JANUARY 27, 2006 -- Congress shouldn't tackle the problem of rising health costs by chopping Medicare and Medicaid, the senior lobby AARP advised Friday in laying out its legislative agenda for 2006.

"Just cutting benefits and services instead of attacking escalating health care costs will only make things worse," the lobby said in a two-page statement of its goals this year on Capitol Hill.

Both business and government are trying to shift pension and health care costs to employees, said the lobby's CEO Bill Novelli. The trend reinforces the "great importance of Social Security, Medicare, and Medicaid as the bedrock or our nation's retirement security," the AARP said.

AARP says in its statement it will "work hard" to see Congress passes legislation this year to lower health costs by allowing the "safe and legal" importation of low-cost prescription drugs from other countries. HHS should be given the power to negotiate with drug companies how much Medicare will pay to cover prescription drugs. And access to the extra prescription drug benefits low-income beneficiaries receive should no longer be barred to those qualify based on income but who are ineligible because of assets they own, according to AARP.

Health care costs should be tackled more broadly through legislation promoting the adoption of health care information technology and easy public access to the prices of drugs and doctor, hospital, and diagnostic care, the group urges. Legislation also should spur greater reliance by health care providers on treatment practices justified by the medical literature. And lawmakers should ensure quality of care is rewarded through payment-for-performance systems.

In the area of long-term care, Congress should expand the availability of services outside the nursing home through home- and community-based care. Those who provide care to the frail and disabled should receive tax credits for doing so, and private long-term care insurance policies should be made more affordable, AARP said.

Congress also should pass legislation rejecting long-term care eligibility rules such as penalties for charitable giving and lengthening the period before entry into a nursing home in which assets can't be sold.

JANUARY 26, 2006 -- John D. Dingell, D-Mich., renewed his call for nationwide health coverage Thursday, saying a vote next week on a budget savings package and a faltering new Medicare benefit highlights the urgent need for change.

Dingell spoke at a Washington health care conference sponsored by left-leaning advocacy group Families USA.

"The safety net is becoming threadbare," Dingell said. "It has large holes."

The longest currently serving member of the House has introduced a bill to provide nationwide health coverage every session since taking office in 1955, in keeping with his father's efforts to overhaul health care during his own tenure in Congress.

Dingell seized the opportunity this week to denounce a $37.9 billion budget savings package slated for final passage Feb. 1.

The bill would accumulate savings by trimming entitlement programs such as Medicaid, reducing the price that program pays for prescription drugs, and giving states flexibility to increase cost-sharing for Medicaid beneficiaries and to alter benefits packages. The measure would result in a net $4.8 billion from projected spending on Medicaid and $6.4 billion from Medicare.

Dingell said the changes would force parents to pay more money out of pocket to provide health care to their children and warned health care advocates that families could be denied care if they cannot immediately pay.

"The reconciliation bill is the hardest and harshest on those who are the sickest," Dingell said. "The health consequences will be severe."

Dingell also told his audience he sent a letter on Monday to Department of Health and Human Services Secretary Michael O. Leavitt, criticizing the administration's implementation of the new Medicare benefit, Part D. Since its launch on Jan. 1, low-income seniors have reported widespread problems getting drugs they previously received through Medicaid, and several states have stepped in to pay for seniors' drugs until the problem is rectified.

Dingell's letter asks HHS to respond with a timeline and plan of action to correct those problems by the time the House returns Jan. 31. The letter also assures the secretary that "clearly, legislative solutions will be needed to address some of these matters."

"We saw this as a train wreck," Dingell said. "We knew it was coming."

The Bush administration announced Jan. 24 that either insurance plans or the federal government will reimburse states that have stepped in to pay for medications for low-income seniors enrolled in the new Medicare drug benefit.

The Senate Special Committee on Aging, the first congressional committee scheduled to examine the new benefit's implementation, has scheduled a Feb. 2 hearing to examine problems with implementing the new benefit.

"An undertaking of this magnitude is going to have some complications early on," said Demetrios Karoutsos, the Aging panel's communications director. "The worst-case scenario is people ending up in emergency rooms because people are not able to get their drugs or are unable to afford their drugs."

Dingell insisted that a bill to provide sweeping health care coverage would eliminate such pressing problems.

"Lobbying Rep. Dingell is not like preaching to the choir," said Families USA director Ron Pollack. "It's like preaching to the Pope."

JANUARY 24, 2006 -- The Bush administration announced Tuesday that either insurance plans or the federal government will reimburse states that have stepped in to pay for medications for low-income seniors enrolled in the new Medicare drug benefit. The Health and Human Services Department will assist states with recouping their costs, said HHS Secretary Michael O. Leavitt. The government will pay the states whatever they cannot recover from insurance companies, he said.

More than 20 states have stepped in to pay such costs since Jan. 1, when low-income seniors began reporting problems obtaining prescription medications under the new Medicare drug program. These beneficiaries, known as "dual eligibles" because they qualify for both Medicare and Medicaid, had received drug coverage under Medicaid. In anticipation of the rollout of the new drug benefit, they were automatically enrolled in a private drug plan through Medicare. On Jan. 1 Medicaid no longer covered this group, and some seniors who were supposed to receive drug coverage under Medicare were turned away or forced to contribute high co-payments because pharmacies had incomplete or inaccurate information.

