By John Reichard, CQ HealthBeat Editor

November 29, 2007 -- The Centers for Medicare and Medicaid Services (CMS) on Thursday released the names of 54 nursing home facilities it rates among the nation's "poorest performers" in terms of quality of care. The release is intended to "promote more rapid and substantial improvement in the quality of care in identified nursing homes and end the pattern of repeated cycles of non-compliance" with quality standards, said acting CMS Administrator Kerry Weems.

Release of the names was prompted by the number of facilities consistently providing poor quality care, but that were periodically making enough improvements to pass an inspection only to fail the next one for many of the same problems identified previously. "Such facilities with a yo-yo compliance history rarely addressed underlying systemic problems that were giving rise to repeated cycles of serious deficiencies," the news release said.

The 54 were among a group of facilities designated as "special focus facilities." Government agencies conduct twice as many inspections of those facilities and apply increasingly strict enforcement until they either improve significantly, or are granted more time to comply with quality standards because of "promising developments," or are banned from the Medicare or Medicaid program or both. CMS said that under this "progressive enforcement" status, "the severity of penalties will increase over time, ranging from civil monetary penalties, denial of payment for new admissions, and, ultimately, removal" from the programs.

Rep. Pete Stark, D-Calif., praised CMS for releasing the names but wondered why it didn't also publicize all 128 facilities with the "special focus" designation. Stark added that facilities are making it harder by shielding assets and establishing certain ownership structures to hold them accountable for their care. "This disturbing trend provides additional impetus for Congress to do what hasn't been done in two decades: enact legislation to protect nursing home patients," Stark said.

By John Reichard, CQ HealthBeat Editor

November 26, 2007 -- Few employers in Massachusetts are likely to stop offering health benefits to their employees because of the state's new law subsidizing an individual's purchase of health care coverage, a new survey suggests.

Only about three percent of small employers in the state will drop coverage, suggested the survey led by Jon R. Gabel of the National Opinion Research Center, which is affiliated with the University of Chicago. However, Gabel acknowledged in an interview Monday that not all the data are in yet to show how large—or small—the problem will be of expanded government-funded coverage "crowding out" private coverage.

The likely extent of crowd-out looms large in debates over expanding publicly funded health insurance. In opposing legislation passed by Congress expanding the State Children's Health Insurance Plan (SCHIP), the White House has pointed to a Congressional Budget Office (CBO) estimate suggesting that many children are likely to shift from private to public coverage as a result. The CBO reported earlier this year that for every 100 children who enrolled in SCHIP, between 25 and 50 left private health insurance plans.

Some estimates are much lower. According to an analysis by the consulting firm Mathematica Policy Research, between 10 percent and 56 percent of families in SCHIP dropped or declined private coverage. The percentage depends on how crowd-out is calculated; the higher figure requires the assumption that any reduction in private coverage observed among low-income children eligible for SCHIP is caused by crowd-out.

The survey led by Gabel and recently posted online by the academic journal Health Affairs found little evidence that crowd-out was occurring or planned in Massachusetts. "Less than three percent of Massachusetts employers with 3–50 workers said that it was very or somewhat likely that they would drop coverage in the next year," the survey reported. Under the state's law designed to create nearly universal coverage in the state, employers with 11 or more full-time employees must pay a penalty of $295 per employee unless they pay up to one-third of the cost of coverage, Gabel said. That caused concern that employers would drop coverage to save money, knowing that at least some of their workers would qualify for state-subsidized purchases of private insurance plans. "The rationale is that the required contribution of $295 per year is less than 10 percent of the actual cost of providing coverage," said Gabel and his co-authors.

However, the survey was conducted between February and July of 2007 when employer understanding of the requirements of the overhaul law was spotty. Companies weren't required to report until Nov. 15 whether their insurance offerings were sufficient to escape the penalty. Gabel acknowledged the possibility Monday that with greater understanding of the law, the crowd-out figure could climb.

However, Gabel said that a Boston Globe analysis published Nov. 22 is consistent with his survey findings suggesting that crowd-out is not likely to be a major problem. Of 62,000 companies required to report by Nov. 15 on the extent of their insurance coverage, only 518 will pay a penalty instead of providing the required level of coverage, according to the Globe. Employers are reluctant to take the step of dropping coverage to save money, Gabel noted. "Any time an employer drops coverage . . . they realize that very often leads to morale and productivity problems."

