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March 3, 2008

Washington Health Policy Week in Review Archive 7b1554cc-6962-405b-92c8-30c7b49c8412

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GAO: Medicare Advantage May Not Always Save Seniors Money

By John Reichard, CQ HealthBeat Editor

February 28, 2008 -- With the veto pen of President Bush a potent weapon this year against any payment cuts to Medicare's private health plans, it may have come as a surprise Thursday when Michigan Republican House member Dave Camp got hot over a new Government Accountability Office report questioning payments to the plans.

GAO criticism of the payments is nothing new, and Bush still appears to have the votes to block any significant payment cuts to the plans, which are strongly defended by Republicans as the key to saving Medicare. But hot is what the usually low-key Camp got when GAO released the report at a House Ways and Means Health Subcommittee hearing, calling it fake, fake, fake and accusing GAO of preparing an unfair analysis.

Why the strong reaction? Before long, 2008 will turn into 2009 and the White House may no longer be a bulwark against payment cuts to the plans, no matter who lives there. And the report called into question one of the key arguments made by defenders of the relatively high payments that plans get: that they lower out-of-pocket costs for seniors, particularly those with low incomes. On average, enrollees do save seniors money, testified GAO's James C. Cosgrove, but seniors in some health plans could see higher out-of-pocket costs, he said.

"If the policy objective is to subsidize health care costs of low-income Medicare beneficiaries," Cosgrove added, "It may be more efficient to directly target subsidies to a defined low-income population than to subsidize premiums and cost sharing for all Medicare Advantage beneficiaries, including those who are well off."

But Camp said "Clearly it's a fake report with fake conclusions and we're having a fake hearing on it so we can all run to the media and make certain pronouncements."

GAO specifically analyzed what happens to "rebate" payments to the plans, known as Medicare Advantage (MA) plans. Under the MA program, plans bid to offer Medicare benefits against payment benchmarks set for each county. The benchmark is how much the government will pay them; if plans bid below the benchmark, Medicare sends them a rebate equal to 75 percent of the amount below the benchmark. The plans are supposed to use the rebates to lower premiums, provide added benefits, reduce cost-sharing, or any combination of the three. "Cost-sharing" refers to the money a patient must pay out-of-pocket for a specific type of service such as home, hospital, or physician care.

GAO said that rebates to MA plans totaled $8.3 billion in 2007. While plans used money from rebates—and in some cases from additional premiums—to pay for extra benefits such as dental, hearing, and vision benefits, they said most of the money would go to reduce the out-of-pocket costs of beneficiaries. Specifically, plans projected that they would 11 percent of their rebate money on added benefits, 69 percent on reduced cost-sharing, and 20 percent to lower premiums, GAO found.

On average, plans projected that cost sharing by MA enrollees would be less than half—42 percent—of that paid by enrollees in traditional Medicare. But some plans projected higher cost-sharing for certain services. "For example, 19 percent of MA beneficiaries were in plans that projected higher cost sharing for home health services and 16 percent of beneficiaries were in plans that projected higher cost sharing for inpatient services," the report said. Because cost sharing was projected to be higher for some services, "beneficiaries who frequently used these services could have had overall cost sharing that would be higher" than in traditional Medicare, the report added.

It also found that 87 cents of every dollar paid to MA plans went for medical care, 9 cents for administrative costs, and 4 cents for profits. By contrast, 98 cents of every dollar that goes into traditional Medicare is spent on medical care, Cosgrove said.

Camp pounced on the methodology of the report. It "does not reflect the reality of a single beneficiary in a Medicare Advantage plan," he said. "The report only looks at hypothetical beneficiaries, who use only certain types of services and enroll in a narrow selection of plans." Critics using the report to attack Medicare Advantage payments "will ignore the reality that the vast majority of plans actually provide much better cost-sharing benefits."

Democrats said however that GAO was forced to rely on projections rather than actual data on the beneficiary use of services because plans aren't required to turn over any data on services to the government or to beneficiaries. Cosgrove confirmed that data on actual use of services was not available to the GAO.

But Republicans said GAO could have used a different methodology.

Camp also released the text of a letter to GAO that requests a new study. The study released Thursday "fails to take into account that most Medicare beneficiaries use many types of services and as a result may actually achieve greater savings than the hypothetical scenario laid out in the GAO report," the letter said.

