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June 28, 2010

Washington Health Policy Week in Review Archive 1b4d1e80-4b6f-44f3-bc99-e3fa23a0db2b

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President Signs Physician Pay Bill, But Unhappiness Lingers

By Jane Norman, CQ HealthBeat Associate Editor

June 25, 2010 -- President Obama signed a bill into law early Friday that prevents a 21 percent pay cut in Medicare physician reimbursements, bringing a conclusion—for now—to a stalemate over the level of government payments to doctors.

"I'm pleased that Congress has acted to ensure the security of our seniors' health care," Obama said. "A 21 percent pay cut to physicians' payments would have forced some doctors to stop seeing Medicare patients—an outcome we can all agree is unacceptable."

The Senate approved the stand-alone bill (HR 3962) by voice vote June 18 and the House cleared it Thursday. The measure postpones the cut for doctors until Nov. 30, instead providing a 2.2 percent pay increase. The so-called doc fix had been part of a broader tax break and social spending package (HR 4213) but congressional leaders extracted it when that measure stalled.

The increase is retroactive to June 1, when a previous short-term measure to prevent the pay cut (PL 111-157) expired. The Centers for Medicare and Medicaid Services issued a statement that the agency has directed its claims contractors to stop processing claims with cuts and temporarily hold all claims for June 1 and later until the pay increase is tested and loaded into the computer system. Claims will be reprocessed as soon as possible, CMS said.

Nancy-Ann DeParle, head of the White House Office of Health Reform, said in a blog post on the White House website that the pay increase is the highest for doctors under the Medicare schedule since 2001.

"The bottom line: With today's signings, doctors won't need to worry about a drastic pay cut, and seniors can rest assured that the care they need will be there when they need it," DeParle wrote.

But the American Medical Association expressed little joy over enactment of the law. The group had lobbied hard for a permanent fix to the reimbursement formula and complained about repeated delays in action on the pay cut this year. AMA President Cecil Wilson called it a "very temporary" fix that doesn't solve a "Medicare mess" created by Congress.

"In December, the Medicare physician payment cut will be a whopping 23 percent, increasing to nearly 30 percent in January," he said. The formula developed by Congress governing physician payments calls for the increased cuts, though cuts in the past have been averted.

"Congress is playing a dangerous game of Russian roulette with seniors' health care," Wilson said. "The baby boomers begin entering Medicare in six months, and if the physician payment problem isn't fixed, these new Medicare patients won't be able to find a doctor to treat them."

AARP, which represents seniors, agreed that the problem hasn't gone away. "The short-term Band-Aid passed tonight gives little reassurance to the 46 million Americans in Medicare who need reliable access to their doctors," said association Vice President Nancy LeaMond. "The time for Congress to find a long-term physician payment solution is far past due."

Members of Congress were reluctant to reverse the pay cut without an offset in spending, so the bill's $6.4 billion cost is fully paid for—partly by prohibiting health care providers from submitting separate payment claims for outpatient services provided within three days of a related hospital admission.

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'Bill of Rights' Is Law at Long Last, Dems Crow

By John Reichard, CQ HealthBeat Editor

June 22, 2010 -- The White House announced publication Tuesday of a package of "Patients' Bill of Rights" regulations issued under the health care overhaul law that includes a three-year phase-out of annual limits on medical care payouts by insurers.

Under the phaseout, plans issued or renewed starting Sept. 23 can't set annual limits below $750,000, $1.25 million a year after that and $2 million two years later.

Annual limits would no longer permitted in 2014, according to a White House summary of the regulations issued under the health care overhaul law.

Otherwise, many of the basic provisions in the regulations have been widely reported. But the Obama administration is intent on using every opportunity to crank up the White House publicity machine to promote the benefits of the law in the face of repeated Republican attacks blaming it for premium increases. Publication of the regs created that opportunity. For the most part, the protections take effect in plan or calendar years beginning after Sept. 23.

Another big White House message of the day was that insurers shouldn't jack up premiums, and that greater scrutiny of rising premiums is paying off. After a meeting with insurance regulators and insurance company executives about the law, President Obama said that companies "shouldn't see [the law] as an opportunity to enact unjustifiable rate increases that don't boost care and inflate their bottom line."

HHS Secretary Kathleen Sebelius said in a telephone press briefing later in the day that the cumulative impact of the regulations would likely raise insurance premiums less than 1 percent.

The regulations eliminate limits on lifetime benefits, cancellation of coverage after a policyholder becomes ill and denial of coverage of children under 19 based on pre-existing medical conditions. They also bar insurers from denying specific benefits for children, such as chemotherapy coverage in the case of children with cancer, said Jeanne Lambrew, head of the HHS Office of Health Reform.

