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January 7, 2008

Washington Health Policy Week in Review Archive 20b3bc41-2848-4791-931a-4dcdbccf6321

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CMS Confirms Plan to Restrict Medicaid Expansions

By John Reichard, CQ HealthBeat Editor

January 4, 2008 -- The Centers for Medicare and Medicaid Services has quietly begun applying a controversial directive limiting expansion of the State Children's Health Insurance Program (SCHIP) to state proposals to expand Medicaid coverage to children.

The new policy, implemented without obtaining congressional approval or going through the federal notice-and-comment rulemaking process, apparently blocks 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.

That standard is impossible to meet, according to advocates for wider government coverage of uninsured Americans with modest incomes. They emphasize the difficulty of locating all of those eligible for enrollment and shepherding them through a sometimes bewildering and frustrating enrollment process. "It's essentially imposing the income ceiling through the back door," said Cindy Mann, executive director for the Center for Children and Families at the Georgetown University Health Policy Institute. Mann supervised federal Medicaid coverage of children and families and the SCHIP program in the Clinton administration.

CMS announced the standard as it applies to the State Children's Health Insurance Program (SCHIP) in an Aug. 17, 2007, letter to state officials that does not mention Medicaid expansions. That the letter is now being applied by CMS Center for Medicaid and State Operations Director Dennis Smith to state proposals to expand Medicaid coverage above 250 percent of poverty was first made evident by a Dec. 20 CMS letter to Ohio state officials, Mann said.

"This is the first time that Dennis has articulated his policy that the Aug. 17 letter applies to Medicaid," a CMS spokeswoman said.

The New York Times reported Friday that CMS has used the tighter criteria so far to block proposals by state officials in Ohio, Louisiana, and Oklahoma to expand coverage to up to 300 percent of the poverty line. Mann said Wisconsin also wanted to go up to 300 percent of poverty but scaled its expansion back to 250 percent.

David Parrella, who heads the Connecticut Medicaid program, said Friday that his state also intended to extend Medicaid coverage to children in families with incomes up to 300 percent of poverty.

Mann described the policy as generally one that tries to stop any state from covering children above 250 percent of poverty in SCHIP or the Medicaid program. Twenty three states are affected by the policy, she said; 14 that already have covered children above 250 percent and that have been given until August to come into compliance with last year's Aug. 17 letter, and 9 states whose legislatures had approved plans to go above 250 percent and will not be able to obtain CMS approval.

Parrella, who also heads the National Association of State Medicaid Directors, said states, until now, have been able to expand their Medicaid children's coverage to essentially whatever percentage of the poverty line they wanted to fund. Both states and the federal government share the costs of the Medicaid program. "It's an extraordinary departure from 20 years of law," Mann said of the new policy. Administration officials express concern that going above 250 percent of poverty crowds private coverage out of the marketplace.

Parrella said state Medicaid directors would oppose the new policy and said legislative attempts to do so are likely. Asked whether a court challenge is likely, he said "it's hard to say. Individual states may or may not decide to do that."

However, Leighton Ku, a Medicaid analyst for the Center on Budget and Policy Priorities, noted that legislative attempts to overturn the Aug. 17 directive as it applies to SCHIP have failed to obtain congressional approval. Ku added, "many people believe that the Aug. 17 letter in the first place was not legal." But getting a court to block the letter and its application to Medicaid would be a slow process, he said.

Congress is still out of session, but some lawmakers quickly criticized the policy.

"With more than 46 million currently uninsured, state efforts to protect the health of more low-income citizens should be encouraged, not blocked," said Rep. John D. Dingell, D-Mich., in a statement. "Instead, the Bush administration has again chosen to prevent states from providing affordable coverage to more uninsured children. The restrictions the administration is imposing—on both SCHIP and Medicaid—are arbitrary, shameful, and harmful."

