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February 25, 2008

Washington Health Policy Week in Review Archive 7421f7ce-1e82-4692-9c96-b512e8af8a42

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A Year After Tragedy, Witnesses Say Medicaid Dental Coverage Still Lacking

By Miriam Straus

One year after a 12-year-old Medicaid beneficiary could not obtain dental care and died after tooth decay spread to his brain, witnesses told a House panel that the Centers for Medicare and Medicaid Services (CMS) has done little to improve beneficiaries' access to dental services.

"Medicaid still hasn't learned the most important lessons from the preventable death of Deamonte Driver," said Rep. Dennis J. Kucinich, D-Ohio, referring to the Maryland youth whose death highlighted the difficulties Medicaid beneficiaries face in obtaining dental services.

While many experts say that increasing Medicaid reimbursements for dental services is critical to improving beneficiary access, that has not happened, Kucinich said at a February 14 hearing. Kucinich is chairman of the House Government Oversight and Government Reform Domestic Policy Subcommittee, which held the hearing to review Medicaid's coverage of dental services a year after Driver's death.

Jim Crall, the director of the National Oral Health Policy Center at the University of California, Los Angeles, told the panel that Medicaid dental reimbursement rates are far lower than the "Usual, Customary and Reasonable" (UCR) fees that private providers charge for dental services. In addition, he said, most states have no provisions for updating Medicaid reimbursement rates regularly to account for inflation and other increases in the cost of services. The center studies access to dental care, particularly among low-income children and families.

Crall told the panel that the rates are calculated by analyzing how much dentists charged patients in the past year for given procedures. However, instead of submitting their charges for all patients, dentists in many cases submit their charges for Medicaid patients only. "This custom relates to the dentists' recognition that they are bound by law to accept the Medicaid fee as payment in full for any covered procedure, and that billing Medicaid at the Medicaid fee instead of their usual charge eliminates the need to reconcile or write-off the difference for each procedure provided," Crall said in prepared testimony. "There is no incentive for dentists to make this accounting adjustment because they cannot 'balance bill' Medicaid clients for the difference between Medicaid and their private-sector fees, as they would for their private sector clients." The result is much lower reimbursement rates in Medicaid, he said.

For example, Connecticut's Medicaid payment rate for a periodic oral exam was $18.08 in 2004, Crall testified, while the median charge for such a procedure in the state was $37.00. In states that have increased their Medicaid reimbursement rates, the increase in provider participation is substantial, he said. Georgia raised its Medicaid rate to the 75th percentile of dentist fees in the state, and dentist participation has increased 825 percent in the 48 months since the change, according to materials Crall submitted to the subcommittee.

Oral diseases, such as tooth decay and gingivitis, or inflammation of the gums, are among the most common chronic diseases of U.S. children. These problems can have severe consequences for general health. Tooth decay infections can spread to the bloodstream, lymph systems, and other parts of the body, for example, which is what happened in Driver's case. Although Driver had been enrolled in United HealthCare through his Medicaid coverage until close to the time of his death, he had not seen a dentist in several years.

Dennis Smith, director of the Center for Medicaid and State Operations at the Centers for Medicare and Medicaid Services, emphasized that Medicaid spends approximately $2,900 per child each year. According to Smith's written testimony, in 2006, one in three children enrolled in Medicaid or the State Children's Health Insurance Program (SCHIP) had received a dental service during the past year, a 10 percent increase from 2003.

Smith noted that CMS had submitted to the subcommittee a review of children's dental coverage in Maryland and has begun reviews of several other states in the last week. But when Kucinich asked Smith about the number of Maryland children enrolled in Medicaid who have not received dental care in the last three years, Smith responded that the agency did not have data on specific individuals. "States have that information," Smith testified.

Kucinich was not pleased with that answer. "Did you ever pick up the phone and ask?" he pressed, noting that his own staff had contacted Maryland officials. The number of Medicaid-enrolled children in the state who had not received dental care in the last three years is 22,555, Kucinich said. "As a federal administrator, it might be helpful if you could find a way for your own staff to access the kind of information that a small congressional office was able to get," he told Smith.

Rep. Elijah E. Cummings, D-Md., also directed sharp remarks towards the CMS director, recalling that the subcommittee had sent a seven-page outline of steps that CMS could take to improve dental care for Medicaid beneficiaries. "I have been significantly underwhelmed by your lack of urgency," Cummings said. He added that all the deadlines CMS had given to states were imposed after the agency had received notice of the hearing.

