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December 10, 2007

Washington Health Policy Week in Review Archive 08dd2257-a644-4cf1-9865-7db9abd5a33e

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Employer-Sponsored Coverage Not Vanishing, Experts Say

By Sara Lubbes, CQ Staff

December 6, 2007 -- Employers are not backing away from offering health insurance to workers, according to a new study by the Employee Benefit Research Institute (EBRI), a business-focused research group.

But companies do want workers to take more responsibility for their health care costs, something that will be hard for employees to swallow, experts told employers gathered at an EBRI-sponsored forum Thursday.

The EBRI study—released to coincide with the forum—found that although the number of firms offering health insurance has declined about 9 percent since 2000, about 59 percent of employers are still offering the coverage. That number is same as it was in 1996.

"We're essentially where we were back them," said study author Paul Fronstin, the director of EBRI's health research and education program. "Employer-sponsored health care is not vanishing."

Employers in the study also agreed they would only drop health care coverage if they lost government-sponsored tax breaks and said it would be "insane" for any large firm to be the first to slash insurance benefits, Fronstin said.

But employers do want to move away from traditional health insurance plans toward a new model, known as consumer-directed coverage, the experts said.

Under the relatively-new kind of insurance plan, employees use a health reimbursement account or a health savings account to buy routine health services. Employers can contribute to these accounts, much like firms contribute to retirement savings plans. Other worker expenses are covered by traditional insurance, but only after workers pay a high deductible.

Such plans are designed to put more of the burden of responsibility for costs on the employee, who, in turn, is supposed to receive more detailed information about health care costs and options for treatment and doctors.

Critics of the plans say they shift the cost-burden to employees and discourage them getting health care when they need it. A 2006 survey, conducted by the Kaiser Family Foundation, found that enrollees in such policies are twice as likely as individuals in traditional health care plans to say that they needed medical care in the past year but did not get it due to costs.

But Joe Bogdan, a representative of insurance firm CIGNA Healthcare, said Thursday that a comparison of workers enrolled in CIGNA's traditional plans versus their consumer-directed plan showed that people in the two plans spent about the same out-of-pocket amount on health care over two years.

At the same time, overall costs of health care went down: CIGNA saved 12 percent in the first year under the consumer-directed plan. In the second year, the insurer saved about 5 percent.

People enrolled in the consumer-directed plan were also more likely to visit a doctor for preventative care, not just once they got sick, Bogdan said.

But convincing workers that a consumer-directed plan is preferable to traditional health insurance will not be easy for employers, said Jodi DiCenzo, a behavior specialist with Behavioral Research Associates.

Employees are unlikely to voluntarily enroll in the new plan, but employers could opt to enroll workers automatically, much like firms do with 401(k) retirement savings accounts, DiCenzo told forum attendees, which included representatives from Bank of America, American Express and the International Brotherhood of Teamsters.

DiCenzo stressed it is important that employers do not overwhelm their employees with too many health care choices, but that just giving employees a pamphlet or hosting a class about the health care options is not going to be enough.

"People are not likely to do anything unless they get a kick in the pants," she said.

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Groups, Lawmakers Push for E-Prescribing in Medicare Package

By Mary Agnes Carey, CQ HealthBeat Associate Editor

December 5, 2007 -- A coalition of consumer and health care groups joined forces Wednesday to support legislation that would require Medicare physicians to issue prescriptions electronically by 2011 or face financial penalties.

The measure would foster the adoption of e-prescribing by providing permanent Medicare funding for payment bonuses to physicians who acquire e-prescribing technology. In addition, for every Medicare prescription a doctor writes electronically, they would be paid an extra 1 percent bonus.

"E-prescribing will save money, save time, save doctors from piles of paperwork, and most importantly, save lives," said one of the measure's co-sponsors, Sen. John Kerry, D-Mass. "Deaths and injuries from hand-written prescriptions could be nearly eliminated if e-prescriptions were adopted on a wide scale. We need to seize this bi-partisan opportunity and make this common sense reform a reality now."