"I would ask that you review the actual historical spending patterns of a statistically valid sample of Medicare beneficiaries, and then compare that utilization data against the full cost-sharing benefits package offered by the top three Medicare Advantage plans, ranked by total national enrollment data. This type of analysis could then determine how much these beneficiaries could receive in total savings from reduced cost sharing across all types of Medicare spending," he said in the letter.

One thing Republicans and Democrats did appear to agree on at the hearing, however, was that policy makers need more information to better assess the value Medicare and taxpayers get for the higher payments made to Medicare Advantage plans. On average, those plans receive payments 12 percent higher than providers get in traditional Medicare, according to the Medicare Payment Advisory Commission. Acting CMS Administrator Kerry Weems said that plans will be expected to provide his agency with data on the actual use levels of the added benefits provided by the plans. Stark said legislation should be passed requiring such disclosure. While Camp and Weems agreed that such data should be disclosed, they stopped short of calling for legislation.

Meanwhile, there were other signs Thursday that Republicans are gearing up to take a strong stance against renewed Democratic efforts to cut Medicare Advantage payments. Former Centers for Medicare and Medicaid Services Administrator Mark McClellan briefed Senate Finance Committee Republicans in an afternoon meeting on the potential impact of such reductions. Utah Senator Orrin G. Hatch said on leaving the meeting that such cuts would be "cruel." He added that "it's not well thought out. It's a voracious demand for money at all costs.

"The Democrats want to take Medicare Advantage and use it to pay for a lot of their spending programs, which is stupid because [MA] works," Hatch said.

Republican Sen. John E. Sununu of New Hampshire said when he left the meeting that "if we start cutting the program, [seniors] are going to lose their benefits. Pushing seniors off the Medicare Advantage plans means their costs are going to go up. We should be very careful before we start engaging in policy that raises the cost of health care for seniors."

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Governors Discuss Strategies to Provide Health Coverage for Residents

By Reed Cooley, CQ Staff

February 28, 2008 -- At a House Small Business Committee hearing Tuesday, state officials approached the issue of health care overhaul from widely different angles.

The testimony of Govs. Edward G. Rendell, D-Pa., and Tim Pawlenty, R-Minn., discussed distinct strategies that ranged from emphasis on pay-for-performance systems to providing subsidies for eligible small businesses that enroll employees in private plans—both with the goals of reducing costs and expanding coverage to a larger amount of citizens.

"I believe it is becoming increasingly clear that addressing the problem of the uninsured requires a focus on encouraging small businesses to offer health insurance coverage," said Small Business Committee Chairwoman Nydia M. Velázquez, D-N.Y.

Rendell's plan focuses on making health insurance affordable to companies with 50 or fewer employees earning less than the average state wage.

Under the plan, employers, supported by state subsidies, would pay $130 a month toward each premium, while employees would pay on a sliding scale.

Individuals earning up to 150 percent of the federal poverty level (FPL) would pay nothing, while those earning 150 to 200 percent of the FPL would pay $40 per month and those earning 201 to 300 percent would pay $60 per month.

Rendell hopes the plan will drive down costs as well as expand coverage.

"If we cover all Pennsylvanians, it will save the health care delivery system $1.2 billion in Pennsylvania," he said.

The subsidies strategy is part of a broader plan that Rendell calls "Prescription for Pennsylvania," which includes giving more play to non-physician health care providers and cutting down on health facility acquired infections.

Gov. Pawlenty, whose state enjoys some of the lowest health care costs and percentages of uninsured in the country, has proposed a variety of pay-for-performance strategies, including offering incentives to providers for completing procedure according to standards developed by the Mayo Clinic and other health care authorities.

"We can say to small and rural providers: 'here are the outcomes we expect; how you get there is part of the art of medicine,' " he said.

He acknowledged that his and other states have a long way to go in terms of successfully implementing pay-for-performance methods.

"We're not ready yet, nor are the databases ready yet, nor is the delivery system ready yet to pay tribute for health care outcomes . . . in the mean time, as a proxy for outcomes, we want to pay for adherence to world class standards," he said.

A recent report by the Blue Cross and Blue Shield Association found that health care accounted for nearly one-third of total state spending across the country in 2007.

The report also indicated that, although many states tried last year, none passed universal mandate for health coverage, like those passed by Vermont and Massachusetts in 2006.

Pawlenty emphasized mandates are not a necessary step on the path to universal coverage and even said that they "wind up criminalizing poor people."

