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June 27, 2005

Washington Health Policy Week in Review Archive 2552bcac-5fb7-4a32-aaf4-b0c2b45c9cdb

Newsletter Article


AHRQ Announces Studies Comparing Effectiveness of Treatments in Medicare

The Agency for Healthcare Research and Quality announced plans Wednesday for studies it said will help point Medicare policymakers, beneficiaries, and doctors to the most effective types of treatments in 10 areas.

By reviewing both published and unpublished scientific literature, the study "will provide invaluable information to providers and patients who need to make evidence-based decisions about treatments and interventions every day," said Dr. Carolyn Clancy, the AHRQ administrator.

AHRQ's history includes a move in Congress in the mid-1990s to zero out funding of the agency after it issued guidelines on effective treatment of low back pain that infuriated spine surgeons.

Many observers since then have expressed doubt that the federal government would be willing to fund a major research program that might lead to winners and losers in markets for health care products and treatments.

Nevertheless, the studies announced Wednesday wade into treatment areas that involve heavy health care spending. The areas reflect research priorities picked not only by representatives of AHRQ but also of the Food and Drug Administration, the HHS Office of the Secretary, and the Centers for Medicare and Medicaid Services.

Further insulating AHRQ from the potential fallout is the fact that it is no longer issuing treatment guidelines on the most effective treatments. Rather, it is funding "Evidence-Based Practice Centers" in largely academic settings to prepare the literature reviews.

"They're not guidelines, they're evidence reviews," an AHRQ spokeswoman said of the coming reports.

Among the studies announced are those that will address strategies to manage gastroesophageal reflux disease; benefits and safety of analgesics for osteoarthritis; new technologies for diagnosing breast cancer; the use of Epoetin and Darbepoetin for managing anemia in patients receiving cancer treatment; and off-label use of atypical anti-psychotic medications.

Other announced studies will focus on renal artery stenting compared to aggressive anti-hypertensive therapy for mild renal artery stenosis; treatments for localized prostate cancer; depression drugs; oral drugs for diabetes; and drugs and "behavioral interventions" such as diet, exercise, and vitamin supplements for osteoporosis and osteopenia.

The research program is funded under Section 1013 of the Medicare overhaul law (PL 108-173), championed by Senate Majority Leader Bill Frist, R-Tenn.

"This AHRQ research is another modest step in the Republican revolution in health care—where Uncle Sam wants proven value for each Medicare dollar," said Alec Vachon, a former GOP staffer on the Senate Finance Committee who now works as a consultant. "CMS head Mark McClellan and Majority Leader Bill Frist may look button-down, but don't be fooled—on this issue, they are wild-eyed radicals."

AHRQ said it will announce research reviews in the future relating to Medicaid and the State Children's Health Insurance Program. Findings of the reviews for all three programs are available generally to the public, including doctors, patients, and health plans in the commercial marketplace.

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Conservative Wonks: Time to Debate Tax Treatment of Health Benefits

Analysts from the Heritage Foundation, the Galen Institute, and the National Taxpayers Union said Monday that it's time for Congress to step up to the plate and debate the continued existence of the deduction of employer-paid health insurance premiums from employee income.

A petition circulated by the groups to attract media and congressional attention to the issue says deduction of the premiums from income and payroll taxes should end because it keeps market forces from restraining the galloping growth of health costs.

"We've created this system that's destroyed any semblance of the free market," Heritage Foundation analyst Daniel J. Mitchell told a standing-room-only forum on Capitol Hill. Health costs would fall if they were paid out of pocket with insurance coverage reserved for catastrophic expenses, he said.

The exclusion from taxable income "provides a huge incentive for employers rather than consumers to purchase health insurance and has resulted in a system that hides from workers the true cost of their health care consumption," the petition states. The result is artificial support of increased demand for more expensive health insurance and medical services, the petition adds.

"Employers should continue to be allowed to deduct the cost of health insurance as a legitimate business expense, but employees should not receive tax exemption for an unlimited amount of health insurance," according to the petition.

"Congress could begin by capping the amount of income that employees can shelter from taxes, allowing only a fixed dollar amount of health insurance to be tax exempt. A better approach would be to eliminate the employee tax exclusion for health insurance. If it is the policy of the government to encourage people to buy health insurance, it might better be done by means of allowances targeted directly to individuals to assist them in purchasing the health coverage of their choice."

Galen Institute President Grace-Marie Turner said after the event that if a cap were in place, employees would work with employers to keep the costs of coverage below the ceiling in order to avoid paying higher taxes.

