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June 12, 2006

Washington Health Policy Week in Review Archive 5f52ff2f-260a-49c5-8a54-770c406feb88

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AHRQ Brief Looks at Number, Cost of Uninsured Hospitalizations in 2003

JUNE 5, 2006 -- Almost 5 percent of all hospitalizations in 2003 involved patients who were uninsured, according to a statistical brief released recently from the Agency for Healthcare Research and Quality (AHRQ). The brief also notes that hospital charges for the 1.7 million uninsured hospital stays in 2003 totaled $29 billion.

It cites that while people may put off some basic medical care, hospitalization may be the only option when it comes to a life-threatening or serious condition.

The brief shows that half of all uninsured hospital patients in 2003 were between 18 and 44 years of age, compared with one-third of privately insured and Medicaid patients in this age range. In addition, nearly 60 percent of uninsured hospitals stays originated in emergency rooms and that uninsured people in the South were the most likely to be hospitalized.

The statistics were compiled through the agency's Healthcare Cost and Utilization Project, a group of health care databases developed through a federal-state-industry partnership.

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Blue Cross Blue Shield Launches Program to Increase Health Care Transparency

JUNE 8, 2006 -- National health care insurer Blue Cross and Blue Shield Association (BCBS) on Thursday announced a new nationwide program aimed at increasing transparency of health care costs and quality. The program, called Blue Distinction, will use existing measures to gather hospital and physician data and provide the information to the insurer's 94 million members.

In a conference call Thursday, Scott Serota, BCBS president and chief executive officer, said the program is based on the belief that through transparency, consumers will become "more judicious purchasers of health care." He added that the program also intends to improve quality outcomes and health care affordability.

Health care price transparency has been a major focus for the Bush administration. In February, President Bush said that legislation might be needed to ensure that hospitals, physicians, and other health care providers give consumers more detailed information about the cost of health care services. And on June 1, the Centers for Medicare and Medicaid Services posted information on what Medicare pays for 30 common elective procedures—including hip and knee replacements and heart operations—and other hospital admissions.

The Blue Cross Blue Shield program is made up of three different components: transparency demonstrations, a hospital measurement and improvement program, and Blue Distinction centers that specialize in bariatric surgery, cardiac care, and transplants.

According to Serota, 17 BCBS plans are currently conducting transparency demonstrations, using BCBS Minnesota's online consumer information tool as an example. The main objective of the demonstrations is to provide consumers with "absolute and relative" costs of procedures and services, according to a BCBS news release. When asked about the cost information provided to consumers, Serota emphasized that data would include a range of prices because cost varies by specific diagnosis or insurance.

Through the Blue Distinction Hospital Measurement and Improvement program, BCBS will collaborate with medical societies and providers to integrate standards of care for common conditions using measures set by the Centers for Medicare and Medicaid Services and the Agency for Healthcare Research and Quality.

The Blue Distinction Centers, which are based off the Blue Distinction Centers for Transplants established by BCBS in 1991, will use criteria including quality and care outcomes to select hospitals to act as centers for bariatric surgery and cardiac care. According to a BCBS statement, a national provider locator for Blue Distinction Centers will be available to BCBS members July 1.

When asked if BCBS was planning on collaborating with CMS's price transparency efforts, Serota said, "We're doing this as a Blue initiative." He added, "While we communicate frequently, we're not working in partnership with CMS."

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GAO Report Looks at Trends, Details of Health Savings Accounts

JUNE 5, 2006 -- A small but growing number of the 177 million Americans with private health insurance are choosing a tax-free health savings account (HSA) over traditional health care options, according to a report published in April by the Government Accountability Office (GAO).

The GAO report is the government's first look at how prevalent HSA and health reimbursement arrangement (HRA) plans are since Congress passed the 2003 Medicare drug law (PL 108-173), which created HSAs. The law mandates that individuals can contribute funds to cover their health care cost tax-free coupled with a high deductible insurance program.

With an HSA, an individual has a minimum deductible amount of $1,050 and a maximum limit of $5,250. And for family coverage, there is a minimum of $2,100 and a maximum out-of-pocket limit of $10,500.

