By Lydia Gensheimer, CQ Staff

March 19, 2008 -- At a summit on Wednesday highlighting innovative programs for chronically ill patients, a mix of labor unions and health care providers said health care change cannot be addressed without reshaping the current approach to chronic care.

Hosted by the Partnership for Quality Care, the event is the first of a year-long series focusing on the effectiveness of care. The coalition, which comprises labor organizations like the Service Employees International Union (SEIU) and major health care providers, launched last May to focus the national health care debate on quality care issues.

The coalition advocates for universal health care coverage and argues that the quality of health care—which includes access, affordability, efficiency, and cost containment—must be a central component to any universal health care debate.

Dennis Rivera, chairman of SEIU Healthcare and of the Partnership for Quality Care, said he expects an "intense debate" about the future of health care next year, and the coalition, he said, intends to have a voice in that debate.

Kenneth Raske, president of the Greater New York Hospital Association, said the partnership is not advocating that Congress just "throw money at the issue." Instead, he said, the coalition will determine which practices increase the quality of care, and will use those lessons "when it comes time to enact universal coverage."

"This conference is about what works," Raske said.

Wednesday's summit at Union Station's Columbus Club highlighted unique programs aimed at improving the quality of chronic care while containing costs for both providers and patients. Leaders of the coalition said that 30 percent of people—most with chronic conditions—account for more than 70 percent of health care costs in the United States.

One program featured at Wednesday's forum was a Kaiser Permanente initiative that the health insurer says has helped reduce heart disease mortality among its members in northern California by 30 percent. It prescribed generic medications to patients with high blood pressure and used preventive programs in an attempt to expand care while controlling costs.

Sal Rosselli, president of SEIU UHW-West, praised Kaiser Permanente for the "whopping" 30-percent decrease, which he said was possible "just by fixing the infrastructure."

Also highlighted on Wednesday was a post-discharge support program administered through Catholic Healthcare West that helped patients discharged from the hospital monitor their diseases. The group said the program has reduced health care costs by 28 percent.

George Halvorson, chairman and CEO of Kaiser Foundation Health Plan and Kaiser Foundation Hospitals, said some of the pioneering programs to address chronic care are examples that "take your breath away."

Both Halvorson and Andrew Stern, president of SEIU, called the 2008 presidential campaign "exciting" because the health care debate has focused on the nuances of mandated health care instead of on whether or not the nation will have universal health care.

Stern placed special emphasis on the fact that for the first time in history, every Democratic presidential candidate has presented a universal health care plan.

He stressed the need for a fundamental, not incremental, health care plan, and said there would be "a moment in 2009" to get this done.

"The time is now, America can't wait," Stern said.

By Leah Nylen, CQ Staff

March 21, 2008 -- Although many agree that the current model of employer-based tax subsidies for health insurance should be changed, there is little agreement on the best solution, said panelists at a Kaiser Family Foundation webcast.

Under the current system, employers receive a tax break for providing health insurance coverage to their employees. The subsidies act as an incentive for employers to offer more expensive coverage rather than basic coverage, according Katherine Baicker, professor of health economics at Harvard School of Public Health. If individuals had to pay for coverage on their own, more people would choose basic coverage and pay for routine expenses out-of-pocket, leading to reduced insurance premiums, she said.

"The tax code pushes people into those kinds of plans and that means that people pay more for health care and more for health insurance than they would otherwise," Baicker said. "The tax code shouldn't be pushing us one way or the other. All of these proposals [with] a flat amount, whether it's a credit or a deduction ... in essence takes the tax code out of the decision-making process."

Because it is based on pre-tax dollars, the current system also subsidizes health care for higher-income workers more than it does for lower-income workers, said Jason Furman, a senior fellow and director of the Hamilton Project at the Brookings Institution.

"It's an upside down system," Furman said.

Jack Meyer, a principal at Health Management Associates, a private health care research firm, said the market-based model has problems because people with preexisting conditions or chronic illnesses would have difficulty getting adequate coverage.

"Older, sicker workers are often priced out of that market, if not turned down, flat out rejected from that market," Meyer said. "The problem with some of these proposals is they would incentivize people out of good coverage into this highly inequitable market ... The goal of this tax reform should be to stop subsidizing health care for people like Bill Gates and start subsidizing it for a waitress who works the night shift and the day shift."

Baicker suggested one way to get around the problem would be to offer transition assistance, such as risk-adjusted credit deductions based on health status, for those who might have a harder time finding private insurance.

"If you are diabetic, you could be given a much bigger voucher with which to buy health insurance and you can then take that voucher anywhere you want," Baicker said. "Maybe you go to an insurer who specializes in the disease management of diabetic care. You could end up with much more effective insurance because insurers would no longer be trying to repel sick enrollees while attracting healthier enrollees."

