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August 13, 2012

Washington Health Policy Week in Review Archive 5c24f9e3-e6a3-4830-8dfe-f3deb9b34035

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Premium Support Moves to Prime Spot in Policy Debate

By John Reichard, CQ HealthBeat Editor

August 11, 2012 -- Mitt Romney's choice of Rep. Paul D. Ryan as his running mate accelerates a national debate over a premium support-based overhaul of the Medicare program—possibly teeing it up for prime consideration in Congress next year if the Republican ticket proves to be a winner with the voters.

The premium support blueprint is controversial, to be sure. But it can't be laughed off as purely partisan, as doggedly as Democrats will try. It has proved to be attractive to such influential Democratic thinkers as former Congressional Budget Office (CBO) directors Alice Rivlin and Robert Reischauer. And it's an idea that has led pragmatic Democrats like Oregon Sen. Ron Wyden to think Medicare's core promise—a guarantee of decent affordable health care during old age—can be kept in a way that finds common ground with Republicans who insist that Medicare spending must be reined in sharply to defuse the debt crisis.

But it's also a concept with plenty of warts and unproven assumptions. Ryan has been unable to show how premium support could fly politically and still deliver the budget savings he says the nation so desperately needs. The CBO foresees big new costs down the road for beneficiaries of a Ryan-type approach. Still, this new focus on premium support will force Democrats to detail and sharpen their case for how an alternative Senate Majority Leader Harry Reid calls "smart spending cuts" would save Medicare over the long term.

Premium Support Defined

Premium support refers to a system under which Medicare enrollees would pick from a menu of competing plans with a fixed government payment to help defray premium costs. Enrollees would be on the hook for any charges above the government contribution. But they could save money by selecting a plan with a premium below the federal subsidy.

By limiting its premium contribution, the federal government gets control over how much it shells out for Medicare each year. Competition among plans to keep their premiums close to the federal contribution would keep beneficiaries from having to pay big new costs as the government limits its own contribution—in theory at least.

Some academics see significant savings from this approach. University of Minnesota economist Roger Feldman, for example, has predicted annual Medicare savings of 8 percent and possibly much more.

The Ryan Approach

Democrats say Ryan's Medicare overhaul would subject seniors to the whims of the private market, suggesting they'd have no protection against rising premiums and watered down benefits. Ryan counters that by saying that under his approach to overhauling Medicare, the government's contribution toward premiums would be equal to the cost of the second least expensive plan in a given market, or traditional Medicare, whichever costs less.

In other words, the government would fully cover the premium costs of some plans, and of traditional Medicare in some instances, Ryan says.
Ryan's plan could be more politically feasible because he delays its start until 2022 and he exempts baby boomers. It also would retain traditional Medicare for individuals 55 and older in 2011.

An early version of the Ryan plan called the "Path to Prosperity" would have ended the traditional Medicare fee-for-service program as an option for younger Americans. However, that changed in December 2011 when Ryan, in concert with Wyden, announced modifications to his plan.
The premium support system would still begin in 2022, and, as before, Americans 55 and older in 2011 would see no changes to Medicare. But, unlike before, the plan would keep the traditional Medicare fee-for-service program as an option when premium support started in 2022. The private plans offered couldn't water down Medicare benefits. "Any private plan that wishes to participate in this new program must provide at least as comprehensive a benefit as traditional fee-for-service Medicare," Ryan and Wyden said.

But there are huge questions about how vulnerable beneficiaries would actually be under a premium support system.

A CBO analysis of the original "Path to Prosperity" Ryan plan said that out-of-pocket costs for Medicare beneficiaries would more than double in 2022 when compared with the current system. CBO also said the plan would actually drive up overall health expenses by requiring people to get care through private plans. Essentially, seniors would be picking up the extra costs in the form of higher out-of-pocket expenses. Democrats said at the time that the average costs for Medicare enrollees would rise from $5,538 in 2022 under current law projections to $12,513 that year under the Ryan plan.

'On the Back of Grandma'

Insurance industry analyst Robert Laszewski said of the earlier Ryan premium support approach that it shifted too much financial risk from the government to the beneficiary. "Everything's on the back of Grandma," he said. "How is Grandma going to do this?" Capping Medicare expenditures would help solve America's health spending problem. But, he said, insurers, doctors and hospitals also should have to absorb some costs if expenses increase. "Most of the risk needs to be with the big boys in the system," he said.