An aide to Senate Finance Committee Chairman Max Baucus said the Montana Democrat "is watching closely to make certain that CMS does not block access to health care for poor, uninsured Americans who are eligible for Medicaid and who desperately need the doctor's visits and care the program provides. Restrictions on state efforts cannot be inconsistent with current law, or pursued outside appropriate administrative and legislative channels."

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Community Health Centers Feeling Pinch of Serving a Growing Uninsured Population

By Emily P. Walker, CQ Staff

January 3, 2008 -- Despite record-setting federal funding for community health centers—which provide care largely for underserved people—the nation's 1,100 centers are feeling the strain of providing quality care for the growing uninsured patient population.

According to a report released by the Centers for Studying Health System Changes (HSC) that culled findings from community health centers (CHCs) in 12 nationally representative communities, patient volumes have shot up from 10 million patients in 2001 to 16 million patients in 2006, most of whom are minorities, low income, uninsured, or Medicaid recipients.

Funding for CHCs in 2006 was nearly $2 billion, a result of the recognition by the Bush administration and many members of Congress on both sides of the aisle that funding public health care "isn't a question of whether to do it, but how to do it," said Craig Kennedy, associate vice president for federal and state affairs of the National Association of Community Health Centers, a nonprofit group dedicated to improving CHCs.

The funding goes toward building new health centers, bolstering capacity of existing centers, introducing new, in-demand services such as mental health and dental care, and providing assistance for general operations.

Still, costs associated with new patients—40 percent of whom are uninsured—have outpaced funding from the federal government, insurance providers, state and local government, local businesses, hospitals, and philanthropists, the report said.

According to the report, the number of uninsured patients has increased because of declining employer-based insurance, rising numbers of immigrants who lack insurance, and Medicaid cutbacks. The rise in uninsured patients is taking a toll on the finances of CHCs, which collectively treated 6 million uninsured patients in 2006, compared with 4 million in 2001.

Additionally, CHCs have experienced an increase in immigrants lacking access to employer-based coverage or public insurance. CHCs cannot, by law, ask about a patient's legal status, the report said.

In addition to reimbursement issues and rising patient volumes, many CHCs struggle to recruit and retain enough nurses, physician assistants, doctors, and other clinical staff with salaries and benefits that don't stack up against those offered by hospitals.

Recruiting new staff relies largely on the National Health Service Corps doctors, nurses, and other health care professionals who receive federal medical school loan repayments for working in underserved areas, said Kennedy.

A draft measure approved by the Senate Health, Education, Labor and Pensions (HELP) Committee in November would add $60 million over a five-year period in additional funds for the National Health Service Corps.

That legislation—sponsored by Orrin G. Hatch, R-Utah—would reauthorize the Community Health Center Program at more than $14 billion for the next five years, starting with $2.2 billion for fiscal 2008.

The program "is the most cost effective way to bring dental, low-cost prescriptions, and mental health care to medically underserved areas," said Bernard Sanders, I-Vt., who is a cosponsor of the legislation.

According to the HSC report, the number of patients seeking mental health care at CHCs has grown by 170 percent between 2001 and 2006, while dental services grew by more than 80 percent during the same period.

At a Senate HELP committee hearing in November, Lisa Murkowski, R-Alaska, spoke strongly in favor of the bill, and emphasized that the program serves entire communities, not just the uninsured.

"It's not just lower-income people using this," she said.

Kennedy said the report shows that the centers are meant to reach a larger slice of the community than the centers currently draw in. It is crucial that CHCs are marketed as an effective, less-costly alternative to hospital emergency rooms for anyone in the community, regardless of insurance status, he said.

According to Kennedy, one "knee-jerk reaction" to community centers aimed at underserved populations is that the care is lesser-quality than hospitals or private providers.

"That's our job to get the facts out there that it isn't lesser care," Kennedy said. "It's high-quality care in the community."

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'Comparative Effectiveness:' Can It Really Cut Health Care Costs?

By Mary Agnes Carey, CQ HealthBeat Associate Editor

December 19, 2007 -- While many health care analysts believe that comparing medical treatments in terms of how much they cost and how well they work will reduce health care costs, the precise impact of "comparative effectiveness" research is difficult to predict, with any potential for substantial cost savings taking a decade or more to materialize, a Congressional Budget Office (CBO) analysis concludes.

