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March 27, 2006

Washington Health Policy Week in Review Archive 3bcf82a5-4f0b-43d8-87fe-4c6e4fdda5ad

Newsletter Article


CMS Aims to Launch Nursing Home 'P4P' Demo Soon, Kuhn Says

MARCH 24, 2006 -- The Centers for Medicare and Medicaid Services hopes later this year to invite state agencies to participate in a pilot project that would pay nursing homes more if they provide better quality of care.

Homes in the pilot could pile up "quality points" for reducing bedsores, giving good care to heart failure patients, and reducing staff turnover, among other activities. Those with the most points would earn higher payments, as would lesser performers that improved their point totals from year to year.

Both groups would get equally large bonus payments under tentative plans for the demonstration project. "In many cases the better homes are going to continue to be good. We actually think we would get more bang for the buck by making mediocre facilities better," said Mark Wynn, director of the CMS Division of Payment Policy Demonstrations.

Nursing homes have expressed concern about some of the quality measures CMS plans to use in the demo, however.

The "Nursing Home Quality-Based Purchasing Demonstration" is part of a broad effort at CMS to eliminate wasteful Medicare spending and improve quality of care through "P4P," or payment-for-performance systems. Key lawmakers in Congress also have expressed support for the P4P approach.

Even so, the timing of the nursing home demo is uncertain, as is funding for the project. "We don't have a budget right now, but we're trying to line one up," Wynn said in an interview Friday.

In remarks delivered Thursday at a forum on nursing home quality, Herb Kuhn, director of the CMS Center for Medicare Management, said facilities in "four or five" states would be asked to participate. Tentative plans call for 50 facilities per state to take part. CMS will choose the participating states after reviewing applications from state Medicaid programs, according to Wynn.

Wynn estimated the cost of operating the three-year demo at $3 million. Bonus payments themselves would not come out of those funds, and the size of the bonus payment pool hasn't been determined, he said. Nevertheless, Wynn said he expects nursing facilities to be highly interested in the pilot program because of the possibility of higher payment and the absence of any payment deductions for lower-quality care. "There's no downside to it," he said. "We're not going to take money away from anyone."

Demo Design Under Discussion
Wynn described several tentative decisions that have been made about the design of the demo while noting that it is still subject to change. Bonus payments would be made to the top 20 percent in terms of point scores. Another 20 percent of facilities would receive payments for quality improvement.

CMS plans to assign quality points in four categories:

  • Staffing: Homes with higher ratios of nurses to patients would get higher quality scores, as would those with less staff turnover. "Nursing homes with lower turnover provide better continuity of care and in many cases better care for the patients," said Wynn.
  • Hospitalization: Homes that do a good job of providing preventive care that keeps patients out of the hospital would receive higher quality scores. Wynn noted a home might do a particularly good job of providing care that keeps congestive heart failure patients out of the hospital, for example, generating considerable savings for the Medicare program. In fact, savings from preventing hospitalizations may be used in the pilot project to help fund bonus payments, he said.
  • Other measures: CMS evaluates quality of care from the "Minimum Data Set"(MDS) nursing homes must provide to the agency. Performance on a variety of MDS measures of quality are now posted on the CMS Nursing Home Compare Web site. The pilot will use a number of those measures.
  • Inspection results: Points also would be assigned based on how well nursing homes perform in state inspections.

For example, Wynn said, CMS will include measures of the percentage of nursing home residents who have bed sores; the percentage who are tied to their beds to keep them from wandering; the percentage whose ability to move around on their own deteriorates; and the percentage who need growing assistance with "activities of daily living," such as bathing, eating, and getting dressed.

Nursing homes say the MDS measures are useful as rough indicators of quality of care problems. But better "risk adjustment" of those measures is needed before comparative rankings of homes are made for payment purposes, said Barbara Manard, a vice president at the American Association of Homes and Services for the Aging.

Some homes that don't perform as well on MDS scores may actually provide superior care not reflected by the measures because they have a sicker patient population, the AAHSA official noted. She added that an Institute of Medicine study last year found that the MDS measures aren't yet suitable for performance-based payment.