The plans also have a yearly limited contribution of $2,700 for an individual and $5,450 for a family, creating a bridge of as much as $5,050 for a family between the out-of-pocket expenses and the maximum HSA yearly contribution.

The administration is pushing for additional tax breaks for the program. Those changes would include raising the yearly contribution limits to $5,250 for an individual and $10,500 for a family. President Bush also wants to establish tax breaks for individuals who purchase the insurance as well as create a refundable tax credit to low-income families who purchase HSA-qualified insurance.

Proponents of the accounts believe that the best way to combat rising health care costs is to put Americans in greater command of health care spending. Such price and quality comparison shopping will eventually stem rising health care expenses, supporters say.

Mohit Ghose, a spokesman for America's Health Insurance Plans (AHIP), said the report clearly shows that there has been a lot of work done to enable the plans to be sold nationwide, "specifically in states that may have had impediments" such as tax deductibility.

The report found that between 2 million and 3 million employees and dependents were enrolled in the plans as of January 2006, up from around a half a million in December 2005. Ghose noted that laws had to change because "in a lot of states we did see early on that you could not sell products with a $1,000 or $1,100 deductible."

One thing standing in the way of the plans is that health providers are lagging behind in providing pricing and quality information to consumers, GAO researchers found. The report noted that kind of information for physicians and other medical professionals is lacking.

Some federal health programs have begun to take steps toward greater price transparency. On June 1, Medicare posted prices of what it pays at hospitals across the country for 30 medical services.

Gail Shearer, director of Health Policy Analysis for Consumers Union, said it is too early to determine how HSA plans will affect health care coverage. Shearer said she believes they may not be the panacea that proponents believe.

"One day the consumer is going to wake up and be really annoyed" because HSAs will not provide comparable coverage to traditional health insurance, she said.

Some health care analysts, such as Families USA Executive Director Ron Pollack, are skeptical about the accounts' ability to fairly cover all Americans, especially those with greater health care needs. "I think that is a major step in the wrong direction," Pollack said, noting that many will forgo preventive and primary care.

In a recent AHIP census of its member companies, AHIP found that "close to 30 percent of individuals purchasing high deductible health plans that are HSA compatible did not previously have health care coverage," Ghose said.

The GAO report also found that as many as half of those who purchased a high-deductible insurance policy did not open or contribute money to a tax-free HSA to help meet those deductibles and other out-of-pocket medical expenses. And many who did open HSAs met the deductibles with their own money instead of using cash from the tax-free savings account.

The plans are set up so that employees contribute with their employers. "Small employers are more likely to purchase rather than self-fund their health insurance plans," the report said.

The GAO report focuses on HSAs as well as the second most popular consumer-directed health plan, HRAs. These plans have also seen growth in the last few years, from 2.5 million in 2005 to 2.9 million the following January, according to data cited by the report.

The HRA plans are a bit more flexible because they do not have the same statutory requirements as the HSAs, said John Dicken, the director of Health Care Issues for the GAO. But unlike HSAs, HRAs are funded solely by the employer, are not transferable, and can't be used for other purchases. And "although employers are not required to couple an HRA with a high-deductible health plan, in practice the two are typically combined," the report said.

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Group Formed by Medicare Law Recommends Universal Care by 2012

JUNE 5, 2006 -- The Citizens' Health Care Working Group released its interim recommendations in a report Friday, calling for universal health care by 2012.

"Access to care means that everyone should be able to get the right care at the right time and at the right place," the report argues. "Appropriate health care must be available and affordable, as well as convenient and accessible for people in their communities."

The group was created by the 2003 Medicare drug law (PL 108-173) to develop health care recommendations for the president and Congress. The recent report reflects input from over 20,000 people in more than 75 community meetings.

The group recommends financing universal health care through new revenue streams such as enrollee contributions, income taxes or surcharges, "sin taxes," business or payroll taxes or value-added taxes. The report was a general outline of the plan. The group is still deciding whether to be more detailed in the plan's financing proposal in the final report.