Comparative effectiveness research compares treatment outcomes from different therapies for the same condition, allowing providers and patients to avoid ineffective or wasteful treatments. Since public sector health insurance programs account for 40 percent of all health care spending, the federal government has an interest in generating evaluations of the effectiveness of drugs, medical devices, and other treatments. Some have suggested adding comparative effectiveness research to the mandate of an existing government agency or establishing a new agency or creating a public–private partnership to perform and distribute the research.

Having the government take a larger role in comparing treatments would tend to reduce federal health spending somewhat in the near term, but that effect may not be large enough to offset the full costs of conducting the research over that same time period, CBO found. To make such research have a meaningful impact on spending, doctors, other health care professionals, and patients would have to change their behavior accordingly. Higher-value care identified by comparative effectiveness research could be promoted with the use of financial incentives, such as in the reimbursements doctors receive or the cost sharing that patients incur, according to the report, released Tuesday.

Many members of Congress believe that comparative effectiveness research holds great promise to help improve health care while lowering its cost. "Comparative effectiveness research will inject common sense into our health care system by improving outcomes for patients and by helping us direct attention and resources to medicines and treatments that work," Senate Finance Committee Chairman Max Baucus, D-Mont., said in a statement. He added that when the Finance panel holds a series of hearings next year on how to overhaul the nation's health care system, "ideas like incorporating comparative effectiveness research into the health system will be front and center."

In May, House members Tom Allen, D-Maine, and Jo Ann Emerson, R-Mo., introduced legislation that would increase funding for research to help health care providers and patients decide which drugs, medical devices, and treatments are the most effective. The bill (HR 2184) would authorize $3 billion over five years for research by the Agency for Healthcare Research and Quality, which already has done comparative effectiveness reviews on renal artery stenosis, anemia drugs used by cancer patients, and other items.

But others believe that savings from comparative effectiveness may be slow and difficult to achieve. An analysis released Tuesday by Avalere Health concludes that a number of factors, such as funding, structure, and scope of research, will define its success. "There are multiple, complex decision along the way to creating a formal CER [comparative effectiveness research] program, and each choice will determine when, if, and how in fact CER can generate a positive economic and health outcomes impact," said Avalere Health president Dan Mendelson.

The Pharmaceutical Research and Manufacturers of America (PhRMA) said that while it supports the development and use of high-quality evidence, including comparative clinical effectiveness research, for health care decision-making, many issues must be addressed in designing such a system. "It is important that any initiative involve all health system stakeholders, operate in a transparent fashion, and recognize the strengths and limitations of different types of research," PhRMA vice president, policy, Lori Reilly said in a statement.

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Report: Health System Overhaul Could Save $1.5 Trillion over the Next Decade

By Miriam Straus

December 18, 2007 -- Major health care system changes, combined with universal health insurance, could save $1.5 trillion compared to projected spending growth over the next 10 years, according a report released Tuesday by the Commonwealth Fund.

The analysis, prepared by the Commonwealth Fund and the Lewin Group, found that placing an additional $2.00 tax on a pack of cigarette to support tobacco interventions would result in an overall savings of $191 billion over the next decade. Public obesity programs, financed by a federal tax of one cent per 12 ounces of sugar-sweetened soft drinks, would yield a total savings of $283 billion.

The report, which examines 15 specific policy options, highlights four major goals: producing and using better information, promoting health and disease prevention, aligning incentives with quality and efficiency, and correcting price signals in the health care market.

"Many in the public are frustrated that the debate [on health care policy] has taken place on a fairly abstract level," said James J. Mongan, the president of Partners HealthCare Systems and the chairman of the Fund's commission that studied the findings. "This report has dollars attached."