Ryan and Wyden appeared to take that view to heart when they announced modifications to the original Ryan plan the following month. They said that increases in Medicare spending above the amount the federal government would pay "will be reflected in reduced support for the sectors most responsible for cost growth, including providers, drug companies, and means-tested premiums."

Wyden boasted that "this is the only proposal—let me emphasize, the only proposal—that stipulates that if costs rise you don't automatically throw those costs onto the backs of senior citizens in the form of higher premiums."

But the pair didn't explain exactly how stakeholders other than beneficiaries would be forced to shoulder the burden of rising costs not borne by the federal government. They appeared to say lawmakers would have to pass legislation to make that happen. But they didn't say what would happen if Congress refused. Nor did they specify how much their proposal would reduce Medicare spending.

Does Limiting Contributions Work?

Republicans point to the Medicare Part D prescription drug program as evidence that a system of competing plans and limited premium contributions can work wonders. They note that Part D costs much less than the CBO has projected.

But former CBO Director Peter Orszag, who served as head of the Office of Management and Budget under President Obama, rejects the defined contribution approach, including Medicare premium supports.

"The whole goal ... is that by shifting risk onto individuals you want them to become better shoppers, and thereby to reduce the total cost for themselves and the federal government combined," he said recently. "There is some limited evidence that more cost sharing does help to reduce cost," he noted. "The question is how big is it? And the answer is it's not very big. The reason is that even under these kinds of approaches you still provide insurance against catastrophic costs and the vast bulk of health care costs come from those catastrophic cases. So you don't get as much traction from that cost sharing method. And then against that you've got less negotiating leverage with hospitals and doctors because you're splintered across multiple providers and you also have higher" administrative costs.
In other words, Medicare beneficiaries are in multiple plans, which means lower negotiating pressure to obtain favorable rates, he said, adding that administrative costs are higher because plans have to figure in a profit.

But American Enterprise Institute analyst Joseph Antos, and Gail Wilensky, who run Medicare in the early 1990s under President Bush, said in a recent paper that it's important to add market incentives to Medicare through defined contributions. "Reliance on competitive markets rather than on regulatory controls provides strong incentives for more efficient delivery of the health care services that consumers truly value," they wrote. Antos said he wants people to ask themselves, "Why am I buying this? Shouldn't this be better?"

Ryan is fully immersed in the details of the premium support debate and brings the same budget wonk's sensibility as Orszag to the interplay of argument. That means the weeks ahead could be particularly focused on health policy.

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Reduce Medicare Spending by Using Fixed Subsidies, Authors Argue

By Rebecca Adams, CQ HealthBeat Associate Editor

August 2, 2012 -- The best solution for holding down health care spending would be to limit Medicare patients to a fixed subsidy and change the tax benefits of employer-sponsored insurance, wrote American Enterprise Institute scholar Joe Antos and others in a new New England Journal of Medicine article.

The article provides a contrast to another New England Journal piece published in the same issue this week with a competing viewpoint of the best way to hold down health care spending. The other paper was co-written by former Obama administration advisers Ezekiel Emanuel and Peter Orzsag, along with other Democrats.

National health spending will be about $2.8 trillion in 2012, or 18 percent of the gross domestic product. It is expected to rise to 20 percent of the economy by 2020.

At an AEI discussion last week about the paper co-written by Antos, one panelist said that although the two papers present two ideologically distinct approaches, they do have some commonalities. The panelist, Center for Studying Health System Change President Paul Ginsburg, said both papers did a good job of addressing the urgency in reducing cost trends and accepting that both the market and government have to play some role. Each would nudge the current system away from payments based on volume, as the current fee-for-service system does, he said.

Antos, University of Pennsylvania scholar Mark Pauly and Project Hope expert Gail Wilensky said in their paper that Medicare should move to a defined contribution approach instead of continuing with the defined benefit system. They proposed giving seniors and other beneficiaries a uniform subsidy that they could use to buy insurance from competing health plans or traditional fee-for-service Medicare. All of the coverage would offer a common set of core benefits.