Among its provisions, the measure would provide permanent Medicare funding for one-time grants to physicians to help offset the start-up costs to physicians of acquiring and implementing e-prescribing technology, and provide permanent Medicare funding for payment bonuses to physicians for use of e-prescribing.

Under the legislation, physicians would be required, as of Jan. 1, 2011, to write their Medicare outpatient prescriptions electronically. Physicians that continue to write prescriptions by hand would face a per-claim financial penalty. The measure also would give the secretary of Health and Human Services the authority to grant one- or two-year hardship waivers for physicians who face particular difficulties in acquiring and implementing e-prescribing, especially those from rural areas or very small or solo practices.

Former House Speaker Newt Gingrich, who heads the Center for Health Transformation, said Wednesday that Americans are ready for e-prescribing. "With Americans using ATM cards everyday in this country and abroad, we believe they are prepared for the massive benefits providing by an electronic prescriptions system—a 21st century system," Gingrich said.

In addition to Kerry, co-sponsors of the measure include Sen.. Debbie Stabenow, D-Mich., and Sen. John Ensign, R-Nev. In the House, co-sponsors include Reps. Allyson Y. Schwartz, D-Penn., and Jon Porter, R-Nev.

Proponents of the legislation, citing Institute of Medicine figures, said that as a result of prescription errors, American hospital patients suffer 1.5 million injuries each year and medication errors will kill at least 7,000 Americans in 2007. Of the more than three billion prescriptions written each year, doctors report nearly one billion require a follow-up between providers and pharmacies for clarification. The health-care system costs are in the billions.

According to the firm SureScripts, 35 million prescription transactions were sent electronically in 2007 between pharmacies and prescribers, with more electronic prescriptions transmitted in the first three quarters of 2007 than in 2004, 2005 and 2006 combined.

In a letter sent Wednesday to the Senate, Consumers Union Senior Policy Analyst Bill Vaughan said the group wants Congress to implement e-prescribing in Medicare and Medicaid and urged that the legislation be included in any Medicare package. Senate Finance Committee Chairman Max Baucus, D-Mont., announced Wednesday afternoon he is scrapping plans for a markup of Medicare legislation and instead will negotiate directly with the House.

The Bush Administration has urged that physicians be required to adopt health care information technology as a part of any Medicare package that would prevent a scheduled cut in Medicare physician payments.

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MedPAC Debates Pay Changes for Doctors, Dialysis, Home Health

By John Reichard, CQ HealthBeat Editor

December 7, 2007 -- The Medicare Payment Advisory Commission (MedPAC) wrapped up its two-day meeting Friday morning by debating draft recommendations to Congress to boost payments in 2009 to physicians by 1.2 percent, to dialysis facilities by one percent, and to keep home health payments that year at 2008 levels.

The morning's discussions included one unusual twist: self-described "rookie commissioner" Jack Ebeler urging that payments to home health agencies be sliced by five percent because of the industry's fat Medicare profit margins. A "zero payment update" is usually as tough as MedPAC gets on the health care industry.

The commission is in the final stages of developing payment recommendations it will submit next March to Congress for 2009. The draft language is subject to change before the commission votes on final recommendations at its Jan. 10–11 meeting.

In reviewing the adequacy of payments to physicians, staffers examined such indicators as the willingness of doctors to treat Medicare patients, the volume of services they provide to those patients and the quality of care they deliver. The staff analysis also examined data on the rising costs to physicians of providing treatment.

Most beneficiaries are able to find new physicians, the analysis said. An August–September MedPAC survey of beneficiaries found that 70 percent reported that finding a new doctor was no problem. That figure is down a bit from 2006, when the percentage was 76 percent. In addition, "most physicians in 2006 were accepting all or most Medicare patients," the analysis said.

One of the commissioners, William Scanlon, pointed out that those statistics refer to the percentage of beneficiaries who are actually looking for a new doctor. Thus it would inaccurate to say that 30 percent of all Medicare beneficiaries are having trouble finding a new doctor, he said. Scanlon estimated that based on the findings, it is really about 3 percent of all Medicare beneficiaries who are having a problem finding a new doctor.