House Ways and Means Committee Chairman Bill Thomas, R-Calif., "thinks we ought to have a national debate, and so do some of his colleagues," said Robert Moffitt of the Heritage Foundation. Moffitt named as examples Rep. Jim McCrery, R-La., Senate Majority Leader Bill Frist, R-Tenn., and Sen. Ron Wyden, D-Ore. Though invited to speak at the event, Thomas was a no-show.

Thomas periodically criticizes the deduction, including in a speech last year explaining how he would like to overhaul the health system and create a system of universal coverage. But politically the challenge would be enormous even if the deduction were capped rather than eliminated.

One questioner in the audience at the event sponsored by the Heritage Foundation and the Galen Institute commented that if a cap were proposed, "the medical industry and the insurance industry will form coalitions to preserve the salad bar that they now have."

But panelists suggested that the tide could be turned with arguments to the business community that changing the taxability of premiums would fuel economic growth and begin reining in "astronomical" health care costs. Turner said the point should be made that the current system heavily subsidizes health insurance for the affluent. Subsidies instead should be directed to poor people, she said.

The conservative think tanks seek to prod the President's Advisory Panel on Federal Tax Reform to take up tax treatment of health care benefits. Former senators Connie Mack and John B. Breaux are chairing the commission.

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Reps. Thomas, Johnson Ask for CMS Help in Changing Medicare's "Irrational" Payment System

House Ways and Means Committee Chairman Bill Thomas and the panel's Health Subcommittee Chairman Nancy L. Johnson have asked the Centers for Medicare and Medicaid Services for help in moving Medicare toward a "pay-for-performance" system.

"Today, Medicare pays providers the same whether they deliver excellent care or care that is ineffective, poor quality or out-of-date," the lawmakers wrote in a June 16 letter to Centers for Medicare and Medicaid Services Administrator Mark B. McClellan. "Unfortunately, since Medicare pays for resource use, we pay for more and more services when providers deliver ineffective and inefficient care. It is time to change this irrational system."

Pay-for-performance, or "P4P," pays a doctor or hospital more for higher scores on specific measures of performance, such as the percentage of heart attack patients who have been prescribed lifesaving beta-blocker drug therapy when they leave the hospital. 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.

Thomas, R-Calif., and Johnson, R-Conn., asked CMS for help in developing quality indicators for providers such as physicians and in determining the size of incentives needed to encourage reporting of such quality indicators.

At its annual meeting in Chicago, the American Medical Association on Wednesday updated the group's principles and guidelines for pay-for-performance programs to include the need for pilot testing prior to implementation of such programs and a call for the programs to not penalize physicians "based on factors outside of the physician's control."

At a forum hosted Wednesday by the Blue Cross Blue Shield Association, officials of Blue Cross plans that offer "pay for quality" programs said the programs produced data that improved patient care, especially for individuals with chronic medical conditions such as diabetes, and would likely reduce health care costs over time.

"We believe we're on to something here," said Dr. Allan M. Korn, senior vice president and chief medical officer of the Blue Cross and Blue Shield Association.

Dr. Bruce E. Landon, associate professor of Harvard Medical School, who studied the Blue Cross Blue Shield pay for quality programs, said their savings may come in "benefits not measured in dollars" but rather in "increased quality of life."

Blue Cross and Blue Shield plans are offering physician pay for quality programs in 32 states and expect to implement programs in 14 additional states in the near future, according to a survey the Blue Cross and Blue Shield Foundation on Health Care released Wednesday.

Sixty-eight percent of eligible primary care physicians and 48 percent of the eligible specialists are participating, and the programs use a broad range of performance measures, such as HEDIS, member satisfaction indicators, and generic drug utilization.

The most common form of incentives, the study found, include lump-sum payments and fee schedule increases, and a limited but growing number of physicians are making their program results public.

As federal officials design pay-for-performance programs for Medicare providers, they should make sure to consult physicians and add extra money into the Medicare payment system to reward doctors for participating in such programs, said panelists at the Blue Cross and Blue Shield forum.

The Medicare Payment Advisory Commission (MedPAC), which advises Congress on payment issues, has urged lawmakers to establish a "quality incentive payment policy" for hospitals, home health agencies and doctors. MedPAC's recommendations include setting aside 1 percent of current payments and giving it to caregivers who improve the quality of their care or meet quality benchmarks.