Either risk adjustment methods should be improved to account for those differences, or alternative measures should be given greater weight, Manard said. She praised the staffing and hospitalization measures as more valid indicators of quality of care.

Another nursing home lobby, the American Health Care Association, expressed dissatisfaction with minimum staffing levels as a measure, however, noting that there is a shortage of nurses in the U.S. Facilities will have to incur added staffing costs with no certainty that their payments will increase if their performance improves, AHCA said.

Although much of nursing home care is funded by the Medicaid program, Medicare aims to play a role in improving nursing home quality because many of its beneficiaries are in such facilities, Wynn said. Higher payments for better quality would benefit all nursing home residents, including those not covered by Medicare, he said.

Nursing homes already report data on the quality of their care, but P4P in the nursing home sector apparently will arrive more slowly than for acute care hospitals. In the case of hospitals, CMS already has completed a pilot program that found P4P improved quality of care. Wynn said the planned three-year demo will help CMS determine how well P4P works for nursing homes before switching widely to such a system.

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Higher Funding for Community Health Centers Could Reduce Costs, Group Says

MARCH 23, 2006 -- Higher funding for community health centers could help reduce the nation's health care costs by as much as $18 billion annually, according to a study released Thursday.

The National Association of Community Health Centers, which released the report at a news conference, said treating patients at their facilities rather than hospital emergency rooms would improve medical care while reducing costs.

The report comes as Congress begins the annual budget process (S Con Res 83), which will impact both the program's funding levels and related programs such as Medicaid. Congress will also be asked to reauthorize the health center program this year.

The Bush administration has made funding increases for community health centers a priority since 2000. The president's 2007 budget proposal, released Feb. 6, requested a $181 million increase in program levels for community health centers. The Department of Health and Human Services estimates the boost would fund 300 new or expanded health centers.

Yet cuts elsewhere will hurt the work that community health centers do, members of the association said Thursday.

Bush's budget request for the Health Resources and Services Administration, which runs the community health centers, is $25 million, or 4 percent less, than last year. HRSA for instance would see funding for health professions programs drop from $295 million to $159 million. The programs aim to direct health care professionals to medically underserved communities. Members of the health group said such cuts would exacerbate the already-difficult job of recruiting staff to community health centers, particularly in rural areas.

"Nobody wants to come to the rural areas," said Sherry L. Hill, chief executive of the Community Health Centers of South Central Texas.

The health center group criticized other proposed cuts, including a $133 million cut to funding for rural health care programs, which Dan Hawkings, the association's vice president for federal state and public affairs, called "devastating." Half of the 15 million people served by community health centers live in rural areas, he said.

The group's report found that community health centers served 4 million new patients over the last five years. During that same period, however, 800 communities applied for funding to open centers but did not receive it.

"Congress can and must increase funding levels to help reach more communities in need," Hawkings said.

The group argues that more community health centers would help solve burgeoning health care problems in the U.S.

Their report says that about one-third of patients who visit an emergency room each year was not experiencing an emergency or could have been treated by a primary care provider. A community health center can treat one patient for an entire year on what one trip to the emergency room costs, the group says.

The group also stressed that significant numbers of Americans still go without health care of any kind—a gap they could help fill with more funding. The group's report cited statistics. For instance, 40 million U.S. children do not receive preventive medical and dental care.

FTCA, Medicaid Citizenship Test Concerns
The health center group touched other legislative issues affecting community health centers' efforts to improve medical access.

They urged Congress to pass several bills that would extend federal liability protection to health center workers beyond the current coverage.

In the aftermath of Hurricane Katrina, employees of centers in other states learned their current liability protection under the Federal Tort Claims Act (FTCA) stopped once they crossed state lines. A bill sponsored by Rep. Joe Schwarz, R-Mich., (HR 3962) would provide liability protections for employees and contractors of community health centers who provide health services in emergency areas.

Another bill (HR 1313) would extend FTCA protections to health care providers who volunteer at community health centers. Supporters say the legislation is particularly needed to bring specialist care to the centers.

