By John Reichard, CQ HealthBeat Editor

February 14, 2007 -- A panel of leading health policy analysts said Wednesday that Congress should no longer delay in creating an entity that would compare the value of health care treatments. With health costs rising at unsustainable rates, authoritative research comparing the effectiveness of drugs, devices, and medical procedures for given medical conditions would provide a way to bring spending down to sustainable levels, the analysts said at an industry-sponsored forum.

Brandeis University professor Stuart Altman, one of the panelists, said that the brakes must be applied on health care spending growth, but in an organized and systematic fashion, not in a "scared" way.

"We do not in this country compare . . . at a fundamental level the benefits to the costs" of care, he said. "We are one of a very small group of countries that don't do it. Other countries—England, Australia, Canada, Israel, Germany—all have various degrees of federal action looking at comparative effectiveness, how well does this technique or technology or procedure work in comparison to another one."

"There are places in this country where people are dying from getting too much care," he said, citing the research of Dartmouth researcher Jack Wennberg. The way to address that problem, Altman said, "is to really understand what works, and what doesn't." Short of that, care will be restructured in a "haphazard way."

Gail Wilensky, who headed the Medicare and Medicaid programs in the administration of George Herbert Walker Bush, echoed Altman's warning that health care spending is growing at an unsustainable pace, saying that even if the Iraq War winds down and there is a "peace dividend," and even if the Bush tax cuts are allowed to expire, there won't be nearly enough money to keep up over the long run with current health care spending increases.

The 2 percent or more that health care spending is growing faster than inflation must be brought down to something more sustainable, such as half a percent or 1 percent, she said.

Getting to that point will require an investment in comparative studies, which in effect would be an expansion on what the Food and Drug Administration does. Currently, the agency only compares drugs to placebos in deciding on safety and efficacy, but similarly rigorous evaluations need to be performed that compare the safety and effectiveness of medical procedures, she said.

An investment of "billions" of dollars, not millions, will be required, she said.

Wilensky warned that the entity given responsibility for comparing clinical effectiveness of treatments should not be the entity that compares cost-effectiveness of procedures or determines whether insurers will cover a given procedure. That would bring political pressures to bear on the entity and doom its efforts, she suggested.

Instead, the entity should merely provide data on clinical effectiveness that could be used by payers as they make coverage decisions. Wilensky said it's highly likely that such an entity would be able to slow spending growth through its research. "We won't know 'til we try it," she said.

Jack Rowe, who retired from his position as chief executive officer of the giant health insurer Aetna in late 2006, said the work of a comparative research center would be "very widely adopted" by insurers and employers. "If you build it, they will come," he said. Employers "are dying to have this," he said.

Rowe said he would go further than Wilensky, however. "I would mandate that Medicare follow" the recommendations produced by the research entity on which treatments work best. But Rowe agreed with Wilensky on how patients should be guided to better treatments, praising the idea of having lower copayments for those treatments.

Speakers expressed concern about having the entity placed in what Rowe called "an immunologically privileged zone" where its budget could not be zeroed out by lawmakers under the influence of powerful health care lobbies adversely affected by research findings. Among the models suggested were creating an independent scientific entity along the lines of the Institute of Medicine or creating a public–private organization.

Kathleen Buto, vice president for health policy at the drug and medical products giant Johnson & Johnson, expressed caution, saying the research entity should have "broad stakeholder participation" in setting its research agenda, and that guidelines that might result from its work should be flexible enough to allow for the fact that individuals may vary in how they respond to treatments. She also expressed some hesitancy about whether the work involved would necessarily save a lot of money, saying she is "a little worried" that it's being regarded as "the new silver bullet."

Before joining J&J, Buto was a senior analyst at the Congressional Budget Office and before that was a senior adviser to Medicare on reimbursement policy.

Legislative efforts to create an entity to conduct comparative effectiveness research are expected in the near future. "We have been meeting with members from the House and Senate in response to a growing congressional interest in comparative effectiveness research," said David Helms, chief executive officer of AcademyHealth, an organization that represents health services researchers. AcademyHealth has laid out various options for how such an entity might be structured and where it might be located.

