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Julyn16, 2007

Washington Health Policy Week in Review Archive 4e91e5fc-94d5-4da5-9ec0-e9375dc9c0d0

Newsletter Article


Bipartisan Pair Seeks Tax Credit to Spur Worker 'Wellness' Programs

By Michael Teitelbaum, CQ Staff

July 9, 2007 – Sens. Tom Harkin, D-Iowa, and Gordon H. Smith, R-Ore., introduced legislation Monday that would provide a tax credit to businesses that offer comprehensive wellness programs to their employees.

The programs would be part of insurance plans available to employees on a yearly basis. The bill would provide a tax incentive of up to $200 per employee for the first 200 employees enrolled and $100 for every employee thereafter.

Harkin, chairman of the Labor-Health-Education Appropriations Subcommittee, and Smith, a member of the tax-writing Finance Committee, said the bill's cost has not been calculated yet. However, Harkin said that typically there is $3 to $4 in health care savings for every dollar spent on wellness and prevention programs over a year to 18 months. Harkin said that he hopes to attach the proposal to tax legislation that is likely to move in the fall.

To qualify for the credit, companies would be required to have three of four components in their wellness programs: health education and risk assessments; behavioral change programs that include counseling, seminars or online courses in such topics as nutrition or smoking cessation; incentives to encourage employee participation, such as health insurance premium reductions to participating employees; and a workforce engagement committee to create a wellness program within the company. Businesses could receive the tax credit for 10 years for creating new wellness programs.

Harkin said that while employers are major providers of health insurance benefits, they have not been at the forefront when it comes to wellness programs.

Supporters of the bill include the American Medical Association, U.S. Chamber of Commerce and various public health organizations such as the American Lung Association and American Cancer Society.

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CBO: Trimming Health Cost Growth Will be Key

July 9, 2007 – If health costs continue to grow as they have in the past four decades, income tax rates will have to rise dramatically by 2050 if they are the mechanism used to pay for those added outlays, according to an analysis released Monday by the Congressional Budget Office. Based on the current rate of health cost growth—2.5 percentage points per year higher than the growth in the Gross Domestic Product—the tax rate in the lowest tax bracket would have to climb from 10 percent to 26 percent. In the next bracket, it would climb from 25 percent to 66 percent, and in the highest bracket, it would have to rise from 35 percent to 92 percent.

But if health cost growth is held to one percentage point above GDP, the rate in the lowest bracket would rise to 17 percent instead of 26 percent; in the middle bracket to 43 percent instead of 66 percent; and in the highest bracket to 60 percent instead of 92 percent. "Given the nature of the nation's long-term fiscal challenge, constraining the growth of federal health care costs seems a key component of reducing the deficit over the next several decades," the CBO said in an analysis prepared for the top Republican on the Senate Budget Committee, Judd Gregg of New Hampshire.

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Docs Joust Over Medicare Advantage Payments

By Mary Agnes Carey and Susannah Crepet, CQ Staff

July 11, 2007 – While a group of California physicians on Capitol Hill Wednesday hailed the benefits of Medicare Advantage plans, the American Medical Association (AMA) made a counter move by reiterating its plea to lawmakers to trim payments to the plans. The jockeying occurred as lawmakers continue to mull ways to cut Medicare to pay for other health care priorities, including coverage of uninsured children.

The California Association of Physician Groups said during a press briefing that coordinated care delivered by Medicare Advantage plans creates "a level of quality and efficiency that is not possible in traditional Medicare." The plans do so by providing "evidence-based medicine" and more effective use of health information technology, the association said.

Donald Crane, the group's CEO, complained that in the current debate over Medicare Advantage, "there has been no meaningful discussion on the comparative abilities of Medicare Advantage and traditional Medicare in meeting the increasingly complex needs of a rapidly expanding population of seniors with extended life expectancy." The association's report said "it is the experience of more than 150 physician groups in California and the 59,000 physicians who are part of these groups that they are able to provide better health care to their patients who are in Medicare Advantage plans than those in traditional Medicare."

Some Capitol Hill Democrats are eager to cut Medicare Advantage reimbursements as a way to fund, for instance, expanded coverage of uninsured children through reauthorization of the State Children's Health Insurance Program (SCHIP). On average, Medicare Advantage plans are paid 112 percent of the rates paid in traditional Medicare, while private fee-for-service plans are paid 119 percent of those rates, according to the Medicare Payment Advisory Commission (MedPAC) and Congressional Budget Office (CBO).