Funding for states' payments would come from the part of the HHS budget that funds Medicare demonstration programs.

Tuesday's White House announcement follows criticism from congressional Democrats about the drug benefit implementation—and appeals from governors in both parties to help cover states' drugs costs while the federal program is sorted out.

A group of Democratic senators—including John D. Rockefeller IV of West Virginia, Debbie Stabenow of Michigan, Frank R. Lautenberg of New Jersey and New Yorkers Charles E. Schumer and Hillary Rodham Clinton—introduced legislation last week that would require the federal government to reimburse states.

'We Don't Need Legislation'
Centers for Medicare and Medicaid Services (CMS) administrator Mark McClellan emphasized that Congress does not need to act to remedy the problems. The process of getting reimbursements to states "can start right away," he said. "We don't need legislation."

Under the proposal released Tuesday, HHS will require states to stop covering costs for Medicare patients by Feb. 15.

Leavitt and McClellan also compiled a list of seven aspects of the drug law (PL 108-173) that need improvement, saying they were working to quickly alleviate problems and prevent glitches.

Among the areas needing attention are a smoother data transmission of patient information to the private plans, more customer service personnel at Medicare and at private health plans, and a stronger surveillance to ensure drug plans are complying with the law.

To remedy these and other problems, the agency has increased outreach to pharmacists and states, and has been closely monitoring the program.

Leavitt said there could be another round of problems beginning Feb. 1 if new information for seniors who changed their plan in late January had not yet reached all the databases.

Because of potential problems later in the year, some members have suggested delaying the May 15 deadline for all Medicare beneficiaries to enroll in a plan without an added late fee. Republican Sen. Olympia J. Snowe of Maine introduced a bill (S 2168) that would extend that date by six months.

But Finance Committee Chairman Charles E. Grassley, R-Iowa, said there was no need to push back that deadline. "CMS can fix these problems using its authority under the law and can do it faster than if Congress comes in and changes the law," he said. Members of his committee will meet with Leavitt and McClellan Wednesday morning.

"Any time you make a change this big in a small amount of time, there's bound to be some problems," Leavitt said. "Every day the system is getting better."

JANUARY 26, 2006 -- At least 3 million Americans have enrolled in high-deductible plans sold in connection with health savings accounts, America's Health Insurance Plans said Thursday.

"Everyone is very surprised at the robustness of this number," AHIP President and Chief Executive Officer Karen Ignagni told reporters, adding that enrollment in HSAs tripled over the past 10 months.

HSAs, which were created by the 2003 Medicare law (PL 108-173), allow employers and employees to contribute pretax dollars to the accounts, which grow tax free and are used to pay health expenses not covered by the high-deductible health plans.

The study is based on aggregate responses from the group's member companies, which include nearly all the ones offering HSA-eligible plans. The preliminary findings also show that the market for HSAs is becoming broader, Ignagni said, with companies offering them in more markets and to a wider array of large groups, small groups, and individual customers.

A specific breakdown of numbers of AHIP data would be available at a later date, Ignagni said.

President Bush and GOP conservatives have advocated HSAs as a way to make individuals more responsible for their own health and health care expenses. Critics say the accounts benefit primarily healthy and wealthy Americans.

Bush is expected to discuss possible expansions of the HSA program in his Jan. 31 State of the Union address.

Despite the phenomenal growth, Sen. Edward M. Kennedy, D-Mass., said Thursday that expanding HSAs would be a mistake.

"With 2,000 more Americans becoming uninsured every day, the Medicare drug plan failing, and health costs sky rocketing, it's absurd for the Bush administration to make a bad situation even worse," Kennedy said. "Its health proposals will fatten the bank accounts of HMOs and the drug industry and lavish more tax giveaways on the wealthy, but will do nothing to make health care more available and affordable for millions of average families."

JANUARY 27, 2006 -- There are two words most politicians won't say in front of health care reporters: Defined Contribution.

But the president's younger brother, Gov. Jeb Bush, R-Fla., did just that at a Friday forum hosted by the Galen Institute and the Council for Affordable Health Insurance to discuss his plan to overhaul Florida's Medicaid program.

Bush said his initiative, which begins on a limited basis July 1, will not only control state spending on the program but also increase beneficiaries' choices for medical care while improving the quality of care they receive. Critics predict it will give too much flexibility to insurers to decide what is covered and how much beneficiaries will have to pay for it, which will mean beneficiaries are likely to pay more and get less.

Insurers will have the power to design benefits packages, including the amount, duration, and scope of services offered as long as they meet an "actuarial equivalence" test to assure benefits offered by private plans have the same dollar value as the previous combination of mandatory and optional benefits.

"There are huge unanswered questions about it," said Joan Alker, a senior program director at the Georgetown University Center for Children and Families.

Bush said he is determined to apply "needed fiscal restraint" on his state's Medicaid spending, which has been growing 13 percent a year and takes up 25 percent of Florida's budget.