Rowe said attention should be paid to training more health services researchers if such an entity is developed. "I'm not sure we have all the people to do the analysis that needs to get done," he said. Rowe is a former member of the Medicare Payment Advisory Commission, served for years as president of the Mt. Sinai Hospital and School of Medicine in New York City, and is now a health policy professor at Columbia University.

By John Reichard, CQ HealthBeat Editor

February 12 -- New York City Mayor Michael R. Bloomberg Monday joined the ranks of prominent politicians prescribing a major overhaul of the U.S. health system, but he turned coy when asked if he would join them by running for the presidency in 2008. "You only get one question!" Bloomberg interjected when a reporter tried again to ask him about his presidential ambitions after he ducked a question on his plans to run in 2008.

Bloomberg made his fortune in business news by putting computers on the desktops of investors that delivered key financial analysis at a critical point in their decision-making. In a speech to health policy makers Monday in Washington, Bloomberg outlined a similar vision for the medical field, one that would harness health information technology to improve preventive care.

Bloomberg called for a $20 billion investment in health information technology in the United States and an overhaul of the health care reimbursement system that would reward preventive care.

Differentiating "pay-for-prevention" from "pay-for-performance," Bloomberg said that paying bonuses for delivering particular types of treatment, as is the case in pay-for-performance, fails to correct a fundamental misallocation of health care dollars in the United States.

"All too often, pay for performance focuses on what's easy to measure rather than what's truly important," he said. It fails to properly emphasize preventive primary care and focuses on the processes rather than improving the medical outcomes of treatment, he said.

"Over time, paying for prevention should cut health care costs," he said. "But there are going to be start-up expenses in equipment, training, and transition costs involved in retooling primary care in America." Bloomberg said $20 billion "is a lot of money, but in the context of a $2 trillion-a-year health care industry, it's a worthwhile investment. And let's not forget that what we're doing now costs money, too. The big difference is that paying for prevention will produce better results."

Electronic health records (EHRs) are a powerful tool that should be the centerpiece of a pay-for-prevention system, he said. "In this day and age, there is no excuse for any more delay. So let's set this national goal: Five years from today, every doctor's office, clinic, and hospital in America that accepts Medicaid and Medicare must be using prevention-oriented electronic health records."

Bloomberg said "we need to make EHRs as standard as stethoscopes in doctors' offices across the country. That's because the essence of preventive care is information—information that patients, doctors, and other health care workers need so they can make the right decision, at the right times."

As an example, Bloomberg said that his city's health department has brought prevention-oriented EHRs to more than 1,000 doctors serving a million patients in community health centers and other settings. The effects can be dramatic, he said. For example, a provider that operates 11 health centers in Manhattan and the Bronx was able to use EHRs to increase the number of elderly patients receiving pneumonia vaccinations by 400 in a single month.

The EHRs delivered those results by giving doctors electronic reminders to administer the vaccination. Vaccination rates at the clinics "have improved steadily ever since," Bloomberg said.

Bloomberg distinguished himself from other major politicians with major overhaul proposals by not specifically focusing on coverage of the uninsured.

Coverage of the uninsured is important, but "we have to face that, by itself, insuring the uninsured won't automatically produce the health improvements we have a right to expect from an additional investment in health care."

"Amazingly," Bloomberg said, nearly nine out of 10 Americans who have hypertension, diabetes, and high cholesterol have some form of insurance coverage. That's why paying for prevention is key, he emphasized.

However, Bloomberg was not so different from the political pack when it came to questions of what choices he would make to come up with the $20 billion to pay for prevention-oriented health IT. Bloomberg offered only a vague response, saying that the costs of technology would come down over time.

By Colby Itkowitz, CQ Staff

February 13, 2007 -- Sen. Hillary Rodham Clinton, D-N.Y., said Tuesday that she will reintroduce legislative proposals that would broaden the use of health information technology and give principal caregivers temporary relief from their obligations.