The group also criticized a citizenship requirement added to Medicaid in the fiscal 2006 budget reconciliation package (PL 109-171). Under the change, states are prohibited from receiving federal Medicaid reimbursement for an individual who has not provided documentation proving their citizenship or nationality.

Hawkings said the measure threatens to dramatically increase the number of uninsured Americans, further straining the U.S. health care system, including community health centers.

"They're going to end up on our doorsteps," he said.

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House Starts Down Budget Path Leading to Conflict with the Senate

MARCH 24, 2006 -- The House will almost certainly take a tougher position than the Senate on both discretionary and entitlement spending in its version of the fiscal 2007 budget resolution.

That likely scenario will begin to play out when the House Budget Committee is expected to mark up on March 30 or 31 a budget plan that will likely attempt to trim mandatory spending programs while holding the line on discretionary spending.

Bowing to opposition within their own caucus, Senate Republican leaders abandoned efforts to trim entitlements in the budget resolution the Senate adopted March 16. Floor amendments added more than $16 billion in discretionary spending flexibility above the $873 billion cap sought by the White House, including $7 billion in advance appropriations counted as fiscal 2008 spending.

House conservatives want a tighter discretionary cap, as well as cuts in entitlement spending for a second straight year. House moderates, however, are balking at attempts to cut Medicare and Medicaid and oppose the Senate resolution's plan for a filibuster-proof reconciliation bill that would open Alaska's Arctic National Wildlife Refuge (ANWR) to oil drilling.

House Budget Chairman Jim Nussle, R-Iowa, says ANWR drilling will not be part of the budget resolution he brings before his committee. Ways and Means Chairman Bill Thomas, R-Calif., whose panel has jurisdiction over Medicare, has said he does not expect to see Medicare provisions.

That would leave budget writers with little flexibility to put together a package of entitlement savings. They might be able to propose $10 billion or a bit more over five years—perhaps enough to appease conservatives without driving away moderate Republicans nervous about election-year cuts in social programs.

"Why send them home with pain?" asked Sarah Chamberlain Resnick, executive director of the Republican Main Street Partnership, which represents moderate GOP lawmakers. "It's already potentially going to be a tough election year, why make it worse? If we don't get reelected, we don't maintain a majority. Very simple."

But conservative Mike Pence, R-Ind., chairman of the Republican Study Committee, and his allies have put GOP leaders on notice that they are unhappy with this year's lack of budget-cutting fervor. Nineteen House Republicans voted against the $92 billion package of hurricane relief and war funding (HR 4939) the House passed on March 16, citing a lack of offsetting cuts in other spending. A similar break in GOP ranks—whether by moderates or conservatives—would almost certainly sink a budget resolution, because few if any Democrats are expected to support a GOP-drafted plan.

Only one Senate Democrat, Mary L. Landrieu of Louisiana, voted for that chamber's budget resolution (S Con Res 83).

Instead of deep budget cuts, conservatives may have better luck bargaining for tight budget rules intended to clamp down on funding earmarks and other spending. House Majority Leader John A. Boehner, R-Ohio, has said he expects a package of budget rule changes to move in tandem with the budget resolution, although no decisions have been provided on what such a package will contain or when it will advance.

One proposed rule change is the line-item rescission authority proposed by President Bush and embraced by House and Senate GOP leaders and some Democrats (HR 4890, S 2381). But that plan is opposed by Appropriations Chairman Jerry Lewis, R-Calif.

House Democrats will push their own budget alternatives and rule changes. Conservative Blue Dog Democrats have for years tried to add rule changes to budget resolutions. They would require written justifications for earmarks, impose penalties on agencies that flunk audits and scrap the politically convenient "Gephardt Rule" that allows House members to avoid voting on measures that increase the federal debt limit.

The Democrats will try to paint a Republican-backed budget resolution as stingy toward important programs while full of red ink.

Appropriators will ultimately decide how to allocate discretionary spending under the budget resolution's cap. But if they follow Bush's plan, education, health, and other domestic programs will be targeted for deep cuts.

