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March 6, 2006

Washington Health Policy Week in Review Archive 5ff0fdff-c414-4822-8057-83c3cbf5c225

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AHRQ Report Finds Hospital Admissions Increasing for Surgical, Medical Care Complications

March 3, 2006 -- More patients are being admitted to hospitals because of complications from surgery or medical treatment, according to HHS' Agency for Healthcare Research and Quality.

The number of patients with such complications rose from 305,000 in 1993 to 452,000 in 2003, the agency stated in a news release. Of these, the number admitted through hospital emergency departments rose from 98,000 in 1993, or 32 percent of all cases, to 211,000 in 2003, or 47 percent of all cases.

Meanwhile, the average cost to hospitals for treating surgical or medical complications rose from $6,840 in 1993 to $9,600 in 2003, according to AHRQ.

According to AHRQ, complications from surgery can include postoperative infections, while complications from other medical care can result from extended bed rest, including lung embolism, dangerously low blood pressure, or a collapsed lung.

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CMS Downplays Problem of Seniors Being Enrolled in Two Drug Plans at Once

MARCH 3, 2006 -- Medicare officials are downplaying a drug benefit snafu reported this week—that "tens of thousands" of beneficiaries who have switched drug plans are now actively enrolled in two plans simultaneously.

Centers for Medicare and Medicaid Services spokesman Gary Karr said Friday he does not know how many beneficiaries fall into that category.

But Karr said the "vast majority" of Medicare beneficiaries who have switched drug plans aren't harmed by being simultaneously enrolled for a time in two plans. That's because most of the 800,000 Medicare beneficiaries who have switched plans so far are doing so under Medicare's program of relatively generous drug benefits for low-income beneficiaries, Karr said. That means they are going from one plan charging low or no out-of-pocket costs to another, Karr explained.

The New York Times reported March 1 that "tens of thousands" of Medicare beneficiaries are finding themselves actively enrolled in two plans at the same time, with both in the mode of paying out benefits and charging premiums and copayments. The situation leaves beneficiaries at risk of being charged premiums twice in a month, or of having to pay higher copayments when they get prescriptions filled, the story said.

Karr said, however, that Medicare officials are wary of moving too quickly on disenrolling plan switchers from their first plan because they don't want the beneficiary to be without any coverage whatsoever. The earlier in the month a beneficiary switches plans, the more likely he or she is to avoid duplicate coverage the following month, Karr said.

Karr said he did not know the percentage of plan switchers who qualify for Medicare's relatively generous benefit for low-income beneficiaries, and who therefore are switching from one relatively generous plan to another. He did say it is the "vast majority."

But the Times story said Medicare typically provides information on a beneficiary's low-income status to only one of the two drug plans involved. The result: The second plan is unaware the beneficiary is eligible for the more generous coverage, according to the story. That in turn means beneficiaries may be charged premiums they do not owe and much higher copayments than they owe.

The story also quoted a Florida pharmacist as saying that in some cases, premiums from both plans are being automatically deducted from Social Security checks. And while low-income beneficiaries may be switching from one relatively generous plan to another, they often do so because the first plan doesn't cover as many of their medications.

The story did not say how often problems from double coverage occur. Karr said he had no data on the problem, or a tally of how many beneficiaries have complained to Medicare as a result.

To the extent plans charge premiums or copayments not owed, beneficiaries can contact 1-800-Medicare for help or deal directly with the plans, he said.

Karr described periods of overlapping coverage as a normal operational issue when plan switching occurs. "These kinds of plan-to-plan reconciliations are always going to take place," he said.

Robert Hayes, president of the New York City–based Medicare Rights Center, said low-income beneficiaries are being harmed by the problem of double coverage. Hayes said his counseling operation is relatively small but that "we've had scores of complaints" from beneficiaries, including "a bunch of calls from Florida" about premiums being charged twice. Hayes said many of the complaints are from beneficiaries who have switched plans but whose new plan does not recognize them as eligible for the low-income benefit. As a result, they are subject to deductible and copayment charges they can't pay and must leave the pharmacy without getting their prescriptions filled, he said. "This is one of scores, if not hundreds, of data system breakdowns," he said.

Overlapping coverage is occurring in part because of a mix-up in the way the government sends out notifications to drug plans, according to the Times. If a beneficiary switches plans, Medicare is supposed to send a disenrollment notice to the first plan and a confirmation of enrollment to the second plan.

According to the Times in the case of a number of beneficiaries, Medicare mistakenly sent both notices to the second plan, so the first plan continued coverage.
Under the Medicare drug law (PL 108-173), beneficiaries who qualify for Medicare's low-income benefit can switch plans once a month, Karr said. This year, other beneficiaries can switch once if they do so before May 15 and again in the fall 2006 open enrollment period for 2007. After this year, however, beneficiaries who qualify for the regular drug benefit will only be able to switch plans during the fall open enrollment period.

