By Ben Weyl, CQ Staff

December 9, 2010 -- The House cleared a measure to provide a one-year extension of Medicare physician payment rates, giving lawmakers up to a year before they revisit the matter, which they already considered several times this year.

The bill (HR 4994) would freeze current payment rates until Dec. 31, 2011, and would avert a 25 percent cut in the rates scheduled to take effect Jan. 1. The measure also would extend several expiring Medicare programs, including protections for rural doctors and hospitals.

The House voted, 409-2, to concur in the Senate amendments to the bill, thus passing the measure, which the Senate passed by unanimous consent . President Obama is expected to sign it.

The bill would be fully paid for, mostly by changing a provision in the health care overhaul (PL 111-148, PL 111-152), the first substantial modification to the landmark legislation.

Until now, lawmakers have only been able to agree to short-term delays, often just before the extensions expired, and sometimes afterward. Physician and patient groups have urged a lengthier extension of the "doc fix," or permanent changes to the underlying payment formula, to provide more stability for the Medicare program. Democrats and Republicans have not been able to agree on how to offset the cost of those proposals.

Obama released a statement calling the measure "an important step forward to stabilize Medicare," but called for a permanent solution and said he looked forward to working on the issue with Congress next year.

The increases in mandatory spending under the bill would be offset primarily by recouping more money from consumers who receive excessive insurance subsidies under a specific provision in the health care law. That provision will provide tax credits to help individuals and families afford insurance on state-run insurance exchanges when they take effect in 2014. If a tax credit recipient misstates income, or if it changes over the course of the year, he or she has to pay back part of the subsidy—up to $250 for an individual or $400 for families.

The measure advanced would replace that flat repayment with a sliding-scale structure, requiring smaller repayments at lower incomes and dramatically increasing the maximum amount for high earners.

The 'First Blow' to Health Care Law?

Lawmakers from both parties praised the agreement, though they warned that a permanent "doc fix" was still necessary. And Republicans said the battle over the health care law—Democrats' signature legislative achievement this year—was far from over.

"Giving physicians a year of certainty in their pay is important to protect Medicare beneficiaries' access to their physicians," said Rep. Pete Stark, D-Calif. "In the long run we all know we need to do much better by Medicare than continued one-year patches on the physician payment formula."

Wally Herger, R-Calif., noted approvingly that Congress was acting in "a bipartisan way" and "a fiscally responsible manner," but added that he saw it as "pulling at the thread that will begin to unravel Obamacare."

"Let it be known on this day in the people's House the dismantling of Obamacare begins," Herger said. "Once the House passes this bill and the president signs it into law, we will have landed the first blow to the Democrats' massive health care overhaul."

That came as news to New Jersey Democrat Frank Pallone Jr., who strongly disagreed with Herger's characterization.

"There is nothing in this bill that would any way disrupt or repeal the health care reform," Pallone said. "If there was any remote suggestion that we were repealing, or this was the beginning of the repeal, as the gentleman suggested, of the health care reform, not one Democrat would support that."

Pallone called the yearlong extension "a vital piece of legislation for America's seniors, persons with disabilities and military families," and a good stopgap "until we can work out a permanent solution."

Groups React

The House's action garnered praise from a variety of stakeholders, but most also prodded Congress to address the issue on a permanent basis.

Joe Baker, the president of the Medicare Rights Center said that in passing the measure, "Congress did right by people with Medicare." But Baker stated, "We also hope that Congress uses the next year to work with the Centers for Medicare and Medicaid Services (CMS) to create a long-term fix that preserves Medicare patients' access to care and relationships with their physicians."

Cecil B. Wilson, president of the American Medical Association, agreed, praising the House vote but pledging to work "closely with congressional leadership in the new year to develop a long-term solution to this perennial Medicare problem for seniors and their physicians."

By John Reichard, CQ HealthBeat Editor

December 7, 2010 -- The net effect of the economic downturn on the uninsured population was an increase of 5 million to a total of 50 million, according to an Urban Institute analysis.

The number of Americans below age 65 insured through employers dropped by 9.3 million during the period of the study, 2007 through 2009. The drop from 164.5 million to 156.2 million stemmed in large part from job losses and the movement of workers from full-time to part-time status, said Urban Institute analyst John Holohan.