Other new regulations assure access to pediatricians and obstetrician-gynecologists without a referral for enrollees in new insurance plans or in those that lose "grandfather" status in the overhaul law. That status allows Americans to keep their current coverage.

Except in the case of grandfathered plans, the provisions also end insurer requirements for pre-approval to get emergency care in an out-of-network emergency room.

'Further Than We Could Have Dreamed'

Congressional Democrats offered statements describing the regulations in historic terms, saying they put into effect many provisions of the failed attempt in the 1990s to enact consumer protections in so-called Patients' Bill of Rights legislation.

"Because of the work of President Obama and HHS Secretary Sebelius, we've gone even further than we could have dreamed a decade ago," Michigan Democrat Rep. John Dingell said. "Millions of Americans will now receive the timely medical care they need and deserve without fear of insurance company rascality."

"We have worked for more than 15 years to secure these protections and the robust policies we were able to achieve in this Bill of Rights represent a victory for patients across the country," said Senate Finance Committee Chairman Max Baucus, D-Mont.

In his comments after the meeting with insurers and regulators, Obama highlighted the cases of individual Americans who would benefit from the ban on lifetime limits. He also said states are more actively reviewing rate increases.

"We're already seeing a wave of change that's lifting up consumers and leveling the playing field," he said. "Maine rejected a proposed 18 percent rate hike there. Pennsylvania is investigating premium increases made by nine of the state's largest insurers. New York recently passed a law granting the state the authority to review and approve premium increases before they take effect. And we're working with other states and the state insurance commissioners here today to support similar efforts."

Sebelius said that in her previous work as Kansas state insurance commissioner she was "very familiar with companies alleging costs well in excess of what they ended up being. Every single mandate passed in my experience at the legislative level was always estimated to be well more costly than tended to be the reality."

Insurers kept a low profile after the meeting but America's Health Insurance Plans issued a statement emphasizing that premiums are going up not because of profits and administrative costs but because of big underlying increases in the cost of doctor, hospital and pharmaceutical treatment.

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Connecticut First to Expand Medicaid Under Health Care Law

By CQ Staff

June 21, 2010 -- Connecticut on Monday became the first state in the nation to expand Medicaid enrollment to low-income adults under the new health care law, Health and Human Services Secretary Kathleen Sebelius announced.

Sebelius praised the state for its "speedy" move in permanently adding low-income adults to the federal-state health insurance program. "Today's action will bring substantial new federal support to the state and help improve the health of its citizens," she said in a statement.

The Centers for Medicare and Medicaid Services approved the state's plan amendment on Monday. It's estimated that 45,000 adults will become eligible for public health aid under the expansion.

Childless adults with incomes up to 133 percent of the federal poverty level, or $14,400 for an individual in 2010, can receive coverage under the law. Until now the only way states could cover such individuals was by applying for a waiver, which was temporary. Such coverage is required to begin in 2014, but states can also apply to start sooner.

Rep. Rosa DeLauro, D-Conn., also praised the state's action. "I am so proud that after the long, uphill battle in getting the new health care reform law passed, Connecticut will be the first state to permanently expand coverage to some of our neediest residents," she said in a statement.

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'PCORI' Backers Eye PR Strategy to Cool 'Death Panel' Rhetoric

By John Reichard, CQ HealthBeat Editor

June 24, 2010 -- Insurers, drug companies and health care policy leaders got together today to talk about comparative effectiveness research, which is ramping up under the new health care law. The consensus? The effort to find out what works in medicine is going to require a good public relations strategy as much as a scientific one.

The health care overhaul law provides for hundreds of millions of dollars in research to pinpoint what works and what doesn't in medicine, through a new Patient-Centered Outcomes Research Institute to be launched in October.

Boosters of comparative effectiveness research—known as CER—on Thursday emphasized the critical importance of a good PR strategy at a Washington, D.C., conference sponsored by insurance groups, the National Pharmaceutical Council and Brandeis University.

Gail Wilensky, a Republican who ran the Medicare and Medicaid programs during the George Bush administration, told the conference to "be very clear about the challenges . . . there are many people who for a variety of reasons think this is a bad idea, and they will be only too happy to unite to have it blown off the map."

Wilensky was referring at least in part to concerns voiced by tea party activists and some Republicans that the research would be used to deny care to elderly Americans. Conservative bloggers have even used the research to justify claims that the health care law would lead to creation of government "death panels." But a broader swath of Americans grew concerned last year, too, when the move toward evidence-based medicine led a federal advisory panel to recommend less-frequent mammograms.

Moderates like Wilensky see CER as essential to avoiding wasteful spending as the nation tries to control the growth public and private health care spending. But they note that suspicions remain and that supporters will have to address them.

