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February 11, 2008

Washington Health Policy Week in Review Archive e36c39f2-f15d-4e71-8bc2-e29133b62b91

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Advisers for Top Presidential Candidates Discuss Health Care

By Sara Lubbes, CQ Staff

February 6, 2008 -- On the eve of the Feb. 5 "Super Tuesday" primaries, health policy advisers for three of the top presidential candidates met in Washington to explain to other health experts why their candidate has the best plan to overhaul America's health care system.

Despite trading some barbs, representatives for Democrats Sen. Hillary Rodham Clinton of New York and Sen. Barack Obama of Illinois also joined forces at the forum—sponsored by health think tank AcademyHealth and attended by medical professionals from around the country —to attack Bush administration health policies and stress why they believe either Democrat's plan would be superior to ideas touted by presumed GOP front-runner Sen. John McCain of Arizona.

"I couldn't be prouder of the Democratic candidates," said Chris Jennings, a former adviser to President Bill Clinton now advising Clinton's campaign. "We couldn't feel better about our candidates and about our future."

Both the Obama and Clinton campaigns want to require employers to make some kind of health care cost contribution or provide health insurance to their workers—the so-called pay or play mandate. But Clinton would require all Americans to carry health insurance, while Obama would require families to carry the insurance for their children.

McCain wants to open up the private insurance market to more people by awarding tax credits to families that want to buy insurance they could carry from job to job. The credit would award $2,500 in tax credits to individuals and $5,000 to families, explained McCain health adviser Tom Miller, a fellow at the conservative think tank American Enterprise Institute.

McCain also would allow people to buy insurance plans across state lines to make the market more competitive and drive down costs, Miller said.

"It's called giving the American people money and letting them make the choice," Miller said. "You could spend your money on [many things] as long as it related to health."

But both Jennings and Obama health care adviser Gregg Bloche, a law professor at Georgetown University and fellow at the left-leaning Brookings Institution, said McCain's plan is based on a "myth" and argued the tax credit would never be enough to cover costs for a family of four.

"Affordability is really a difficult subject reality or families sitting around the table," Bloche said.

Bloche and Jennings did spar a bit over whether Clinton's plan to require every American to have health insurance coverage is the right solution to drive down health costs.

Clinton has argued that unless everyone is covered, the insurance risk pool will never be large enough to convince insurance firms to lower their costs. Obama has said such a plan would be punitive and impossible to pass through a highly-polarized Congress.

Jennings, Clinton's adviser, argued that Obama's plan contradicts itself because it would require insurance for children, although Obama has said he believes it's too much of a burden to cover everyone.

"All we're talking about is a false promise at the end of the day, and that would be a cruel hoax," Jennings said.

But even with their disagreements, the Clinton and Obama advocates were civil: Bloche tampered the debate by noting that Obama is not opposed to a health insurance mandate; he just believes in trying a more "modest" approach first.

"If Obama is open to looking at" mandatory insurance, "we're making progress in this debate," Jennings said with a chuckle.

McCain adviser Miller said the American people will never support either Democrat's health care plan once they realize the costs. Clinton has said she's willing to garnish the wages of people who would refuse to pick up health insurance. And critics of a "pay or play" insurance mandate for employers say it could prompt employers to lower wages or fire people to avoid costs.

Universal health care "doesn't mean ordering your menu of ice cream and someone else pays for it," Miller said. "The money has to come from somewhere, and it's likely to be you."

ChartCart: See select slides from event moderator and Commonwealth Fund president Karen Davis' Presidential Candidates' Health Care Reform Proposals Presentation.

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Can Traditional Medicare Improve Care of the Chronically Ill?

February 4, 2008 -- Many politicians and policy analysts see better management of chronically ill patients as key to controlling spending in Medicare and other health care programs. However, critics of traditional Medicare argue that care is too disorganized in the program to allow for more effective treatment of diabetes, chronic heart failure and other chronic conditions.

Medicare is conducting various pilot programs testing approaches that might prove those critics wrong—but the largest of those programs isn't going well, according to documents recently posted by the Centers for Medicare and Medicaid Services (CMS) on its Web site.

Although CMS isn't officially pulling the plug on the pilot, ordered by the 2003 Medicare overhaul law (PL 108-173), its decision may amount to much the same thing. A CMS "fact sheet" on the pilot, known as the "Medicare Health Support" program, says that preliminary findings show that the first phase of the program "is not meeting the statutory requirements of improved clinical quality outcomes, improved beneficiary satisfaction, and the achievement of financial savings targets." As a result, services provided under the Medicare Health Support program to 68,000 beneficiaries with diabetes or chronic heart failure will run out this year.