Gains in publicly funded coverage offset some of the losses for adults; the number of uninsured adults during the period increased by 5.6 million. Increases in coverage of uninsured children by Medicaid and the Children's Health Insurance Programs more than offset losses in coverage of children through employer-sponsored insurance.

Thus the modest gain in children's coverage overall, coupled with the loss of adult coverage, had the combined effect of adding 5 million to the ranks of the uninsured.

The study also found that the largest percentage increase of the uninsured occurred in the Midwest, and that 60 percent of those who became uninsured were white Americans.

Holohan said in a summary of the study that the health care overhaul law will help prevent such losses and largely end the link between employment loss and loss of insurance coverage. But that will not happen until coverage provisions of the law take effect in 2014. Until then, employer-sponsored coverage likely "will continue to decline, because premiums will almost certainly grow faster than wages and salaries," Holohan said. The number of uninsured people "is likely to increase," he added. The study was posted by the policy journal Health Affairs.

By Jane Norman, CQ HealthBeat Associate Editor

December 10, 2010 -- When Connecticut regulators earlier this month rejected a proposed 20 percent increase in health insurance premiums by Anthem Blue Cross and Blue Shield, the Obama administration applauded and pointed to the decision as an example of the power states can wield over insurers in an effort to keep premiums down. There will be "more good news" like that in months to come, predicted Nancy-Ann DeParle, director of the White House Office of Health Reform.

DeParle was referring to a mechanism in the new health care law designed to give insurance companies pause before proposing such large increases. Under the law, Washington won't be able to block big increases, but it will work with states to conduct annual reviews of increases that are considered "unreasonable." And the federal government gets to define what's unreasonable.

Any day now, Health and Human Services Secretary Kathleen Sebelius is expected to issue regulations spelling out how the department will define the standard and the process by which the HHS will work with states to review the increases.

Under the law, insurers that have levied unreasonable increases will have to provide detailed explanations and financial information to the states, the federal government and consumers, and all this will have to be posted on plan websites.

As part of its regulation, HHS is considering which information to require, and it could include material that has not previously been readily available to the public. Some state insurance regulators, for example, want to require disclosure of the annual compensation of the 10 highest officers or employees.

"It's kind of a transparency, sunshine provision," said Sabrina Corlette, a research professor at the Georgetown Health Policy Institute.

The industry, health care providers and consumer groups are keeping a close eye on HHS because they are worried about how that definition will be shaped.

So are state insurance regulators. But the stakes are different for each state. That's because the degree to which state regulators have authority over premium increases varies widely across the country, ranging from none at all to prior approval of any proposed hikes, according to a recent Kaiser Family Foundation report.

To boost state regulatory efforts, the health care law (PL 111-148, PL 111-152) provided $250 million in grants for state insurance departments. The first awards of $46 million to 45 states went out in August. States will use the money to add staff to review rates, create websites with new consumer information, or to ask state lawmakers for more authority to review increases. DeParle says the grants demonstrate the government's commitment to cracking down on extreme premium increases.

Insurers See Politics at Work

But some members of Congress say federal rate review should have gone much further under the law. Two Democrats, California Sen. Dianne Feinstein and Illinois Rep. Jan Schakowsky proposed legislation (HR 4757, S 3078) that would have given HHS the power to deny or modify rate increases. They plan to push the proposal again in the next Congress, though it's unlikely to get very far with Democrats in the minority in the House.

"Unless you have some method of controlling premiums and have some premium rate review ability by the government, these companies will charge whatever they can," Feinstein said. Schakowsky says national authority is needed when insurers "game the system" to pad profits.

As it is, the law is causing concern among insurers. Karen Ignagni, chief executive of America's Health Insurance Plans, which represents the industry, said HHS should consider the underlying factors driving health care costs, and thus premiums, including increases in hospital and other provider costs. Decisions should be made based on the actuarial data insurers use to calculate premiums, conditions in particular markets that may be driving costs and insurer solvency, she said.