"Massachusetts, I think, is defining universal coverage at 95 percent, and we're already at 93 percent, and we still have a ways to go with respect to our reforms," he said.

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Health Spending to Double in a Decade

By John Reichard, CQ HealthBeat Editor

February 26, 2008 -- New projections by federal analysts show that health spending in the United States will double by 2017, even though the arrival of baby boomers in the Medicare and Medicaid program won't have much of an impact on health care outlays by then. The single biggest factor driving spending growth during the period is price growth, according to the study by economists at the Centers for Medicare and Medicaid Services (CMS).

U.S. health spending will grow 6.7 percent annually between 2007 and 2017, almost three times the yearly general inflation rate of 2.4 percent, the study said. And with the economy projected to grow at a slower yearly rate of 4.9 percent, health care will continue its pattern of consuming a bigger share of the Gross Domestic Product (GDP). The study pegs its share of GDP in 2007 at 16.3 percent—up from 16.0 percent in 2006—rising to 19.5 percent of GDP in 2017, or $4.3 trillion.

Perhaps a more realistic 2017 estimate is 19.7 percent of GDP; the analysis assumes politically unrealistic cuts in Medicare payments to doctors will go into effect as now scheduled. Assuming no cuts would occur over that period and payments stayed flat, health care's share of GDP would climb the added two-tenths of a percent, CMS economists said.

"This projection of health care spending reminds us that we need to accelerate our efforts to improve our health care delivery system to make sure that Medicare and Medicaid are sustainable for future generations of beneficiaries and taxpayers," Acting CMS Administrator Kerry Weems said.

Spending growth on publicly funded health care programs such as Medicare and Medicaid is expected to accelerate over the 10-year period, while that of the private sector is expected to slow down.

Medicare spending jumped 18.7 percent in 2006 with the start of the program's prescription drug benefit but in 2007 that growth rate is expected to have slowed to 6.5 percent once final spending calculations are made for the year.

"After 2007, Medicare spending growth is anticipated to rebound, then accelerate to a greater degree in the last half of the projection period, driven by higher growth in Medicare enrollment" said the CMS analysis, posted Tuesday on the Web site of the policy journal Health Affairs. "Medicare spending is expected to account for just over one-fifth [20.7 percent] of national health spending by 2017."

But despite the acceleration, that's not a lot more than the 19 percent Medicare now makes up of national health spending. "It's not going to create a huge jump, at least not in the [next] 10 years," said Sean P. Keehan, a senior economist at CMS. Medicaid's share of national health spending meanwhile will rise from 14.8 percent in 2006 to 16.8 percent in 2017. Medicaid spending is expected to grow at an average rate of 7.9 percent per year during the projection period, with home care spending in the program among the fastest growing spending categories. A trend toward caring for frail Medicaid patients outside of nursing homes and in their homes is expected to fuel that growth.

CMS Actuary Richard Foster said in a press briefing Monday that the arrival of baby boomers won't have a big impact on Medicare and Medicaid over the next decade. Yearly enrollment growth in Medicare will rise from about one percent now to three percent near the end of the projection period but baby boomer enrollees will be relatively young at that point. Thus their impact will be "relatively modest," he said. But "after age 75 health care costs begin taking off quickly," he said. "Watch out for the next 10 years."

The main factors driving spending growth during the projection period "are medical prices and utilization, followed by smaller impacts from population growth and the age–sex mix," the study says. "In 2008 and beyond, medical price growth is anticipated to rebound" from a slight downturn in 2007. "For the 2012–2017 period, price growth is expected to account for 3.8 percentage point of the 6.7 percent growth" in yearly spending growth on health care services, the study found.

CMS economists said at Monday's briefing that prescription drug prices will rise an average of 3.7 percent per year during the study period, while hospital price increases will average 3.6 percent yearly. The prices doctors charge for care will rise 4 percent yearly on average, they added. Much of the increase in the prices of the components that make up health care stems from rising compensation for those who deliver care, the economists said.

The growth in private health spending, which includes out-of-pocket and private health insurance spending, is expected to peak in 2009 at a rate of 6.6 percent, then slow through 2017 because of slower economic growth. Hospital spending growth is expected to accelerate from 7.0 percent in 2006 to 7.5 percent in 2007, partly because of higher Medicaid payment rates. But hospital spending growth will decline slightly after that because of slowing growth in demand for hospital services, according to the federal forecasters.