Robert E. Moffit, director of the Center for Health Policy at the Heritage Foundation, said universal health care is possible but argued not through the financing means the working group advocates.

"It seems like they are reinventing an ancient wheel for revenue stream," Moffit said. He instead proposed paying for the coverage through rearranging subsidies.

The report acknowledges that the transition to universal health care will take time so multiple financing sources will need to coexist for the move.

Since the failure of President Bill Clinton's attempt to overhaul the nation's health care system, lawmakers have concentrated on piecemeal approaches. The Clinton administration, led by Sen. Hillary Rodham Clinton, D-N.Y., as first lady, attempted to create universal health care coverage.

Moffit said he doubts this report will result in action on universal health care by Congress. He argued that while the debate hasn't stopped for universal coverage, Congress doesn't have the stomach to overhaul the health care system now.

Massachusetts recently became the first state to require its 6.4 million residents—550,000 of whom are uninsured—to obtain health care coverage by July 1, 2007. However, lawmakers have stayed away from a national plan.

The working group's report also recommends establishing a non-partisan private/public group to identify and update a "core" benefits package; guaranteeing financial protection against high health care costs; introducing an integrated public/private health care providers network; increasing efforts to improve of quality of care and efficiency; and finding new ways to finance palliative care, hospice care, and other end-of-life services.

The public may comment on the report until August 31, and the final recommendations will be sent to the president and Congress at the end of September. The Medicare prescription drug law requires five congressional committees to hold hearings on the report.

The working group sent a copy of the report to Sens. Orrin G. Hatch, R-Utah, and Ron Wyden, D-Ore., the sponsors of the bill, and the leadership on the committees directed to hold hearings on the recommendations.

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Panel Blocks Some Proposed Cuts in Health Programs, Adopts Others

JUNE 8, 2006 -- A House appropriations panel Wednesday rejected fiscal 2007 cuts proposed by the Bush administration in doctor and nurse training programs for rural areas and in funding for children's hospitals. But the panel went along with White House plans for flat funding for the National Institutes of Health, which scientists say, because of inflation in research costs, will lead to the funding of fewer research grants—just as promising research leads proliferate because of a wealth of new knowledge about the human genome.

Similarly, the panel, the House Labor-HHS Appropriations Subcommittee, went along with proposed cuts at the Centers for Disease Control and Prevention, although the reductions it approved were smaller than those favored by the White House.

But the panel increased funding for community health centers by $206 million, an amount it said would fund the creation or expansion of 300 medical facilities across the U.S. to treat people, many of them low-income or uninsured, in areas lacking in health care services, such as inner cities and rural areas. And it boosted a CDC program for immunizing children by $70 million over last year's spending levels.

The panel shielded several programs targeted by a "hit list" developed earlier this year by the White House Office of Management and Budget (OMB) to cut spending on health care programs.

For example, the Bush administration had proposed to trim almost $200 million from a $300 million a year program to fund graduate medical education (GME) programs at children's hospitals. The panel voted to keep funding essentially flat.

Peters D. Willson, vice president of public policy for the National Association of Children's Hospitals, said the proposed cut in GME funding would damage children's hospitals, which he called "the backbone of pediatric medical care and research," and which train 30 percent of the nation's pediatricians and the majority of physicians who work in pediatric subspecialties such as pediatric pulmonologists and neurologists.

The OMB had said that children's hospitals were more likely to be profitable than other hospitals and that it would "redirect" funding to the facilities with the greatest need and the largest number of uninsured children.

The panel also protected another program targeted by the OMB budget "hit list," the health professions training program at the Health Resources and Services Administration. The Labor-HHS Subcommittee said those proposed cuts would have been "devastating" to "critical programs that improve the availability of well-trained health care professionals to underserved areas."

The panel voted to provide $313 million for those programs, $18 million more than last year. The administration proposed $159 million in funding.

The panel also voted to continue or slightly increase funding for programs to foster the spread of centers to treat traumatic brain injury and to screen newborns for hearing difficulties.