Technically that doesn't mean the pilot will end because a decision on whether to move into a second phase of the program hinges on the findings of an independent evaluation of the program. But that evaluation won't be completed until 2011 or 2012, said CMS Spokesman Peter Ashkenaz.

If the five health care organizations now in the pilot wanted to resume participation should the program restart a few years from now, they'd bear heavy new costs recruiting doctors and reestablishing "call centers" to call enrollees regularly to make sure they are taking their medications, getting proper nutrition, and taking other steps to manage their conditions, said Tracey Moorhead, president of DMAA: The Care Continuum Alliance, an association representing companies offering services to manage care of the chronically ill.

Moorhead said her organization is trying to get Congress to intervene to keep the project from stopping completely by the end of the year.

CMS originally described the pilot, which began in 2005, in glowing terms. Contracts awarded to carry out Medicare Health Support, formerly known as the Chronic Care Improvement Program, "mark a major milestone in the shift toward prevention and quality improvement for chronically ill beneficiaries under [the] Medicare fee for service" program, says a CMS Web site especially devoted to the pilot. "This initiative is an important component of modernizing and strengthening Medicare."

"Fragmentation of care is a serious problem, especially for Medicare beneficiaries," the site notes. "On average, they see seven different physicians and have 20 prescriptions each year."

Brochures advertising the program tell beneficiaries it "helps you follow your doctor's advice. Your Medicare Health Support nurse will be familiar with your specific health needs. Your nurse will take time to answer your questions. You will receive regular calls" to "remind you about certain tests that you need, like regular blood tests or eye exams; answer your questions about how the different medicines you take work together;" and "answer your questions about test results or instructions you receive from the different doctors you see."

CMS said the program is intended to "reduce health risks, improve quality of life, and provide savings to the Medicare program," or at a minimum to be budget-neutral. The original CMS contracts with the five health care organizations called for savings of five percent after subtracting their fees for the program. Late last year, CMS approved a request that the savings target be reduced to budget neutrality.

But CMS says that "to date there has been nominal impact on Medicare claims costs" as a result of the program. To achieve budget neutrality, the five organizations "need to reduce Medicare claims costs by between $300 and $800 per participant per month for the remaining months of the pilot program. This represents a 20 to 40 percent reduction in claims costs from the current levels that are being billed."

The agency noted that Medicare fees paid to the organizations total $360 million to date—"an increase of 5 to 11 percent in Medicare costs for participating beneficiaries. Total operational costs to date to CMS are estimated at approximately $27 million," it added.

Moorhead said the CMS decision is not supported by the findings of an interim evaluation released in July of 2007 by Washington-based RTI International, which is under contract with CMS to evaluate the pilot.

"The CMS position that Phase I failed to meet statutory requirements is not supported by last year's interim report, which found insufficient evidence for any firm conclusion about the pilot's performance and noted significant disparities between the control and intervention groups and other critical flaws," Moorhead said.

That report said "this initial evaluation reflects considerably less than six months of active care management. We therefore refrain from drawing any early conclusions with respect to the pilot programs' impact on quality of care of health outcomes." With respect to financial performance, the report said, "fees paid to date far exceed any savings produced."

Moorhead didn't elaborate on her association's plans for seeking congressional intervention.

If the pilot effectively dies, does that mean the end of "disease management" programs in traditional Medicare to better organize care for the chronically ill? CMS Spokesman Ashkenaz said no, noting that his agency is getting ready to launch a "medical home demonstration" in which doctors will be paid directly to better coordinate care of the chronically ill, rather than paying health care management firms to do so as is the case in the Medicare Health Support program.

But Moorhead said that while there are other programs to test improved coordination of care in traditional Medicare, they are far smaller than Medicare Health Support. "This is the most comprehensive population management program in traditional Medicare," she said.

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CBO Report: Technological Advances Responsible for High Health Care Spending

By Reed Cooley, CQ Staff

February 5, 2008 -- A new report by the Congressional Budget Office (CBO) has identified rapid technological advances as the single biggest factor in the substantial rise in health care spending in the United States.