"This is a defined contribution plan," Bush told the reporters and health analysts gathered at the City Club of Washington. What is allotted will be spent—the defined contribution—instead of spending going beyond that specific amount, which often happens to pay for a defined benefit.

"The way we've been operating, we appropriate a 13 percent increase (for Medicaid) then it hits 16 percent," Bush said.

In October, the Department of Health and Human Services approved the Florida plan, which will enroll an estimated 212,000 Medicaid beneficiaries in the state's Broward and Duval counties in its first phase.

In its current form, the state's Medicaid program is "a mess," Bush said. "Costs aren't contained. Health care outcomes aren't working ... it can be done better."

Bush said he believes that, with the proper counseling (which the state will provide), beneficiaries will be able to pick a health insurance plan that's best for them.

"To suggest people of lower incomes on Medicaid can't make decisions for themselves" is wrong, he said.

Health plans will be paid a "risk-adjusted" premium to reflect a beneficiary's health status and history of health care use. Funds from "enhanced benefit accounts" can be used to offset health related costs, such as over-the-counter drugs and weight reduction programs.

"There will be ample choices" for Medicaid beneficiaries to choose from, Bush said, and beneficiaries also can take their premium money to purchase coverage from an employer or from Florida's State Children's Health Insurance Program.

Alker and other critics of Bush's plan have their doubts that it will work as envisioned. Alker said Medicaid costs less than private insurance, so she doubts relying on the private market will save Florida money.

Ron Pollack, executive director of the consumers group Families USA, said last month that the "harmful impacts of this waiver should not be underestimated and should be carefully analyzed before this proposal is extended to other Florida counties or other states across the country."

JANUARY 26, 2006 -- A Medicaid overhaul plan developed by Gov. Dirk Kempthorne, R-Idaho, received a warm reception Thursday from the federal commission charged with telling Congress how to remake the program for an era of aging baby boomers.

The plan is a "terribly important document," said commission member John Nelson, past president of the American Medical Association.

The plan, released in November, mixes proposals for cutting-edge programs with a strong call for state control over the design of benefits.

Advocates for the poor oppose such control. But the plan has won praise from provider groups, the largest business association in Idaho, and "several" advocacy organizations in the state, the governor told the members of the commission, who were appointed by the Bush administration.

The plan builds on changes in Idaho that Kempthorne said involved "no cuts in eligibility, no cuts in services, and more than $150 million in savings and better care for patients."

Among the provisions that might warm the hearts of left-leaners is a program to pay for "respite care" for people who provide long-term care to the frail and elderly in their homes.

Kempthorne's plan also aims to establish pilot programs for adding new Medicaid-funded health care services in the schools, and to reward doctors and hospitals who follow recommended treatment practices with higher payments.

At the same time, the plan includes features that are likely to appeal strongly to conservatives. Kempthorne calls for co-payments for missed appointments and emergency room visits for routine care.

"Co-pays for no-shows sounds like the best idea I've heard for a long time, especially for this population," said one commission member.

But the governor said the problem with pilots is that states must get approval from the federal Medicaid program to do them. Kempthorne said that was ironic because the federal government requires special approval if changes aren't statewide even though, he said, it is best to try new approaches on a small scale.

A Focus on Outcomes and Prevention
Kempthorne made a strong pitch for rethinking Medicaid from the ground up. The goal should be to define the desired health outcomes for the population and cover services accordingly, with an emphasis on preventive care, he said.

"Let us look at the outcomes and design the benefits," said a Kempthorne aide. The aide said it didn't make sense to have the same benefits for a 7-year-old as for a 70-year-old.

Also, entry in the program would entail a comprehensive physical exam "to ensure every participant has access to the benefits they need," Kempthorne said. "I have already included funding in my budget recommendation to increase provider payments for these services to ensure that every child will have a comprehensive check-up at the time that they enroll in the program."

The assessment, which Kempthorne also plans for adults, would establish a baseline to determine "if we're having success, or if we need to change our strategy."

The pilot programs would also bring more preventive care into schools. Kempthorne said that Medicaid should pay for the up-front services needed to prevent chronic conditions such as conduct disorder from getting to the point where a student needs special services.

Simplifying Categories
The plan calls for collapsing 50 different eligibility categories in Medicaid to three categories—low-income children, the elderly, and individuals with disabilities or special health needs.

"We will direct services toward quality of care instead of using the 'one-size-fits-all' approach of offering the same services to everyone, regardless of need," Kempthorne said.

Success in Idaho
The Idaho governor pointed with particular pride to changes in his state to bring down growth in the costs of long-term care. Idaho has increased the number of residents receiving long-term care outside of nursing homes—in "home and community-based" care—from just over 4,000 in 2003 to nearly 7,000 in 2007.

"At a cost of $838 per month when caring for someone in their own home and community—compared with a cost of $3,800 when in a nursing home—that's significant cost savings to the state," Kempthorne said.

Idaho fully deducts from state income taxes the premiums paid for long-term care insurance policies, Kempthorne said. He urged that such incentives to buy those policies be added at the federal level.