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March 16, 2009

Washington Health Policy Week in Review Archive f10e0244-0756-4990-ae06-a7b0e9366117

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Fight Over Public Plan Option Dominates Ways and Means Hearing

By Rebecca Adams

March 11, 2009 -- The House Ways and Means Committee bickered along party lines in a Wednesday hearing about the need to create a public plan option for the uninsured in legislation to update the nation's health care system. The debate underscored the controversy that continues to surround the public option proposal and the level of difficulty that Congress will have in resolving this and other differences in order to meet Democrats' goal of sending a health care bill to President Obama by the August recess.

Democrats, led by Chairman Charles B. Rangel of New York and Health Subcommittee Chairman Pete Stark of California, argue that a public plan would have lower administrative costs than commercial insurance, avoid giving insurers or providers too much power, and provide an important safety net. Republicans such as top panel Republican Dave Camp of Michigan say that private insurers would never be able to compete with the negotiating power of the national government and that a public plan would undermine employer-sponsored insurance.

After the hearing, a House Democratic committee aide expressed little hope that the two parties would reach an agreement on sharp differences such as the public plan option. "They're girding for war on the other side," said the aide.

Despite the many differences between the two parties on health care, House Democrats aim to mark up health care legislation in July in the Ways and Means, Energy and Commerce, and Education and Labor committees. They hope that their robust majority in the House and a more bipartisan process in the Senate will provide the votes to move legislation to the president's desk before the August break.

At the hearing, Republicans brandished a recent report from Seattle actuarial firm Milliman, Inc., that suggested that lower Medicare and Medicaid payment rates to hospitals and physicians caused those providers to charge commercial insurance plans more for similar medical services. The cost shift to commercial payers was significant, the study said. If all of the payers had paid providers at the lower government rates, the study found, then commercial insurance payment rates could fall by 18 percent for hospitals and 14 percent for doctors.

The study was commissioned by health industry groups such as America's Health Insurance Plans, the American Hospital Association, the BlueCross BlueShield Association, and Premera Blue Cross.

If a public plan were created that offered medical providers lower rates than commercial insurance plans, Milliman principal John M. Pickering testified, then providers would face "tremendous pressure" that could become "untenable."

However, the independent Medicare Payment Advisory Commission (MedPAC), which advises Congress on payment issues, challenged key parts of the study's findings. In a statement released separately from the hearing, MedPAC questioned the study's assumption that if Medicare paid providers higher rates, then hospitals would charge private insurers less. In fact, said MedPAC officials, hospitals seek rates that are as high as insurers will pay, regardless of the level of Medicare payments, and higher rates from private commercial insurance plans simply allow hospitals to spend money less efficiently.

"It is not reasonable to think that hospitals with market power will voluntarily lower the prices charged to insurers and reduce their revenue," said the MedPAC statement. "Instead, hospitals might spend some or all of that revenue, resulting in higher costs."

Throughout the hearing, Republicans invoked the study to argue that a public plan could cause more people to lose access to health care services.

But Pickering said under questioning from Rangel that actuaries and other professionals could probably find a way to design a public program that would not harm providers. And he also said providers could respond to a public program by finding ways to become more efficient.

Karen Davis, president of the private research foundation The Commonwealth Fund, emphasized that point. Moreover, she said, giving health care coverage to the nearly 47 million people in the United States who don't currently have it could reduce costs for everyone. She advocated an expansion of both private insurance coverage and the creation of a public plan, defending the public program as a necessary component of health overhaul legislation "to make sure that our scarce federal dollars are used efficiently" by covering the uninsured through methods that have low administrative costs.

The third witness on the panel, Harvard Medical School professor and Institute of Medicine (IOM) committee member John Z. Ayanian, said that the most important thing for lawmakers to remember is that action of any type that can reverse the deterioration of the nation's health care system is needed.

Both employer-sponsored private health insurance and public programs are under tremendous stress in the current economic downturn, he said. When patients lose insurance, their health is at risk. Ayanian cited a Feb. 24 IOM study that found that uninsured adults are 25 percent more likely to die prematurely than adults who do have insurance. Patients who have serious conditions such as heart disease or cancer face risks of premature death that are 40 to 50 percent higher, suggesting that the continued unraveling of the health system can be a death sentence for some Americans.

"There is no evidence that the trends will reverse without concerted action by policymakers," said Ayanian.

