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December 27, 2005

Washington Health Policy Week in Review Archive 7136462b-1d51-4095-bae1-ba09cd4a7071

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Echoing Earlier Reports, Consumers Group Finds Medicare Drug Prices Higher Than VA

DECEMBER 22, 2005 -- A new survey conducted by Families USA, a consumer health organization, reports that drug prices under the new Medicare plan will be much higher than those negotiated by the Department of Veterans Affairs.

The survey compared the lowest pharmacy price of the 20 drugs most frequently used by seniors and found that the median price paid by Medicare plans was 48 percent higher than the price paid by the VA.

In addition to premiums and deductibles, seniors enrolled in the new drug benefit plan would pay approximately 25 percent of the pharmacy price of the drug.

"Many seniors will be burdened with unaffordable high drug costs, and America's taxpayers will be fleeced," said Ron Pollack, executive director of Families USA.

In November, the minority staff of the House Government Reform Committee released a report also comparing the prices of Medicare and Veterans' drugs and found that Medicare drugs would be up to 80 percent higher.

The surveys used different methodologies. The Families survey examined the top 20 most used drugs, while the Committee examined the 10 most expensive drugs. The Committee took the average price of a drug across all the plans in a region, whereas the Families chose the cheapest price in all of the plans.

Government officials and a pharmacy benefit managers' group dispute the findings of both surveys.

"The [Families USA] press release overstates the amount people will pay," Gary Karr, spokesman for the Centers for Medicare and Medicaid Services, said on Wednesday.

He argued that the VA model is not a good one for Medicare because of limitations on drug choices and on where to fill prescriptions.

The Pharmaceutical Care Management Association (PMCA), an organization representing pharmacy benefit managers, released a statement contesting the findings of the Families USA report.

"Replicating a Veterans Administration–style approach to Medicare drug pricing would lead to higher costs for working families, unions, and small businesses," the statement said.

The new Medicare plan and the Veterans' plan represent two different approaches to getting cheap prescription drugs to seniors. The new Medicare plan relies on private insurers to negotiate drug prices with pharmaceutical companies. Seniors enrolled in the program would be able to choose their insurance plan and their drugs. The Department of Veterans' Affairs negotiates drug prices directly with pharmaceuticals.

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Feds Say Enrollment Numbers Show Drug Plan on Track

DECEMBER 22, 2005 -- More than 1 million Medicare beneficiaries have signed up for the program's new prescription drug benefit since the enrollment period began last month and another 500,000 are expected to be enrolled by the end of January, government officials said Thursday.

Those Medicare beneficiaries join more than 19 million others who have been enrolled in the drug benefit through their Medicare Advantage plan, by their employer as part of retiree health care coverage, or through an automatic government enrollment plan for Medicare beneficiaries who also qualify for Medicaid. The figure also includes retirees from Tricare, the Defense Department's health care system, and the Federal Employee Health Benefits Program, which covers federal government employees.

Ron Pollack, executive director of the consumers group Families USA, called the government announcement "extraordinarily misleading" and "designed to mask the fact that only 1 million seniors have actually enrolled so far in the new Medicare prescription drug program."

Medicare drug plan enrollment for the program's more than 40 million beneficiaries began Nov. 15 and ends on May 15. Government officials said they expect a spike in enrollment close to that May deadline.

"The new prescription drug benefit is off to a strong start," said Department of Health and Human Services Secretary Michael O. Leavitt. "With more than 21 million participating in coverage as of Jan. 1, we are well on the way of meeting our goal of 28 to 30 million enrolled in the first year of the program."

The Medicare drug plan enrollment figures, which government officials plan to update each month, also show that employers are not dropping health care coverage for retirees, which had been feared. Centers for Medicare and Medicaid Services Administrator Mark B. McClellan told reporters that a "very high percentage" of employers were applying for the federal subsidy provided in the drug law to encourage employers to keep offering retiree health care coverage after the drug law begins Jan. 1.

"Just about everybody with very good retiree coverage is continuing it and getting help from Medicare in one way or another," McClellan said. "It's a very big number of retirees, more than people expected in their projections last year."

A survey released earlier this month by the Kaiser Family Foundation and Hewitt Associates found that four of five employers that now provide retiree health benefits were planning to accept government subsidies for continuing to provide retiree drug coverage at least as good as Medicare's coverage.

"There is no question that the coverage options and financial incentives now available under Medicare have been one of the few encouraging notes for retiree health coverage in a very long time," said James A. Klein, president of the American Benefits Council, which represents sponsors and administrators of retirement, health, and stock compensation plans.

Not all health analysts were as optimistic in their review of the drug plan enrollment figures. Robert M. Hayes, president of the Medicare Rights Center, a New York–based elderly advocacy group, said the government figures show that less than five percent of people who could voluntary choose a prescription drug plan have done so. "People with Medicare are frustrated and bewildered about a program that is needlessly complex and unreliable," Hayes said.

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Health Groups See Second Chance to Stop Budget Provisions

DECEMBER 21, 2005 -- An arcane Senate procedure may help groups opposed to budget reconciliation legislation rally the support needed to defeat the measure when it comes before the House again.

Senate Democrats delayed final action on a $39.7 billion budget savings package Wednesday as they forced the deletion of three provisions that violated Senate budget reconciliation rules.

By a 51–50 vote, with Vice President Dick Cheney breaking a 50–50 tie, the Senate amended the measure essentially with the text of the House–Senate conference agreement except for the three disputed provisions, and sent it back to the House.