President Bush has suggested a plan that would eliminate the tax exemptions for employer-based health insurance. Instead, those who purchase health care plans would receive a standard deduction.

But a tax deduction would not help all of those currently uninsured because those with low-income do not pay taxes, according to Furman.

A more fair way would be to offer tax credits for health insurance, Furman said, because this would allow lower-income workers who don't pay taxes to receive money for health care.

Republican presidential candidate John McCain has suggested a similar tax credit that would give $2,500 to a single individual or $5,000 for a family to use toward health insurance.

By John Reichard, CQ HealthBeat Editor

March 21, 2008 -- The ideas advanced on Friday by the Mayo Clinic for overhauling health care may not be novel in many respects, but they are the Mayo Clinic's, after all—its sterling reputation means they'll get a look from policy analysts. A key tenet of the Mayo approach: there is no "system" now per se of U.S. health care, and the mere act of admitting that is liberating, because it frees policymakers to focus on designing one.

Outlined by Mayo Clinic CEO Denis Cortese in a speech to the National Press Club, the overhaul plan treats universal coverage almost as an afterthought—sure, Mayo regards it as an essential goal, but Cortese spent little time talking about it and said other goals to improve the value of health care will be tougher to accomplish.

An essential element of the Mayo vision, developed through consultations with some 800 "thought leaders" and 1,400 patients over the past year and a half, is the idea of teamwork. To be effective, care must be well coordinated and tailored to the particular patient and his or her particular condition and genetic makeup. Using a musical analogy, that means everything from a duet for simple health care needs to a chamber ensemble for less simple cases to a full orchestra of providers for complex cases, Cortese said.

Mayo envisions a new system of health care in which teams of hospitals, doctors, nurses, and others function as "learning organizations" that engineer and implement processes of care that reduce medical errors and increase quality and share successful approaches with patients and providers nationwide.

Cortese cited research showing so many preventable deaths of hospital patients occur every year that it's the equivalent of a Boeing 747 crashing every two or three days. "Would this country tolerate this in the airline industry?" he asked. "You know we don't even have a way to report near misses and reports errors in this country to a central body that systematically looks at it and reviews it and tries to get ahead of these problems and tries to distribute the learning throughout the whole organization—so if a hospital in Seattle finds a new way to eliminate a complication of a drug, every other hospital in the country should learn about it the same day. The click of a button. That should be a goal. That's what I mean by learning organizations."

The promise of information technology must be realized to share up-to-date medical records and medication lists and develop techniques of care based on the latest medical evidence; right now providers give the right treatment only about half the time, Cortese said.

Medical schools must train doctors "not to memorize stuff" so much but how to organize care, how to pull the right people together to deliver the right treatment.

Government and private health insurance plans should "pay for value", rewarding providers for safer care, better treatment outcomes, and greater patient satisfaction with health care services. Cortese contrasted that approach with the path Medicare is now on toward rewarding providers more if they practice certain processes of care and provide certain services—the emphasis, in other words, is on results, not techniques.

Each individual should be responsible for purchasing health insurance but government should assist those unable to pay for coverage themselves. Government should not set prices, but prices should be made public as part of a system in which consumers have a menu of insurance plans from which to choose, and insurers should not be permitted to deny coverage.

Cortese also suggested that some sort of independent entity like the Federal Reserve Board that is shielded from political pressure should be established to oversee health care.

"Congress interferes with Medicare's ability to do what it needs to do," Cortese added. The current system leads to Medicare paying more in parts of the country that have the worst treatment outcomes, the opposite of what it should do, he said.

"Congress does not allow Medicare to make decisions based on comparative effectiveness" of treatments. "Something has to be done to have Medicare become insulated from political pressure. In other words, Congress has to get out of the business." he said. Medicare "is just spending money it shouldn't be spending."

By Leah Nylen, CQ Staff

March 20, 2008 -- Community health centers could save taxpayers as much as $40 billion per year in health care costs if the federal government is willing to invest $10.5 billion over the next eight years, according to a report released recently by the National Association of Community Health Centers (NACHC).

The report, titled "Access for All America," urges Congress to increase the funding for health centers between 12 and 15 percent each year. The centers would use the money to invest in new facilities and technologies, such as health IT, and the improvements would allow health centers to increase the number of patients to 30 million by 2015.

Created under a federal law in 1965, community health centers assist about 17 million uninsured and people in medically underserved areas at 6,300 facilities around the United States.

Heath centers already save as much as $18 billion a year by keeping the estimated 56 million Americans without primary care physicians out of hospitals and emergency rooms, according to estimates from the Robert Graham Center at the American Academy of Family Physicians. A single visit to a hospital emergency room can cost more than a year's worth of care at a community health center, said Dan Hawkins, policy director at NACHC.