During a morning speech to AARP, Clinton, who has formed her own exploratory committee and is considered a front-runner for the Democratic presidential nomination, highlighted the health care system's problems and said "the time has come" for an overhaul.

"I think we need to take a deep breath as a country and ask ourselves, we're spending more than everyone else and we're not insuring everyone and we're underinsuring millions?" Clinton said. "It's time to have a serious conversation about what we do moving forward."

The first bill under her plan would allow hospitals and doctors across the country to access a patient's records electronically. Currently, if a patient needed to see a doctor while visiting another state, Clinton said, "you have to give a history, they'll do tests, and maybe you had that test a week ago." She said such redundancy results in an "enormous" amount of spending.

Her second bill would offer respite for those who take care of elderly relatives or friends. The bill would authorize grants to statewide respite-care service providers. The grants could be used for various purposes, including training and recruiting workers and volunteers, training family caregivers, and providing information about available services.

The former first lady addressed the roadblocks she experienced in the 1990s when she led a failed effort to overhaul health care. She said some feared that insuring the uninsured would take away health care from everyone else. She said others argued universal health care would cause employers to drop employees or restrict patients' choice of good physicians.

"Well, we didn't pass health care reform and all of that happened," Clinton said. "We have many more uninsured, we have an outcry among health care professionals that they are being dictated to."

As she travels the country rallying support for her presidential campaign, Clinton said she is asking people for their take on how health care should be overhauled. She admitted to not having the answer but said a consensus needs to be reached. According to Clinton, there's no choice but to change the system.

She pointed to the advent of human genome mapping as an example—a science that is moving closer to predicting disease through DNA.

"Imagine what that means for an insurance system that tries to exclude people on the basis of preexisting conditions," she said. "Circumstances in health and science and medicine and the economy and globalization are outracing our capacity to deal with those changes in the system we currently have."

By Drew Armstrong, CQ Staff

February 13, 2007 -- Lawmakers ready to overhaul the way Medicare pays physicians are starting to understand exactly how much it will cost to fix the sustainable growth rate, or SGR, a major priority for Congress later this year.

According to House and Senate aides and lobbyists, the cost of changing the formula ranges from $4.2 billion at the low end to as much as $252.2 billion for a top-to-bottom overhaul of the formula.

The aides' estimates on SGR costs came during a Tuesday session of the National Health Policy Conference. There, Sen. Max Baucus, D-Mont., laid out several health policy priorities for the year, giving particular mind to the State Children's Health Insurance Program (SCHIP). Lawmakers from both parties have said that reauthorizing the program will be a priority this year, in addition to dealing with physician payments.

On the physician payment issue, at least, they will have some help.

In early March, the Medicare Payment Advisory Commission (MedPAC) will issue a report to Congress with suggestions to change the SGR. Since 2001, the formula has mandated cuts to Medicare physician pay rates, handing lawmakers what often turns into a last-minute scramble to find dollars and postpone the cuts.

The MedPAC report will be the "kickoff" for debate, according to a House Democratic aide, offering lawmakers a number of policy proposals to consider.

Last year, as they have several times in the past, lawmakers passed a short-term patch to stave off the cuts. But in doing so, they left the 110th Congress with an even larger cut scheduled for the beginning of 2008. While MedPAC likely will offer some solutions, the House Democratic aide said the report was not a guaranteed cure-all.

"We're hoping that they have the magic bullet to help us get that," the aide said, but added, "I quite frankly doubt it's going to be all that magic."

The cost to change the formula completely would be substantial, and even avoiding the cuts for another year carries a heavy price tag. A scenario that would stop physician payment cuts for one year but not increase payment rates would cost $28 billion over 10 years. To freeze updates for the next 10 years would cost $170.8 billion, and even more if lawmakers inserted a clause to keep beneficiaries' share of premiums stable.

Two even more expensive options include offering a 1 percent payment update through 2017, or tying the payment rates to the Medicare Economic Index, which tracks the increasing cost of providing care. The 1 percent increase would cost $208.9 billion, while tying payment rates to the economic index would cost $252.2 billion. Under House Democrats' budget-minded "pay as you go" rules, it might be difficult to find that kind of money.