The Connecticut case did none of that, Ignagni said. "There was no data driving the decision," she said, calling the rate review a "political process, not a technical process." To underscore the point that provider charges are driving the increases, AHIP recently released a study showing a 159 percent growth in hospital inpatient revenue per day billed to private insurers in California between 2000 and 2009.

Consumer groups, meanwhile, have urged Sebelius not to set the "unreasonable" threshold too high. They recommend that increases should be deemed unreasonable if they are greater than 10 percent; greater than the annual increase in the medical Consumer Price Index; or if the carrier had to issue consumer rebates under the health law because it spent too much on administrative costs.

HHS officials are not saying when they will issue the regulation. Asked about the timetable, a department official said HHS is "working diligently" to implement the law.

By Dena Bunis, CQ HealthBeat Managing Editor

December 9, 2010 -- Federal officials made it clear that only under two limited circumstances can insurers who have received waivers to continue offering so-called "mini-med" health plans sell more of these policies. And for all of these limited coverage plans, companies must alert consumers that such insurance does not meet the minimum coverage standards required under the health care overhaul law.

Health and Human Services officials began issuing waivers for these plans—used mainly to cover part-time and low-wage workers—because they were concerned that companies such as McDonald's might drop insurance for employees if they had to abide by the rules of the health law (PL 111-148, PL 111-152). The plans put a far lower annual limit on coverage than the minimum $750,000 called for under the law.

As of 2014, these mini-med plans will be outlawed. "Unfortunately, today,'' HHS Secretary Kathleen Sebelius said in a news release, "mini-med plans are often the only type of private insurance available to some workers.'' And because of that, the waiver program was started. Policy holders who want waivers have to prove to HHS that without the plans, they would either see a large increase in their premiums or would no longer have access to coverage.

Concerned that once insurers received a waiver they would continue to sell mini-med policies, HHS issued guidance Thursday spelling out the two situations under which the policies could be sold. The first is when a state requires insurers to offer coverage with low annual limits and that state has received an HHS waiver. The second is when an employer with a waiver wants to change insurers and still be able to offer mini-med plans.

The waivers, the HHS materials stress, are only good for one year. So insurers or states that want to continue selling them after a year would have to apply for a new waiver.

HHS's guidance also spells out what insurers must tell people who are getting these mini-med plans. Insurers have to provide the information in "14 point bold type" on the front of any insurance materials sent out to consumers. HHS provided model language that tells people that their insurance plan "does not meet the minimum standards required by the Affordable Care Act" when it comes to dollar limits on coverage. Sebelius sent a letter to consumer groups explaining the new notice requirements.

There's been an explosion in the number of mini-med waivers HHS has granted. As of October, HHS had given permission to 30 companies to sell such policies. In November, that number swelled to 111 and covered 1,175,411 workers. As of Dec. 7, the most recent date for which data is available, 222 waivers had been approved, covering1,507,418 people.

"Prior to the Affordable Care Act, there was little public data available on these plans,'' HHS officials said in an e-mail. "The notification requirement is part of our strategy to ensure consumers have the information they need and keep the coverage they have as we move to the consumer-focused system in 2014. This is just another area where we are shining light for consumers on an otherwise non-transparent industry."

Sen. John D. Rockefeller IV, who has railed against these plans and did so at a recent Senate hearing, called the HHS announcement "a small but important step forward for consumers.''

"Consumers need to get the straight story about 'mini-med' policies that do not protect them if they get seriously sick or injured,'' Rockefeller said in a statement. "We pledged to bring more transparency to the health care process. I've heard firsthand about the devastating impact that inadequate coverage can have on individuals and families. These 'mini-med' policies have gaping holes in coverage and do not help with serious health problems. I am encouraged by HHS taking this step to begin to improve consumer protections as we transition to a fully reformed insurance market in 2014."

December 8, 2010 -- The federal government should be more aggressive in pushing hospitals and physicians to adopt electronic health record systems that can trade information with other providers rather than just store electronic information internally, said a report by the President's Council of Advisors on Science and Technology (PCAST).

The 91-page report recommended 24 steps that federal agencies could take to spur the adoption of interoperable systems. The proposal included a recommendation for the Office of the National Coordinator for Health Information Technology (IT) to "move more boldly to ensure that the nation has electronic health systems that are able to exchange health data in a universal manner." The group said that the ONC should tell providers that they will need to have this type of system in place by 2013 in order to get Medicare bonus payments.