"Most of these savings are extremely optimistic," said Joseph Antos, a health policy expert from the American Enterprise Institute. For example, tobacco taxes are already high, and people still smoke. "We are down to people who have a true physical addiction. Taxation isn't going to do much to curb their smoking," said Antos, who supports the tobacco public health interventions but not the consumption tax.

He also is skeptical of the obesity prevention programs funded through a tax on soft drinks. "Anyone who has a weight problem and wants to lose weight knows how difficult that is," said Antos, noting that social, psychological, and body chemistry factors aspects all play a role in obesity.

The largest projected savings in the report, estimated at $368 billion, comes from establishing a Center for Medical Effectiveness and Health Care Decision-Making which would examine different treatment options to design which ones are most effective and help incorporate the information into insurance benefit design. Urban Institute President Robert Reischauer called this option an essential building block to overhauling the nation's health care system.

But others caution that savings and positive health outcomes may be slow and difficult to achieve with "comparative effectiveness." An analysis released Tuesday by the Washington consulting firm Avalere Health states that a number of factors, such as how such an entity would be funded and how a program is created and operates will impact how quickly and to what extent any new federally funded comparative effectiveness research program could generate savings.

Commonwealth Fund President Karen Davis noted that the report includes options supported by advocates across the political spectrum. One suggestion is to establish competitive bidding between Medicare plans and traditional Medicare, allowing beneficiaries to choose whether to pay for the extra benefits of Medicare Advantage. While beneficiaries would pay more, the overall health systems savings is estimated at $104 billion over the next decade, the report concludes.

The report also suggests establishing a Medicare pay-for-performance program for all hospitals similar to the current Centers for Medicare and Medicaid Services/Premier Hospital Quality Incentive Demonstration. By reducing Medicare payments though a decline in hospital readmissions, this option could save $34 billion over the next decade.

Other suggestions from the report include promoting health information technology (saving $88 billion over 10 years), giving the Secretary of Health and Human Services the authority to negotiate or set price limits for Medicare prescription drug plans ($43 billion over 10 years), and strengthening care coordination ($194 billion over 10 years).

"We must address the problems of the uninsured and rising costs," said Davis. "This report kicks off the discussion with models for achieving savings that will allow us to get real value for what we spend on health care."

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Satcher: Cuts Show Lack of Seriousness About Ending Racial Disparities

By John Reichard, CQ HealthBeat Editor

December 21, 2007 -- Despite progress at the federal level toward ending racial and ethnic disparities in health care, federal efforts are underfunded and show a lack of seriousness about getting the job done, former U.S. Surgeon General David Satcher said during a recent panel on minority health issues.

"If we are serious about eliminating disparities in health, if we are serious about improving health of minorities, then we would adequately fund these programs. And we're nowhere close to adequate," Satcher said during a Dec. 14 panel discussion on health care disparities webcast by the Henry J. Kaiser Family Foundation.

Satcher served as director of the Centers for Disease Control and Prevention and as Surgeon General during the Clinton administration and has conducted research on disparities since then. He now heads the Satcher Health Leadership Institute at the Morehouse School of Medicine in Atlanta, which conducts workshops, training, and research programs aimed at increasing the number of minorities in the health professions and at ending racial disparities in health.

Garth N. Graham, who heads the Health and Human Services Office of Minority Health, said Friday that HHS "continues to be committed to the issue of eliminating health disparities through a number of programmatic activities and campaigns." He noted in particular that the Bush administration has accomplished its goal of expanding or opening 1,200 community health centers around the U.S.

"In 2006, 23 percent of health center patients were African American and 36 percent were Hispanic/Latino—almost twice the proportion of African Americans and over two-and-a-half times the proportion of Hispanics/Latinos reported in the overall U.S. population," he said. Graham added that "in April we launched a national infant mortality campaign aimed at addressing the serious problem of infant mortality in the African American community and just recently awarded $11 million to community based organizations to tackle health disparities."

During the panel discussion, Satcher said recent examples of federal progress toward ending racial and ethnic health care disparities include the creation of the National Center for Minority Health and Health Disparities at the National Institutes of Health and establishment of the Racial and Ethnic Approaches to Community Health (REACH) program at the CDC.

