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February 27, 2006

Washington Health Policy Week in Review Archive 804b7c5f-382a-4009-a319-2e75c44cfd89

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AEI Report: Geography Seen as Source of Racial Health

FEBRUARY 22, 2006 -- Geography rather than race could be the central reason for health care disparities between black and white patients, according to an analysis released Wednesday by researchers at the American Enterprise Institute (AEI).

Authors of the report dismissed the notion that unequal medical treatment is the result of biased physicians during a forum at the conservative Washington research organization. In turn, they urged health care policy experts to alter their approaches to crafting solutions aimed at closing the gap.

"We acknowledge that health care certainly varies by race, but we challenge the notion that it varies because of race," said AEI fellow and psychiatrist Sally Satel, who co-authored the analysis with Florida State University law professor Jonathan Klick.

Klick explained that if the problem does not stem from discrimination, its solution should not hinge on efforts such as cultural sensitivity training for doctors. Instead, Klick said policy may need to focus on getting better care to low-income areas by placing better doctors there, funding night hours for clinics, or subsidizing transportation to more distant hospitals.

"Residence is a big—and maybe the main—part of the problem," he said.

According to its authors, the findings presented Wednesday challenged those published in a 2002 Institute of Medicine study that they concluded did not adequately account for where patients live. The IOM study recommended increasing awareness about racial disparities, based on findings that racial and ethnic minorities experience a lower quality of care and are less likely to receive routine medical procedures—even when insurance status, income, age, and the severity of medical conditions are comparable.

"At best, the IOM prescriptions are wasteful," Klick said. "We need to sort of reframe the issues that the IOM has given to us."

But health care policy experts who attended the forum did not readily accept that analysis.

"Very few social scientists would present this as an either/or," said IOM study director Brian Smedley, adding that factors such as geography, racial bias, and cultural and linguistic barriers were all considered in the 2002 study.

Likewise, Marsha Lillie-Blanton, vice president of health policy at the Kaiser Family Foundation, said, "I'm a bit discouraged by the characterization of the IOM report."

Nonetheless, Lillie-Blanton added she was startled by maps and geographical data presented during the forum that illustrated a major care disparity in the southeast United States. Panelist Christopher Foreman, who spent a decade at the Brookings Institution, gave credit to those data, saying it would consequently be conceivable for lawmakers from those areas to create a coalition and focus their efforts to close the gap in care.

Research presented by both Amitabh Chandra, assistant public policy professor at Harvard University, and Peter Bach, physician at the Memorial Sloan-Kettering Cancer Center, signaled that while geography is not the only factor in accessing good health care, it may be possible to narrowly target the disparity on hospitals that treat predominately black patients.

Bach's data illustrated that black patients are clustered around certain doctors who care mostly for other black patients, are more likely to get care from physicians who practice in low-income areas, and are less likely to see doctors that have optimal access to quality resources.

Still, University of Delaware professor Linda Gottfredson emphasized that identically treating all patients would not ensure equal results. She said patients face varied "cognitive hurdles" in following through on their health care, whether reading medicine labels and documents, calculating dosage requirements, or recognizing the symptoms of their illness.

With a broad-based consensus that a disparity indeed exists, Lillie-Blanton said the forum left her encouraged, explaining, "We are moving forward in this debate and not standing still."

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AMA Chair Assures Specialty Groups on Hill Agreement

FEBRUARY 24, 2006 -- The American Medical Association (AMA) has not agreed to a "pay for performance" system without accompanying changes in Medicare reimbursement, the AMA's chairman has told specialty physicians.

In a letter sent Thursday to seven medical specialty groups who criticized an agreement AMA Chairman Duane M. Cady struck with Hill leaders in December, Cady said the accord focuses on the development of a physician voluntary reporting program and additional payments to physicians who report such information in 2007. "Details of a pay for performance program will have to be worked out in future legislation," Cady wrote.

In a Feb. 10 letter to Cady, the specialty groups charged that the AMA chairman had agreed to a "pay for performance" system without any changes in the sustainable growth rate (SGR) formula that will cut Medicare payments in 2007 and beyond unless Congress takes action.