Sarah Kuehl, a Democratic staffer on the Senate Budget Committee involved in drafting the language creating the research program, noted that drafters of the overhaul law had to respond to such fears in creating the institute.

She told the conference that "we explored in great detail putting cost-effectiveness as the core mission of this institute. And to be quite frank the level of hostility and of fear was really quite high" about doing so now. "I think that will have to evolve over time," she added.

"The thorniest bucket of issues we had . . . to address was in relation to fears about using comparative effectiveness research by the federal government to ration care." Drafters "tried to address these fears in a thoughtful and responsible manner," she said.

"In response to fears about discrimination, we prohibited the [HHS] secretary from using the research for coverage or reimbursement in ways that discriminate on the basis of age, disability or terminal illness," Kuehl said. "We couldn't envision a world in which the research was going to be used in that way, but we had to at least address that fear."

In response to fears that the Centers for Medicare and Medicaid Services would immediately use findings from CER coming out of the new institute as the basis for Medicare or Medicaid coverage decisions, "we put in a whole layer of additional patient safeguards," she said. Drafters did so to "ensure that the way CMS used the research had to take into account things like impact on different sub-populations. They had to use the research in a thoughtful, transparent process. They couldn't use one study to make a coverage determination" but must consider research more widely.

Kuehl said that one of the ways supporters of the institute hope to foster its acceptance is though having a wide variety of participants in the health care system on the board of the institute. "We have been particularly excited about the caliber of candidates for the board . . . it's just an embarrassment of riches," she said.

Kuehl said the aim is to build public support through frequent public meetings and through a public advisory board. And a key goal is to hire an executive director for the institute who is politically savvy. The hire will have to testify in Congress frequently and will have to be skilled at explaining the importance of the program and at defending it on the Hill, she suggested.

However, during Q-and-A at the forum, an audience member prodded speakers to be more creative in their thinking about PR. In particular he called attention to anecdotes offered at the forum by speakers Carolyn Clancy and Michael S. Lauer to explain the importance of CER, saying they should be used to build a friendly public image for the research. Both Clancy and Lauer appeared to agree.

The reference was to a story told by Lauer, director of the division of cardiovascular sciences at the National Heart, Lung and Blood Institute, when he first became a doctor. Lauer said a woman with a heart attack came in for treatment, and he prescribed clot dissolvers. The woman's vital signs responded strongly and her spirits lifted: the treatment appeared to be a clinical success. Yet hours later she had a stroke and died.

CER findings since then have showed that stents to prop open clogged arteries work better than clot dissolvers, Lauer said. Were he treating the same woman today she would have received stents and wouldn't have died, he suggested.

For her part, Clancy, director of the Agency for Healthcare Research and Quality, told about the case of a colleague recently recommended for bypass surgery. The decision-making process about treatment was less than ideal because an opening on the surgical calendar for the procedure came up suddenly and the colleague was given the impression by the provider that treatment shouldn't be delayed because of the possibility of death. But the process was so hasty that the individual hadn't really had a chance to assess the pros and cons of that particular treatment. Clancy cited the case as an example of the need to improve the way clinicians are educated about CER findings and share that information with patients.

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'Loss Ratio' Debate Proves Again That Rulemaking Is as Hard as Lawmaking

By Jane Norman, CQ HealthBeat Associate Editor

June 25, 2010 -- Democrats outraged by insurance company profits designed a piece of the new health care law to force insurers to direct most premium money toward benefits. But severe birth pangs are afflicting the process of spelling out this concept in regulations.

The law (PL 111-148, PL 111-152) requires that, beginning in 2011, large group plans spend 85 percent of premiums on clinical services and activities related to quality of care. Only 15 percent can go to other items, such as administrative costs, advertising and profits. For small group and individual plans, it's 80 percent premiums and 20 percent other costs.

Although Congress set the "medical loss ratio," as it is called, at 85-15, the law was otherwise fairly vague about what counts as medical claims and what counts as administrative costs.

That is where the difficulty comes in. The National Association of Insurance Commissioners (NAIC), a group of state regulators directed under the law to develop recommendations on the rule, has been deluged with comments. For insurers, the stakes are high because the decision could directly—and in some cases adversely—affect companies' profits.

But many questions surround the group's final recommendations to the Department of Health and Human Services. The group missed a June 1 deadline requested by HHS because of the complexity of the deliberations. "This is still really in motion," said Janet Trautwein, chief executive officer of the National Association of Health Underwriters, whose members design health care plans.