But of the 62,000 companies required to report their insurance status, 18,000 have yet to report, the Globe analysis also noted. If the non-reporters are less likely than those who have reported to offer sufficient coverage, crowd-out may be more of a problem than it now appears to be, Gabel said. But "so far it looks like our worst fears are not realized." Gabel said that one reason may be that employers were part of negotiating the compromise that led to the Massachusetts overhaul law, which called on individuals as well as companies, providers, and taxpayers to share in the costs of providing coverage.

Gabel shied away from drawing conclusions about whether his findings suggest SCHIP crowd-out fears may be exaggerated. Asked whether the survey means crowd-out wouldn't be a big problem in other states that adopted a Massachusetts-type overhaul, Gabel suggested that employers in the state may not be typical, in that Massachusetts residents tend to be healthier, wealthier, better educated, and more liberal. While those factors suggest that employers in Massachusetts may be more open to the state's coverage plan, another factor does not: companies face higher premiums costs in Massachusetts, he said.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

November 28, 2007 -- As the Senate Finance Committee assembles legislation that is expected to reduce Medicare reimbursements to some health care providers to help stop a scheduled 10 percent cut in Medicare physician payments, groups are applying pressure to make sure that their reimbursements remain untouched.

Earlier this month, Finance leaders said the panel would consider a Medicare physician's pay package after the Thanksgiving Day recess, with action possible the first week of December. The cornerstone of the measure will be either a one- or two-year delay in cutting Medicare physician reimbursements, with financing expected from a cut in payments to private Medicare plans run by insurers, called Medicare Advantage. Depending on the size of physician payment package, reimbursements to other Medicare providers may also have to be reduced.

A bipartisan group of senators have asked Finance Chairman Max Baucus, D-Mont., and Charles E. Grassley, R-Iowa, the panel's ranking Republican, to spare Medicare's oxygen benefit from further cuts, noting that in recent years the program has sustained an estimated $1.5 billion payment reduction due to new federal regulations enacted as part of a budget-savings bill (PL 109-171) and the Medicare drug benefit (PL 108-173).

"Additional cuts to the Medicare oxygen benefit could not only increase costs to the Medicare program in the form of increased hospitalizations, but could also present substantial health risks to over half a million Medicare beneficiaries," wrote the senators, who include George V. Voinovich, R-Ohio, and Sen. Tim Johnson, D-S.D.

Sen. Mark Pryor, D-Ark., has asked the Finance leaders as well as Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., to make sure any Senate Medicare package does not cut Medicare funding for skilled nursing facilities. In his letter, Pryor notes that skilled nursing facilities (SNFs) provide rehabilitative, health care, and related services to 3 million Medicare beneficiaries each year. Pryor also notes that since approximately 70 percent of SNF costs are labor related "any reduction in Medicare funding for SNF care will likely have a direct and negative effect on these Americans."

In a statement, American Health Care Association President and CEO Bruce Yarwood said the more lawmakers understand how potential cuts to SNFs would hurt patient care, "the more we believe they will understand how this key funding is integral to both sustaining quality improvements in the nation's nursing homes and improving the quality of life of our oldest citizens."

House legislation (HR 3162) to reauthorize and overhaul the State Children's Health Insurance Program (SCHIP) would have reduced SNF funding by $2.7 billion over the next five years and $6.5 billion over the next decade, and nursing home advocates do not the want the Senate to follow that path.

Separately, AARP CEO Bill Novelli has asked Senate Finance members to protect beneficiaries' access to physicians—but not by increasing Medicare premiums. In his letter, Novelli notes that monthly Medicare Part B premiums for beneficiaries have risen by more than 106 percent from 2001 to 2007, with the Social Security cost-of-living-adjustment rising 21 percent during the same period.

"If Congress enacts a Medicare physician update without offsetting the costs through other legislation, the cost to the beneficiaries will be reflected in the announcement in the fall of 2008 and 2009 and beyond," Novelli wrote. "Older Americans are willing to pay their fair share for Medicare, but we should not ask them to take on an increasing burden for a flawed physician payment system."