The panel voted to approve $6.17 billion in funding for CDC, compared with the $6.09 billion proposed by the administration. But that's below this year's funding level of $6.37 billion. While the agency's budget overall would be trimmed under the budget approved by the panel, spending for programs to control infectious diseases would increase $148 million. The increase voted for CDC programs to immunize children would help those from low-income families or with limited insurance coverage to gain access to the growing number of vaccines now recommended for the young, including to prevent meningitis.

The budget approved for NIH—$28.26 billion—actually cuts funding for most of the individual institutes at the agency while increasing funding for the office of the director by $140 million.

The panel also voted to fund Ryan White AIDS programs at $2.13 billion, an increase of $70 million over last year. However, federal spending for AIDS Drug Assistance Programs (ADAPs) would remain flat at $789 million under the funding level approved by the subcommittee. That means low-income AIDS patients who can't afford AIDS drugs will have to be placed on waiting lists for ADAP programs, say those who favor an increase in their funding.

The subcommittee also approved $318.7 million in funding for the Agency for Healthcare Research and Quality, the same amount as this year.

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Stark: MedPAC Data Shows MA Plans Not Worth the Price

JUNE 7, 2006 -- New data from a panel that advises Congress on Medicare payment policy proves that the program continues to overpay private health care plans for the services they provide to beneficiaries, according to Rep. Pete Stark of California.

Stark, the ranking Democrat on the House Ways and Means Health Subcommittee, released new data on Tuesday from the Medicare Payment Advisory Commission (MedPAC) that found on average Medicare pays Medicare Advantage (MA) plans 11 percent more per beneficiary than for individuals enrolled in the traditional fee-for-service program.

The MedPAC analysis was prepared in response to a request from congressional committees to update past analyses. In 2004, MedPAC found the average payment to MA plans was 107 percent of the cost of demographically and geographically similar beneficiaries in the fee-for-service program.

"While working to enact the Medicare Modernization Act, Republicans crowed that adding Medicare Advantage plans to Medicare would save money through 'competition' and 'market efficiencies,'" Stark said in a statement. "It is time for Congress to enact legislation eliminating government overpayments to HMOs. MA plans should be paid the same as traditional Medicare."

Mohit Ghose, a spokesman for America's Health Insurance Plans, said Medicare Advantage plans save both beneficiaries and the Medicare program money while providing better coverage than traditional fee-for-service Medicare. According to the Centers for Medicare and Medicaid Services, more than 7 million Medicare beneficiaries are enrolled in Medicare Advantage plans.

Ghose said that MedPAC "greatly overestimates" the payment differences between Medicare Advantage and traditional Medicare. AHIP has long contended that the MedPAC calculations are flawed because they do not include a variety of factors, such as the fee-for-service program's graduate medical education payments to teaching hospitals.

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Study: Physician Access to Clinical IT Increased Over Last 5 Years

JUNE 7, 2006 -- Physician access to clinical information technology (IT) increased by more than five percentage points over the last five years, according to a study published Wednesday by the Center for Studying Health System Change.

In surveys from 2000–01 and 2004–05, the center asked physicians about their practices' use of IT in the following five areas: obtaining information on treatment or recommended guidelines, exchanging data with other physicians, accessing notes, generating treatment reminders, or writing prescriptions.

According to the study, access to each of the five areas increased by at least five percentage points in the time between the two surveys. For example, 21.9 percent of physicians in 2004–05 had access to electronic prescribing, compared with 11.4 percent in 2000–01. Physicians in 2004–05 also were more likely to report that their practices used IT for four or five clinical activities.

The study reports, however, that 16.8 percent of physicians in 2004–05 had no access to any of the clinical activities and 20.2 percent had access for one activity.

"Despite substantial growth rates across the five clinical activities—between 23 percent and 97 percent—many physicians still lack access to practice-based clinical information technology," said Marie Reed, a data manager for the center and co-author of the study. "For example, nearly 80 percent of physicians surveyed couldn't use IT to write prescriptions, and a third didn't have IT for the easiest-to-implement activity—accessing guidelines and treatment alternatives," she said in a statement.