Meanwhile, growth continues in the use per beneficiary of physician services. The volume of doctor services per beneficiary in 2006 grew by 3.6 percent. The highest rates of growth in 2006 were for "tests"—6.9 percent—and for medical imaging, 6.2 percent.

Most quality of care indicators were "stable" or showed improvements, the analysis found. Meanwhile, Medicare's preliminary estimate of 2009 "input prices," a measure of what it costs doctors to deliver care, shows an increase in those costs of 2.7 percent. Adjusting that figure for "productivity growth" in the economy—estimated at 1.5 percent—adds up to a recommended increase of 1.2 percent in physician payments in 2009 if that is the increase MedPAC finally recommends and if Congress were to accept it.

The panel also is considering a draft recommendation that Congress enact legislation to require the Centers for Medicare and Medicaid Services to establish a process for measuring and reporting, on a confidential basis, the health care resources consumed by doctors in delivering care. The aim would be to prod doctors who order too many tests and services to conform the way they practice to that of their efficient peers. But some commissioners said that after a couple of years, tougher steps should be taken to discourage inefficient care, such as penalizing it by paying less or by publicizing which doctors are less efficient.

With respect to dialysis facilities, the commission's analysis found that profit margins on Medicare patients in 2006 averaged 5.9 percent. It projected profit margins in 2008 averaging 2.6 percent. The draft recommendation called for increasing the payment rate to the facilities in 2009 by one percent on average while establishing a quality incentive program that might mean payments above or below that figure depending on the quality of care delivered by a facility.

Regarding home health, the commission estimated that industry profits on Medicare patients averaged 15.4 percent in 2006 and that in 2008 they would average 11.4 percent. It unveiled a draft recommendation that would freeze 2009 payments at 2008 levels.

The level of profit combined with a lack of clarity about what care is actually provided to Medicare patients led Scanlon to strongly challenge the current payment system. "We have to take fundamental issue with this payment system," he said. The commission should explore how the Medicare dollars represented by those 15 percent margins could better be allocated to other services provided to Medicare beneficiaries, he said.

First-year commissioner Jack Ebeler went even farther, saying "we should be discussing a five percent reduction" in payments to home health agencies. Scanlon replied a five percent across-the-board cut would be unfair to agencies that are delivering home care properly. But Ebeler said "there's a point where you simply have to say, 'Stop.'"

MedPAC Commissioner Glenn Hackbarth even called into question whether home health payments should be broken out separately, suggesting that they might be better bundled with payments for other types of services.

But Bill Dombi, vice president for law at the National Association for Home Care and Hospice, said MedPAC calculations are for freestanding home health agencies and do not take into account the many home care agencies he said are affiliated with hospitals and have higher costs and lower profit margins. He added that the MedPAC margin calculations do not include such costs as those associated with the use of dietitians, respiratory therapy, and telehealth services. Nor do they include certain business operating costs such as marketing, he said. When all types of payments are taken into account, the profits of home health agencies average just three percent, he said. He added that agencies face a number of payment cuts in the next few years because of CMS regulatory changes.

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Panel Analyzes Current State of Nursing Home Care

By Emily P. Walker, CQ Staff

December 7, 2007 -- Patients' rights have improved drastically in the two decades after Reagan-era legislation overhauled a shoddy nursing home system, but staffing shortages, lags in technology, and a lack of transparency are preventing further progress, panelists concluded Friday at a briefing sponsored by the Alliance for Health Reform.

The briefing commemorated the 20-year anniversary of the Omnibus Budget Reconciliation Act (OBRA) of 1987, which included the first major revision of federal nursing home standards since the creation of Medicare and Medicaid in 1967.

Prior to OBRA, some nursing homes were so bad they resembled a turn-of-the-century asylum rather than a long term care facility, according to a Kaiser Family Foundation video shown at the briefing,

"There was widespread neglect, which often turned into abuse, and then death," said Elma Holder, founder of the National Citizen's Coalition for Nursing Home Reform (NCCNHR).

OBRA created "rigorous standards that were more focused on resident rights," including banning the use of physical restraints in most situations, requiring centers to patient care plans and requiring that nurses aids have at least 75 hours of training, according to Joshua Wiener, program director for Aging, Disability and Long Term Care at RTI International.