By Emily P. Walker

November 30, 2007 -- Despite medical advances that have enabled doctors to unclog fat from arteries and prescribe tumor-killing medications and radiation, public health officials are hoping the future of health care will be focused on preventing the nation's most expensive and deadly diseases from ever happening in the first place.

"It's a perfect storm of health care costs increasing and baby boomers aging. These things have made us realize that prevention is important. It's time to create a culture of wellness," said Kathleen Toomey, director of the Coordinating Center for Health Promotion at the Centers for Disease Control and Prevention (CDC).

According to the CDC, the United States spends more than 70 percent of its health care dollar on providing care for those with chronic diseases such as cancer, heart disease, high blood pressure, and mental illness, causing some to dub the nation's health care system "sick care."

The World Health Organization recently ranked the United States behind 40 other countries based on health statistics. But "we can outspend everyone else blind," said John Clymer, president of the Partnership for Prevention. The United States spends about 16 percent of gross domestic product on health care, compared with 8 to 10 percent in most major industrialized nations.

"We need to do a better job to make people realize that chronic conditions are preventable," said Janet Collins, director of the national center for Chronic Disease Prevention and Health Promotion at the CDC. "You can have an angioplasty, but it doesn't equate to the same quality [as preventing heart disease]."

The current health care debate has recently been dominated by presidential hopefuls touting new payment plans so more Americans can get coverage for things such as cancer screenings, check-ups, medication, hospitals stays, and surgery.

Democratic candidates Sen. Hillary Rodham Clinton of New York, Sen. Barack Obama of Illinois, and former North Carolina Sen. John Edwards, and Republican candidates Sen. John McCain of Arizona and Arkansas Governor Mike Huckabee, all include steps for preventing chronic diseases and encouraging healthy lifestyles, said Ken Thorpe, founder of the Partnership to Fight Chronic Disease and chairman of the Rollins School of Public Health at Emory University.

Aside from national plans, individual states have the potential to spur major changes in the health of their residents, said Ross DeVol, director of the Center for Health Economics at the Milken Institute during a Friday Milken Institute–sponsored briefing on the economic burden of chronic disease. DeVol lauded the initiatives in the state of Vermont, which he called "the most comprehensive health care reform in the country." Vermont provides incentives for patients with chronic illnesses to "self-manage" their condition at home, which helps alleviate the strain chronically ill patients put on primary care physicians and hospitals.

An entire state also can promote a healthier culture by encouraging physical activity to combat obesity, like Arkansas did when it built a massive walking bridge over the Arkansas River connecting Little Rock and North Little Rock. Arkansas is consistently ranked one of the unhealthiest states in the nation, but has enacted some major reforms such as healthier school lunches and bonus payments for state employees who avoid unhealthy behaviors, according to Arkansas' Surgeon General Joseph Thomas, who spoke at a CDC summit on prevention held earlier this week in Washington.

At the community level, local health centers can reduce the prevalence of chronic disease by closing the loop between preventive testing and follow-up by placing public health workers in hospitals, said Collins. These workers would get the information of people who tested poorly on diagnostic tests such as blood pressure screenings, and contact them with for follow-up. Collins added that incorporating electronic medical records into the health system would help eliminate the problem of losing patients in follow-up.

Public health experts call the collaboration between national, state and local levels, and business and schools a "health systems integration" model and say without such a system, a push toward prevention-based care would be impossible.

Implementing a prevention-based approach to health care, especially one that would cut obesity and smoking rates, would translate to a $200 billion savings in treatment costs by 2023, DeVol said.

While paying for preventive services remains an issue, experts said, some private insurance companies are recognizing that paying to prevent a disease is far cheaper than paying for decades of disease management down the road, and are rewarding their policy holders for healthy lifestyles. Some even cover expensive preventive screenings such as a colonoscopy and bone density tests.

Medicare, meanwhile, could do a better job at covering preventive services, according to Kerry Weems, acting administrator for the Centers for Medicare and Medicaid Services who spoke at the summit about the "prevention gap" in Medicare.