About 22 percent of the funding for community health centers—$2.1 billion in fiscal 2008—comes from the federal government in the form of grants administered by the Health Resources and Services Administration. But because of federal law, community health centers cannot use the grant money for capital improvements and expansions.

The report suggests several changes to the law—such as tax credits or allowing health centers access to tax-exempt bonds—to help health centers complete capital projects like renovations.

About $1 billion of the increase for health centers would go towards investing in health IT projects, such as electronic health records.

"We're not asking for a handout. What health centers are asking for is an investment," Hawkins said. "When we get to 30 million, the savings generated will be upwards of $40 billion. This is an investment with a great return: lower costs for everyone."

According to Hawkins, the response from members of Congress toward the plan has been positive.

A Senate bill, S 901, would reauthorize funding for community health centers in even greater amounts than the report requested. The full Senate has not yet considered the bill, and no action has occurred on a House companion, HR 1343.

However, neither bill would alter the law to allow the grants to be used for capital programs. But a separate Senate bill sponsored by Debbie Stabenow, D-Mich., S 2270, would allow community health centers to participate in a federally guaranteed mortgage insurance program within the Department of Housing and Urban Development.

"The fact that community health centers are unable to take full advantage of programs that provide necessary funding and support just doesn't make sense," Stabenow said in a statement. "This bill is a critical step toward providing quality, affordable health care to all Americans."

By CQ Staff

March 18, 2008 -- A proposal governing states' ability to impose cost-sharing and premiums on Medicaid beneficiaries may make those payments higher than Congress intended, according to Senate Finance Committee leaders.

In a letter sent Tuesday to Department of Health and Human Services (HHS) Secretary Michael O. Leavitt, the senators say a proposed rule the agency issued last month may violate language in a budget-savings law (PL 109-171) that gave states flexibility to set co-payments for Medicaid beneficiaries, and then directed the HHS secretary to increase those payments each year by the annual percentage increase in the medical care component of the consumer price index then round up in an "appropriate manner."

Baucus and Grassley say the proposed HHS rule would index co-payments for inflation after the amount is rounded up, not before, as in most federal programs, which over time would increase beneficiaries' payments much more quickly.

While the differences in rounding may result in small amounts—a 10-cent difference is an example the senators cite in their letter—"the effect of applying the annual increase to the previous limit after rounding would grow steadily over time," they wrote. "That, in turn, would make Medicaid co-payments increasingly burdensome for beneficiaries ... We are concerned that the approach that the rule takes may harm the health of some of the nation's poorest individuals."

HHS Spokeswoman Christina Pearson said the senators' concern about co-payments "is a technical issue that we became aware of through the comment period, rather than a difference in policy. We recognize this part of the rule may not be as clear as it should be and therefore could be interpreted differently."

The senators' letter also asked that HHS clarify that all co-payments for Medicaid beneficiaries in managed care be the same, regardless of whether they receive their care in a managed care or fee-for-service setting.

By Jesse Stanchak, CQ Staff

March 19, 2008 -- Well-insured patients are more likely to be referred to a physician-owned, ambulatory surgical center (ASC) rather than hospital outpatient departments, limiting access to the best care and possibly undermining hospitals' ability to cover uninsured patients, according to a study released Tuesday by the journal Health Affairs.

Lead study author Jon Gabel said hospitals are put at a disadvantage when doctor-held facilities take a disproportionate number of well-insured patients.

"Hospitals have traditionally used profits from privately insured patients to subsidize care for uninsured patients and Medicaid enrollees. The worry has been that physicians with ownership stakes in ASCs would unravel this safety net by directing lucrative patients to their own facilities while sending low-paying patients elsewhere," said Gabel, a senior fellow in the Washington office of the National Opinion Research Center. "Based on our findings, that's exactly what's happening, and the threat to the safety net grows as the role of physician-owned ASCs in our health care system increases."

The study looked at outpatient ASC referrals from 2003 in the Pittsburgh and Philadelphia, Pa. metropolitan areas coming from the top 50 percent of referring doctors. It found that these doctors referred 91.2 percent of privately insured patients to ASC facilities and sent just under 8.7 percent to a hospital outpatient department. However, for patients on Medicaid, the rate of referral to an ASC facility was just 55.4 percent. In addition, the study found that the top-referring doctors are much less likely to see a Medicaid patient. Even though 11 percent of Pennsylvanians are covered by the government program, they only make up 1.4 percent of top-referring doctors' patients.

The study authors said they began the study trying to examine possible financial motives for doctors referring patients to doctor-owned facilities. When information about which facilities doctors owned proved unavailable, they began examining patterns in high-referring doctors as a proxy, they said. However, the findings also have financial significance, they said, since hospitals rely on well-insured patients to help pay for the care of uninsured and Medicaid patients.