But AMA officials said the physician group's report "offers no conclusive reason why the government should continue overpaying Medicare Advantage plans," and urged that the money be used to help prevent a 10 percent Medicare physician payment cut scheduled for Jan. 1. "Congress needs to do what's right for seniors by stopping harsh Medicare cuts ... that will make it very hard for physicians to care for new Medicare patients," said AMA board member Cecil Wilson said in a statement. "The most viable way to do that is to level the playing field by eliminating the Medicare Advantage overpayment."

Separately, executives of the American Academy of Family Physicians, the American College of Physicians and the American Osteopathic Association—organizations that together represent 300,000 doctors—also urged Congress to prevent the scheduled 10 percent cut to Medicare physician payments.

At a Tuesday news conference, the groups said the sustainable growth rate formula (SGR) used to calculate Medicare payments to physicians does not take into account changes in practice patterns, coverage determination and new treatment options and technologies. Insufficient Medicare payments resulting from the SGR formula could reduce participation in the Medicare program and the amount of care available to Medicare patients, according to Rick Kellerman, president of the American Academy of Family Physicians.

Other speakers at the news conference agreed. "The U.S. health care delivery system is not broken, as Michael Moore would assert, but the Medicare physician payment system is 'sicko' and we, the representatives of the primary care physicians of the United States, 300,000 strong, are here in the nation's capitol today to fix it," said American Osteopathic Association Executive Director John Crosby.

An overhaul of the SGR could be attached to SCHIP reauthorization, Crosby and other speakers said.

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Grassley, Hatch Urge Bush Against SCHIP Veto

By Alex Wayne, CQ Staff

July 12, 2007 – The chief Republican architects of a tentative deal the Senate Finance Committee has struck on children's health insurance are defending the proposal against criticism by President Bush, who may veto it.

Charles E. Grassley of Iowa and Orrin G. Hatch of Utah said that they are steadfast against expanding the program as much as Democrats would like, and gave examples in a statement Thursday of how they have scaled it back in committee negotiations.

Bush said in a speech July 10 that the State Children's Health Insurance Program is going beyond its original intent and that he will resist efforts to expand the program. Bush did not mention a veto, but the two Republican Senators said there are reports that he will do so if the proposal expands the SCHIP program. The White House press office did not return a phone call Thursday seeking confirmation of a veto threat.

Finance Committee members said earlier this week they have reached an agreement that would increase spending for SCHIP by $35 billion over the next five years—$15 billion less than Democrats called for in the congressional budget resolution (S Con Res 21.) The extra spending would be financed with increased tobacco taxes; chiefly a 61-cent boost in the cigarette tax, to $1.00 per pack. Senate Finance Chairman Max Baucus,
D-Mont., plans to release the proposal Friday and have his panel mark it up July 17, but lobbyists said Thursday negotiations were still underway.

The Finance deal would not allow SCHIP to be expanded to cover more adults, they said, though they did not say what would happen to the more than 600,000 adults already covered by the program. The deal also would not allow SCHIP to cover legal immigrants, a standard provision in every SCHIP reauthorization bill that Democrats have introduced so far.

"What the administration needs to understand is that if a bipartisan plan isn't achieved, then the Democratic-controlled Congress will, at the very least, extend the current program with all the terrible policy provisions that have evolved, such as waivers for childless adults and coverage for higher-income kids," Grassley and Hatch said.

Further, the lawmakers warned that Bush's preferred policy—tax breaks for middle-income families to help them buy health insurance—isn't going anywhere soon. "[I]t's not realistic—given the lack of bipartisan support for the President's plan—to think that can be accomplished by next week or even before the current children's health care program runs out in September," they said.

However the Senate SCHIP renewal evolves, it is likely to be more palatable to Bush than the House version. Rep. Diana DeGette, D-Colo., vice chairwoman of the Energy and Commerce Committee, which has jurisdiction over SCHIP, said Thursday that Democrats in her chamber are still planning a $50 billion expansion that would allow continued coverage of adults.

"If the president wants to veto an expansion of a program—that his own administration has supported—which provides health care for low-income kids, I think that's just a terrible misjudgment," she said.

While Baucus plans for his committee to vote on its bill July 17, DeGette said negotiations are ongoing in the House, and the Energy and Commerce Committee won't vote on a bill next week.

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Report: E-Prescribing Could Save Medicare Billions, Reduce Rx Errors

By CQ Staff

July 11, 2007 – Electronic prescribing could save the Medicare program as much as $29 billion over the next decade and prevent almost two million medication errors, yet many physicians are reluctant to adopt the practice, according to a new report and poll released Wednesday by the Pharmaceutical Care Management Association (PCMA).