The law also linked Centers for Medicare and Medicaid Service (CMS) payments to quality care benchmarks, and defined sanctions for facilities that did not comply with the new, tougher, standards.

Despite OBRA acting as "a map to a new way of thinking about nursing home care that we hadn't even imagined," regulation of the law hasn't exactly lived up to the law itself, according to Mary Jane Koren, assistant vice president of The Commonwealth Fund.

According to Janet Wells, director of public policy for NCCNHR, states and licensing boards are often poor enforcers of nursing home standards like care quality and staff-to-patient ratios.

But perhaps the biggest major barrier to further improving nursing home care is the nationwide nursing shortage, said Jack MacDonald, senior vice president for Golden Horizons, which operates more than 80 nursing homes nationwide. In addition, nursing homes often have a difficult time attracting nurse's aides because the pay is generally a few dollars short of what hospitals pay, MacDonald said.

Aside from addressing staffing issues, nursing home care lags behind improvements seen in other medical industries because of the absence of telemedicine in the nursing home setting, panelists said.

"In this age of the internet, computers, data access, why is it that we cannot introduce that concept into a nursing home," MacDonald said. "And especially to a rural nursing home where they have the problem of gaining access to certain specialties."

Other panelists suggested making data—such as staff-to-patient ratios, staff turnover, and care quality metrics&#8212available to consumers and the government.
"I applaud Medicare for releasing the list of the 75 worst performing nursing homes," said John Rother, director of policy and strategy for AARP.

As in 1987, it may be up to Congress to make further changes, according to Wells, who said it's time to look at a new overhaul law to augment OBRA.

Meanwhile, a coalition-based two-year campaign called "Advancing Excellence in America's Nursing Homes" that asks nursing home to select and set goals for three out of eight quality care indicators may help establish better baseline standards for nursing homes to follow. Wells said 40 percent of all nursing homes are a part of the voluntary initiative, which began in 2006.

Susan Weiss, senior vice president for Advocacy at the American Association of Homes and Services for the Aging said negative public perceptions of nursing homes and the intense focus on measuring care quality have shrouded what should be the entire mission of nursing homes.

"The standard of nursing homes is quality of life. And another word for that is joy," Weiss said. "How we manage people clinically and compassionately as they get to the end of life, that is something we haven't really talked about."

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Some Doctors' Oaths Hypocritical, Study Says

By Jesse Stanchak, CQ Staff

December 3, 2007 -- Many doctors have trouble living up to their own professional standards, according to a new study published Monday in the Annals of Internal Medicine.

The study, performed by David Blumenthal and Eric Campbell of Massachusetts General Hospital, surveyed 1,600 doctors across a range of specialties and found widespread agreement among doctors on a range of ethical standards, but considerable disparities in how well they live up to those ideals.

According to the study:

  • If a colleague was "significantly impaired," by drugs or alcohol or some other problem, 96 percent of doctors felt they should always report the problem, but 45 percent had let it slide at least once.
  • Ninety-three percent of doctors felt all serious medical errors should be reported, but 46 percent said they'd failed to report such an error.
  • A quarter of doctors would refer a patient to a facility that presented a clear conflict of interest for the doctor, even though 96 percent of physicians said their duty to their patients outweighed financial concerns.
  • While 93 percent of doctors felt they should treat anyone regardless of ability to pay, only 69 percent are currently taking patients who cannot pay for their treatment.
  • Only 25 percent of doctors have looked for disparities in care based on patient gender or race in the last three years, even though 98 percent of doctors agreed they should be working to minimize these inequalities.

"There is a measurable disconnect between what physicians say they think is the right thing to do and what they actually do," Campbell said in a news release. "This raises serious questions about the ability of the medical profession to regulate itself."

At a forum Monday at the National Press Club to discuss the study's findings, James Thompson, CEO of the Federation of State Medical Boards, argued that doctors were penned in by the American the health care system, fighting giant bureaucracies while fearing legal action if they make a mistake.