The groups also accused Cady of cutting a deal with Hill lawmakers without first consulting them, and that he agreed to an overly ambitious timetable of developing 140 physician performance measures covering 34 clinical areas by the end of this year.

While many physician groups say they support quality measures and pay for performance—which links payment to the quality of care provided—they say Congress must move cautiously because one set of quality measures will not work for all medical specialties.

In hopes of calming the specialty groups' concerns, AMA Executive Vice President Michael D. Maves sent a memo Feb. 21 to the heads of state medical associations and physician specialty societies stating the AMA did not agree to too much too soon. Representatives of the specialty groups, however, said they wanted Cady to respond to their letter.

Cady's letter covered ground similar to Maves' memo, with Cady reiterating that the AMA believes "the measure development goals outlined in the agreement are feasible."
Cady also told the specialty groups that lawmakers would not "support simply continuing to pass short-term relief to avert SGR pay cuts without substantial movement towards quality improvement."

Cady urged the medical groups to work with the AMA to resolve concerns. "If organized medicine does not work together on these challenging issues, government officials and health plans will fill the void," Cady wrote.

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Governors Sticking to 'Health Care Light' at Winter Meeting

FEBRUARY 24, 2006 -- Although health is the theme of the National Governors Association winter meeting in Washington this weekend, the issue won't carry the legislative weight it did a year ago when state executives were pushing Congress to make controversial revisions to the Medicaid program. Instead, the focus will be on helping states take advantage of those recently legislated revisions, and on fostering "wellness initiatives" around the United States.

A "Healthy America" forum will kick off the first two days of the meeting, showcasing the efforts of NGA Chairman Mike Huckabee, R-Ark., to spread anti-obesity programs around the country.

"We cannot regulate our way out of this obesity crisis and we are not looking to be the Grease Police or the Sugar Sheriff, but there are things governors can do to battle this epidemic," Huckabee notes in a brochure on his Healthy America initiative.

Huckabee lost 110 pounds and became a marathon runner after being diagnosed with Type 2 diabetes. He has been prodding his fellow governors to promote better health in homes through steps like encouraging families to eat meals together and take walks, and awarding grants to establish fresh food retailers in underserved urban areas.

His initiative also is showcasing state programs to improve school nutrition and increase the time students spend in physical education classes each week. And it aims to encourage employers to adopt exercise breaks during the day and preventive screening.

The meeting's Tuesday afternoon session will feature a speech by former president Bill Clinton, who has joined Huckabee in promoting his health initiative. Will Clinton address other health care issues? As one state official said, "It's hard to script" the former president.

Some Meatier Fare . . .
A session at 3 p.m. on Monday will examine recent Medicaid changes. Centers for Medicare and Medicaid Services Administrator Mark B. McClellan will advise governors how they can take advantage of benefits flexibility, copayment, prescription drug, and asset transfer provisions to save money.

With those revisions expected to spur health plan competition in Medicaid, Scott Beeken, an executive with Great American Insurance Co., will advise governors on the lessons they can learn from the private sector on delivering health care.

Mark Birdwhistell, secretary of health and family services in Kentucky, will describe that state's revised Medicaid program that includes a cap on spending increases and health plan competition.

Chris Jennings, White House health care advisor in the Clinton White House, will caution states on changes that could undermine access to care such as excessive premium or other out-of-pocket charges.

. . . And a Little Red Meat Too
Wal-Mart CEO Lee Scott is scheduled to deliver a speech Sunday afternoon widely viewed as an attempt to ward off efforts by other states to follow Maryland's lead in requiring the giant retailer to spend a certain percentage of its payroll on health care.

Slammed by Democrats and labor unions for skimping on health care benefits for its low-wage workforce, Wal-Mart recently announced changes in its health plan and says it plans still others in the near future.

"During our most recent open enrollment period, we signed up more than 70,000 associates who didn't have our health insurance before," Scott said in a press release previewing his speech. "Fifty thousand of those working men and women were previously uninsured. And this is just a start."

Wal-Mart employees—known as "associates"—now have access to a "Value Plan" that charges $11 per month. Enrollees have access to three doctor visits and three generic drug prescriptions per year before a $1,000 deductible kicks in for individual coverage and a $3,000 deductible applies for family coverage. The plan also caps insurance payouts at $25,000 in the first year of coverage but does not have a cap in subsequent years.