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Senate Finance Chairman Sets Summer Deadline for Health Care Overhaul

By Drew Armstrong and Alex Wayne, CQ Staff

March 10, 2009 -- A key Senate chairman Tuesday firmed up a deadline for getting a health care overhaul bill to the president, promising to have the measure out of committee by June and to President Obama by the summer's end.

Finance Committee Chairman Max Baucus, D-Mont., doubled down on his own self-imposed timeline, promising earlier action than the president has asked for.

"We should put a health care bill on the president's desk this summer," Baucus said, promising his committee will mark up the bill in June.

Obama has said he wants a health care overhaul completed this year, without being more specific.

Committee ranking Republican Charles E. Grassley of Iowa called the timeline an "ambitious but achievable schedule." Baucus plans to begin a series of informal "walkthroughs" previewing the legislation to interest and advocacy groups in late April, a sort of dress rehearsal before the bill's actual introduction.

The Finance leaders' comments came at a hearing on Obama's budget health care proposals, with Office of Management and Budget Director Peter R. Orszag as the only witness.

The administration continues to shy away from providing detail about how many of the country's 46 million uninsured a health overhaul might cover, or how to structure a minimum benefit to insure them.

"You should not expect and you will not be receiving from me any information on the benefits or coverage side," Orszag told the panel at the beginning of the session.

Orszag also told senators that the biggest savings they could hope to achieve might come not from health information technology or cutting payments to private Medicare plans known as Medicare Advantage, but from equalizing the widely varying costs reported by doctors and hospitals in different parts of the country.

Orszag said finding ways to bring down the costs in areas that spend the most for care could save as much as $700 billion a year.

"There's nothing else that comes close," Orszag told lawmakers.

A health overhaul was the subject of hearings on the other side of the Capitol as well. The House Energy and Commerce Subcommittee on Health quizzed Congressional Budget Office (CBO) Director Douglas Elmendorf and Medicare Payment Advisory Commission Chairman Glenn Hackbarth about proposals to reduce costs in the health care system.

Energy and Commerce Chairman Henry A. Waxman said he was "not wedded" to any specific overhaul plan and said that "the best approach" will be "one that we can pass."

The committee's senior Republican, Joe L. Barton of Texas, sounded a conciliatory note, saying that he thought there was a better chance at reaching compromise on a health care overhaul than on climate change legislation. Another Energy and Commerce subcommittee was holding a hearing on that subject at the same time as the health care hearing.

"This is not like the hearing upstairs on climate change, where there is a clear ideological difference," he said.

Elmendorf and Hackbarth each warned lawmakers that wringing costs from the health care system will be tough, because many people and companies benefit from those costs and because payment systems lack incentives to encourage doctors and hospitals to save money.

"The available evidence suggests that a substantial share of spending on health care contributes little if anything to the overall health of the nation, but finding ways to reduce such spending without also affecting services that improve health will be difficult," Elmendorf said in prepared testimony.

He also said in response to a question by Del. Donna Christensen, D-V.I., that CBO cannot precisely estimate the potential long-range savings from health overhaul proposals. Many lawmakers have complained that legislation to overhaul the health care system might be constrained or even hamstrung because CBO only calculates the costs of legislative proposals over 10 years.

"Unfortunately, we don't have the evidence or modeling capacity to play out a whole set of reforms and how they're to matter 10, 20 or 30 years down the road," he said. He told Christensen that CBO would "try to offer qualified judgment" on the long-term effects of overhaul proposals.

A hearing at the House Education and Labor subcommittee on Health, Employment, Labor and Pensions, meanwhile, focused on issues in the employer-sponsored health insurance system. The subcommittee's chairman, Rep. Robert Andrews, D-N.J., said the cost of employer-sponsored insurance could be lower if Congress passes an overhaul that expands coverage to all Americans.

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Health Overhaul Should Address Workforce Shortages, Hearing Told

By Rebecca Adams, CQ Healthbeat News

March 12, 2009 -- Consumers often complain about the difficulty in getting a doctor's appointment or the frustrations of long waiting room delays before a rushed medical exam, especially in the offices of primary care physicians. Now senators and health care experts are agreeing that the problems are a significant health policy issue that ought to be addressed in health care overhaul legislation.

At a Senate Finance Committee hearing Thursday, senators discussed how to change payment incentives for health care professionals, such as primary care doctors, and better train medical students. Four witnesses testified that unless significant adjustments are made, physician and nursing shortages could be made worse by legislation to expand access to health care because more patients will be seeking care.