The report, prepared by Gorman Health Group, outlines a series of steps the government could take that could potentially expand "e-prescribing" to cover nearly 80 percent of prescriptions by 2017. They include requiring that electronic prescribing be used for all Medicare drug program prescriptions and offering financial incentives to increase physician participation, which combined would have the largest savings, researchers found. The report estimates that less than 30,000 of the more than 900,000 prescribers in the United States actively use electronic prescribing.

PCMA, a trade group representing pharmacy benefit managers (PBMs), also released a survey Wednesday that found while many physicians think that prescribing drugs electronically would reduce medication errors among other benefits, only one in 10 actually use e-prescribing on a regular basis.

Two-thirds of the 407 physicians interviewed said implementing e-prescribing is not a priority, with most citing financial or administrative hassles as barriers, according to the poll, which was conducted by Ayers, McHenry & Associates, Inc.

PCMA said that as Congress considers a $30 billion update to Medicare physician payments, " it should also consider ways to increase physician adoption of e-prescribing in Medicare."

In response, American Medical Association board member Joseph M. Heyman said in a statement that while physicians "are eager to adopt new technologies that have the potential to increase patient safety and quality of care ... hitting doctors with an unfunded e-prescribing mandate at the same time the government plans to cut Medicare physician payments 10 percent next year is untenable." Heyman added that the AMA supports national standards for e-prescribing, but the Congressional Budget Office (CBO) has not identified any savings to the Medicare program from the practice.

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Senate Finance Nears Deal on Expansion of Children's Health Care Program

By Alex Wayne, CQ Staff

July 10, 2007 – Members of the Senate Finance Committee said Tuesday they have reached agreement on the framework for an expansion of the State Children's Health Insurance Program.

Under the bipartisan agreement, the expansion would cost $35 billion over five years—significantly short of the $50 billion increase sought by Democratic congressional leaders and included in the congressional budget resolution (S Con Res 21), several senators said. The expansion would be paid for with a 61-cent increase in the 39-cent federal cigarette tax, to an even $1 per pack.

"There is general bipartisan support on the committee" for the SCHIP agreement, said Sen. Gordon H. Smith, R-Ore., who has pressed for a tobacco tax increase to pay for the program's expansion. Finance Chairman Max Baucus, D-Mont., who has been negotiating a compromise on the bill for months, said his committee would likely vote on the bill July 17.

But while the compromise might have the support of most of the Finance Committee, it is likely to be politically difficult for other members on both sides of the aisle to support.

SCHIP is a state-federal insurance program, similar to Medicaid, that covers about 6 million children, along with about 600,000 adults. It is intended to provide health insurance for children whose families are low-income, but not poor enough to qualify for the larger Medicaid program.

The government has spent about $4 billion per year on SCHIP since it was created 10 years ago.

An estimated 9 million children in the nation do not have health insurance, and many health experts say about two-thirds of them are eligible for SCHIP but are not enrolled.

SCHIP will expire Sept. 30 without congressional action. Children's advocates and many health groups, including insurers and hospitals, have been pressing Congress to reauthorize and expand the program.

Since the start of the year, Baucus and other Democratic leaders have said that their goal is to boost spending on SCHIP enough to cover every child eligible for the program, an expansion that has been estimated to cost $50 billion over five years. But conservative Republicans, including President Bush, have pushed back, arguing that such a large expansion is unaffordable and is a step toward socialized medicine.

"Their goal is to take incremental steps down the path toward government-run health care for every American," Bush said June 27. He has proposed a far smaller increase of SCHIP that would limit eligibility for the program to children from families earning twice the poverty level or less, combined with tax deductions or credits for middle-income families to help them buy health insurance.

The agreement between Finance Committee members could be too small an expansion for some Democrats and too expensive for some Republicans. Sen. John Kerry, D-Mass., a member of the committee, said Tuesday that he was disappointed that the expansion would be smaller than many Democrats had hoped.

"It may be that's what has to happen to get the votes," he said.

But a large increase in the tobacco tax might be difficult for conservatives on either side of the aisle to support, especially those from Southern, tobacco-growing states. "That, in and of itself, will be a challenge on our side," said Finance member Olympia J. Snowe, R-Maine.

And other conservatives, such as Finance Republican Michael D. Crapo of Idaho, say they prefer Bush's proposal. "I'd prefer a solution more focused on a market-oriented approach," Crapo said.

There are still details to be resolved before the committee votes on the bill, members said, including an all-important analysis of the legislation's cost by the Congressional Budget Office. But Baucus said he is "very optimistic" that his months-long effort to reach agreement on the bill is nearly complete.

John Reichard contributed to this story.

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