Health care spending has tripled twice over the past 40 years, causing it to account for nearly 15 percent of the Gross Domestic Product (GDP) in 2005 compared with only 5 percent in 1965, according to the report, released late last month. About half of this growth is attributable to advances in technology, it said.

The CBO asserts that advances in technology contribute to an increase in spending growth, largely because of overspending and overprescribing. "Newer, more expensive diagnostic or therapeutic services are sometimes used in cases in which older, cheaper alternatives could offer comparable outcomes," it said.

As a result, the growth has caused per capita spending in the United States to reach rates much higher than those of many other industrialized countries, making health coverage unaffordable for many Americans, the report found.

"For people who lack group coverage and are not eligible for public programs, higher per capita health care spending can make individual private coverage prohibitively expensive," it said.

The CBO predicts that health care spending will continue to grow in proportion to overall GDP reaching 31 percent by 2035 and 49 percent by 2082. Medicare and Medicaid will grow to account for over one third of that spending.

The report indicates that the "nation's long-term fiscal balance is at stake . . . Current policies governing spending on Medicare and Medicaid will be unsustainable in the decades to come if historical patterns . . . continue."

The CBO proposes using comparative effectiveness to decide, more selectively, which new technologies should be incorporated into the health care system to gauge what services offer the clinical benefits that justify the increase in cost.

The Advanced Medical Technology Association (AdvaMed) expressed concern that such use of comparative effectiveness research could deny some patients appropriate care.

"It is clear that limiting patient access to safe and effective treatment based on averages is not sound policy let alone sound health care," AdvaMed said in a statement released Thursday.

The statement found that advances in technology have led to a decrease in disability among older Americans that it said would save Medicare $73 billion annually by 2009.

The CBO report projects federal spending on Medicare and Medicaid to make up nearly 20 percent of GDP by 2082 if no comparative effectiveness policy is enacted.

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CMS Eyes Bigger Payoff from Medicare's Quality Improvement Organizations

By John Reichard, CQ HealthBeat Editor

February 8, 2008 -- The Centers for Medicare and Medicaid Services (CMS) said this week it will have its 53 quality improvement organizations concentrate more of their efforts on nursing homes and hospitals that offer the best opportunity for quality improvement. The agency announced the sharpened focus as part of a new set of "QIO" responsibilities that responds to criticism by the Institute of Medicine and the Senate Finance Committee that the organizations need tighter management and structural changes.

"You should not conclude in any way that these are the worst nursing homes or the worst hospitals," acting CMS Administrator Kerry Weems told reporters in a telephone press briefing. Weems emphasized that QIOs would focus on selected quality measures and that facilities targeted might perform well on other measures. That means it wouldn't be fair to hang the label of "worst" on the facilities, he said.

In the case of nursing homes, QIOs will work with facilities to reduce the incidence of bed sores and the practice of using physical restraints to keep patients from wandering, officials said. "Physical restraints" include belts, vests, and wrist devices that restrain movement. Other examples include special chairs and bed side rails. The focus of the work with hospitals will be on preventing post-operative complications such as surgical infections.

While CMS is emphasizing that the facilities aren't the worst performers, the agency is clearly applying public pressure on the targeted facilities to improve. CMS has posted the names of the facilities—some 4,000 nursing homes and some 900 hospitals—on its Web site to help consumers make "informed choices about health care," CMS said in a statement detailing the new duties.

Medicare contracts with QIOs to improve the quality, efficiency and safety of care provided to Medicare patients by hospitals, nursing homes, home health agencies and doctor's offices. QIOs have long enjoyed a strong reputation for quality improvement but in the past few years have encountered skepticism about how they pick the providers they work with and where they place their resources.

The Institute of Medicine released a study in 2006 saying that QIOs should devote more effort to working with providers on processes of care that result in better quality and less time on handing beneficiary complaints. The study also called for greater funding for QIOs and for governing boards that included consumers and a broader variety of health care professionals.

In the same year, Republican Senator Charles E. Grassley of Iowa, then chairman of the Senate Finance Committee, raised a number of questions about salaries paid to QIO executives and board members and about payments for their travel expenses.

The new duties, outlined in a three-year contract with QIOs called the "9th Statement of Work," include several features that aim to keep QIOs on a tighter leash. Instead of evaluating QIOs at the end of their three-year contracts, the organizations will be evaluated quarterly, CMS Medical Director Barry Straub said in the press briefing. If after 18 months a QIO fails to produce quality improvements, CMS can give its contract to another QIO. The new requirements also address the composition of QIO boards, boosting participation by other types of "stakeholders" in addition to doctors, he said.