"For health reform to succeed, we need a strong health care workforce," said Finance Committee Chairman Max Baucus, D-Mont. "Health care is useless without a workforce to provide that care," said Charles E. Grassley of Iowa, the panel's top Republican.

The decline in access to physicians has grown significantly in the past few decades. In 1965, there were approximately 150 physicians per 100,000 people in the United States. The current ratio is more than 270 per 100,000—less than in countries such as France or Germany but more than in nations such as Canada.

Workforce issues permeate the health care system, affecting providers, patients, insurers, and communities at large.

Students in recent decades have chosen to bypass opportunities to serve as primary care physicians because the job is often harried and pays less than specialty care. Many rural areas have a particularly hard time retaining physicians to do the work of caring for basic illnesses. Fewer than 10 percent of physicians practice in rural areas such as Montana or Iowa, while 20 percent of the national population lives in rural towns.

The issue is gaining more attention as lawmakers focus on the details of writing health care overhaul legislation. The Medicare Payment Advisory Commission (MedPAC) is expected to explore potential changes in a meeting Friday.

Experts testifying before the committee said the current system could be improved by changing payment incentives to improve the efficiency of the current physician workforce. They also urged the creation of a new federal commission to oversee and coordinate health workforce policy.

Allan Gorroll, a professor of medicine at Harvard Medical School, proposed that Medicare payments be changed so that doctors whose patients achieve desired health outcomes would be paid more and physicians would be paid a set amount for a particular illness.

Currently, physicians are often paid for each service that is performed, regardless of whether the patient gets better or whether the care is necessary.

Gorroll also proposed more generous financial incentives to encourage medical students to choose to go into primary care. As a professor who works closely with medical students, Gorroll said that every year students tell him how disappointed they are that the current system discourages them from pursuing primary care because of the lower pay and hectic schedules that lead primary care doctors to "do no more than triage" and send patients to specialists. He argued that Medicare should spend more on medical education.

One expert challenged the notion that there are too few physicians. David C. Goodman, the director of the Center for Health Policy Research at the Dartmouth Institute for Health Policy and Clinical Practice, said that the problem is that physicians are not distributed in the best way geographically or professionally. There are too few primary care doctors, Goodman said, and too few physicians practicing in particular areas of the country.

But a high concentration of doctors, especially specialists, does not translate into better care. In many areas with a large number of physicians, patients spend more unnecessary time in the hospital and have greater problems with the coordination of their care because they are seeing multiple specialists who do not communicate effectively with each other about patients' treatment. Goodman called for a new commission to evaluate medical training. He suggested that the government should consider providing teaching hospitals more funds to focus on primary care training and higher payments for primary care doctors.

Grassley suggested that senators should find a way to redirect funds so that medical students get more training in clinics rather than in hospitals. The issue of changing the financing of medical education will be a focus of the committee as it writes its health overhaul bill, said Baucus. Changes to graduate medical education are "clearly on the table," he added after the hearing. "It's such a large part of health care. I don't know what the answers are yet, but it's something we will address."

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Accountable Health Organizations Enter Policy Spotlight

By John Reichard, CQ HealthBeat Editor

March 13, 2009 -- It's been a big week for the dryly named "accountable health organizations," the brainchild of perhaps the most influential thinker and health services researcher in health policy circles today. Proposed by Dartmouth College researcher Elliott S. Fisher to begin eliminating unnecessary medical services that analysts like White House budget director Peter R. Orszag say waste $700 billion a year, the organizations got top billing at different meetings this week by the prestigious Brookings Institution and the closely watched Medicare Payment Advisory Commission (MedPAC).

What's the lure? "ACOs" are meant to spur teamwork by providers to deliver efficient care in a system that many analysts believe is rife with duplication and medical procedures of uncertain value. Savings generated by that teamwork would be shared by big payers like the Medicare program and the doctors and hospitals involved in the organizations. ACOs would be paid more if they delivered efficient, high quality care—an attempt to end the current system in which doing more generates bigger revenues for providers with no clear payoff in higher quality and perhaps medical outcomes that are worse, not better, researchers like Fisher say.

Affiliations of providers such as hospitals and physician practices are nothing new, but the ACOs concept is supposed to go hand in hand with newer systems of payment meant to encourage coordination. "The approach is practical and feasible," Fisher said in an analysis co-written by Mark B. McClellan, former administrator of the Centers for Medicare and Medicaid Services and now director of the Engleberg Center for Health Care Reform at the Brookings Institution. Other co-authors include John M. Bertko, a former executive with the insurer Humana, Inc.