Emphasizing that CMS "ought to be doing everything in its power" to improve the situation, Cummings asked if Smith had encouraged states to raise reimbursement rates.

Smith replied that he recognized Medicaid reimbursement rates for dental services were low and that the rates were "major barriers of access" for Medicaid beneficiaries trying to obtain dental care.

Rep. Diane Watson, D-Calif., asked Smith to investigate why only two states have developed guidelines for the frequency of dental visits. "Forty-eight states are in violation of federal law," she said. Watson was referring to the Omnibus Budget and Reconciliation Act of 1989 (PL 101-239), which amended the Social Security Act to mandate that each state develop its own periodicity schedule for dental services and examinations.

Witnesses also questioned why under Smith's leadership, CMS in 2004 removed a policy section from the agency's Guide to Children's Dental Care in Medicaid. According to the subcommittee's Web site, the section dealt with reimbursement rates, legal obligations to ensure dental care for low-income children, data on the lack of children's access to dental care, and how states should oversee dental services provided by Medicaid managed care organizations.

Smith explained that he had not thought that the policy section belonged in what he described as a "clinical guide."

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CMS Proposes Medicaid Regulations on Coverage, Cost-Sharing

By Mary Agnes Carey, CQ HealthBeat Associate Editor

February 21, 2008 -- The Centers for Medicare and Medicaid Services (CMS) on Thursday released two proposed rule changes that the agency said would give states "unprecedented flexibility" in designing their Medicaid programs.

The changes would allow states to adjust their benefit package to more closely align with beneficiary needs and require increased cost-sharing requirements for enrollees, the agency said in a news release.

"The proposed rules will result in patients having more choices and greater control over their health care decisions," Department of Health and Human Services Secretary Michael O. Leavitt said in a statement.

According to CMS, alternative benefit packages called "benchmark" plans will allow states to offer beneficiaries health care that has the same value as plans being offered to other individuals in the same state. Benchmarks in the proposed rule include the standard Blue Cross/Blue Shield preferred provider option benefit plan offered to federal government employees, state employment coverage, offered by the largest commercial health maintenance organization in the state, or coverage approved by the HHS secretary.

States would be given the flexibility to provide additional benefits, such as dental coverage, and states would have the option of paying part of a beneficiary's health insurance premium at their place of employment so the individual could remain on private sector coverage.

One of the proposed regulations would allow states to change current premiums and cost sharing structures to resemble those allowed under the State Children's Health Insurance Program (SCHIP), but would limit all cost sharing to no more than five percent of a family's income. The proposal would not change existing cost sharing rules for Medicaid beneficiaries with family incomes below 100 percent of the federal poverty level, but individuals with family incomes between 100 and 150 percent may see some cost sharing, while monthly premiums could be charged to individuals with incomes above 150 percent.

David Parrella, the director of the Connecticut Medicaid program and the chairman of the National Association of State Medicaid Directors, said the regulations CMS proposed Thursday represented "a step forward" in giving states flexibility on coverage, but added that CMS "didn't go as far as they could have gone" because the regulations would not create new flexibility options such as for single working adults that states are trying to cover through Medicaid waivers.

Parrella also said that while Medicaid directors would have liked to have see additional flexibility in cost-sharing, "all in all it is a step in the direction that a lot of states have been looking for in terms of being able to design alternative benefit packages" for Medicaid beneficiaries.

The proposed rules would implement provisions of a 2006 budget savings law (PL 109-171) and a 2006 package of popular tax break extensions (PL 109-432), CMS said, adding that the rules are the latest in a series of regulations to implement the Bush administration's "goals of aligning Medicaid more closely with private market insurance and giving states more control over their Medicaid benefits packages."

Some Capitol Hill lawmakers and the National Governors Association have raised concerns about other Medicaid regulations that CMS has proposed, saying they would shift costs to states. As part of Senate debate on an Indian health bill (S 1200), senators approved by voice vote an amendment to block a regulation that would limit Medicaid reimbursement for ancillary services, such as help finding housing and jobs, that states offer to beneficiaries under case management plans. The administration considers the services, many of them non-medical in nature, outside the scope of Medicaid. The regulation is scheduled to take effect March 3.