While Medicare does cover some disease screening and certain adult immunizations, introducing more preventive services, like smoking cessation assistance, would require national legislation. Currently, Medicare covers smoking cessation only if a smoker is exhibiting symptoms of a chronic smoking-related disease, Weems said.

Some states are paving the way in prevention-focused health insurance by providing their employees with lower deductibles and bonuses for maintaining healthy lifestyles. For example, in West Virginia, state employees can sign an agreement to avoid disease-causing activities and receive extra coverage for things like smoking cessation and chemical dependency support, according to Weems.

One CDC official balked at the notion that money should even enter the discussion about disease prevention.

"We need to change the discussion about prevention so we don't have to prove that this will save money," said Edwin Trevathan, director of the National Center on Birth Defects and Developmental Disabilities at the CDC. "It should be worth the investment to never have the disease and go through the pain. Why do we have to prove that it saves money?"

If a CDC report released this week about stagnated obesity rates is any indication, collaborative, integrated anti-obesity campaigns may be working. The report found that after a quarter century of rising obesity rates, the number has finally flat lined.

One-third of the U.S. population is obese—or has a body mass index of 30—which puts much of the country at risk for cardiovascular disease, certain types of cancer, and type 2 diabetes. Still, the fact that obesity rates have not risen since 2003 is encouraging, said Collins.

Collins says the flat lining of the nation's obesity rates is partly due to the CDC putting obesity prevention on the top of its preventive agenda.

"We are actively working in partnership with state and local public health agencies, the nation's schools, community organizations, businesses, medical systems, and faith communities to promote and support healthy eating, physical activity, and healthy weight," Collins said.

By Alex Wayne, CQ Staff

November 30, 2007 -- States and child advocates are pressing Congress to abandon its troubled efforts to reauthorize children's health insurance and instead focus on a short-term extension, out of concern money is running short.

For most of this year, lawmakers have been debating an expansion of the State Children's Health Insurance Program, or SCHIP, which covers about 6 million children whose families are low income but not poor enough to qualify for Medicaid.

Democrats want to expand the program by $35 billion over five years, to $60 billion—enough, they say, to cover 10 million children. But they have been opposed by President Bush, who has vetoed one bill (HR 976), and House Republicans, who have backed Bush and sustained his veto.

Democrats negotiated with House Republicans for two weeks before the Thanksgiving recess, trying to reach agreement on changes to a second bill (HR 3963) that would satisfy enough in the minority to override another Bush veto.

However, the talks broke down after Republicans proposed including federal eligibility limits on Medicaid, an idea Democrats strongly oppose.

States and child advocates are increasingly worried about running out of money. A continuing resolution (PL 110-116) that has kept money flowing into SCHIP at fiscal 2007 levels expires Dec. 14.

"We've been working on the broader bill all year long," said Lisa Shapiro, vice president for health policy at First Focus, a child advocacy group. "Basically, we think they've run out of time."

Pressure Builds
Officially, congressional leaders say they intend to continue work on a renewal and expansion of SCHIP, and that there are no plans for an extension of current law. "We are still working on a reauthorization," said Stacey Bernards, a spokeswoman for House Majority Leader Steny H. Hoyer, D-Md.

But lawmakers are under pressure.

The Congressional Research Service (CRS) reported Oct. 25 that 21 states face combined shortages of $1.6 billion in their children's health insurance programs this year.

The first of those states will run out of money in March, and they—along with child advocates—want an SCHIP extension that runs at least a year and provides enough money to cover the shortfalls.

On Nov. 27, 25 senators representing 16 of those states sent a letter to Senate leaders asking them to pass a "fully funded" long-term extension if a reauthorization agreement is not reached by Dec. 14. "Otherwise, health care coverage for children across the nation will be at serious risk," the senators wrote.

Without extra money to cover their shortages, states will strip coverage from about 1.6 million children, CRS estimated.

Some House Democrats have proposed extending SCHIP until the end of fiscal 2008—Sept. 30—just in time to raise the issue again before the November elections. Shapiro said a two-year extension is also under discussion in the Senate.

But Congress might have as much difficulty with an extension as it has had with a full reauthorization. The sticking points in this year's debate have been less over money and more over policy changes advocated by Republicans.

For example, under current law several states have won permission from the federal government to cover adults under SCHIP. Many Republicans want those adults kicked out of the program, and no more enrolled.