The study reports that major barriers still exist for clinical IT adoption, including start-up and maintenance costs. The study also notes that physicians were asked about access to clinical IT but not whether they use the technology or how frequently they use it.

The surveys were part of the center's Community Tracking Study Physician Survey, which had 12,000 participants in 2000–01 and 6,600 in 2004–05.

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Study Finds Mixed Record for Health Insurance Tax Credit

JUNE 5, 2006 -- A new report by the Kaiser Family Foundation suggests a 2002 health insurance tax credit for trade-displaced workers and retirees is effective—when eligible individuals know how to use it.

According to the report, 26 percent of the surveyed retirees from bankrupt steel companies LTV Corporation and Bethlehem Steel Corporation reported using the tax credit after losing their health benefits. Eligible workers can use the refundable credit, which was part of a 2002 expansion of Trade Adjustment Assistance (TAA) programs (PL 107-210), to pay up to 65 percent of their health insurance premiums.

"It's a very effective tax credit" that seems to help protect individuals from going uninsured," said Isadora Gil, a Kaiser policy analyst and one of the report's authors. "It seems to offer some protection, which is important for this group of people," she said, noting that retirees are more likely than younger individuals to need health insurance to safeguard against high costs for illness and injury.

Yet the survey also suggests that outreach constitutes a key element of the tax credit's effectiveness.

Eligible Bethlehem Steel retirees were more than twice as likely to take advantage of the credit as retirees from LTV, a discrepancy the report says might relate to the education campaign the United Steelworkers of America (USWA) implemented for Bethlehem retirees.

LTV retirees, in contrast, lost their health benefits before the tax credit went into effect, though retirees younger than age 65 were eligible once the credit took force. The credit was in place by the time Bethlehem Steel retirees younger than age 65 lost their coverage.

"We didn't expect to find this . . . really big difference," Gil said of the tax credit claim rates.

The survey found that 34 percent of eligible Bethlehem Steel respondents used the tax credit, compared with only 13 percent of eligible LTV retirees.

Both groups surpassed the national average of 7 percent of eligible individuals taking the tax credit.

Gil said the survey's findings on the health insurance tax credit indicate that its effectiveness correlates to access to information and support on how to use the credit.

"There's scant information available about it, even on the Internet," and applying for the health insurance tax credit is complicated, said Gary Hubbard, a USWA spokesman. The union assisted Kaiser's survey by helping identify affected retirees and surviving spouses.

"The program is not being used as much as it ought to be," Hubbard said.

Kaiser released the study, which evaluated 2004 data, on May 30. The report surveyed 2,691 retirees who lost their health coverage in 2002 and 2003 when the two major U.S. steel companies went bankrupt. Overall, those bankruptcies left about 200,000 former workers and their dependents without health benefits.

Most of those surveyed—about 75 percent—secured alternative coverage once they lost their retirement health benefits. But the remainder of the survey's findings indicates that loss of benefits led to significant hardship for retirees.

Close to half of respondents under age 65, for instance, said they or a spouse returned to work or put off retirement because of health care costs.

Medicare afforded retirees and spouses 65 and older with primary coverage; 74 percent of that group was covered by a Medicare HMO or purchased supplemental coverage.

Of those Medicare-eligible respondents without supplemental coverage, however, 51 percent said they "often" or "sometimes" skip prescription medications due to cost. Only 29 percent of those with supplemental coverage reported skipping medication.

Eighteen percent of respondents were uninsured at the time of the survey. That group was twice as likely as other retirees to say cost forced them to forgo or delay needed care.

"It's a fundamental policy problem for our country," said Hubbard of legacy health care costs, adding that the automobile and airline industries are facing similar strains. If government does not find a solution, he argued, the burden will fall on workers and their families.

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Time for Feds to Stand and Deliver on Health IT, Brailer Says

JUNE 7, 2006 -- Lauding the private sector for "remarkable progress" in moving toward common standards for health information technology (IT), the federal government's former top IT coordinator said Wednesday that the time has come for Uncle Sam to step up to the plate too.