"Reliance on competitive markets rather than on regulatory controls provides strong incentives for more efficient delivery of the health care services that consumers truly value," they wrote.

One of the goals of their idea, Antos said, is "for people to become aware of what they are actually spending." He wants people to ask themselves, "Why am I buying this? Shouldn't this be better?"

Under their plan, lower-income and sicker patients would get higher subsidies.

The proposal, based on the "premium support" model, shares characteristics with others that have been floated before by Republicans and others over the years. The House has adopted in two subsequent years budget resolutions by House Budget Committee Chairman Paul D. Ryan, R-Wis., that include a variation of the idea.

Congressional Democrats criticize Ryan's plan as a voucher system and say it would cut benefits for future retirees. One version of the Ryan plan would limit growth to the equivalent of GDP plus 0.5 percent. The Antos paper does not include those restrictions. The authors noted those limits and said, "If unduly restrictive limits were enforced, they could threaten access to beneficial care and impede medical progress."

At the AEI forum, the authors and other panelists were asked by an audience member whether providing subsidies and allowing people to choose insurance might result in younger and healthier people buying one type of coverage, while sicker patients would be stuck together in a different type of plan. The concern is that if this happened, this could increase costs for the sicker patients.

Wilensky, who ran Medicare and Medicaid during the George H.W. Bush administration, said this fear would not materialize if appropriate adjustments were made to the payments so that plans would get paid more for sicker patients.

She also said there are "a lot of advantages in having a lot of sick people group together in plans because you can develop real expertise" about how to care for that population.

However, she acknowledged that if the payments were not adjusted for the health of patients, then there could be problems.

Ginsburg disagreed that risk adjustment payment tools are refined enough now to be able to identify and appropriately predict the future costs of beneficiaries.

"Theoretically, risk adjustment completely solves the problem," he said. "On the ground, though, it doesn't. It's not good enough yet."

The article said the current Medicare program not only costs too much but also produces poor results.

"The uncapped entitlement and distorted fee-for-service structure of traditional Medicare are major causes of the rapid rise in program spending," they wrote. "Poorly targeted fee-for-service payments promote the use of more—and more expensive—services, delivered in a fragmented and uncoordinated environment. The result has been higher spending and poorer patient outcomes."

The authors also said the current tax exclusions on health insurance provided by companies to their workers are ineffective. They said they could be converted into a tax credit that could be used by individuals to buy insurance on their own—if political support for the idea increased.

During the forum, political analyst and AEI fellow Norm Ornstein said he suspected that if you put the authors of the two New England Journal articles in a room together, they probably could "hammer out something that'd be better than what we got." But he said that although some moderate senators are looking for bipartisan compromises, many lawmakers in the next Congress will have no interest in listening to any approaches that find common ground. "Making that work in this political environment is a near impossibility," he said.

  • Antos paper
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    Deceleration in Health Spending: Is It Only the Weak Economy?

    By John Reichard, CQ HealthBeat Editor

    August 7, 2012 -- Government actuaries say the sharp downturn in health spending growth over the past few years stems from a weakened demand for services as Americans cut back on spending to cope with a weakened economy. But that may not be the whole story, some analysts say. They suggest fundamental changes in health care delivery also may be driving the slowdown.

    Others, however, dismiss such talk as wishful thinking.

    Prominent among those who see something broader at work is Peter R. Orszag, former head of the White House Office of Management and Budget in the Obama administration and former director of the Congressional Budget Office (CBO).

    In remarks at a forum sponsored by the Center for American Progress, Orszag said a big part of slower spending growth "is a weak economy but it's not all the economy. There are structural changes that are happening out there in the field that are helping to mitigate cost growth."

    Orszag elaborated on that point in an Aug. 1 Bloomberg op-ed piece. "Health care providers are anticipating a shift away from fee-for-service reimbursement, and they are increasingly using computer software to inform clinical decision-making and are 'bench marking' physicians—that is, comparing their practice norms with those of other doctors—to move toward better care," he wrote. "These structural changes are essential to maintaining slower health-care cost growth" as the economy picks up, he said.

    Orszag and other analysts viewed as left-leaning emphasize how unusual the recent spending figures are.