Under the changes, part-time workers will qualify for the Value Plan in six months, the same waiting period as full-time workers. Part-time workers must now wait two years. In addition, children of part-time workers will be eligible for the plan. Wal-Mart will also add health clinics in at least 50 stores this year. It has nine clinics now as part of a pilot program.

Clinics in the pilot program offer care at "affordable" rates for 20 common, non-emergency health conditions and also provide flu shots. The average cost of a clinic visit is $45. In some cases, insurance covers that cost.

Wal-Mart covers 615,000 of its 1.3 million workers. Twenty-five percent of its workforce has no coverage whatsoever.

Legislators in 23 states have introduced bills this year to adopt laws like Maryland's, says Maureen Riehl, vice president for government and industry relations at the National Retail Federation, which opposes such legislation. The bills remain alive in 19 of the states, she said. The states with political environments most conducive to such legislation are Rhode Island, Massachusetts, West Virginia, Connecticut, New York, New Jersey, and California.

Wal-Mart said 10 states have either rejected such legislation or had key state lawmakers voice objections to it.

The Democratic Governors Association (DGA) will urge the NGA to adopt a proposal that would ask the federal government to offer a tax credit of up to 17 percent for premiums states pay for health coverage.

DGA spokesman Jon Summers said the proposal would make U.S. companies more competitive globally. The NGA isn't expected to adopt that legislative proposal, however.
In addition, Democratic governors will urge a legislative fix for snafus in the startup of the Medicare drug benefit, including reimbursement of states that resumed Medicaid coverage. The NGA isn't endorsing that step either.

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Health Quality 'Report Cards' May Inflate Grades, Rand Says

FEBRUARY 22, 2006 -- "Report cards" that rate quality of health care may be giving grades that are too high, says a new study by the Rand Corporation. Those report cards typically examine claims and other administrative data rather than actual medical records to measure what percentage of patients treated by certain hospitals or doctors receive recommended types of care.

Examining actual medical records for 399 patients, the study found that 55 percent of them received recommended care, while the administrative data showed that 83 percent did. Moving to computerized medical records would help ensure more accurate grading that could be carried out efficiently, researchers concluded.

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In the Weeds: Peering More Closely at Those Long-Term Health Spending Projections

FEBRUARY 22, 2006 -- The health care spending projections unveiled Wednesday by government economists are mostly unspectacular—but are a testament to the way that unspectacular increases can produce an eye-catching result if they persist over time.

For the most part, yearly percentage increases in various types of health spending are well shy of double-digit figures. But even so, health care will consume 20 percent of the gross domestic product a decade from now, up from 16 percent, according to projections released Wednesday by the Centers for Medicare and Medicaid Services.

"The relatively stable trends we expect through 2015 likely obscure dramatic changes," noted the analysts in a study posted on the Web by the policy journal Health Affairs. Those changes include the rapid growth of Medicare and Medicaid, and a health care economy in which the government's share of health care spending rises to about half of total health outlays, owing in part to the new Medicare drug benefit.

Here's a closer look at the estimates prepared by the National Health Statistics Group in the CMS Office of the Actuary.

After annual Medicare spending increases 25.2 percent in 2006 with the start of the drug benefit, the annual growth rate will slow to 5.4 percent in 2007 with lower increases in managed care payments. After those ups and downs, the growth rate is expected to even out at an average of 7.5 percent between 2008 and 2015. The projected growth rate likely underestimates actual spending increases, however, because it bases estimates on current law calling for a series of cuts in physician payment. Those cuts aren't likely to be made.

Home care is one of the hot spots in Medicare spending growth but is not a big enough part of the program to have a significant impact on the overall pace of Medicare spending growth. The annual increase for home health care spending in Medicare is projected to slow to 15.3 percent in 2005 (the last year in the study for which data are complete is 2004), down from 19 percent growth in 2004. The yearly growth in Medicare spending for home care will top 10 percent in 2006, according to the analysis.

But annual spending growth will cool off to 6.9 percent for the period 2007 to 2015. An expected shift to managed care in Medicare in part will account for slower home care spending growth, the CMS study said.