"It's our view that the president's budget and what we anticipate the House Republican budget to be . . . share the same flaws—large, large deficits, huge tax cuts, and big cuts to critical services," said Tom Kahn, Democratic staff director at the House Budget Committee.

Looking ahead to a budget resolution conference, the discretionary spending cap, ANWR drilling, and any House-proposed entitlement cuts will be the chief areas of debate.

It will likely prove difficult to win House adoption of a budget resolution conference report that includes ANWR, unless Republican leaders can strike a bargain with pro-ANWR Gulf Coast Democrats by offering additional aid to the hurricane-damaged region. That strategy succeeded in netting Landrieu's vote in the Senate.

Two dozen House Republicans are on record in opposition to including ANWR in the budget resolution. Their votes would be enough to prevent adoption of the budget resolution unless Democratic support is found.

"We hope ANWR is off the table," Resnick said.

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Medicare Drug Benefit Less Generous than Calif. Program, Study Says

MARCH 21, 2006 -- Many low-income California residents now receiving drug coverage under the Medicare drug program have benefits less generous than they received as part of the state's Medicaid program, according to a report released Tuesday.

The study, compiled by Avalere Health for the California HealthCare Foundation, found that coverage for California dual-eligibles—beneficiaries who qualify for both Medicare and Medicaid but who now receive their drug coverage under Medicare as part of the drug law—was inferior to their coverage under Medi-Cal for the four classes of drugs analyzed in the report. Those are antipsychotics, which are used to treat conditions such as schizophrenia; antiretrovirals, which are used to treat HIV; and antihypertensives and anticholesterol drugs, which are used to help regulate high blood pressure and reduce cholesterol.

Approximately one million of California's Medicare beneficiaries have transitioned from Medi-Cal's prescription drug coverage to Medicare drug plans. While these dual-eligibles pay no deductible or monthly premium for their Medicare drug coverage, they do have to make copayments of $1 to $5, which is higher than Medi-Cal's non-mandatory $1 copay for all prescription drugs.

In addition, the study found, dual-eligibles who were automatically enrolled in a Medicare drug plan by the Centers for Medicare and Medicaid Services (CMS) receive different coverage, depending on the plan they were enrolled in.

"The wide variance in plans accepting dual-eligibles calls into question the appropriateness of the auto-assignment policy for enrolling this group of beneficiaries," said Jon Blum, vice president of Avalere Health and a co-author of the report.

CMS Spokesman Peter Ashkenaz said that the health plans being offered to the California beneficiaries provide access to medically necessary drugs. "The conditions are all being treated as they are supposed to be," he said. "The generic equivalent or other drugs that work in similar ways are covered by the plans," Ashkenaz said, adding that the study focused on access to specific brand-name drugs when many generics work just as well. CMS requires plans to include at least two drugs in each therapeutic category or class in their plan formularies, which are lists of approved drugs. CMS also designated another six drug categories as "protected," and expects plans to cover all or substantially all available drugs.

The Avalere report evaluated 10 prescription drug plans into which some of California's dually eligible beneficiaries were automatically enrolled. The analysis found that plans accepting dual-eligibles covered a low of 626 drugs and a high of 3,360.

While Medi-Cal covered 20 anti-psychotic drugs, which can have different effects on different people, some of the plans that accepted automatically enrolled beneficiaries covered 15 of the same drugs. Avalere's review of two subclasses of cardiovascular drugs showed that while Medi-Cal covered 26 drugs, auto-enrollment PDPs cover between 12 to 32 of these drugs.

The plans reviewed in the report also vary in their requirements for "prior authorization," before the plan will cover a prescription not on a plan's formulary. While one auto-enrollment plan requires prior authorization for eight antipsychotic drugs, others do not require prior authorization for any drugs in the same class, the study found.

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Medicare Drug Enrollment Grows

MARCH 23, 2006 -- The Bush administration announced Thursday that an additional 1.9 million seniors had signed up for the Medicare prescription drug benefit in the last month.

