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June 20 2005

Washington Health Policy Week in Review Archive 85446174-2bdf-4739-a214-6ab4ea3897ab

Newsletter Article


Administration Opens 'Large Conversation' with Nation on Medicare Drug Benefit

JUNE 16, 2005 -- Led by President Bush, administration officials said Thursday they are opening a sustained campaign to fuel a national discussion of the Medicare prescription drug benefit that starts Jan. 1. Acknowledging that beneficiaries will face a potentially confusing array of choices, officials said they are getting an early start on perfecting Internet and other tools to help Medicare enrollees sort through their choices. Beneficiaries will have until May 15, 2006 to pick a drug coverage plan after the open enrollment period begins Nov. 15.

Addressing an afternoon rally at HHS headquarters, Bush said that "over the next 11 months, we will unite a wide range of Americans: from doctors, to nurses, to pharmacists, to state and local leaders, to seniors groups, to disability advocates, to faith-based organizations."

"Together, we will work to ensure that every American on Medicare is ready to make a confident choice about prescription drug coverage, so they can finally receive the modern health care they deserve." Bush added that "countless" organizations are "holding community events and connecting with seniors face-to-face, so Medicare recipients can get their questions answered and make informed choices about prescription drug coverage. In other words, we're on a massive education effort, starting today. And I'm asking for America's help."

"We're preparing the nation for a large conversation," HHS Secretary Michael O. Leavitt told reporters earlier in the day. "It may be a daughter sitting down with her parents... it may be a youth volunteer. We're creating information now" to fuel those discussions.

The good news in the program may look like bad news to some people—lots of choices to evaluate, with large pocketbook consequences riding on the decisions made. Leavitt said there will be multiple drug coverage plans in every part of the country, multiple drugs in each therapeutic category of the plans, and robust competition that will serve beneficiaries well. He said Wall Street analysts' estimates that 28 to 30 million of the nation's 42 million Medicare beneficiaries will enroll in the drug benefit next year are reasonable.

Centers for Medicare and Medicaid Services Administrator Mark B. McClellan, noted that Medicare Advantage plans will offer more generous drug coverage than drug-only "PDPs," or Prescription Drug Plans, in which beneficiaries who wish to remain in the traditional fee-for-service part of Medicare will enroll.
Three-quarters of those Medicare Advantage (MA) plans offer drug benefits now; under the Medicare overhaul law (PL 108-173), MA plans will also receive the payments PDPs receive to provide drug coverage.

McClellan said better MA drug benefits could take the form of lower deductibles, co-payments, or premiums, or of filling in "gaps" in coverage, an apparent reference to the "doughnut" hole in which beneficiaries must pay 100 percent of drug costs for a large range of their pharmaceutical outlays if they incur major prescription drug costs in a year.

Medicare Advantage enrollment, now at about five million, could grow considerably thanks to the better drug benefits. McClellan said 90 percent of beneficiaries in 2006 would have access to Medicare Advantage health plans. Although the plans are expected to offer better drug benefits, they also entail higher out-of-pocket costs—in the case of HMOs, much higher—if enrollees go outside the plans provider network for doctor or hospital care.

McClellan said MA enrollment is growing at a pace of 50,000 per month now. He declined to predict how the advent of better drug benefits in 2006 would affect that pace of enrollment growth.

Right now, there are limits on how detailed the national conversation on benefits can be. Information about the drug benefits offered by Medicare plans won't be available until October when the "Medicare and You" handbook is mailed to the households of all beneficiaries. However, beneficiaries will have until May 15, 2006 to actually enroll. The drug benefit itself starts Jan. 1, 2006.

But officials stressed that applications to determine eligibility for the more generous drug benefit for low-income beneficiaries are already available. McClellan said it's very important that beneficiaries who might qualify fill out the applications as soon as possible to determine whether they are eligible.

Medicare has found that describing the coverage as a "low-income" benefit may not get the point across because some people who qualify may not think of themselves as poor, McClellan noted.