CMS also is requiring 8 of the 53 QIOs to compete for their contracts in the 9th Statement of Work, which starts August 1. That's because they did meet all the performance criteria outlined in the current contract cycle, the agency said. The QIOs are in California, Minnesota, Mississippi, North Carolina, Nevada, New York, Oklahoma and South Carolina.

In the new contract, QIOs will carry out four types of activities: beneficiary protection, patient safety, prevention, and "care transitions." Beneficiary protection includes reviewing appeals by patients of decisions by doctors on aspects of their treatment. Patient safety will include reducing medication errors and drug-resistant staph infections such as MRSA. Prevention will include increasing mammography, colorectal cancer screening, and increased vaccinations for flu and pneumonia, among other measures. Care transitions includes improving plans of care for patients who move across health care settings.

"It's a good assignment," David Schulke, executive vice president of the American Health Quality Association, said of the new set of responsibilities. Particularly exciting is a requirement for programs in which QIOs will work with doctors, hospitals, home health agencies and nursing homes to coordinate efforts to prevent hospital readmissions, he said.

But Schulke, whose association represents QIOs, said "it throws some curves at providers." For example, many of the approximately 2,000 home health agencies now getting assistance from QIOs will no longer receive it after the current contract ends, he said. In addition, hospitals and nursing homes on the list to be assisted by QIOs are concerned about how they are might be publicly characterized, Schulke said. "The home health providers are upset," as are some of the hospitals and nursing homes, he said. "But I think we can get past all that." Schulke sees some room, for example, for home health agencies to participate in programs to prevent hospital readmissions.

Under the new approach, CMS rather than QIOs are selecting the providers that will receive assistance. Straub said the perception has been that QIOs have selected providers that are easier to work with, not necessarily those in greatest need of help. The new contract calls for CMS to pick 85 percent of the providers and QIOs 15 percent.

Schulke calls the providers that now receive assistance "typical" rather than the worst performers and the best performers. "You work with people that are willing to work with you," he said. In some cases the worst performers are in management turmoil, he added. Thus a management team might agree to work with the QIO, only to be replaced by managers who don't want to cooperate.

While the IoM report called for giving QIOs greater resources to carry out their duties, the Bush administration has proposed a 13 percent cut in funding for the QIOs, Schulke noted. "We think it's troublesome because the work is very demanding," Schulke said.

The work will be worthwhile, said the American Cancer Society Cancer Action Network. "The decision to include screenings for breast cancer, the most frequently diagnosed cancer in women, and colorectal cancer, the third most common cancer in both men and women, is evidence CMS is placing newfound emphasis on preventive medicine," the network said in a statement.

It also noted that CMS, in its voluntary pay-for-performance system, is tying higher payments for doctors to the use of certain practices, such as improved cancer screening and greater counseling of patients to avoid tobacco use. "Medicare is setting an extraordinary precedent that will be of enormous benefit to its more than 41 million patients," said Daniel E. Smith, the president of the network.

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Medicaid Reg Moratorium, More FMAP Funds May Fuel New SCHIP Push

February 5, 2008 -- House Democrats may combine more Medicaid funding for states and a moratorium on administration-imposed Medicaid regulations with legislation to expand the State Children's Health Insurance Program (SCHIP), a House Democratic leadership aide said Tuesday.

Pursuing such a strategy may help House Democrats secure enough support from House Republicans and Republican governors in Democrats' push to enact SCHIP legislation this year, said the aide, who asked not to be identified.

Late last month, House Democrats failed to override President Bush's second veto of a children's health insurance bill. The Jan. 23 override failed, 260-152 — 15 votes short of the two-thirds majority required, so garnering more Republican votes is key to overriding a Bush veto.

Lawmakers and governors have complained about several of the administration's new Medicaid regulations, including one issued last August that prohibits states from extending Medicaid coverage to children in families with incomes above 250 percent of the federal poverty line without first showing that 95 percent of those eligible below 200 percent of poverty have been enrolled in the program. Some health care analysts have said that standard is impossible to meet, because it is difficult to locate and enroll all individuals at that income level.