Health and Human Services Secretary Michael O. Leavitt said the number of beneficiaries who had signed up individually for the drug plan now totals 7.2 million.

"We are very pleased that more and more people with Medicare are taking advantage of this important benefit. Strong and steady enrollment has continued this month," Leavitt said.

Overall, about 27 million seniors are enrolled in drug coverage under Medicare. Of that, 6.4 million low-income seniors who qualified for both Medicaid and Medicare were automatically enrolled in prescription drug plans or managed care plans that include prescription drug benefits. Some 5.7 million are enrolled in managed care plans that offer drug coverage. About 6.2 million retirees are enrolled through the Medicare retiree subsidy and 1.4 million retirees are enrolled in employer and union-sponsored coverage that incorporates Medicare drug coverage. An additional 3.5 million seniors are covered through federal plans.

Seniors have until May 15 to sign up for a drug plan without being charged a penalty.

"There will be a surge at the end," Leavitt said. "They can avoid that rush by signing up now. We recommend people not wait until the end."

Last-minute sign-ups and changes to plan choices caused some seniors problems getting their drugs in January because the databases had missing or incorrect information. Leavitt is trying to avoid a recurrence after the May 15 deadline.

Responding to complaints that the drug benefit has been confusing and complicated for seniors, Leavitt said, "We're starting to discuss Medicare version 2.0. We know it needs to be simpler and more streamlined."

Meanwhile, Rep. Henry A. Waxman, D-Calif., released a report he said shows that many prescription plans are limiting access to drugs through the use of prior authorization requirements and caps without disclosing the terms to seniors.

But Center for Medicare and Medicaid Services administrator Mark McClellan said the report "appears to be misleading" and that formularies and prior authorization requirements in Medicare plans can be more generous than the Veterans Administration program and the Federal Employees Health Benefits Program.
"AARP is encouraged that enrollment in the Medicare prescription drug program remains strong," said Bill Novelli, chief executive of the seniors' lobby AARP.

"The focus right now needs to be on helping people, not playing politics. Discouraging enrollment is a disservice to the millions who could be saving money on prescription drug bills."

Democrats have been working to make the drug benefit a campaign issue, saying Republicans wrote a bill geared toward special interests and bungled the implementation of the new program. Republicans, in turn, have accused them of scaring seniors into not signing up for the plan.

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Study Finds Physician Charity Care Declining

MARCH 23, 2006 -- Ongoing financial pressures and changes in physician practice arrangements have contributed to a decline over the last decade in the proportion of physicians providing charity care, a new study has found.

The report, released Thursday by the nonpartisan Center for Studying Health System Change (CHSC), found that while about three-quarters of physicians provided free or reduced cost care 10 years ago, that figure has now declined to about two-thirds. The drop occurred as the number of uninsured Americans grew to 45.5 million in 2004, creating growing stress on the health care safety net.

"Already, there are signs that uninsured Americans are having more problems getting care, and if the decline in physician charity care continues, those problems are probably going to get worse," CHSC senior researcher Peter J. Cunningham said in a news release.

The study also found, however, that the actual number of physicians offering charity care has remained relatively stable because the overall number of U.S. practicing physicians increased from about 347,000 in 1996–97 to 397,000 in 2004–05, the group said.

Other findings of the report include:

  • The proportion of physicians providing charity care declined across all major specialty groups and geographic regions and in both urban and rural areas. Surgeons are most likely to provide charity care because they encounter many uninsured patients in hospital emergency rooms.
  • Levels of charity care are highest among physicians in solo or small group practices and those that are full or part owners of their own practice. Physicians in larger groups or institutional-based practices, such as medical schools or hospitals, are less likely to provide charity care.
  • Physicians at the highest income levels—$250,000 or greater —provide more charity care than physicians who make $120,000 or less.

American Medical Association President J. Edward Hill said that nearly 70 percent of physicians provide uncompensated care worth more than $2,000 every week despite increasing time and financial pressures.

But another solution must be found, Hill said. "Charity care is not the solution for the 46 million Americans who are uninsured," he said.

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