    "A common way to evaluate the growth in spending for Medicare is to compare the increase per beneficiary to income per capita," Orszag wrote. "Over the past 30 years, this excess cost growth for Medicare has averaged about 2 percent a year. The goal of many policy proposals, including provisions in the 2010 Affordable Care Act, is to reduce the future excess cost growth to about 1 percent annually.

    "Over the past year, though, excess cost growth has been much less than the target of 1 percent. According to the most recent figures from the Congressional Budget Office, total Medicare spending this year through June rose 4 percent from the previous year. Meanwhile, the number of Medicare beneficiaries rose by almost 4 percent, too, and income per capita rose by about 3 percent. So excess cost growth has been significantly below zero, let alone below the target of one percent a year.

    "That is a highly unusual situation," he told the CAP audience. "And again there has been a multi-year trend now of much slower growth rates."

    Early this year, Commonwealth Fund President Karen Davis noted that overall health care spending in 2009 and 2010 grew at the slowest rates in 50 years. Davis cited figures from the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary. The figures showed U.S. health care spending grew 3.8 percent in 2009 and 3.9 percent in 2010. More recently, the CMS office has projected a 2011 growth rate of 3.9 percent. From 2000 to 2009, yearly health spending growth averaged 6.8 percent, according to CMS.

    "Loss of jobs and insurance, slow growth in wages and family incomes, and greater out-of-pocket health care costs have undoubtedly caused uninsured, under insured, and low-wage workers and their families to forgo care, contributing to the slowdown in health care spending" Davis blogged on the Commonwealth Fund site Jan. 18. "An estimated 9 million people became uninsured when they lost a job with benefits over 2008-10, and they were much more likely than those who did not lose coverage to report delaying needed care," she noted.

    Davis added, however, that "a major point that has been overlooked in the analysis is that CMS is projecting lower health spending over the rest of the decade. While it is almost certainly the case that the poor economy is having an effect on current spending, the recession doesn't plausibly explain why projected health spending in 2020 is substantially below estimates made just two years ago."

    Blair Childs, a vice president with the hospital group Premier, said in a recent interview that pressure on hospitals to measure the quality and efficiency of their services are having an impact on spending. Medicare requires hospitals to report on and make publicly available such quality performance data and will soon lower payments to facilities that perform poorly. "Part of the reason that health care spending has been going down in the last three years is because of this movement," Childs said.

    Growth Reasons Not Clearcut

    However much merit such explanations have, pinpointing the factors driving spending changes and their precise impact is hard to do. The CMS actuaries the health policy community relies on heavily to explain why spending patterns change do not venture much beyond the economic downturn to explain the slowdown.

    "There is no miracle at work here," says Joseph Antos, a senior scholar with the American Enterprise Institute, in response to suggestions that fundamental health care delivery changes may be occurring that will tame spending growth over the long term.

    The CMS actuaries "see no basis whatsoever for thinking that this past few years of slower cost growth per person is going to last," Antos said in an interview.

    The actuaries see a jump up in health spending growth in 2014 with the expansion of insurance under the health law (PL 111-48, PL 111-152), with spending rising 7.4 percent that year compared to 2013, notes Antos. And in 2021, the CMS actuaries say health spending will grow 6.2 percent compared to 2020. These figures show a rebound in spending growth rates compared low growth occurring now, Antos said.

    "I think the reason they put those numbers in there was to show first the impact of the ACA and second their view that the basic forces that drive health care spending are normal there on out," Antos said.

    Antos pointed to the conclusion of the actuaries in a June 12 article in the journal Health Affairs to make the point that spending on health care will rise as economic conditions improve and people have more money to spend, among other factors.

    The actuaries concluded in the article that "by the end of the projection period [2021] higher income growth and the continued shift of baby boomers into Medicare are expected to cause health spending to grow roughly two percentage points faster than overall economic growth, which is about the same differential experienced over the last 30 years."

    Gail Wilensky, who ran Medicare and Medicaid in the George Bush administration in the early 1990s, suggested in an interview that the unusually severe recession may have made people more hesitant to spend on health care than during other recessions. But she said it's also possible that changes in health care delivery are having an effect.

    "Only looking at this as a loss in income per person may well understate the impact of the period we've been going through because it is so much greater and more extensive than what we've been used to experiencing during recession in terms of the depth of the wealth loss, the depth and duration of job loss, et cetera, et cetera," Wilensky said.