Prescription drug spending growth in 2007 was an estimated 6.7 percent, down from 8.5 percent in 2006. "For 2008 through 2017, prescription drug spending is projected to accelerate due in part to the projected leveling off of growth in the generic dispensing rate," according to the CMS analysis. The Medicare drug benefit "is expected to have very little impact on total national health expenditure growth through 2017, as per capita spending growth for Medicare beneficiaries is expected to be identical to that of the rest of the population."

Nursing home spending growth is forecast to increase to 3.8 percent in 2007, then accelerate to an average annual growth rate of 5.3 percent through 2017.

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Listening to MedPAC

By John Reichard, CQ HealthBeat Editor

February 29, 2008 -- Which among the many recommendations formally transmitted to Congress Friday by the Medicare Payment Advisory Commission in its 355-page "March report" will lawmakers most likely heed this year? Advice by the commission to freeze Medicare payment rates in fiscal 2009 for home health agencies and skilled nursing and inpatient rehabilitation facilities could prove the most handy for lawmakers looking to justify politically unpopular cuts to pay for legislation blocking a scheduled 10.6 percent payment cut to doctors in July 2008 and a 15.4 percent cut in 2009.

The panel's arguments for trimming payments to private health plans are likely to be well-thumbed parts of the Democrats' playbook this year and next as they try to slow the rapid movement of the program away from traditional Medicare. And the commission's recommendations for tying hospital payment to quality performance will likely be part of the ongoing struggle in Congress to fulfill the vision of many policy analysts of bringing greater value to Medicare spending.

The March report, one of two key annual reports filed by MedPAC with Congress, tends to be viewed by at least some analysts as a sort of bible of good policy—but in the yearly clash between political reality in Medicare and aspirations to good policy, the March report only has so much influence and is prone to being read in a selective way to advance personal interests.

The principal feature of the report—recommendations for payment revisions for the upcoming fiscal year—is already well known to health industry insiders, having been resolved at the January meeting of the commission. But the March report also includes other types of recommendations relating to the quality and efficiency of the program. In that area, one of the key recommendations this year is a call for greater access to the millions of claims filed each year for prescriptions filled under the programs "Part D" prescription drug benefit.

At a press briefing on the report Friday morning, questions about its take on Medicare Advantage payments, the reimbursements made to private health plans in Medicare, dominated the session.

Executive Director Mark Miller emphasized that the commission has always supported choices for beneficiaries between traditional Medicare and private health plans in the program. Those plans create an opportunity for innovation in the program that improves the coordination and efficiency of care, he said. But that innovation will only occur if payment policy is structured the right way, he added. Originally, payments to the plans were set at levels below that in traditional Medicare, a decision meant to capitalize on the claims of the plans that they could deliver care more efficiently. Not only were plans paid less, but they were able to operate at costs enough below the payments they received to allow them to offer extra benefits to seniors beyond those in traditional Medicare.

MedPAC's policy, he said, is one of "financial neutrality" between traditional Medicare and Medicare Advantage—in other words, that plans should be paid at the same levels as providers in traditional fee-for-service Medicare. But MedPAC projects that in 2008 Medicare Advantage plans on average will be paid 13 percent more than rates in traditional Medicare. And one type of Medicare Advantage plan known as the private fee-for-service plan will be paid rates 17 percent higher, even though they are organized in a way that is less likely to produce efficient care than managed care plans in Medicare Advantage, he said.

Plans say that although they are paid more they offer lots of extras in the form of lower premiums and out of pocket charges and added benefits such as vision, dental and hearing benefits. Miller said that's true—"there's lots of extra benefits being offered out there"—but that the payments they receive are now at levels that no longer encourage plans to be as efficient as traditional fee-for-service care, which MedPAC views as a badly flawed standard in that their are many inefficiencies in traditional Medicare, he said. "The concern here is that we are encouraging inefficient plans to come into Medicare," he said. Setting bidding benchmarks above payment levels in traditional Medicare does not make for a sustainable Medicare program, Miller said.

With higher payment levels, enrollment in the Medicare Advantage program is growing fast. Miller noted that Medicare Advantage now accounts for 20 percent of all Medicare enrollment, or almost 9 million beneficiaries, and that for the most part growth in the program has occurred in private fee-for-service plans not set up for efficient care and in "special needs" plans that are subject to few standards to spur efficiency. Between November 2006 and November 2007, enrollment in private fee-for-service plans grew from 800,000 to 1.7 million, while that in standard types of managed care plans that are better organized to coordinate care grew much more modestly, from 6.7 million to 7.2 million. However, access to those more standard plans is growing, according to the report. In 2008, 85 percent of Medicare beneficiaries will have access to a local HMO or PPO in their county of residence, up from 82 percent in 2007 and 67 percent in 2005.

