurance coverage last week. But Democratic leaders face difficult negotiations ahead over how to pay for the enlarged program.

On Aug. 1, the House passed, 225–204, a bill that would expand the State Children's Health Insurance Program (SCHIP) by $47.4 billion over five years. The Congressional Budget Office (CBO) estimates that the extra spending would add 7.5 million uninsured children to the current 6 million covered under the program.

The Senate followed suit the next day, passing a narrower, $35 billion expansion on a 68–31 vote. The plan would provide coverage for an additional 6.1 million children.

The Senate measure relies on a 61-cents-per-pack increase in the federal cigarette tax to offset its costs, which is highly unpopular with some House Democrats. Conferees will have to tamp down resistance to the increase or find other savings, most likely from significant cuts to Medicare Advantage, a Republican-championed program in which private managed-care plans provide benefits to seniors in place of the government.

"We have to cover all of the kids who are eligible for SCHIP in this country and not enrolled, and we have to pay for it," said Colorado Democratic Rep. Diana DeGette. "Any creative suggestions would be welcomed."

Further complicating matters is a veto threat from Bush, who has characterized the Democratic measures as thinly veiled attempts to expand government-run health care. Bush has said SCHIP can be sustained with a $5 billion increase over five years, to $30 billion.

The senior Republican on the Senate Finance Committee, Charles E. Grassley of Iowa, said he planned to ask for a meeting with Bush to try to persuade him not to veto the bill. Many Republicans fear political backlash for opposing an SCHIP expansion but also are chagrined that the program has been used in some states to cover adults and children in families with incomes three or four times the federal poverty level.

Senate Minority Whip Trent Lott, R-Miss., acknowledged that a veto override is possible but only if negotiators accept the lower spending total in the Senate bill. "If it goes one iota above what's in [the Senate] bill, we will be able to sustain the veto," he said.

Lott also said Senate Republicans would block a formal conference from convening until there was an agreement on spending. "Grassley is going to hold the line pretty strong on this," Lott said.

SCHIP provides capped block grants to states in order to cover families not poor enough to qualify for Medicaid. Bush has supported it, vowing at the 2004 Republican National Convention to "lead an aggressive effort to enroll millions of poor children who are eligible but not signed up for the government's health insurance program."

However, the current showdown has evolved into both a test of fiscal discipline and a trial run for Democrats and Republicans to perfect health care messages before the 2008 elections.

In the House, Republicans forced a handful of roll call votes on procedural motions to slow the bill's progress before they won the concession of an extra hour of debate. Democratic leaders brought the bill (HR 3162) to the floor under a closed rule that didn't allow amendments and limited debate to two hours.

Republican Study Committee Chairman Jeb Hensarling of Texas said the delays were intended to draw attention to what he characterized as a sweeping expansion of government health care and Democrats' attempts to create a new entitlement program.

Democrats disagreed. "This is not an entitlement, this is a block grant set up by Newt Gingrich," said Democratic Rep. Frank Pallone Jr. of New Jersey, invoking the name of the former GOP Speaker from Georgia, who presided over the chamber when SCHIP was enacted in 1997.

Before the vote on passage, Republicans offered a motion to recommit the bill that would have scrapped Democratic provisions and replaced them with a one-year extension of the existing program. The House defeated the motion, 202–226.

Last-Minute Tweaks
House Democrats made several last-minute changes to the bill in an early-morning Rules Committee markup Aug. 1 in order to comply with pay-as-you-go budget rules.

To save $20.4 billion over 10 years, Democrats eliminated bonus payments to states for enrolling more children in SCHIP after five years. An additional $35.7 billion over 10 years would come from cuts in Medicare physician payments—cuts unlikely to ever take place. The bill actually would increase physician payments over the next two years.

The bill would eliminate the current Medicare payment formula, which uses a single formula to determine national payment rates. It would rely instead on a system that breaks payment calculations into six different medical areas, including preventive care, imaging procedures, and major medical procedures. Payment levels would be tied to economic growth, with preferences given to preventive and primary care.

Other offsets would come from minor changes to SCHIP, including the imposition of new age limits that would save $3.6 billion. Democrats also added a provision that would bar SCHIP payments to illegal immigrants.

But other financing mechanisms exposed rifts within the Democratic caucus. Eight Democrats voted against the House bill because it would increase cigarette taxes by 45 cents per pack, to 84 cents. Their ranks would almost certainly grow if Senate conferees prevail in enacting an even larger increase.

The holdout Democrats and many Republicans believe that tobacco-tax boosts are unwise because they rely on a declining source of revenue to fund a fast-growing government program. Beyond creating long-term budget problems, critics contend, a large tax increase will also cause tobacco consumption—and resulting revenues—to decline even faster.

Medicare Politics
Instead of a larger tobacco tax, House Democrats included in their bill a cut in spending for Medicare Advantage. Under the program, private health plans are paid about 12 percent more per beneficiary than traditional Medicare costs, according to CBO and the Medicare Payment Advisory Commission, which has recommended reducing the imbalance. The cuts in the House bill would raise $157 billion over 10 years—enough, with the tobacco-tax increase, to pay for both the SCHIP expansion and the reversal of the scheduled cut in Medicare reimbursements for doctors.

But Medicare Advantage is championed by Republicans, and the insurance industry is lobbying to preserve it. Several Republicans who voted for the Senate SCHIP bill, notably Gordon H. Smith of Oregon, say they will not vote for a compromise that includes Medicare Advantage cuts.

Negotiators also must decide whether to keep the Medicare provisions and SCHIP expansion linked. The American Medical Association is lobbying for the physician payment change. Nearly everyone in Congress seems to agree that the cut must be averted.

"The idea of linking these does make sense, and I haven't heard that the Senate would be unwilling to link them," said Pallone, the chairman of the Energy and Commerce Subcommittee on Health.

But that drags Medicare Advantage into the debate because reversing the physicians' payment cuts is expensive, costing $67 billion over 10 years, according to CBO. Lawmakers have had trouble identifying other cuts that would yield that kind of money, and further tax increases probably are not an option.

Senate Action
In the Senate, Democrats dispensed with several Republican attempts to modify the bill (S 1893), which was debated as a substitute to a House-passed tax measure (HR 976).

An amendment by Elizabeth Dole of North Carolina that would have created a new budget point of order against increases in excise taxes, such as tobacco taxes, failed, 32–64. Points of order are a procedural hurdle against legislation that require 60 votes in the Senate to waive.

An alternative SCHIP reauthorization offered in the form of an amendment by Lott and Minority Leader Mitch McConnell of Kentucky failed, 35–61. It would have expanded SCHIP to nearly $35 billion over the next five years, which they said would allow about 1.3 million more children to be covered by the program. It would be offset by reducing federal reimbursements for administration expenses in the program and by health insurance proposals in the bill, including a long-debated proposal to allow small businesses to band together across state lines to purchase health insurance plans.

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