CMS said the proposed rules issued Thursday are expected to be published in the Feb. 22 Federal Register and will have a 30-day public comment period.

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CMS Releases Preliminary Growth Rates for 2009

By CQ Staff

February 22, 2008 -- Medicare Advantage plans may see a 4.8 percent increase in their per capita growth percentage rates in 2009, Medicare officials said late Friday.

The estimates are preliminary and could change before the final 2009 payment rates are announced April 7, Centers for Medicare and Medicaid Services (CMS) officials said in a news release. The notice is issued annually, 45 days before the final payment rates are announced, and includes the preliminary growth trend that affects payment rates for Medicare Advantage (MA) plans. The estimates also include other technical updates on calculations affecting payments to MA plans and Medicare prescription drug plan sponsors.

Every three years, CMS is also required to recalculate or "rebase" each county's average per capita expenditures for original Medicare services using the most recent fee-for-service spending data. In the notice released Friday, CMS said fee-for-service rates for 2009 will be rebased with more recent data, with final capitation rates for each county announced on April 7. The county capitation rates define the upper limit for payments for MA health plans.

In the notice released Friday, CMS also proposes a downward adjustment to risk scores based on a requirement in a 2006 budget savings law (PL 109-171) that CMS adjust Medicare Part C risk scores to the extent that the secretary of Health and Human Services has identified differences in coding patterns between MA plans and providers under original fee-for-service Medicare. The law provides for this adjustment for 2008, 2009, and 2010. Based on risk data from 2004–2006, CMS estimates an absolute adjustment to risk scores of 0.0375.

For Medicare prescription drug plans, the deductible in the defined standard benefit will be $295 in 2009, while the initial coverage limit will rise to $2,700 from $2,510. A beneficiary's out-of-pocket cost threshold will increase to $4,350 from $4,050. The retiree drug subsidy cost threshold will rise to $295 from $275 while the cost limit will rise to $6,000 in 2009 from $5,600 in 2008.

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Geographic Variation Offers Clues to Health Care Efficiency, CBO Says

By John Reichard, CQ HealthBeat Editor

February 19, 2008 -- A new report by the Congressional Budget Office says that large variations across the United States in spending for the care of similar patients underscore the importance of identifying efficient methods of delivering treatment. The report analyzes data and reaches conclusions about geographic variations well known to health policy analysts, but that doesn't mean the report won't have influence. The CBO is undertaking a high-profile analysis of rising health care costs and is giving geographic variation prime billing, which could lead Congress to give greater attention to the issue.

"Large differences across the country in spending for the care of similar patients could indicate a health care system that is not as efficient as it could be," the report says. "Given the importance of health care spending in the nation's long-term fiscal outlook, identifying and encouraging patterns of care that are more efficient is clearly important."

The analysis, which focuses primarily on Medicare data, says that factors such as the prices of health care services and the severity of illness explain less than half the geographic variation in health care spending. Income and the preferences of individuals for specific types of care appear to explain little variation in spending, the report adds.

"Unmeasured differences in demand for care could be important, but some of the variation in medical practice probably is attributable to regional differences in the supply of medical resources . . . and the propensity to take advantage of the financial incentives provided by Medicare or other payers in developing and using those resources," the report says. Examples of medical resources include the supply of specialist physicians and health care facilities.

"Some regions appear more prone to adopt low-cost, highly effective patterns of care whereas others are more prone to adopt high-cost patterns of care and to deliver treatments that provide little benefit or are even harmful," the report notes. "Spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. But policies that reduce spending in high-spending areas would not necessarily lead to increased efficiency—and could result in worse health outcomes—unless the reductions targeted ineffective or harmful treatments."

The report does not offer a specific policy solution to the problem of geographically-based inefficiency but it does offer policy options.

"More intensive oversight, which helped end the rapid increase in spending for Medicare's home health care program, would probably serve to increase the program's efficiency and reduce geographic variation in spending," the report said. As a first step, the Centers for Medicare and Medicaid Services, the Medicare Payment Advisory Commission (MedPAC), and the Government Accountability Office could identify services with high rates of spending growth or high rates of geographic spending variation or both, CBO analysts said. "If distorted financial incentives or regulatory lapses were found to promote those services, MedPAC could propose legislative remedies and CMS could implement appropriate regulatory changes," the report said.