Meanwhile, growth in special needs plans climbed from 532,000 in July 2006 to 1,081,000 in November 2007. The plans in theory are meant to coordinate the care of sicker and more costly beneficiaries but the value they deliver is unclear, according to the report. It recommends various steps to assure efficiency, such as adoption of tailored performance measures and the coordination of Medicaid with Medicare benefits for those in both programs.

"Let's be honest," Miller said concerning MedPAC's view that there should be financial neutrality. "If you start to do this less plans will be offered"—as well as fewer extra benefits—"but my point is that we will be growing managed care plans that are more efficient."

With respect to prescription drug claims, Miller said that "there's a lot of use this data could be put to but there's no way to get it out." MedPAC regards opening up access to the data for research purposes as "incredibly important," he said. Congress will ask the commission how well the drug benefit is working, but it is hard put to answer without access to the data, Miller suggested.

MedPAC previously recommended that the HHS secretary should broaden access to the data but that hasn't happened. The March report goes farther, calling on Congress to direct HHS to widen access.

The report notes that in 2006, Medicare and Part D enrollees spent nearly $50 billion on benefits and premiums but "there are fundamental questions that the Commission and other organizations cannot answer about how Part D is operating. These include questions such as: which prescription drugs enrollees are using most widely; how much, on average, enrollees are paying out of pocket for their medicine; and how many beneficiaries are entering Part D's coverage gap.

"Other federal agencies need Part D data to carry out postmarketing surveillance of drug safety and efficacy, to help monitor the prevalence and treatment of specific conditions, and to support research on clinical outcomes and the effectiveness of covered drugs," the report said.

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Mass Gov.: CMS Directive Threatens Massachusetts Overhaul

By John Reichard, CQ HealthBeat Editor

February 26, 2008 -- Massachusetts Democratic Gov. Deval Patrick told a House subcommittee on Tuesday that a directive issued last August by the Centers for Medicare and Medicaid Services (CMS) jeopardizes efforts under the state's landmark health overhaul law to increase coverage of uninsured children.

Two other Democratic governors also at the forefront of state efforts to widen coverage of uninsured children joined Patrick in warning the House Energy and Commerce Health Subcommittee panel that the directive would deny coverage to thousands of uninsured children, but Republican governors and lawmakers at the hearing showed little inclination to budge much from its current provisions.

Mississippi's Republican Gov. Haley Barbour joined the Democratic governors, however, in criticizing pending Medicaid regulations that would trim some $12 billion from Medicaid spending over five years. And he voiced no objections to a Democratic proposal to temporarily increase federal Medicaid payments to counter the looming economic downturn forecast by many economists. "I can tell you if you all have got some extra money lying around we'd like to have it," Barbour allowed in his Mississippi drawl.

Subcommittee Chairman Frank Pallone Jr., D-N.J., and full committee Chairman John D. Dingell, D-Mich., said the directive would not only block efforts to cover more uninsured children but also strip children who have coverage now of their health care benefits under the State Children's Health Insurance Program (SCHIP).

But they offered governors no assurances about legislative prospects for overturning the controversial set of CMS instructions, which prevents states in their SCHIP programs from covering children in households with incomes above 250 percent of the federal poverty line if they haven't first enrolled 95 percent of eligible children under 200 percent of the poverty line.

Georgia's Republican Gov. Sonny Perdue told the panel that "the goal of this program all along was to provide an answer to an insurance need for our most vulnerable population: low-income children. It is a grave mistake to expand taxpayer funded insurance to a level that undermines personal responsibility for those who are able to purchase private insurance on their own," he said. "By focusing funding on low-income children and re-targeting a distribution formula that has not changed in a decade, states will continue to make progress in reaching and insuring our children."

Patrick testified that although "these are still early days" for the Massachusetts law, which has been widely discussed as a model for national overhaul efforts, "our reform plan has already been very successful. Three hundred thousand adults and children who were uninsured just a year ago are insured today, reducing our uninsured population by almost half."