The CMS chief said that 7 to 8 million beneficiaries fall into the category of non-Medicaid-eligible Medicare beneficiaries who are eligible for the low-income benefit. "We have a large outreach operation starting right now" to reach them, McClellan said. The Social Security Administration is in the middle of a campaign to send out almost 19 million applications between May and August.

Medicare expects to sign up 20 percent of the 7 to 8 million—a very high figure for that population based on experience with other forms of government low-income assistance.

Some six million Medicaid beneficiaries also eligible for Medicare will be automatically enrolled in the new drug benefit if they do not pick a plan themselves. About 10 million Medicare beneficiaries have retiree drug benefits; McClellan said they will get notices this fall from their retiree plan on what decisions they need to make.

McClellan estimated there are 12 million beneficiaries into a category he called "other people" that includes two million people with Medigap coverage. The category is a likely source of enrollment in the drug benefit, officials said.
Officials estimated that they will spend $300 million in fiscal 2005 on outreach, including the Medicare and You handbook, one-on-one counseling by state and local agencies, Internet sites, and the 1-800-Medicare helpline.

The administration also is enlisting pharmacists and doctors in the education effort, Leavitt said. Doctors don't have time to help patients pick the right plan, he said, but can give them information on where to go for help.

Leavitt added that HHS has entered into partnerships with senior groups and a variety of other partners. "We're going to reach beneficiaries where they live, work, pray, and play," he said.

John Lewis, D-Ga., of the House Ways and Means Health Subcommittee and ranking member of the Oversight Subcommittee, complained Thursday that some low-income beneficiaries had received empty envelopes in a mailing about the drug benefit.

He called on Republicans to carry out oversight hearings on the implementation of the benefit. A CMS official said the administration received fewer than 100 calls about empty envelopes and resent the mailing to those people.

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Frist, Clinton Pledge Health Care IT Push

JUNE 16, 2005 -- Sens. Bill Frist, R-Tenn., and Hillary Rodham Clinton, D-N.Y., both potential presidential candidates for 2008, joined forces Thursday to introduce legislation to create a nationwide electronic medical record system they said would improve the quality of care and save billions in health care costs.

The Frist–Clinton alliance, along with ongoing efforts by the Department of Health and Human Services to create electronic standards that would allow health information technology systems to share information, plus a call from President Bush for most Americans to have electronic medical records within the next decade, have raised hopes that "Health IT" legislation will move this year.
Frist said Thursday he hoped to pass legislation within the next 18 months. He also said he would work with sponsors of other health IT bills to see if they could combine their measures in order to speed the legislative process. A handful of measures, such as one sponsored by Sens. Debbie Stabenow, D-Mich., and Olympia J. Snowe, R-Maine, have been introduced to speed the use of health care information technology. Frist also said he was discussing the issue with House GOP leaders.

Frist and Clinton unveiled their bill during a news conference staged at the admissions waiting area of George Washington University Hospital, a facility that has its own internal electronic medical record system where physicians can access information about patient allergies, test results, and other items that could mean the difference between life or death in a medical emergency.

"We're ahead of most hospitals," said Dr. Richard Becker, the hospital's chief executive officer.

But without "interoperability," the ability to transfer that information electronically between systems and across the country, the true promise of health care technology will never be realized, the senators said.

"With all of this advanced care, we are still one of the most fragmented systems in the world," said Frist, who is also a physician. "We're in the stone age. We're not in the information age."

Frist called Clinton his "partner in this endeavor," an alliance that he admitted "surprises some people." The senators said the idea was hashed out over a working dinner the lawmakers shared with other Senate colleagues a few years ago. Frist and Clinton collaborated on an op-ed piece about health IT published in the Washington Post last summer and said Thursday that they plan to work aggressively to move their legislation through the Senate as soon as possible.

Clinton said the bill would help "improve quality and reduce costs in our wasteful, inefficient system" that spends more on health care than any other nation in the world.