    "Having said that, I do think. . . this [dropoff in spending growth] is definitely greater than what you'd expect purely on the basis of a recession alone. What is equally important to understand is we don't know what's driving it. And therefore it would be very foolhardy to assume it will necessarily continue because we don't really understand why this is happening right now."

    Private sector changes preceding the health care overhaul, such as attempts by insurers to identify more efficient providers and to organize accountable care organizations outside of Medicare, may be having an impact, she said. "There is a lot of movement that is going on right now that could be at least contributing in the short term, to the slower than expected growth in health care spending," she said.

    Wilensky added that the health care overhaul law may have helped to prod some of the existing private sector activity to find more efficient ways of delivering care. But it can't be said to be a factor in the current spending growth slowdown.

    "I don't mind giving them some credit for being able to come into a lot of action that was going on and give it a booster shot," she said. But "the big caution going forward is that we don't know whether we will be able to sustain this in any way or not."

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    Safety-Net Hospitals Adapt to Difficult Times by Investing in Health IT and Integrated Care

    By Rebecca Adams, CQ HealthBeat Associate Editor

    August 7, 2012 -- Safety net hospitals face fiscal challenges that will force them to change the way they do business, according to a pair of studies in the journal Health Affairs.

    One report, led by Harvard University researchers, examined the characteristics of 150 safety net hospitals from 2003 to 2007. The researchers were surprised by their finding that the hospitals that were directly overseen by politicians and those in highly competitive markets were the most profitable.

    Another study, led by Urban Institute fellows, examined the way that five safety net hospitals are coping with changes in the health care system.

    The first study found that even though public hospitals have lower profit margins than private for-profit institutions, some of the most financially secure safety net hospitals were those governed by elected officials. That was partly because the hospitals were supported by state, local and federal governments. But that aid is more difficult to find when government budgets are strained, as is the case now.

    Separately, safety-net hospitals face Medicare and Medicaid cuts stemming from the 2010 health care law (PL 111-148, PL 111-152), including a 75 percent reduction in Medicare disproportionate share payments in 2014.

    "Safety-net hospitals face a new market reality," said the study, which was written by Harvard School of Public Health professor Nancy Kane and others. "The economic downturn, slow recovery, and politics of deficit reduction erode the ability of local governments to support the safety net. Safety net hospitals that have not focused on cost control, quality improvement or services that attract insured patients will face increasing financial and competitive pressure."

    The analysis concluded that "the adverse consequences of public hospital failure may be serious and long lasting." While the study outlined the problems safety net hospitals face, it did not offer specific solutions.

    The other study examined how five hospitals were preparing for the changes. Between September 2010 and January 2011, the authors visited five hospitals—Bellevue Hospital Center in New York City; Denver Health Medical Center; Parkland Health and Hospital System in Dallas; San Francisco General Hospital; and Virginia Commonwealth University Health System in Richmond. The authors wrote that the hospitals in the study were selected after a review of financial data from the National Association of Public Hospitals and Health Systems.

    Officials with the hospitals reported that health information technology and integrated systems of care improved their ability to withstand lower levels of government funding. Integrated care gave the hospitals increased purchasing power, the authors said.

    The study said that Denver Health, Bellevue, and Parkland also have benefitted from implementing variations of a strategy based on the Toyota production system known as "lean performance improvement." The technique seeks to eliminate the use of resources for any goal that does not clearly create value for customers.

    At Virginia Commonwealth, the hospital invested in specialized beds to reduce bedsores, decreasing the length of hospital stays.

    "The study hospitals' preparations for reform include improving the efficiency and quality of care delivery; investing in the systems, staffing, and physical environment needed to retain current patients and attract newly insured patients; and laying the groundwork for accountable care organizations and new payment systems," said the study's authors.

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    Many of Those Covered Under Medicaid Expansion Could Be Young People

    By John Reichard, CQ HealthBeat Editor

    August 10, 2012 -- Of the 15 million uninsured adults nationwide who could get Medicaid coverage under the health care law, slightly more than half are under the age of 35, according to a new study.

    Most are white, and most are not living with dependent children, according to the analysis prepared by the Urban Institute with funding from the Robert Wood Johnson Foundation.