Separately on Tuesday, Senate Majority Leader Harry Reid, D-Nev., and Senate Finance Committee Chairman Max Baucus, D-Mont., urged the Department of Health and Human Services to revise a rule that the senators said would prevent some Medicaid beneficiaries, such as children in foster care, from accessing necessary medical, social and other services by limiting or preventing access to health care providers. In a letter, Reid and Baucus wrote that the interim regulation, which the Centers for Medicare and Medicaid Services (CMS) issued in December, "extends far beyond the scope of Congress' intent and will result in needless harm to beneficiaries with disabilities or chronic health conditions."

At a November House Committee on Oversight and Government Reform hearing on the administration's Medicaid regulations, a witness from the Government Accountability Office testified that states have a long history of devising Medicaid financing arrangements that inappropriately increase federal Medicaid matching payments. Dennis Smith, head of the federal Medicaid program at the CMS, told the panel that the proposed rules aim to protect the fiscal integrity of Medicaid.

If the economy continues to worsen, however, the Medicaid regulations will make it impossible for governors to not cut benefits or reduce eligibility for Medicaid at a time when more people may need the program, the House Democratic leadership aide said in remarks to Academy Health's National Health Policy Conference. The aide also said that worsening economic conditions also will necessitate a temporary increase in federal Medicaid payments similar to what Congress enacted in 2003.

Some Senate Democrats have tried but failed to include "federal medical assistance percentage" or FMAP money in an economic stimulus package now pending before the chamber. Last month Raymond Sheppach, executive director of the National Governors Association, said that an FMAP increase is a top priority for governors on a bipartisan basis.

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Senate Democrats Assail Bush's Proposed Health Program Budgets

By Drew Armstrong, CQ Staff

February 6, 2008 -- Senate Finance Democrats assailed the health proposals in President Bush's fiscal 2009 budget request Wednesday, directing their ire at the treatment of private Medicare plans and children's health funding.

Appearing before the committee, Health and Human Services Secretary Michael O. Leavitt drew battle lines with Democrats over the future of Medicare. He defended the administration's preference for using private insurers and injecting market forces into the big entitlement program, which he described as inefficient and lacking the tools needed for modernizing itself and containing health spending.

Panel Democrats were highly critical of the Bush's budget, which would reduce Medicare's spending growth by $12.4 billion in fiscal 2009 and by $178.2 billion over five years, largely through cuts in payments to health care providers.

"You've asked for huge, draconian cuts that this Congress is not going to enact," said Finance Chairman Max Baucus, D-Mont. "How can we have an honest-to-goodness discussion when your budget seems based on ideology?"

The battle appears to be the administration's last stand in its two-term effort to "privatize" much of Medicare through Medicare Advantage, the private health insurance alternative that is funded by the government. Critics of Medicare Advantage point to the higher payments that such plans receive compared with per-patient costs of traditional, government-run Medicare.

The Senate Finance Committee has scheduled a series of hearings on the Medicare Advantage program as it considers greater regulation of the plans and perhaps equalizing the payments that private insurers receive with the per-patient costs of traditional Medicare.

Charles E. Grassley of Iowa, the panel's ranking Republican, questioned the administration's revised proposal to expand funding the State Children's Health Insurance Program (SCHIP).

For fiscal 2008, Bush proposed a $5 billion expansion over five years; for fiscal 2008, the budget contains a $19.3 billion SCHIP expansion over five years.

"The fact that the president said we only needed $5 billion carried a great deal of credibility with about three-fourths of the people on the Republican side of the aisle," Grassley said. "We didn't get the bipartisan compromise that the president could sign, and we would have been able to do that if this had been acknowledged a year ago."

Last year, Congress twice cleared bills (HR 976, HR 3963) that would have expanded federal funding for SCHIP by $35 billion over five years, to $60 billion. Bush vetoed both measures, and the House failed to override either veto. In December, Bush signed into law a measure (PL 110-173) that keeps SCHIP running through the end of March 2009 with enough money to maintain coverage at current enrollment levels.

When Grassley asked Leavitt to explain the fiscal 2009 figure, the secretary said the administration had recalculated the demand for SCHIP, and added funds for outreach and enrollment efforts to bring in more children.

"We have better estimates now," Leavitt said.

Democrats have declared Bush's proposed budget, which he released Feb. 4, "dead on arrival." The administration has taken pains to not characterize any decrease spending as cuts, but as reductions in Medicare's 7.2 percent annual growth rate. According to Leavitt, the administration's proposals would slow that growth rate to 5 percent in fiscal 2009.

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