The approach also is "voluntary for providers, builds on current referral patterns, requires no change in benefits or lock-in for beneficiaries, and offers the possibility of sustained provider incomes even as total costs are constrained," said the analysis, recently posted on the Web site of the policy journal Health Affairs.

The authors said that simulations they performed show that "it is feasible to provide clear and specific spending benchmarks for provider groups willing to integrate, that the potential shared savings payments to ACOs that perform well could be sizable, and that real savings to the Medicare program would occur within five years with only modest changes in providers' spending behavior."

ACOs would be accountable for the overall quality and cost of care for the populations they serve. "With accountability for overall costs and quality, providers' incomes can begin to be decoupled from the volume and intensity of the services they provide," the authors said. "Innovations that improve quality while reducing overall utilization...can be rewarded or at least not penalized." The study proposed a system in which ACOs would be responsible for 5,000 Medicare beneficiaries apiece. It found that "most physicians already practice within natural referral networks that provide a substantial amount of care for at least 5,000 Medicare beneficiaries."

At the March 11 Brookings forum, jointly sponsored by the Dartmouth Institute for Health Policy & Clinical Practice, McClellan and Fisher announced a new collaborative to begin implementing the ACO model across the country. "Several potential pilot sites around the country have already expressed a strong interest in the collaborative," the forum sponsors said.

Meanwhile, MedPAC commissioners at a March 12 meeting wrestled with the complexity of developing a policy recommendation on ACOs, including such questions as whether they should be voluntary or mandatory, how they could be established in rural areas, and what types of entities could be designated as ACOs, and how to encourage beneficiaries to remain in given ACOs.

It's clear that ACOs won't be arriving overnight. "We do not underestimate the complexity of the political and social challenges that remain," the authors of the Health Affairs piece noted.

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Senators Size Up Health Savings and Search for More

By Rebecca Adams, CQ Staff

March 10, 2009 -- The challenges of paying for a trillion-dollar-plus health care system overhaul like the one that Democrats want to enact this year was never going to be easy. Senators at a Finance Committee hearing on Tuesday made it clear just how hard it would be.

Office of Management and Budget director Peter R. Orszag heard a long list of senatorial complaints about the administration's plans to pay for an overhaul—or, actually, to pay for only a portion of the cost of the overhaul—through changes that would bring in $634 billion over a decade.

Cuts to the Medicare Advantage program run by private insurers and strongly supported by Republicans are again proving controversial.

But senators also voiced complaints about the administration's proposals to cut government payments to home health care and reduce drug company payments. Republicans continued to complain that the White House's plan to compare different treatments in order to determine which offers the most effective treatment would lead to government coverage decisions that amount to rationing. And a moderate Republican whose vote might be crucial to passage of any health care overhaul, Olympia J. Snowe of Maine, raised questions about the fairness of a uniform national limit on tax breaks for employer-sponsored health care which would not account for regional disparities in costs, an idea that some Democrats have floated but which the administration has not proposed.

One GOP senator, Pat Roberts of Kansas, painted previous reduction efforts by the Centers for Medicare and Medicaid Services that Congress has stalled with this label: "Lizzie Borden cuts that CMS was making on virtually every provider in the health care providing world" that would create "a much bigger problem of rationing health care."

At one point during a discussion on savings, Finance Committee Chairman Max Baucus dryly noted, "This ain't easy."

Lawmakers appeared to be reaching for any easy solutions that could provide savings. Top Republican Charles E. Grassley of Iowa argued to Orszag, the former Congressional Budget Office (CBO) director, that the CBO should give Congress credit for savings for proposing changes that could reduce costs such as those generated by fraud or waste.

Orszag, who is now charged with helping the administration hunt for savings, said, "CBO does not recognize those savings even though they are based on hard evidence that they would occur. It struck me when I was CBO director, and it continues to strike me that some revisiting of those rules would be warranted."

Baucus also asked Orszag whether there was a way to get CBO to recognize savings beyond the 10-year budget window that lower long-term health care costs.

Orzsag suggested that many ideas – such as expanding the ability of health providers to communicate electronically and use electronic records, providing incentives for prevention that could stave off costly diseases, and comparing the effectiveness of similar treatments – may well result in long-term savings. However, he said, "One of the frustrations is that has not been enough research done on quantifying the things that we're talking about."