Dr. Jon Shematek, medical director for quality improvement at CareFirst BlueCross BlueShield, said physicians are concerned that their Medicare payments might be reduced under a pay-for-performance system. Congress should provide "positive incentives and recognition" for physicians who participate, Shematek said.

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Study: Health Spending Continues to Outpace Economic Growth

Health care costs for privately insured Americans grew 8.2 percent in 2004, virtually the same rate as in 2003, according to a study released Tuesday by the Center for Studying Health System Change.

Health spending growth continued to outpace overall economic growth by a wide margin—2.6 percentage points—in 2004, despite a robust 5.6 percent increase in the overall U.S. economy as measured by per capita gross domestic product, according to the study, which was published Tuesday as a Web exclusive in the journal Health Affairs.

After peaking at 11.32 percent in 2001, health care spending growth slowed in 2002 and 2003 but now has leveled off at a relatively high rate, according to the center, a nonpartisan policy research organization funded principally by The Robert Wood Johnson Foundation.

"If health care spending continues to grow at a significantly faster rate than workers' incomes—and there's every sign that it will—health insurance will become unaffordable to more and more people," center president and study co-author Paul B. Ginsburg said in a news release.

In 2005, estimated average premium increases ranged from 8 percent to 10 percent, down from an average 12 percent in 2004. And for the fourth year in a row, although to a lesser degree than in recent years, employers in 2005 increased patient cost sharing through higher deductibles, copayments, and coinsurance as a way to cope with high premium increases.

Other Key Study Findings

  • Prescription drug spending per privately insured person increased at a slower pace, growing 7.2 percent in 2004 compared with 8.9 percent in 2003 and less than half the 1999 peak of 18.1 percent.
  • Spending on outpatient hospital care, increased 11.3 percent—keeping it the fastest-growing category of health spending for the firth year in a row—compared with 11.1 percent in 2003.
  • Spending on physician care increased 6.4 percent in 2004, identical to the 2003 growth rate.

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Tennessee Governor Explains TennCare Coverage Cuts

Tennessee Gov. Phil Bredesen on Friday defended his decision to scale back the TennCare program, a move that consumer groups and patient advocates say will likely leave more than 300,000 people without medical care.

Economics, the Democrat said, forced him to make cuts to the country's most generous Medicaid program. "What we have has become unsustainable, and I am going through the very painful process of trimming it back to something our state can afford," he said in remarks made at the National Press Club.

"This is not the right thing to do. This is what we're being forced to do," he said. "We need to balance our budgets every year." Individuals who are losing their TennCare coverage are optional enrollees "that are not on the program in any other state," Bredesen said.

Bredesen said the decision to scale back TennCare was debated and voted on by the state legislature. He also said that consent decrees agreed to by previous administrations have placed additional financial burdens on TennCare.

One such decree he noted was one that requires the state to prove why an appeal was denied. In other states, he said, the petitioner must prove there are grounds for an appeal. "We get 10,000 appeals a month and we lose almost every one of them," Bredesen said.

While Bredesen said it is important to overhaul TennCare to make it financially sound, "I can't tell you how much I hate to tell someone they have to come off this program," he said.

Some of those Tennessee recipients who will lose their TennCare benefits were in the audience Friday. Lori Griffin, who suffers from thyroid cancer and a series of other medical disorders and cannot work because she is her ailing husband's full-time care-giver, asked Bredesen where she will get her health care once she is dropped from TennCare. Bredesen told her that her county health care system may be able to help her and he also offered to have his staff help her find health care coverage.

"You are a poster person ... you are someone I want to help," Bredesen said.

Tony Garr, executive director of Tennessee Health Care Campaign, Inc., a group that opposes the TennCare cuts, said later that a county health department would not offer the medical treatment that Griffin needs.

Ron Pollack, executive director of Families USA, which also opposes Bredesen's plan, said the TennCare cuts will not only eliminate coverage for 323,000 residents but also cause those still in the program to have their health care "determined by state bureaucrats rather than doctors."

Pollack said that Bredesen's claims that consent decrees agreed to by previous governors undercut the state's ability to provide coverage under TennCare were "totally disingenuous," adding that such decrees cover a "tiny proportion" of the state's population.

The seniors lobbying group AARP also criticized Bredesen's remarks. In a statement, AARP Chief Executive Officer Bill Novelli said while AARP was sympathetic to the budget concerns that Bredesen faces, "we don't believe that the unprecedented cuts facing vulnerable Tennessee beneficiaries—both in enrollment and services—are the answer."

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