Sandy Praeger, the Kansas insurance commissioner and chairwoman of one of two main NAIC committees overseeing the recommendations, said she's aiming for the work to be completed by the end of July. "This is a big deal" to get done by then, she said, because insurance plans will soon need to know what rules they'll be operating under for 2011. Essentially, what NAIC recommends will become the regulation, unless for some reason it is determined that the commissioners didn't follow the law, she said.

Proponents of the standard say it will force insurers to spend more on services to consumers. But critics contend it will be to drive individual and small group plans that can't meet the standard out of the market—lessening the competition that's needed to keep prices low. "I really think this is the most significant part of the health care law, pre-2014," said Robert Laszewski, a health policy consultant and former insurance executive.

The Business Roundtable and Business Council said in a recent letter to Office of Management and Budget Director Peter R. Orszag that consequences could include poorer quality of care, higher premiums and reduced competition. If companies can't meet the standard, they will have to issue rebates to customers, under the law—though how is another issue for the NAIC.

Defining the Gray Areas

Perhaps the biggest battle is over what to define as clinical services and what is quality of care. Members of a health information technology coalition, for example, wrote to HHS raising concerns that care coordination and wellness programs often rely on health IT to succeed. However, if that technology is defined as administrative in nature, it could lead insurance plans to abandon spending on such programs.

And what about other insurance company services that could be in that gray area between medical and administrative care, such as 24-hour nurse hotlines? Are they a way to steer patients away from emergency rooms or an improvement in care?

One issue that seems close to settled is whether companies operating in the individual market will have time to meet the 80 percent standard. Some are far from it, with ratios as low as 65 percent, according to a study by the Senate Commerce Committee. Under a draft proposal, the NAIC recommends that the Health and Human Services secretary consult with the insurance commissioner in each state to determine whether to adjust the 80 percent standard in the individual market from 2011 through 2014, considering whether a lower ratio would destabilize the market in that state.

Marketing for such plans is more expensive and labor-intensive, said Praeger. "We want to get everyone to that 80-20, but we don't want to put companies out of business," she said.

Democratic Sen. John D. Rockefeller IV, who pushed hard for the standard during the Finance Committee markup of the overhaul, said it is designed "to find some way to corral them into doing what they're meant to be doing, and not focusing as much on profits and perhaps, radically enough, to even think about trying to help people and provide medical services for people."

The intent of the standard is to be "a great benefit to those who cannot continue to pay skyrocketing premiums," said Rep. Nita M. Lowey, D-N.Y.

She and other proponents of the standard are watching, and warning that insurers can't be allowed to game the system by tucking administrative costs into "quality of care" categories. That is the scenario predicted by some industry analysts even as HHS tries to figure out how to draw a bright line between the two.

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Medicare Advantage Market Competitive? Not So Much, Study Concludes

By John Reichard, CQ HealthBeat Editor

June 25, 2010 -- A small number of firms dominate the market for private health plans in Medicare, says an analysis released this week by the Kaiser Family Foundation.

"Although competition is a stated goal of Medicare Advantage, in fact the market is very concentrated and a few firms are responsible for plans that include a very large share of enrollees," said the analysis prepared by researchers with the consulting firm Mathematica Policy Research along with Kaiser analysts.

The analysis says people have many plans to choose from but that enrollment is concentrated in a handful. It notes, for example, that the average Medicare beneficiary in 2010 has 33 plans from which to choose. But in 14 states and the District of Columbia, a single company (not the same one in each state) accounts for more than half of all Medicare Advantage enrollment.

And in 27 states and the District, three companies account for 75 percent of more enrollees.

"With many highly concentrated markets, Medicare Advantage is more similar to an oligopolistic market than a competitive market," the analysis says. Dominance by a few firms "may allow them disproportionate influence over the Medicare Advantage market."

The biggest players in the "MA" market are United Healthcare, which has an 18 percent share; Humana, with 15 percent, and Blue Cross-Blue Shield plans, with 15 percent. Kaiser Permanente has 9 percent and Aetna 4 percent.

Among the firms with market shares in individual states topping 50 percent are United Healthcare, Humana, and Kaiser. Two-thirds of Medicare Advantage enrollees in the District of Columbia are in Kaiser Permanente.

The study also found that enrollment in Medicare Advantage plans nationally in 2010 climbed 5.7 percent to 11.1 million, up from 10.5 million in 2009. Average monthly premiums for MA plans with prescription drug coverage rose 22 percent to $44, up from $36 the year before.

Industry analysts predict an increase in out-of-pocket costs in MA plans as cuts in the overhaul law take effect in 2011 and following years. They say a number of plans in the fall of 2011 will announce they are withdrawing from the market in 2012, further consolidating the market.

But the Kaiser analysis says that "with payment changes phased in gradually, Medicare Advantage plans are likely to remain a key option for beneficiaries in the future."

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