One of the arguments for covering the uninsured is that it will lower health care costs generally by reducing the amount of uncompensated care given by providers. That lessens the need for providers to charge higher rates to insurers and employers to cover the costs of care for which they are not reimbursed.

According to Patrick, the costs of uncompensated care in the state appear to be dropping as advertised by proponents of the law.

"Free care utilization has dropped," he said. "Between federal fiscal years 2006 and 2007, our uncompensated care pool saw roughly 9 percent fewer inpatient discharges and 12 percent fewer outpatient visits," Patrick testified. "A recent report by the Massachusetts Hospital Association shows that the number of hospital low-income uncompensated care accounts has decreased by 28 percent since October 2004. "And there are initial signs of a leveling off in health care costs, with premiums for subsidized programs increasing at an average of 5 percent, roughly half what increases in the general market have been."

Under the overhaul plan, "CMS agreed to permit Massachusetts to expand SCHIP to children at or below 300 percent of the federal poverty level. As a result, Medicaid and SCHIP enrollment has grown by 40,000 children, including 18,000 newly eligible because of the expansion [of SCHIP eligibility] from 200 percent to 300 percent of the federal poverty level."

But a retreat in commitments made by the federal government to the state, including the Aug. 17 directive, "could have devastating effects on our progress, particularly our ability to cover families who have no affordable options in the unsubsidized private marketplace," he said.

"Specifically, the Aug. 17th directive may prevent us from covering eligible children who are not yet enrolled," Patrick continued. Unless Congress overturns the directive, "many families will be discouraged from enrolling in SCHIP altogether." Patrick added that "as a practical matter in Massachusetts, this directive would leave thousands of children between 250 percent and 300 percent of the federal poverty level uninsured while their parents are covered by other features of our federally approved health care reform."

Washington state Gov. Christine Gregoire, a Democrat, said the directive will block her state's plan to expand SCHIP coverage from 250 percent of poverty to 300 percent as of Jan. 1, 2009. That provision is part of a March 2007 Washington state law Gregoire said she signed to lay "a strong foundation to ensure that all children living in Washington state have health insurance coverage by 2010." But no state including her own will be able to comply with the 95 percent standard, she said. "The effect of the rule intended or otherwise is to preclude states from covering children in low-income households," she said. Washington is one of nine states that has filed a lawsuit challenging the directive, she noted.

"The reason my state is challenging CMS is this: Picture the single mother with two children, trying to make ends meet with an annual income of $45,000 a year just over 250 percent of the federal poverty level under 2008 federal guidelines—and imagine how she will pay for lodging, food, clothing, and transportation for the kids . . . and still have $700 to $900 a month left over so that she can buy health insurance. That's roughly one-fourth of her income."

She added that the rule is "wrong" because it would require a child to go uninsured for a full year before going on SCHIP if that child had been dropped from employer-funded coverage. "This requirement is simply inviting poorer health and greater emergency room utilization," she said.

Similarly, Ohio's Democratic Gov. Ted Strickland said that because of the Aug. 17 directive, 20,000 uninsured children with family incomes between 200 and 300 percent of the federal poverty level remain uninsured. Those children would be covered under an Ohio state law if not for the directive, he said. Strickland noted that CMS recently refused an application by the state to allow Medicaid coverage above the 250 percent standard, a decision that extended the Aug. 17 requirements for the first time to Medicaid expansions. Ohio may file a lawsuit challenging that decision, he said.

But Barbour said the problem with SCHIP legislation is not the Aug. 17 directive but a funding formula that denies Mississippi enough funds to cover even half of the children in the state below 200 percent of poverty. Referring to last year's House-passed SCHIP bill, Barbour said "I cannot support a bill that does not give Mississippi enough money to fulfill the original intent of the program while allowing other states the opportunity to expand their programs to cover higher-income children and adults who don't have any children," he said.

Mississippi has relied on the unspent funds of other states' SCHIP programs to make up for its inadequate allotment, Barbour said. But "instead of sending that money back to Washington, other states starting expanding their SCHIP programs," he said. "Since then, the pool of funds available to be redistributed to states such as mine has shrunk and we are faced with significant shortfalls and much uncertainty."

Rep. Joe L. Barton of Texas, the top Republican on the Energy and Commerce Committee, noted that he has backed legislation that would lower the 95 percent coverage standard to 90 percent. Barton asked witnesses why the 95 percent standard should not be met, however. Strickland responded that children about 200 percent of poverty "are needy kids" as well. They are children from working families "that simply cannot afford the coverage." Strickland added that "every child without health insurance . . . is deserving of health care coverage."