"It's now time for federal agencies to start doing their piece," former National Coordinator for Health Information Technology David Brailer said in a speech to health IT executives in Washington. "We have announced a market-based strategy for making health IT work," Brailer noted. "If we're going to have that happen, it has to start around the purchasing habits of the agencies themselves."

"The federal government has to be the first in line to be able to do this. And this means that agencies have to be able to look at their contracts, how it is that they procure services from health plans, from doctors, from hospitals, from other suppliers," Brailer said.

Also key is how the federal government invests in its own systems, how it purchases health coverage, and how it awards grants, he added. "We're at a point where we have tough decisions to make," Brailer continued. "The standards are complicated, but the decision . . . to turn those standards into purchasing behavior" is a matter of will.

Brailer expressed hope that when the first round of common standards are articulated this September by the Health Information Standards Board—an industry group that coordinates the standard-setting process—government officials will "rapidly take those up into the internal systems, into the contracting, into the benefits purchasing of federal agencies."

If the federal government doesn't do so, it lacks the means to lead in implementing IT, he said. Standards-based purchasing "is something the agencies are committed to, but you have to join with me to redouble those efforts, to make sure that this happens," he added. "Our ability to make sure that the federal government walks the walk and not just talks the talk is going to be a critical factor in our ability to do this."

Brailer suggested that if government purchasing isn't based right away on common standards as they emerge, their adoption could take five to seven years rather than a year or two. The first sets of standards emerging from the Health Information Standards Board will deal with summaries of medical histories, secure messaging, and lab results, among other health information.

"This next six-month period, where we begin looking seriously at how it is that this happens, will be one of the critical events in the life of health IT in the United States," Brailer said.

In an interview after his speech, Brailer predicted that Congress would pass and President Bush would sign legislation this year aimed at speeding the adoption of health IT. Brailer has expressed concern in the past about legislation hindering current government and private sector efforts. But he expressed confidence Wednesday that drafters of health IT legislation will keep that from happening.

The West Coast–based Brailer, who resigned for family reasons, predicted that his successor would be in place by the fall. Brailer, who is heading the search committee to find his replacement, said names of potential successors would be forwarded to the White House in July. But he said there is no short list of names yet.

Brailer said he isn't worried that the process of finding a successor will hinder health IT adoption, saying the Department of Health and Human Services is strongly committed to furthering the technology. He noted that in his current role as a consultant, he is still spending half his time assisting federal health care IT efforts.

Centers for Medicare and Medicaid Services Administrator Mark B. McClellan also addressed the conference, which was sponsored by the Healthcare Information and Management Systems Society.
McClellan said CMS is working hard to develop systems of quality-based payment for Medicare, saying that when providers get paid more for higher quality, they find it much easier to make investments in IT.

McClellan also listed a number of federal pilot projects planned or under way to promote quality-based payment and the use of health care IT. The pilots include efforts to widen the use of handheld computer devices among doctors to prescribe drugs and guard against inappropriate prescribing and grants to encourage the formation of regional networks to speedily transmit electronic health care data. Another pilot aims to develop electronic health records for Medicare beneficiaries, he said.

Quality improvement organizations, which contract with Medicare to improve the quality of care in the program, have recruited 3,500 medical practices to take part in a project to spur health IT adoption by physicians, he noted.

But McClellan said the greatest force for spurring health care IT adoption is "our consumers." The administration is seeking to promote the availability to the public of information on the cost and quality of medical procedures, which in turn will spur providers to increase use of health care IT, he suggested.

McClellan added that final regulations would be issued in late summer allowing hospitals and other health care organizations to donate computers, electronic health record systems, and electronic prescribing hardware and software to doctors without running afoul of federal anti-kickback legislation. The current concern is that such a practice could be seen as illegally inducing referrals of patients or recruitment of enrollees.

In prepared remarks to the conference, Sen. Edward M. Kennedy, D-Mass., urged IT executives to work with him to ensure that the Senate version of IT legislation (S 1418) prevails in any House-Senate conference.

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