It added that experts have noted a link between geographic spending variations and the "degree of uncertainty regarding the clinical effectiveness of a procedure." Greater research on clinical effectiveness has some potential to reduce geographic variation, although guidelines and payment incentives would be required to persuade doctors to change their treatment methods based on clinical effectiveness findings, the report concluded.

Among the options policy makers could consider for improving efficiency of services is an increase in "bundling" of services in setting insurance payments. "Providers could be paid a fixed amount for all treatments for a certain patient with a certain condition, or they could be paid for episodes of care that include inpatient care, physician services and post-acute care," the report advised.

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HHS Launches Medicare Electronic Health Record Demonstration Project

By CQ Staff

February 22, 2008 -- Medicare is launching a demonstration project that would provide payment incentives to physicians who use certified electronic health records to improve patient care.

The project, open to small- and medium-sized primary care physician practices, is expected to reduce medical errors and improve the quality of care for an estimated 3.6 million Americans, according to the Department of Health and Human Services (HHS).

"Broad adoption of interoperable electronic health records has the potential not only to improve the quality of care provided but also to change the way medicine is practiced and delivered," HHS Secretary Michael O. Leavitt said in a statement.

Over a five-year period, financial incentives will be provided to as many as 1,200 physician practices that use certified electronic health records (EHRs) to improve quality as measured by their performance on specific quality measures. In addition to the incentive payments, bonus payments may be awarded based on a standardized survey measuring to what extend EHRs have been incorporated into a physician group practice. Total payments under the demonstration for all five years may be up to $58,000 per physician or $290,000 per practice, according to HHS.

Communities interested in becoming one of the 12 sites for the demonstration may submit applications through mid-May. The Centers for Medicare and Medicaid Services (CMS) expects that the demonstration will start with four communities in 2008, with the remainder beginning in 2009. Once communities have been selected, CMS will begin working with communities to recruit physician practices for participation in the demonstration.

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Study Finds Health Benefits, Not Wages, Key to Increasing Coverage

By Jesse Stanchak, CQ Staff

February 20, 2008 -- Higher wages alone won't reverse the declining number of Americans with health insurance if employers aren't offering their workers coverage, according to a study by researchers at the Urban Institute published as a Web Exclusive by the journal Health Affairs on Wednesday.

The study found that the average number of Americans who lost their insurance each year increased faster during the economic recovery of 2004–2006 than the recession years of 2000–2004. The study concludes this is because the number of Americans receiving coverage from their jobs continued to decline, while wage increases failed to match growing insurance premiums.

"In good economic times and bad, the dominant factor behind the growing number of uninsured was the decline in employer-sponsored health coverage," study lead author John Holahan says.

During the recession of 2000–2004, when real median household wages fell from $49,163 to $47,323, the poverty level rose from 11.3 to 12.7 percent and the number of uninsured rose by 6 million.

In contrast, between 2004 and 2006, median real income levels rose by nearly $800 and the poverty rate fell by 0.4 percent, two common indicators of a robust economy. Yet the number of uninsured Americans increased by 3.4 million during those years, to an annual average rate of 1.7 million newly uninsured persons during 2004–2006, versus an average of 1.5 million during the recession years of 2000–2004.

Half a million of those newly uninsured workers between 2004–2006 lost their insurance because of cuts to employer-sponsored coverage. The study concludes that because companies are reluctant to pass the cost of premiums onto their employees in the form of lower wages, they are more inclined to cut costs by eliminating health insurance benefits.

The study also found that on average wage increases do not keep pace with increases in health insurance premiums. Between 2004 and 2006 insurance premiums increased an average of 8.4 percent each year, while wages increased just 3.5 percent each year.

Two million of those losing coverage were below 200 percent of the poverty line, the study found. Coverage for workers under 200 percent of the poverty line saw a 6.2 percent decline, compared with 1 percent for all non-elderly Americans.

Population increases also are a factor in rising rates of the uninsured. The U.S. population rose by 10 million people between 2000 and 2004 and by another 10 million people between 2004–2006. The study also concludes that illegal immigrants are a factor in the rising number of uninsured persons, comprising about 20 percent of the newly uninsured. The study found that the biggest decline in employer coverage came in the southern and western parts of the country, where population levels are rising faster and there are fewer manufacturing jobs.

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