Among its provisions, the measure would codify the Office of National Coordination for Information Technology, an office within HHS now working to develop interoperability standards. The measure would also provide exemptions from existing federal laws to allow hospitals, health plans, and others to provide health information technology equipment to physicians as long as the purpose was to reduce medical errors, improve quality, and reduce costs, among other goals. The bill would authorize $125 million annually for five years for grants to local or regional collaborations of hospitals, health plans, doctors, and other providers to develop health information technology standards.

While the standards would be mandatory for federal government programs such as Medicare and Medicaid, they would be voluntary for the private sector.

The Frist–Clinton bill would also direct the HHS secretary to establish a "value-based purchasing pilot program" under Medicare to encourage the reporting of health care quality data and facilitate the payment of providers based on performance. After two years, the HHS secretary could expand that program and implement it nationwide.

Pay-for-performance, or "P4P," pays a doctor or hospital more for higher scores on specific measures of performance. Federal officials and policy wonks are touting pay-for-performance as a way to improve medical care for Medicare beneficiaries and spend federal health care dollars efficiently. While many provider groups have embraced the idea, some fear such policies may reduce their federal reimbursement for services.

More than 20 organizations, including manufacturers, health groups, unions, and trade associations, have endorsed the Frist–Clinton bill and Frist said he expects more to join on board in the days ahead. HHS Secretary Michael O. Leavitt said in a statement Thursday that he welcomed the measure and looks forward to working with Frist and Clinton "and with people around the country, to make electronic medical records secure accessible and portable for everyone."

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House Dems Condemn Medicaid Changes on Moral Grounds

JUNE 15, 2005 -- The nation's governors on Wednesday brought their recommendations for an overhaul of the Medicaid program to Capitol Hill, seeking flexibility to change what types of medical benefits are covered and asking beneficiaries to pay more for them.

On a day that effectively marked the opening of what is likely to be an historic debate this summer over the fate of the Medicaid health care entitlement for the poor, House Democrats condemned Republicans on Wednesday for launching what they called an "immoral" attempt to fund tax cuts for the rich by increasing the suffering of the most vulnerable Americans.

In unusually sharp and angry attacks at a hearing that began House consideration of Medicaid revisions urged by state governors, House Democrats appeared determined to fight hard to block GOP attempts to remake a program that lies at the heart of the Democratic ideology and sense of morality.

Congress and an administration-appointed commission soon will begin identifying ways to pare $10 billion from Medicaid over five years. With Medicaid costs now the largest and fastest-growing component of state budgets, governors must find ways to contain Medicaid spending, the governors told Congress.

The House Democrats' arguments may have been weakened by the declaration of fellow Democrat Virginia Governor Mark Warner, the chairman of the National Governors Association (NGA), that Medicaid in its current form is unsustainable apart from the issue of GOP budget priorities.

And in testimony before the Senate Finance Committee where the governors also appeared Wednesday to discuss their Medicaid recommendations, NGA vice chairman Mike Huckabee, R-Ark., called Medicaid "a 45-rpm program in a MP3 world."

Governors United in Effort
Before the House Commerce panel, Huckabee depicted Democratic and Republican governors as united in their conviction that Medicaid no longer can continue in its current form, a contention Warner did not dispute. "We truly do have a bipartisan proposal before you," Warner said.

"I want to point out that budgets are moral documents," Rep. Henry A. Waxman, D-Calif. said in his opening statement. "We have a budget I think is immoral." Waxman said each member of the committee has a responsibility to ask what happens to the nation's most vulnerable citizens because of changes to Medicaid.

Michigan Rep. John D. Dingell, the ranking Energy and Commerce Democrat, faulted Chairman Joe L. Barton, R-Texas, for not inviting witnesses representing the elderly, children, and pregnant women to assess the impact of a set of seven revisions unveiled by the NGA.

The governors' proposals would seek higher rebates from drug manufacturers, increase the use of generics, and institute tiered co-payments for beneficiaries. The NGA plan would also make it more difficult for individuals to transfer assets in order to avoid paying for long-term care services, a trend they say is shifting more of those costs to the federal and state governments.