"We need to replace this system of punitive measures with non-punitive remediation," said Thompson, arguing that fear of punishment, for themselves or other doctors, makes it difficult for doctors to act on problems.

Sara Rosenbaum, head of the Health Policy Department at George Washington University, agreed that the problem was best addressed by state medical boards and other private regulatory groups, not with law suits and legislation.

"The social ideal is to avoid heavy-handed use of the law," said Rosenbaum, "It's too slow. By the time the money or the changes are ready to effect the people who made a complaint, its too late for the individual." She added that doctors and hospitals already have difficulty meeting their regulatory burden, limiting the effectiveness of new rules.

Rep. Michael C. Burgess, R-Texas, a physician, was in the audience but did not speak on the panel. He has long taken an interest in limiting medical liability suits. While he found himself agreeing with Rosenbaum that the medical industry would have to work harder to regulate itself to correct the issues brought up by the study, Burgess said he also knows how hard it can be effect change at a medical practice.

"The trouble is that it's almost impossible to bounce a physician out of a practice, no matter what they've done, even if you think you've got just an iron clad case against them," said Burgess. "Of course no one wants a doctor that's been drinking in an operating room, but what about the guy with the anger management problem? It's trickier."

Burgess cited a particularly extreme example. "I knew a doctor, years ago, who'd killed his wife, strangled her in fact. And everyone who worked with him knew it, absolutely. But it took 10 years for a case to be built against him and for him to be convicted and until then there was nothing anyone could do, because you're innocent until proven guilty."

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Straight Extension of Children's Health Program Likely

By Alex Wayne, CQ Staff

December 5, 2007 -- Prospects for a breakthrough agreement on expanding a popular children's health insurance program look bleak, and lawmakers now expect Congress to pass a long-term extension of the program instead.

House Republican Whip Roy Blunt, R-Mo., said Wednesday that he expected an extension of the State Children's Health Insurance Program (SCHIP) would be passed before Congress adjourns for the year. He said Republicans would support the inclusion of extra money to help states facing shortfalls in their programs

House Speaker Nancy Pelosi, D-Calif., has given congressional negotiators until the end of this week to reach a deal on an expansion of the State Children's Health Insurance Program (SCHIP). But there are no bipartisan talks scheduled between lawmakers, and House Republicans complain that Democrats have not made a counter-offer to their Nov. 15 proposal.

"How do you set a deadline that everything's off if you don't respond to the proposal that's on the table?" Rep. Nathan Deal, R-Ga., one of the authors of the Nov. 15 proposal, asked Wednesday.

Democrats were outraged by that proposal because it included a cap on income eligibility for Medicaid, a separate and much larger federal-state health insurance program for the poor.
Sens. Charles E. Grassley, R-Iowa, and Orrin G. Hatch, R-Utah, who have worked closely with Democrats on the children's health legislation, have made their own counter-offer to House Republicans, but it is not clear whether the Grassley-Hatch offer is backed by Democrats.

Regardless, some House Republicans were unimpressed with the changes Grassley and Hatch proposed.

"I thought all of them were really very, very difficult to accept," Deal said. "They watered down every one of the major issues."

A small group of House Republicans, led by Blunt, met briefly Tuesday morning to review the Grassley–Hatch proposal, Deal said. But even in that their group, he said, there was no clear agreement. "I think the consensus was the donuts were okay and the coffee was fine," he joked.

Democrats have been in intense negotiations for more than a month with House Republicans over an expansion of SCHIP. The program is a priority for Democrats, who want to expand it by about $35 billion over the next five years, to $60 billion—enough, they say, to cover 10 million children. The program currently covers about 6 million children.

But Republicans say they will not support an expansion unless it focuses on enrolling children from families earning less than twice the poverty level&#8212about $41,000 for a family of four&#8212and includes strong prohibitions against enrollment of any adults or illegal immigrants in the program.

Frank Pallone Jr., D-N.J., the chairman of the House Energy and Commerce Subcommittee on Health, said Wednesday that "there continue to be meetings at the staff level" on the bill. But he said he did not know whether an agreement would result.

Edward Epstein contributed to this report.

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