Democrats charged that under the Aug. 17 directive states that now cover children in their SCHIP programs above the 250 percent level would have to cancel their coverage if they live in states that do not meet the 95 percent standard as of Aug. 17, 2008.

And advocates of wider SCHIP coverage say that CMS statements that those states would only be barred from enrolling new children above 250 percent of poverty after Aug. 17, 2008 if they do not meet the 95 percent standard are misleading. Advocates say that although the coverage would continue after that date, it would be canceled when it came time for states to reconsider their coverage status, which states routinely do every six to 12 months.

But CMS Spokeswoman Mary Kahn said that is not the case. The Aug. 17 directive "states that there is no effect on current enrollees," Kahn said. The directive "does not impact those children, so they would not be dropped at redetermination."

Pallone said after the hearing that "no decision has been made yet about whether or when we will move legislation" blocking the directive or the administration's pending Medicaid regulations. Pallone noted that he and Dingell and other House members have introduced legislation (HR 5268) that would temporarily increase federal Medicaid payments to protect access to Medicaid coverage "during the economic downturn."

Strickland suggested during the hearing that House Minority Leader John A. Boehner, R-Ohio, has told him the Medicaid funding increase could be folded into supplemental legislation this spring funding U.S. military efforts in Iraq and Afghanistan, but Pallone said no decision has been made on a vehicle.

"It's definitely something I'd like to move and get passed," he said. "With the economic downturn you have to hope that the president changes his mind and realizes that we've got to cover these people."

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Report Offers Roadmap for Evidence-Based Medicine Center

By Mary Agnes Carey, CQ HealthBeat Associate Editor

February 25, 2008 -- A trustworthy system of comparative effectiveness research must be based on integrity, independence, and transparency, and serve as an honest broker in qualifying evidence-based medicine, according to a new report prepared for the Medicare Payment Advisory Commission (MedPAC).

Comparative effectiveness research compares treatment outcomes from different therapies for the same condition, allowing providers and patients to avoid ineffective or wasteful treatments.

A national center for evidence-based medicine should be independent and systematically identify evidence-based practices, conduct rigorous independent reviews of evidence-based research using strict protocols, and disseminate objective information, according to the report, prepared by staff of the American Institutes for Research. A comprehensive center would be built upon the work of several existing groups, such as the Agency for Healthcare Research and Quality's evidence-based practice centers, or the Oregon Health and Science University's Medicaid Evidence Based Decision Project, which provides state Medicaid programs with clinical evidence to assist in coverage decisions.

The study was prepared by Marilyn Moon, Benjamin Smith, and Sigrid Gustafson.

MedPAC's June 2007 report called for the establishment of an independent entity that would sponsor research on comparative effectiveness of health care services, and Senate Finance Committee Chairman Max Baucus, D-Mont., and House Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif., hope to advance legislation to expand funding for research on the comparative effectiveness of health treatments and other initiatives.

Other countries, such as the United Kingdom, Australia, and Canada, are further along than the United States in the application of evidence-based information for decision making, the report notes. But some states, private managed care organizations and the Veterans Administration have all used some form of evidence-based decision making for establishing Medicaid prescription drug formularies. While Medicare also makes decisions about adoption of new techniques based on evidence of effectiveness, "what has been lacking is any universal effort to apply evidence more broadly, moving beyond effectiveness studies to identifying best practices and/or avoiding wasteful spending," the report states.

Information developed from comparative effectiveness reviews and the dissemination of that information "must be of the highest quality, developed with guidance of key stakeholders and consumers, able to withstand vigorous scrutiny, and able to reach multiple audience of varying levels of sophistication, in culturally appropriate and consumer friendly ways," the report states. Examples of comparative information in the report include medical intervention protocols, procedure fact sheets, Web-based guidelines, and expected clinical outcomes.

"The challenge is to accurately convey the results in plain language and be viewed by stakeholders as valuable sources of information," notes the report. Changes in health care information technology, such as broader adoption of electronic health records, could help health care providers and patients more quickly receive best practices information.

Funding for a national center for evidence-based medicine should come from a source not subjected to the annual appropriations process, such as national foundations and perhaps a consortium of other payers—with strict controls to prevent interference—contributing as well, the report's authors conclude.

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