The plan would give states the option to increase cost-sharing for Medicaid beneficiaries and give states greater flexibility in benefit design. The governors also urged Congress to simplify the federal waiver process and require the Department of Health and Human Services to "stand by states" if a waiver is challenged in court.

Dingell said proposals requiring Medicaid patients to pay more out of pocket for health care "will probably result in no services for many." Equally troubling, he said, are NGA-proposed changes that would take benefits away from children. In the end, he warned, "the nation will pay the social costs" of such treatment of children.

Massachusetts Democrat Edward J. Markey asked angrily why Republicans don't first figure out how to protect "babies and grandmothers" and then fund tax cuts for the rich with whatever money is left over.

"I simply don't think Medicaid is in need of reform," said Illinois Democrat Bobby L. Rush, adding that reform always seems to be reserved in the current Congress for programs that aid the poor and vulnerable.

"We sit here with salaries of more than $150,000 a year, we have health care subsidized by the American taxpayer, and we are taking health care from the most vulnerable among us," said Ohio Democrat Ted Strickland, his voice raised. "It is a moral issue. Jesus said, 'as you have done it unto the least of these, you have done it unto me.' "

Defending Change
Republicans countered that doing nothing is not an option. Barton's face tensed when Dingell complained about the lack of witnesses but reacted by assuring Dingell that the poor and vulnerable would be heard from in a series of Medicaid hearings the committee plans leading to a September markup on an overhaul package.

"Some will say that any change to the system they love will hurt the poor," Barton said in his opening statement. "The critics conveniently ignore the fact that the system is already changing as states try to avoid ruin."

Between 2002 and 2005, Barton said, all states reduced provider rates and implemented drug cost controls; 38 states reduced eligibility; and 34 states reduced benefits. This year, hundreds of thousands of beneficiaries will lose Medicaid eligibility or face reduced benefits in states such as Tennessee, Missouri, and Mississippi, he said.

"We must do something because doing nothing hurts Medicaid patients every day. I want to save Medicaid," Barton said, adding that "if we cannot make Medicaid more affordable to states and the federal government, we will have put the beneficiaries who depend on the program at grave risk."

Rep. Nathan Deal, R-Ga., took exception to the criticism that overhauling Medicaid picks on the most vulnerable Americans. State waivers already put in place by Republicans "have given us the ability to put the safety net under people who didn't have it," he said.

But states are also dropping beneficiaries from the rolls, other lawmakers said. Rep. Marsha Blackburn, R-Tenn., noted that some 300,000 beneficiaries are being dropped for TennCare, which "has proven to be too much for our state's budget to bear.

Before Energy and Commerce, Warner stuck to a line of testimony that gave little succor to fellow Democrats. "We've got to deal with this issue now," he declared. "It's going to get exponentially worse over the next decade." Warner added that he found it "frustrating" that critics frame the changes as harming people in need.
But Rep. Sherrod Brown, D-Ohio, pressed Warner on apparent inconsistencies in his support for beneficiary cost-sharing, saying the Virginia governor had dropped a plan for charging premiums in the state's Children's Health Insurance Program.

And Waxman faulted Warner for "timidity" in his set of recommended revisions, noting the absence of any proposal to increase federal matching payments as a way out of the Medicaid financial crisis.

But NGA's increasingly detailed recommendations for overhauling Medicaid, summarized in a 13-page document, coupled with apparently wide gubernatorial bipartisan support for the changes, may breathe life into prospects this year for a congressional overhaul. Both Warner and Huckabee said they favor legislation this year.

One of the interesting subplots of the Medicaid hearings this summer will be Barton's level of success in keeping rising tensions over Medicaid under control. Although the committee is sharply partisan on the left and right, relationships between Democrats and Republicans have been cordial.

At the Senate Finance Committee hearing, Sen. Blanche Lincoln, D-Ark., said charging low-income people more for their medical care could mean "they don't get the care they need." Huckabee responded that the lowest-income families would not have to pay more than 5 percent of their income on health care.