Cheney's vote was the seventh he has cast to break a Senate tie since taking office at the start of the Bush presidency in 2001.

Senate Majority Leader Bill Frist, R-Tenn., called the Democratic maneuver a "childish antic," and said he would call House Speaker J. Dennis Hastert, R-Ill., to confer.

The budget savings bill, considered under special budget reconciliation rules prohibiting filibuster in the Senate, would make the first cuts in mandatory spending programs such as Medicare, Medicaid, welfare and student loans since 1997.

Organizations representing seniors, health care providers and consumers united against the budget package were reinvigorated Wednesday when Senate Democrats prevailed on budget points of order that stripped specific provisions of the measure, sending it back to the House for another vote.

The delay could give interest groups that oppose the measure weeks to highlight provisions they believe could sink the bill, including higher co-payments for Medicaid beneficiaries and new flexibility for states to change benefits packages that critics say could lead to less comprehensive coverage for millions of children on Medicaid.

Critics of the bill will also point to provisions they say give breaks to the pharmaceutical and insurance industries at the expense of Medicare and Medicaid beneficiaries.

"I don't think you can overstate what happened today. It gives us another shot at defeating reconciliation," said Brad Woodhouse, a spokesman for the Emergency Campaign for America's Priorities, a left-leaning coalition of labor and consumer groups. "The House will have to vote up or down on this bill all over again."

Before that happens, Woodhouse said his group's members plan to dig through the fiscal 2006 budget conference report for "bombshells that will give us more ammunition to derail the bill," especially with moderate House Republicans who voted for the package when the House passed it Dec. 19. New revelations coupled with current criticisms may also influence members who were absent at the first vote if a second vote is taken, Woodhouse and representatives of other interest groups said.

After Wednesday's Senate vote, AARP CEO William D. Novelli said his organization would "work to explain the full impact of this vote to its more than 36 million members," a move that all but guarantees additional pressure on House members to vote the budget package down if it reconsiders reconciliation legislation.

AARP has opposed many provisions of the budget package, including Medicaid "asset transfer" language that the group says will make it difficult for needy seniors to qualify for Medicaid coverage of nursing home care. Proponents of the bill say the legislation will tighten current laws that now allow people to hide assets and qualify for Medicaid.

Debra Ness, president of the National Partnership for Women & Families, said Wednesday's Senate action "will reinvigorate our efforts" against the budget package. "This gives us another opportunity to educate our members on how devastating these cuts are to going to be to low-income families," she said.

But such enthusiasm may not be enough to overcome the fact that the House passed the budget bill once and GOP leaders will put pressure on members to keep their votes exactly the same.

"We will do what we can but I would not bet the House on being able to turn this thing around," said Ron Pollack, executive director of the consumers group Families USA. "This is an uphill battle."

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Opportunities for Health Care Innovations in Post-Katrina Reconstruction

DECEMBER 20, 2005 -- Amid the unprecedented damage left in the wake of Hurricane Katrina, one of Tulane University's top doctors says she sees unique opportunities to test innovative approaches to health care.

"Never before has a city had the chance to completely rebuild its health care system without the usual barriers," said Karen DeSalvo, chief of general internal and geriatric medicine at Tulane University.

Health care infrastructure was the subject of the 46th Washington Primary Care Forum hosted by the Robert Graham Center of the American Academy of Family Physicians. The forum focused on the importance of primary care and technology in the reconstruction of health systems.

The health care system in the Gulf states was already strained before Hurricane Katrina led to the largest displacement of physicians in the U.S. history, according to a study conducted by researchers at the University of North Carolina-Chapel Hill.

"Our previous system produced the worst health outcomes in the country, despite the highest expenditures per capita," said DeSalvo.

She also said there is a broad agreement in the community that the rebuilding should emphasize ambulatory and primary care.

The reengineering of the health care systems is also likely to include a new focus on digital document management. The City of New Orleans Health Department in coordination with the Morehouse School of Medicine is launching a program to create electronic medical records for city residents. In a "Health Fair" in downtown New Orleans scheduled for February, city residents will be able to visit with primary care physicians and create a personal health record, "myHealthFile," in paper and electronic format. The hope is that electronic records will prevent loss of medical information and that patients will be able to access their records anywhere.

"We hope to build a model for other communities in other parts of the state and the country," said Dr. David Kibbe, director of the Center for Health Information Technology at the American Academy for Family Physicians and a consultant to the project.

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Urban Institute Examines Policy Choices on Rising Health Costs

DECEMBER 19, 2005 -- A new report released by the Urban Institute, a liberal think tank, argues that the distribution of health expenditures is skewed, with the minority of high-cost patients accounting for the majority of health care expenditures.

The report describes a shift from insurance-covered costs to individual out-of-pocket payments, in a move to reduce medical expenditures and encourage consumer cost-consciousness.

The report examines two policy approaches to the problem. In the first, high-risk individuals could apply for random assignment to a private insurance carrier and pay income-related premiums with the government paying the balance.

In the second approach, states would identify a high-risk pool of individuals and the benefit costs in excess of premiums would be financed by the federal government or jointly by the federal government and the states.

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You Probably Won't See These on Letterman...

DECEMBER 22, 2005 -- The growing number of the uninsured, the public health impact of Hurricane Katrina and the start of registration for the new Medicare prescription drug benefit were among the top 10 health care stories of 2005 selected by The Commonwealth Fund and the health policy journal Health Affairs.

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