The SGR was initially designed by lawmakers as part of the 1997 Balanced Budget Act (PL 105-33) as a way of keeping Medicare's costs in line and restricting the growth of physician services by limiting payment increases. The formula relies on growth in the gross domestic product, or total amount of U.S. economic activity, to help establish a yearly target for growth in Medicare payments to doctors. When overall spending exceeds the target, payments must be reduced in following years to produce savings equal to the excess amount. After several early years of substantial payment growth, the formula's cost-control mechanisms kicked in and began mandating cuts to physician pay.

On top of tackling the physician payment issue, Democrats also will need to find money to reauthorize SCHIP, though the amount is not quite as large.

Baucus reiterated that it would take $15 billion in additional dollars over the next five years to maintain current levels of coverage. To enroll all eligible children—many of whom are not signed up for SCHIP—it would likely cost billions more. Baucus said the Senate Finance Committee will mark up an SCHIP bill later this spring.

The Bush administration proposed $5 billion dollars in additional SCHIP funds as part of its fiscal 2008 budget proposal, which Democrats say is not nearly enough. The administration proposal would end new eligibility for some of the relatively wealthier enrollees and all adults that are covered by the program, slowly decreasing its total number enrollees from 4.7 million to 4.3 million.

By Alex Wayne, CQ Staff

February 16, 2007 -- Democratic and Republican House members, backed by a broad industry and consumer coalition, announced a $60 billion plan Friday that is intended to provide health insurance to most American children without it.

The effort is being led by Rahm Emanuel of Illinois, the fourth-ranking member of the House Democratic leadership, and two senior Republicans, Ray LaHood of Illinois and Jim Ramstad of Minnesota. Allyson Y. Schwartz of Pennsylvania and Carol Shea-Porter of New Hampshire are other Democratic cosponsors.

The Emanual plan is also supported by an array of health care–related trade associations and consumer groups, including America's Health Insurance Plans, the main industry trade group, and Families USA, a large consumer group—two organizations that do not often agree on policy.

It has not been introduced as legislation yet. Emanuel said he hopes to see elements of the proposal included in a bill that Energy and Commerce Chairman John D. Dingell, D-Mich., will produce this spring to renew the State Children's Health Insurance Program (SCHIP).

"Every time John Dingell and I see each other, he looks at me and I look at him and we say, 'kids,'" Emanuel said.

Sen. Richard J. Durbin, D-Ill., has agreed to introduce the plan in the Senate, Emanuel said.

Extending health insurance to people without it—especially children—has emerged this year as a high-profile issue nationally and a priority for congressional Democrats. Many Republicans are supportive, though they acknowledge that Congress did not give the issue priority when their party was in control.

"I doubt if we were the majority party, we'd be standing here today talking about this bill, or this issue," LaHood said.

The House plan is based in part on elements of a proposal that the health care groups put forward late last year to cover the uninsured. It would combine an expansion of SCHIP and Medicaid, to cover more low-income children, with a new tax credit to help middle-income families purchase health insurance policies.

The plan also would encourage states to streamline their SCHIP and Medicaid programs by offering them more matching federal funds. The intent is to make it easier for families to enroll in the programs and to stay covered. Currently, families in many states drop in and out of public health insurance programs because of difficulties applying and short enrollment periods.

The current SCHIP authorization expires Sept. 30, the end of this fiscal year. Although there is near-universal support for a renewal and expansion of the program, there is no agreement on how much money to pour into it.

President Bush has proposed a relatively small expansion: His fiscal 2008 budget includes about $5 billion for the program, a $600 million increase over fiscal 2006. He has proposed limiting eligibility to children from families that earn up to 200 percent of the federal poverty level; currently some states offer SCHIP to families earning up to 350 percent of the poverty level.

Emanuel's plan would provide SCHIP and Medicaid $50 billion extra over five years—enough, he and his allies say, to cover budget shortfalls some states are experiencing this year and to cover the estimated 6 million children who are eligible for at least one of the programs but not enrolled. SCHIP currently covers about 6 million children at any given moment.