    The health care overhaul provides federal funding to states to expand Medicaid coverage to adults with incomes up to 138 percent of the federal poverty level. The 15 million estimate assumes all states expand their Medicaid populations. However, the June 28 Supreme Court ruling on the health law (PL 111-148, PL 111-152) gives states the right to opt out of the expansion. It's not clear how many will do so.

    "More than half of newly eligible uninsured adults—about 7.8 million—are under the age of 35," the study said. "Thirty-five percent are ages 35-54, while around 2 million are near-elderly, aged 55-64."

    Coverage of the near-elderly group could not only increase their access to needed care but also reduce their costs to Medicare once they become eligible for that program, the study said. "Other research suggests that lack of coverage before reaching Medicare eligibility at age 65 is associated with higher Medicare expenditures," the study noted.

    Fifty-three percent of those who could gain Medicaid coverage are male. A total of 4.6 million uninsured women in their childbearing years—ages 19 to 44 according to the study—could become eligible.

    "This has the potential to lead to better health in women who are or who become mothers, to increased spacing between births, and to improved birth outcomes and health of newborns," the study said.

    Fifty-five percent of the uninsured who could gain Medicaid coverage are white, 19 percent are Hispanic, 19 percent are black and 7 percent are "another race."

    Eighty-two percent, or 12.4 million, do not have dependent children living with them. But parents would see their eligibility for Medicaid increased; currently few states cover parents who aren't disabled or parents where the mother is not pregnant.

    "Increased health insurance coverage of parents should increase the extent to which their physical and mental health needs are addressed, reduce the financial burdens of health care and, as a result, have positive effects on their children and families as well," the study concluded.

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    Quality Forum Recommends Measurements on Cancer, Care Coordination, and Disparities

    By Rebecca Adams, CQ HealthBeat Associate Editor

    August 10, 2012 -- The National Quality Forum recently endorsed several quality measures on cancer treatment, care coordination, and health care disparities. The standards on disparities are the first comprehensive set of measures targeting the problem of health disparities among different populations.

    The forum is a voluntary consensus standards-setting organization. Medicare officials consider NQF-endorsed measures when setting federal policies.

    Individuals or groups that disagree with any of the standards can request reconsideration of them by submitting an appeal no later than Sept. 10.

    The organization decided to take on the issue of racial and ethnic disparities in the wake of research from the Institute of Medicine that shows that minorities often get lower quality care than white patients. That problem is worsened by the fact that minorities often have a harder time getting care and are not as well-versed in health conditions and treatments as white people. NQF officials said they got a grant from the Robert Wood Johnson Foundation in February 2011 to think about structuring quality measures that would affect health care disparities between different groups of people.

    The group considered 16 measures and ended up endorsing 12 of them.

    "Measures evaluating patient engagement and experience are essential to eliminating disparities and supporting culturally competent care for all patients," said Denice Cora-Bramble, professor of pediatrics at The George Washington University and co-chair of the Healthcare Disparities and Cultural Competency Steering Committee. "These measures will give providers the tools they need to support the high-quality care that all patients deserve."

    The standards are evaluations of actions that include efforts to increase patients' health literacy, ensure that patients who have trouble speaking English get translations of information they need to make medical decisions, and that medical professionals communicate with patients in ways that respect cultural differences.

    "Accurate and meaningful metrics to measure care quality for populations adversely affected by disparities are critically needed," said Laura J. Miller, the interim CEO of NQF. "These endorsed measures will be instrumental in promoting equitable, high-quality and compassionate care for all populations across the health care delivery system."

    For cancer care, the NQF released 22 standards that build on previous recommendations. They are focused on specific conditions, such as leukemia and prostate cancer, and also on issues that affect care, such as radiation dose limits, hospice readmissions and care planning.

    "Cancer care is often complex, with many patients facing complicated treatment regimens, individualized therapies, and rapidly changing evidence for existing treatments," said Stephen Lutz, radiation oncologist at Blanchard Valley Regional Cancer Center and chair of the Cancer Steering Committee. "This measure set will help address those complexities and promote the delivery of high-quality cancer care."

    NQF also endorsed 12 measures that evaluate the coordination of care among medical professionals. The metrics assess issues such as reconciling patients' medications, establishing advance care plans and the ability of patients and caregivers medical records when patients leave hospitals and other in-patient facilities.