The administration has made reducing health care costs a priority, saying that significant changes to the nation's health care system could result in big savings in future entitlement spending for government health programs such as Medicare, the program for the elderly, and Medicaid, the program for the low-income. Over the past four decades, health care costs have been rising two to 2.5 percentage point faster than per capita income each year. Orszag cited a goal of reducing costs so that health care grows at a pace of about one to 0.5 percentage points faster than income. He emphasized that Congress would have to invest in health reform over the next decade but said that these investments would pay off in the long run.

Orszag repeatedly tried to draw attention to the fact that health care costs vary considerably across the country without an improvement in outcomes for patients in higher-cost areas.

"If you look at outcomes in quality, the higher-cost states, the higher-cost hospitals, the higher-cost doctors do not produce better outcomes than the more efficient providers," he said.

But changing that dynamic would not only take a long time, it also would be politically difficult to achieve because many patients believe that higher-cost procedures do help improve health .
The costs of health care have emerged as a major issue in the mind of the American public. Lowering health care costs is as important to many Americans as expanding coverage access to some of the nearly 47 million people who don't have insurance.

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House Panel Chairman Promise to Move Similar Health Care Overhaul Bills

By Alex Wayne, CQ Staff

March 11, 2009 -- Three House committee chairmen wrote President Obama on Wednesday promising to move "similar" health care overhaul legislation through their panels—and to do it in a matter of months.

The letter by the lawmakers—Ways and Means Chairman Charles B. Rangel, D-N.Y., Energy and Commerce Chairman Henry A. Waxman, D-Calif., and Education and Labor Chairman George Miller, D-Calif.—seemed to be aimed at reassuring the White House and the public that turf battles in the House would not imperil one of Obama's top priorities.

The three committees all have jurisdiction over overlapping segments of the health care system, meaning each of them will have to approve an overhaul like Obama has described, affecting Medicare, Medicaid, and employer-sponsored health insurance.

"As chairs of these committees and veterans of past health reform debates, we have agreed to coordinate our efforts," the three lawmakers wrote. "Our intention is to bring similar legislation before our committees and to work from a harmonized approach to ensure success."

They also said they plan for all three committees to approve the bill in time for the House to consider it before August, when Congress takes a month-long recess. Many Democratic-aligned health policy experts think Obama must press Congress to complete an overhaul quickly, before both he and lawmakers become distracted by other issues. Former President Bill Clinton's attempt to overhaul the health care system in 1993 and 1994 was thwarted in part, observers say now, because he took too long to submit his plan to Congress and was distracted by other issues in the meantime.

Ways and Means approved a "views and estimates" letter to the House Budget Committee describing a bill that would "expand health insurance coverage, improve the quality of care, and reduce overall growth in health system costs."

The Senate probably will not be able to move as quickly as the House. Senate Finance Committee Chairman Max Baucus, D-Mont., said this week that he wants his committee to vote on an overhaul in June. But Senate Majority Leader Harry Reid, D-Nev., will have to schedule more time for debate in his chamber than House Speaker Nancy Pelosi, D-Calif., will in hers.

And it is unclear whether the bill-writing process in the Senate will be as the expected work of the three House chairmen.

In the Senate, a health overhaul will have to be approved by Baucus' panel and by the Health, Education, Labor and Pensions (HELP) Committee.

HELP Chairman Edward M. Kennedy, D-Mass., is recuperating from brain cancer in Florida and has not announced even a general timetable for his committee to vote on a bill.

Baucus, who is considered a political moderate compared to the liberal Kennedy, has very specific ideas for an overhaul—outlined in a lengthy "white paper" he released in November—and is rapidly moving ahead with hearings and meetings with health care interests.

A spokesman for Kennedy said the two senators had lunch together March 6 and are "working in concert." A spokeswoman for Baucus pointed to a letter he and Kennedy sent Obama on Feb. 5 "to affirm our continuing commitment to enacting comprehensive health care reform this year."

Baucus meanwhile told a business group that he has set an "ambitious schedule" for a health care overhaul but that it was "necessarily so."

He also invited the group, called the National Business Group for Health, to help him craft a so-called "play or pay" policy in health care. Such a policy would require employers either to offer health insurance to their workers—"play"—or pay the government to help offset the cost of their employees' coverage. Many business lobbies are wary of such an arrangement, which they consider a government mandate.

"My vision for reform is one of shared responsibility," Baucus said in his prepared remarks. "We want to make sure that the system works. And the employer role is a vital part of the system."

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