Republicans also want tighter restrictions on immigrants enrolling in the program, and caps on eligibility, so middle-income families cannot drop private insurance and enroll their children in SCHIP instead.

Those issues could arise during debate on an extension.

Democrats, meanwhile, want to negate a policy implemented by the president on Aug. 17 for states to meet new requirements before expanding SCHIP to families making more than twice the poverty level, or about $41,000 for a family of four.

Chiefly, under the new rule, states must assure the government they are covering 95 percent of their children under that level before opening SCHIP to families earning more. State officials have complained about the rule, saying it is impossible to meet the requirements.

But if Democrats seek to negate the policy in an extension, Bush would likely use his veto power, just as he has with the full reauthorization.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

November 26, 2007 -- The Centers for Medicare and Medicaid Services (CMS) on Monday sent a series of options to Capitol Hill to change Medicare hospital payment so that it is based on the quality of care a facility delivers.

The report, mandated by the budget-savings law (PL 109-171) signed last year by President Bush, would build upon an ongoing program that pays hospitals more Medicare money if they report data on various performance measures designed to assess quality. As part of a Medicare "Value-Based Purchasing Program," a percentage of the hospital's base operating payment for each discharge—its "diagnosis related group" or DRG payment—would depend on its quality performance.

"That's the heart of pay-for-performance. If you don't perform, you don't get paid as much," said Kerry Weems, CMS acting administrator.

Scenarios in the report would take between 2 and 5 percent from a hospital's DRG payment, with the money returned depending on how the hospital performed. Information on the quality of care a hospital provided would be posted on Medicare's Hospital Compare Web site, and the shift to a complete value-based purchasing system would take three years.

The report calls for giving hospitals a "Total Performance Score" in deciding payment amounts. The score would be based on the medical outcome of the treatment given as well as whether the facility followed certain clinical practices in treating various conditions. In addition, patient ratings of satisfaction with care delivered would be used to calculate the total score. Facilities would be rewarded for both improvement and for meeting national thresholds of care.

Congressional action would be needed before any changes could be made in how Medicare pays hospitals. The Senate Finance Committee, now developing legislation to stop a scheduled 10 percent cut in Medicare physician reimbursements, is considering cuts in payments to private Medicare plans run by insurers, called Medicare Advantage plans, and cuts to other Medicare providers as well.

"If the Senate is going to take action this year, they probably have time to include this if it's their wish," Weems said in a telephone news conference with reporters. "Could this be used as a savings tool? The answer is yes, it could be, if that the way that Congress implemented it."

Hospital groups on Monday said while they share the goal of improving hospital quality, they did not want to see Medicare payments reduced as a way to accomplish that goal. The CMS report states that any pay-for-performance plan with Medicare and hospitals should be executed in a way that does not increase Medicare spending.

"The Federation really believes there needs to be a new pool of money for the incentive payments, and that the funds not come out of the base DRG rate because you're injuring the hospitals that need the funds to do the improvement," said Jayne Hart Chambers, senior vice president with the Federation of American Hospitals.

In a statement, Blair Childs, senior vice president, public affairs, at Premier Inc., a hospital consortium that has conducted a CMS pilot project on quality based payment, said the agency's plan "provides an excellent starting point for Congress" but added that such a program should "reward hospitals for quality gains and not be used as a cost-cutting program." Any savings from a value-based purchasing program should be used to help reward hospitals for improving the quality of care delivered, Childs said.

The American Hospital Association had no immediate comment on the CMS report.

Sen. Charles E. Grassley, R-Iowa, the ranking Republican on the Senate Finance Committee, said that value-based purchasing "is the kind of reform that every branch of our government ought to go after with full force ... Now that the plan is set, Congress needs to get the job done and pass additional legislation to start implementing value-based purchasing."

The powerful senior lobby AARP said linking payments to a hospital's performance may also help control health care costs, avoid unnecessary procedures, and decrease improper utilization. "We are pleased that Medicare is now taking concrete steps to begin tying a portion of hospital payments to their actual performance, rewarding both those that provide high quality and those that demonstrate meaningful improvement," said AARP Director of Public Policy John Rother.