In addition, the Emanuel plan would provide $10 billion for a tax credit to defray the costs of purchasing health insurance that covers children. It would be available to families earning up to 350 percent of poverty, if they are not eligible for SCHIP in their states. The credit would be refundable and could be advanced, similar to the popular Earned Income Tax Credit for low-income families.

Emanuel said Congress could offset costs of the proposal with legislation (HR 878, S 601) to improve collection of capital gains taxes. That proposal would require stock brokers and mutual fund companies to report cost basis information to the IRS, in addition to the sales information currently reported. Advocates of the proposal say many investors now overstate how much they paid for securities in order to minimize the capital gains on which they are taxed. Supporters say cost-basis reporting could help the government collect about $17 billion in added capital gains tax revenue each year.

By John Reichard, CQ HealthBeat Editor

February 14, 2007 -- Hunting for details to flesh out his rationale for cutting payments to Medicare Advantage plans, Rep. Pete Stark, D-Calif., invited the head of the Medicare program to quantify the extra benefits those plans provide.

Questioning acting Centers for Medicare and Medicaid Services (CMS) Administrator Leslie V. Norwalk at a Tuesday hearing on the CMS fiscal 2008 budget proposal, Stark said he doubted the value of those added benefits comes close to the amount of money the plans receive in "overpayments."

"We have not been able to get a list from you of those extra benefits," Stark complained, echoing bipartisan criticism of the Department of Health and Human Services that months go by before it responds to letters from Capitol Hill—if it responds at all.

Norwalk told the hearing by the House Ways and Means Health Subcommittee that she would provide the information Stark seeks and that CMS plans to be more responsive to Hill inquiries. But she also rattled off a variety of statistics on the added benefits and politely differed with Stark's characterization of reimbursement levels for Medicare Advantage plans as "overpayments."

She said, for example, that Medicare Advantage plans in many instances cover some drugs in the "doughnut hole" gap in standard prescription drug coverage, that unlike traditional Medicare most plans do not require a three-day hospital stay before covering skilled nursing facility care, and that most cover routine physicals and eye and ear exams.

Stark replied that he also wanted an estimate of the dollar value of the added benefits to compare with overpayments he said would total $50 billion at reimbursement levels set in current law. But Stark wants to lower those levels, faulting the administration's budget for omitting cuts to Medicare Advantage plans and noting that he needs to find savings in Medicare to pay for blocking scheduled physician payment cuts.

The subcommittee's ranking member, Michigan Republican Dave Camp, also expressed concern about finding funds to pay for a physician payment fix. Although less critical of the administration's budget proposal than Stark, Camp asked Norwalk why CMS couldn't change they way it calculates the spending target Medicare sets for outlays for physician care. Removing spending on drugs from the calculations would lower the target, in turn reducing payment cuts that would be needed to recoup amounts spent above the target.

Norwalk didn't play that up as a fix, saying CMS lacks legal authority to remove spending on drugs from past calculations of the target—a step that would whittle down the dollar value of past spending overruns CMS must recoup in future physician payment cuts. And Norwalk said removing drugs from future calculations of the target wouldn't lower cuts any time soon.

Norwalk also took exception to Stark's statement that Medicare Advantage plans were spared in the administration's proposed budget cuts, saying that cuts in the fee-for-service part of the program affect Medicare Advantage payment rates, lowering them by a total of $15.2 billion over five years.

In her testimony, Norwalk also defended the Medicare Advantage program by saying it is a "particularly important" program for lower-income Medicare beneficiaries. "Fifty-seven percent of beneficiaries enrolled in Medicare Advantage report income between $10,000 and $30,000 compared to 46 percent of fee-for-service beneficiaries," she said.

"Minorities represent 27 percent of total Medicare Advantage enrollment, compared with 20 percent in fee-for-service," she added. Enrollment in Medicare Advantage now totals 8.3 million, up from 5.3 million in 2003.