    "Care coordination is essential to reducing medical errors, wasteful spending and unnecessary pain and procedures for patients," said Miller, the interim CEO of NQF. "We are pleased to endorse this set of measures that will help providers deliver safer, coordinated, and higher-quality care to patients."

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    Study Shows a Patient's Insurance Still Determines Physician Access

    By Rebecca Adams, CQ HealthBeat Associate Editor

    August 6, 2012 -- About 69 percent of physicians nationwide accepted new Medicaid patients last year, compared to the 83 percent who took new Medicare patients or the nearly 82 percent who saw new privately insured patients, according to a study in the journal Health Affairs published last week.

    The study is extrapolated from an annual Centers for Disease Control and Prevention (CDC) survey of 4,326 doctors.

    The report included a state-by-state chart showing physician acceptance rates. New Jersey was the state where new Medicaid patients faced the biggest challenge in finding a physician; there, about 40.4 percent of doctors accepted new individuals. The state with the second-lowest acceptance rate was California, although its rate was similar to the national average.

    Higher Medicaid rates played a role in persuading physicians to schedule new patients for appointments.

    "Acceptance rates of new Medicaid patients were higher in states with higher Medicaid-to-Medicare fee-for-service fee ratios," wrote author Sandra Decker, an economist with the CDC's National Center for Health Statistics. Medicare generally pays physicians higher rates than Medicaid, although the difference varies because each state sets its own Medicaid physician payment rates.

    Decker found that a 10 percentage-point rise in the Medicaid-to-Medicare payment ratio increased the acceptance of new Medicaid patients by an average of four percentage points.

    The study said that primary care doctors were 11 percent less likely than other physicians to agree to see new Medicaid patients.

    Physicians outside of cities and metropolitan statistical areas were 19 percent more likely to take new patients. Doctors in the Midwest were 12 percent more likely to accept new Medicaid patients than those in the Northeast.

    It isn't clear how temporary payment changes in the 2010 health care law (PL 111-148, PL 111-152) will affect physicians' behavior. In 2013 and 2014, doctors will be paid the higher Medicare rates. But that federal payment boost will disappear the following year. However, states could choose to maintain the higher rates if officials believe that they can afford to do so.

    The findings come as many states are considering whether to expand their Medicaid programs under the 2010 overhaul.

    Another recent Health Affairs study released by George Washington University professor Sara Rosenbaum and former federal Medicaid director Tim Westmoreland examined the June 28 Supreme Court decision on Medicaid. The ruling removed a requirement that states who choose not to expand Medicaid under the law would have to forfeit all of the federal matching funds for their existing program. Instead, states would only lose the opportunity to gain federal matching rates for the population of people who would be newly eligible.

    Rosenbaum and Westmoreland raised questions about whether the Department of Health and Human Services (HHS) has the flexibility to allow states to expand Medicaid by a portion of the group that the health care law would have covered. The pair explored three potential responses from HHS officials.

    Under the first, HHS officials may take a hard line approach and decide that states must either expand their programs to all of the population that would have been covered under the law or none of them.

    Rosenbaum and Westmoreland said that this perspective is backed by the plain text of the law.

    The HHS secretary, they write, "lacks the authority to break the expansion group into pieces, to allow less than full coverage of the group, or to allow states to phase in coverage."

    But they write that "although correct as a matter of law, this position increases attention and pressure on Congress at a critical time in the Affordable Care Act's implementation." Some supporters fear that "in a climate driven by political animosity" toward the law, Congress could end up getting rid of the Medicaid expansion altogether if lawmakers start revising it.

    Under another scenario, which the authors describe as tricky, HHS officials could use flexibility, such as allowing states to expand the program in phases.

    "However, if the secretary were to take this initial step, there would be no obvious stopping point to the calls for interpretation and flexibility," they wrote.

    Under a third possible interpretation, HHS officials might use their demonstration authority under Section 1115 of the part of the Social Security Act governing Medicaid waivers. But that could be fraught with legal peril.

    "Low-income people have challenged unwarranted uses of Section 1115 and won," warned the pair.

    HHS officials have not yet released information on which approach they are inclined to pursue.

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