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Frist Calls for Slower Growth in Federal Medicare Spending

February 27, 2006 -- Policymakers must take a series of steps now to control federal Medicare spending or face an unfunded liability five times worse than Social Security over the next 75 years, Senate Majority Leader Bill Frist, R-Tenn., said Monday.

"The demographic aging revolution dictates that the spending path we're on is unsustainable," Frist said in remarks at the Detroit Economic Club.

Raising taxes, Frist said, would hurt the economy and "we can't turn our backs on our most basic responsibility—national security." Nor can the nation "simply do away with the seed corn for future growth and global competitiveness—education and research investment."

Instead, Frist said, "The place to begin is Medicare. Political figures in Washington aren't talking about it. But let me tell you—if they really care about the country's future—they should be."

Ensuring that taxpayers get the most value for every federal dollar spent on health care and managing chronic disease more effectively would help reduce Medicare expenditures, Frist said, as would improving prevention efforts.

"This sounds so obvious. But politicians in Washington don't seem to get it. Washington focuses on flow of money—who pays and how much, ignoring reducing the amount of disease for which you're paying," Frist said.

Improving health care information technology will save money and improve the quality of care delivered, as will increasing consumer choice, Frist said.

"Income relating," which links the level of benefit provided to an individual's income, is "inevitable to avoid the intergenerational inequities that would otherwise stem from the demographic aging revolution around us," Frist said, referring to the more than 77 million baby boomers set to flood the Medicare system in just five years.

The Medicare drug law (PL 108-173) includes a provision that requires some higher-income Medicare beneficiaries to pay more for their Part B coverage. President Bush's fiscal 2007 budget plan lowers the threshold for "income relating" even further. Opponents of the idea say it will weaken public support for the program over time because not all participants will be treated equally.

Frist also urged that Medicare become a "consumer-driven, patient-centered program" that is "provider-friendly," encouraging provider participation by rewarding quality and provider performance "rather than just blindly reimbursing for treatment."

Overhauling Medicare "is a matter of fiscal responsibility" that will help the federal government "lead the way in transforming the face of American health care," Frist said.

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Johnson No Fan of Proposed Medicare Cuts

MARCH 1, 2006 -- House Ways and Means Health Subcommittee Chairman Nancy L. Johnson, R-Conn., gave a chilly reception Wednesday to cuts in Medicare hospital spending growth advocated by the Medicare Payment Advisory Commission (MedPAC).

Those recommended cuts are at the heart of a proposal by the Bush administration to trim Medicare spending this year. Her remarks won't dispel the impression that key lawmakers aren't keen on cutting Medicare this year.

In a hearing on MedPAC's annual Medicare payment recommendations to Congress, Johnson said she was concerned that more than 50 percent of hospitals are losing money on Medicare patients, and that industry-wide margins on Medicare inpatient care average negative 2 percent.

Policymakers are counting on hospitals to add information and other technology to make care more efficient and to reduce medical errors, yet many hospitals are losing money on Medicare and MedPAC suggests trimming the increase in inpatient hospital payment under current law, Johnson said.

MedPAC Chairman Glenn Hackbarth defended the recommendation by saying private insurer payments to hospitals have increased dramatically, suggesting hospitals have become less careful about their costs of treating Medicare patients as a result. Medicare should set payment levels based on the reimbursement needs of efficient providers, not all hospitals, he said.

Consistent losers among hospitals tend to have higher costs per case than other facilities in their markets, he said. "We shouldn't gear Medicare policy to make sure they make a profit," he said of inefficient providers.

Johnson expressed skepticism about "luxurious" reimbursement of hospitals by private insurers, however.

But California Democrat Pete Stark was skeptical that hospitals are in financial trouble. "What puzzles me is that they aren't going broke," he said, noting that relatively few facilities close each year.

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MedPAC March Report Urges Doctor Pay Revisions (No, This Isn't About SGR)

MARCH 1, 2006 -- "The SGR" and "P4P" may be the hottest issues in the arcane world of Medicare physician payment, but "RVUs" are sexy too, says a report given to Congress on Wednesday by the Medicare Payment Advisory Commission (MedPAC).

Jargon aside, the first two issues relate to the method of calculating the yearly Medicare payment rate to doctors and the effect that the quality of a doctor's care should have on payment, while RVUs are all about "fair" payment—and concern that payments for primary care may be falling too far behind.