The National Center funds research aimed at improving minority health and ultimately ending racial health disparities. The REACH program funds community programs targeting disparities for a variety of conditions including asthma, breast and cervical cancer, diabetes, and cardiovascular disease.

Groups addressed by REACH include African Americans, Latinos, Asian and Pacific Islanders, and Native Americans. Through REACH, "there are at least 40 to 50 communities throughout this country that are really focused on what we can do to eliminate disparities in health," he said. REACH is different because it grants money directly to communities, Satcher observed. "It's amazing what's happened with the leadership of communities, and I think we ought to take a real close look at REACH and what it teaches us about empowering communities."

Satcher also pointed to helpful "processes," including a 2002 Institute of Medicine report on disparities and an annual report by the Agency for Healthcare Research and Quality documenting disparities. Another recent effort includes the setting of dozens of public health goals relating to race and ethnicity in the federal "Healthy People 2010" document.

"It's also perhaps good news that when I came into government, seven years separated African Americans from whites in terms of life expectancy. In 2004, it was five years." But "the bad news ... is that five years still separate African Americans and whites," he said. Satcher added that there is a "29 percent greater risk of mortality among African Americans—that's down from 37 percent back in 1990."

One way of viewing recent efforts is against a backdrop of research published by Satcher and other researchers in 2005 in the health policy journal Health Affairs. The study concluded that if disparities had been eliminated in the 20th century, in the year 2000 there would have been 83,500 fewer deaths among African Americans, including almost 5,000 fewer deaths among African American babies.

Satcher said that if the same percentage of African Americans as of whites were insured there would be three million more African Americans with health coverage today. But access to care, while important, is only part of the reason for disparities in health status, he said.

"We've got to deal with health behavior, and that accounts for 40 to 50 percent of the variation," he said. "So, obesity and the increase in diabetes as a result of that" constitute "a very critical issue." Legislation requiring schools to adopt physical education and good nutrition is "just as critical as access to health care," Satcher said.

The social and physical environment also contributes to disparities, he said. "We talk about human behavior, health behavior, but you know that there are people who live in communities where there is no safe place to get out and walk or jog. You know that there are people who live in communities where they can't find a grocery store with fresh fruits and vegetables. So social determinants of health are sort of basic to this whole discussion and certainly underlie a lot of the disparities that we are talking about."

"We're making progress, but at the same time there are major disparities in health," Satcher said.

Panel moderator Marsha Lillie-Blanton of the Kaiser Family Foundation asked Satcher why progress had been made on only 24 of the 195 objectives in the Healthy People 2010 document. "We've not put the funding behind it," Satcher replied. "NIH's budget is $28 billion, and if the National Center for Minority Health and Health Disparities received less than $250 million for its budget, that tells you we have not made a serious effort."

"CDC's budget is being cut, so the REACH program struggles, and data systems struggle because of cuts in funding. So we've not made greater progress because we have not made this the priority that it's supposed to be as a goal of Healthy People 2010," he said.

Funding is an issue with other programs relating to disparities, including the HHS Office of Minority Health, Satcher said. "I don't think it's ever been adequately funded," he said. And the Bush administration has tried to scale back or zero out the "Health Professions" programs at the Health Resources and Services Administration (HRSA), which aim to increase the number of minority health professionals as a way to increase the availability of health care services in medically underserved areas of the U.S., he said.

Other members of the panel said legislation in 2008 or 2009 could aid efforts to reduce disparities. Goals of the legislation include funding more vigorous efforts to collect data to pinpoint and further delineate the nature of disparities. That in turn could focus lawmakers on specific problems and mobilize them to take concrete action. Research, for example, might show that considerably fewer African Americans get regular dental care, a finding that could focus efforts in that area.