The study estimated that combined federal and state spending on Medicaid grew 7.7. percent in 2005, the fourth year in a row in which the growth rate declined. It calculated that enrollment growth in the program fell from 4.2 percent in 2004 to 2.1 percent in 2005 thanks mainly to the improving economy.

In 2006, the analysts calculate that Medicaid spending will rise only 1.5 percent as some of Medicaid drug spending shifts to Medicare. But starting in 2007, "Medicaid spending growth is projected to rebound to 8.5 percent and average 8.6 percent per year until 2015," the study said.

Medicaid spending for home care will accelerate from 2.4 percentage points in 2005 to 18.6 percent.

"We expect growth to decelerate in 2006 to 8.9 percent and then to average 10.7 percent though 2015," the analysts said.

The trend reflects a shift to care outside the nursing homes. But nursing home outlays will rise too. Medicaid spending for nursing home care will rise faster than Medicare or private spending. By 2015, "we expect Medicaid to pay for nearly half of all nursing home spending, compared with less than 45 percent in 2004," the report said.

Insurance Premiums
Premiums charged by private health insurance plans grew 6.8 percent in 2005, the study calculated, down from 8.4 percent growth in 2004. The slowdown stemmed in part from the "underwriting cycle," in which "growth in premiums first undershoots and then overshoots growth in the underlying medical spending trend," the authors said. But slower premium growth also stemmed from slower growth in medical benefits.

An upturn in the underwriting cycle will push premiums up at a faster rate in 2007, peaking at premium growth of 8.3 percent in 2009, the study projected.

The study calculated the total spending increase for hospital care in 2005 to be 7.9 percent, 1.5 percentage points more then GDP growth. By 2015, spending on hospital care is expected to reach $1.2 trillion, double the 2005 level. Near-term increases in hospital spending reflect in part the impact of an urban-area boom in hospital construction.

Among the major factors driving overall increases in health care spending are growth in personal income, new technology, and price increases, the analysts said. An increase in the proportion of elderly people accounts for only a small part of projected spending increases in the 2005–2015 period, they added.

The Bush administration's hope for controlling spending growth—health savings accounts—will have less of an impact than managed care did in the mid-1990s, the authors said. But they added that their data on the impact of HSAs are limited at this point.

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Medicare Drug Benefit Enrollment up 1.5 Million in Past Month

FEBRUARY 22, 2006 -- The Department of Health and Human Services (HHS) announced Wednesday that the number of Medicare beneficiaries who have signed up individually for the new Medicare drug benefit has grown by 1.5 million in the past 30 days.

About five million beneficiaries have signed up as individuals, HHS said in a press release.

"Individual enrollment" refers to beneficiaries who sign up for the private "stand-alone" drug plans offered to beneficiaries in traditional fee-for-service Medicare and those who enroll in Medicare Advantage plans—managed care plans in Medicare that also offer the new drug benefit.

HHS Secretary Michael O. Leavitt told reporters in a press briefing Wednesday in Pensacola, Fla., that overall enrollment in the Medicare drug benefit is 25,397,391, including the five million individual enrollees.

Most of the 25.4 million beneficiaries already had drug coverage before the drug benefit began, but their prescription benefits are now subsidized by the Medicare program. Examples of such beneficiaries include people who already were in Medicare Advantage plans before the new drug benefit began, retirees whose benefits come from former employers, and federal retirees.

The liberal advocacy group Families USA said the new numbers are misleading and that most beneficiaries had drug coverage that was "at least as good" before they signed up for the Medicare program.

"Perhaps most tragically, only a tiny fraction of the low-income seniors who could most benefit from the new program are new receiving drug coverage," said Ron Pollack, the group's executive director.

Leavitt said that the 25.4 million figure means HHS is well on its way toward meeting its first year goal of enrolling 28 million to 30 million Medicare beneficiaries in the drug benefit. Altogether, Medicare has 43 million beneficiaries.

He added that the worst days of implementing the benefit now appear to be over, saying that once a beneficiary successfully fills a prescription for the first time, use of the benefit is smooth thereafter.

Leavitt also boasted that competition has driven down premium costs and predicted that market forces would soon sort out the confusion seniors have experienced picking a drug plan. The plans that draw the most seniors will be easier to understand and will be "more standardized," he said.

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