David Blumenthal, the national coordinator for health IT, likened his reaction to the goals in the report to the experience of a mountain climber who scales one peak only to find that there are many more ahead before he reaches the summit. He said the council members were essentially saying, "Congrats on what you've done, but there's a whole lot more to do."

Blumenthal said he would implement the recommendations "as quickly as possible" but acknowledged there could be some difficulties in reaching the goals as his office worked through technical details that could bring surprises. Nonetheless, he called the objectives of the council "doable."

Among the other suggestions from the council were recommendations for the ONC to establish minimal technical standards for information sharing.

The group called on the Centers for Medicare and Medicaid Services (CMS) to "redirect the focus of meaningful use measures as rapidly as possible from data collection of specified lists of health measures to higher levels of data exchange and the increased use of clinical decision supports" in an effort to make sure that different computer systems can talk to each other.

The group said CMS should not wait for an upcoming report on IT modernization before beginning "to develop options for the modernization and full integration of its information systems platforms using modern technologies." The members said that by 2014 CMS should try to fully integrate its systems so that it can share valuable data within the agency and with providers.

The group also said CMS should "exercise its influence as the nation's largest health care provider to accelerate the implementation of health information exchange using tagged data elements."

The American Hospital Association said in a statement that it supports the council's goals but has some concerns.

"We support an environment where health information follows the patient so that the right information is available to the right caregiver at the right time to support the best possible care,'' the statement said. "We remain concerned, however, that there are no uniform, national mechanisms in place today to accurately match patients to their records across sites of care. That needs to happen to ensure clinical decisions based on shared records are safe and appropriate.

"In moving forward with greater health information exchange, we must balance the availability of health information to support care with appropriate safeguards on this inherently sensitive information."

The report will be published later this week in the Federal Register, and the Department of Health and Human Services is asking for public comments until Jan. 17, 2011.

By Rebecca Adams, CQ HealthBeat Associate Editor

December 9, 2010 -- A new model of coordinating patients' medical care known as an "accountable care organization" (ACO) is receiving a lot of interest as Medicare officials work on a proposed rule that will be released in January. But analysts with Avalere Health cautioned that it will not be easy for providers to join together to create an ACO network.

ACOs are groups of doctors, hospitals, and other caregivers that work together to improve the quality and efficiency of care. Under the health care law (PL 111-148, PL 111-152), the Centers for Medicare and Medicaid Services will start its version of an ACO program in 2012, which will build on private-sector partnerships that have already launched. CMS officials are expected to allow providers to keep some of the savings that they generate by coordinating more closely together, if there are any savings.

"There's a lot of momentum for ACOs," said Avalere Senior Vice President Erik Johnson as part of a webinar for clients. But he said that setting one up is a "highly uncertain bet for most providers to contemplate." He thought about dubbing his seminar "ACOs: Even Harder than You Think."

"A lot remains unknown about what it will take to be an ACO" under federal rules, said Avalere Director Holly Wittenberg.

Johnson said one key component that providers should consider is how advanced their electronic health records systems are and whether those systems are able to transmit patient data to other hospitals, physicians or other providers. The ability to share records electronically is important because providers don't have the time to sift through lengthy paper records or wait for faxes to deliver information about a patient that is being cared for by several different doctors.

Health IT "is in many ways the linchpin" that will determine whether an ACO is successful, said Johnson.

Wittenberg said that the ACO model is not dramatically different than that of managed care health plans in the 1990s but said that the environment is different now. One difference is that providers will be the central decision makers in an ACO that drive what type of care patients get, not insurance companies.

Seniors also would not be required to get medical services from the providers who are in the ACO that the beneficiaries are enrolled in. They could choose to see other doctors if they want.

However, Johnson emphasized that there are a number of legal and regulatory questions that still have to be decided about how ACOs will operate. Federal officials have not yet decided whether to relax anti-fraud laws and legislation banning physicians from making referrals to a hospital or another institution in which a doctor has a financial relationship.

If providers decide to try to establish an ACO, Johnson said, it will be an "extremely difficult journey and long journey for most providers to get into."