Sen. Max Baucus, D-Mont., said he feared that benefits for mandatory populations might be in jeopardy under the governors' plan, but Huckabee said that was not the case.

Democrats Sen. John Kerry of Massachusetts and Sen. John D. Rockefeller IV, D-W.Va., urged Warner and Huckabee to back Democrats' quest to roll back tax cuts for Americans earning $300,000 or more a year. Taking that step that would provide enough money to provide health care coverage for children who do not have it and also return $6 billion to states, Kerry said.

"That is the choice because this year we are going to vote to make them permanent," Rockefeller said.

Warner said Kerry's plan was "nice" but would do little to respond to rising costs of long-term care.

Sen. Gordon H. Smith, R-Ore., asked the governors to recommend which of their proposals would help lawmakers make the $10 billion target for Medicaid spending reductions. Warner said governors want to work with Congress to decide which elements of their plan should be implemented.

The National Center for Policy Analysis, a conservative-leaning think tank, said the NGA would not go far enough to control rising Medicaid expenditures.
"States should be allowed to innovate to hold down costs but also be held accountable for expenses and results," said Devon Herrick, the center's senior fellow.

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'Patient Navigator' Bill Passes in House

JUNE 13, 2005 -- The House passed legislation Monday aimed at helping low-income patients learn about and take advantage of health care resources available to them.

The bill (HR 1812), which passed by voice vote, aims to improve outreach and coordination of health care services for chronically ill, uninsured patients in low-income and rural areas.

Sponsored by Robert Menendez, D-N.J., the bill would authorize $25 million over five years for grants to "patient navigator" programs. The navigators would help patients learn about treatment options, find clinical trials, and obtain referrals. The programs also would alert patients to government aid for which they might qualify and help them apply for financial assistance.

"The complexity and fragmentation of our health care system is perhaps the most daunting barrier of all," said Sherrod Brown, D-Ohio. "It exacerbates racial and ethnic disparities and reduces the efficiency of health care across the board."

The legislation, he said, would "help ease the way for those who face a serious illness, an intimidating array of treatment options, and uncertainty about the best course of action." The bill was approved by voice vote in the Energy and Commerce Committee on May 4.

A companion Senate bill (S 898), sponsored by Texas Republican Kay Bailey Hutchison, was approved April 27 by the Senate Health, Education, Labor and Pensions Committee. The legislation has been promoted by patient advocacy groups such as the American Cancer Society, American Medical Association, and the American Diabetes Association.

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Study: 'Underinsured' Adults Compound Uninsured Problem

JUNE 14, 2005 -- Millions of Americans have health insurance that does not adequately protect them against catastrophic health care expenses, according to a study released Tuesday by the Commonwealth Fund, which studies health and social issues.

In addition to the 45 million uninsured adults in the United States, another 16 million were "underinsured" in 2003, according to the study published in the journal Health Affairs. An estimated total of 61 million adults, or 35 percent of individuals ages 19 to 64, had either no insurance, sporadic coverage, or insurance that exposed them to high health care costs during 2003, Commonwealth officials said in a news release.

Underinsured adults are almost as likely as the uninsured to go without needed medical care and to incur medical debt, the authors found. Lower-income and sicker adults are also more at risk of having inadequate coverage.

The study defined an underinsured person as one who has insurance and spends between 5 percent and 10 percent of their income on health care.

The study's authors warn that recent market trends will likely place increasing numbers of insured patients and their families at risk due to higher cost-sharing and out-of-pocket exposure. An increase in the number of underinsured could undermine effective care, health, and financial security, making it harder to distinguish the uninsured from the insured, the authors note.

Individuals without adequate health insurance were significantly more likely to go without care because of the cost. More than one-half of both the underinsured and the uninsured went without needed care during the year, such as failing to fill a prescription, skipping a test or follow-up visit, failing to visit a doctor for a medical problem, or not receiving specialist care.

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