"We hope to be successful in moving some type of minority health bill in the spring of 2008, at the latest," said Dora Hughes, health and education policy adviser to Sen. Barack Obama, D-Ill. For example, the Senate Health Education Labor and Pensions Committee may mark up a measure (S 1576) in February that would reauthorize the HRSA programs to foster diversity among health professionals, codify the REACH program, and strengthen data-collection efforts. The legislation, introduced by Sen. Edward M. Kennedy, D-Mass, has 14 co-sponsors including Thad Cochran, R-Miss. The bill also requires the creation of a national plan to improve minority health and eliminate health disparities.

Another focus of disparity proposals is lowering language barriers to care. Sean McCluskie, legislative director for Rep. Xavier Becerra, D-Calif., said his boss has pushed to have Medicare conduct a pilot project to determine whether offering language services for non-English speakers in Medicare would improve their health by avoiding improper use of medications, for example.

Hughes said the Senate may not move on the language issue in the next few months, however. She said "language access is an extremely important issue, but ... has been unfortunately tied up with the fights over immigration."

During the webcast, HHS' Graham said his office has focused on getting providers to adopt standards to help eliminate disparities. Examples include providing interpreter services and training doctors to understand the cultures of their various patients and how cultural differences might affect their care and response to treatment. Graham said hospital accreditation officials and state groups have been working with his office on the use of those standards.

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Weems Urges Congress Down 'Hard' Path to P4P

By John Reichard, CQ HealthBeat Editor

December 19, 2007 -- Despite all the talk in Washington backing "pay for performance" in Medicare, there's no consensus yet on the details of such a system and much discussion and analysis are needed to finish the job of implementing it, acting Centers for Medicare and Medicaid Services Administrator Kerry Weems said Wednesday.

Advocates of "P4P" say Medicare payments should vary according to the quality of treatment given by a doctor, hospital, or other provider. They say that providers don't have enough incentive to do their jobs well because they are paid regardless of the quality of their care they deliver—in fact, they get more money if they do a poor job and the patient has to keep coming back to the doctor or hospital for treatment.

When asked how to solve the problem of physician spending growth in Medicare, "many people will say, well, 'pay for performance' and they sort of stare off into the middle distance," Weems said in a breakfast meeting with health reporters. "When somebody does that, you should challenge them and say, 'Well, what do you mean? Tell me exactly what you mean.'"

Finally reaching agreement on a system is difficult because of differing views of what "quality" really is and questions about how a system should be funded, Weems suggested. "Pay for performance is hard, there's not a consensus around it," he said. "I'm confident that we can get there, but the way that we can get there is through diligent research, demonstrations, and working with the professional societies to make sure when we say 'quality,' we all mean the same thing."

Weems noted that CMS recently submitted a report to Congress on "value-based purchasing" which called for a portion of a hospital's base operating payment for each discharge—its "diagnosis related group" or DRG payment—to hinge on the quality of treatment. Weems told reporters Wednesday that under such a system, DRG payments in general could be reduced by 3 to 5 percent to create a pool of money for quality-based payment. Providers could earn all of that percentage back and more if they performed well on quality measures or showed substantial improvements in quality. Poor performers would earn less.

Asked why such a system isn't yet in place given seemingly widespread support for P4P, Weems alluded drily to the clout of the hospital industry. "Well, the prospect of not getting a full DRG payment can be a pretty substantial obstacle," he noted. The American Hospital Association has expressed concern about the CMS report, with a top AHA official saying that a reduction of up to 5 percent "is a significant cut, and there's a lot of uncertainty in how that money is returned to the system or if that money is returned to the system."

The next step is to have a congressional hearing on the report, Weems said. "I think that it's something concrete that the Congress can now go in and have a hearing about and think about and really question us," he said. "Bring in some experts and say, 'Gee, have you really got it right?' That I think would be the path forward."

Asked his priorities in the remainder of the Bush administration, Weems said "I intend to work very hard to see if we can get a value-based purchasing system for hospitals. One of the things we are that even if that system is not put into place, we may demonstrate to the world what it would look like if it were in place. So actually go through the mechanics of the payment system—not pay hospitals in that way but actually demonstrate what that payment system would look like."

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