At a breakfast meeting with reporters Wednesday, MedPAC Chairman Glenn Hackbarth said the commission is urging changes in the way Medicare figures out how much to pay for one type of care compared with another. The technical procedure for doing that is assigning "Relative Value Units," or RVUs.

The units measure the amount of resources that are needed to provide a particular type of care. For example, RVUs for brain surgery would be higher than RVUs for a much simpler procedure such as cataract surgery. The higher the RVU, the higher the payment rate for the particular service involved. RVUs are part of the Relative Value Scale (RVS).

The way RVUs are assigned leads to relatively low payment for primary care compared with various types of specialty care, Hackbarth said. The concern is not just about income for today's primary care doctors but also about maintaining an adequate supply of primary care doctors in the United States in the future, he said.

The number of medical students seeking residences in primary care has recently seen "a pretty precipitous drop-off," Hackbarth said. Doctors "may opt not to furnish undervalued services, which can threaten access to care," the MedPAC report notes.

The Centers for Medicare and Medicaid Services review RVUs every five years, relying in large part on the recommendations of a private sector advisory group called the RVS Update Committee (RUC). Formed by the American Medical Association, the RUC also recommends values for new services.

MedPAC said the five-year process "does not do a good job of identifying services that may be overvalued." By relying too much on the RUC, "CMS has relied too heavily on physician specialty societies to identify services that are misvalued," the report says. The work of the RUC tilts toward recommending higher values for specialty care.

Five-year reviews have led to "substantially more increases in RVUs than decreases, even though many services are likely to become overvalued over time," MedPAC's report says.

Because the process of assigning values is budget-neutral, increased values have to be offset in some way. Some RVUs have become too high because medicine has found more efficient ways of providing the service involved. To the extent that excessive RVUs are identified and lowered, Medicare has less need for across-the-board reductions of all RVUs that lead to lower payment rates for primary care.

To counter the problem, MedPAC urges the creation of "a standing panel of experts to help CMS identify overvalued services and to review recommendations from the RUC," the report says. "The group should include members with expertise in health economics and physician payment, as well as members with clinical expertise."

Hackbarth said CMS has authority to create the panel on its own. But operating the panel would entail significant added expense, he said. "Funding is an important issue," he said. "We would like to see Congress support this appropriate work."

The report features a variety of payment recommendations widely reported earlier this year that would lead to reductions compared with current law in spending for hospital, home health, skilled nursing, and other care.

The Bush administration has seized on the recommendations to justify cuts in spending growth proposed in its fiscal 2007 budget proposal.

Hackbarth emphasized, however, that such reductions aren't the same thing as actual cuts. For example, even though MedPAC has recommended a cut in hospital spending compared with current law, hospitals would still see a 2.95 percent increase in payment rates in fiscal 2007.

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Senate HELP Sets Markup Date for Insurance Market Bill

MARCH 2, 2006 -- The Senate Health, Education, Labor and Pensions (HELP) Committee has scheduled a March 8 markup for legislation that may break the logjam of proposals to permit small businesses to pool their purchasing power and buy insurance for their workers.

"Working with a diverse group of senators and business groups representing small business, we've bridged the gap between small business proponents of traditional AHPs (association health plans) and state-based interests worried about the prospects of dramatic regulatory changes in health insurance markets," HELP panel chairman Michael B. Enzi, R-Wyo., said last week in a statement. His co-sponsors are Ben Nelson, D-Neb., and Conrad Burns, R-Mont.

Like other pending legislation to permit association health plans, Enzi's bill (S 1955), would allow business and trade associations to band together to offer group health coverage on a statewide or national basis. But Enzi's measure would force those plans to cover any mandated benefits already required by at least 45 states, a provision not included in either the House (HR 525) or Senate (S 406) versions of legislation to permit AHPs.

While the House has passed AHP legislation it faces stiff opposition in the Senate.

AHP supporters, including small business and trade associations, say the plans would help drive down the cost of insurance for small businesses and employees, and that market demands would persuade insurers to cover such services.

But AHP opponents, which include insurance and patient advocacy groups, have said that such plans would do little to cover the uninsured and would erode state laws that require insurers to cover preventative health care services such as well-child care and mammography screening.

AHP critics have also said that the plans would destroy an array of state-mandated consumer protections such as limits on premium price hikes when an employee gets sick and requirements that consumers get independent reviews when care is denied.

To allay such concerns, Enzi's measure would leave supervision of the plans with state officials, rather than turning it over to the Department of Labor, which AHP opponents said did not have the resources to regulate the plans. While Enzi's bill would permit business and trade associations to pool their members independently, they would not be allowed to establish self-insured plans, but would rather have to provide benefits through a fully funded plan.

Enzi has been receptive to hearing about the unintended consequences of AHPs, said Mary Nell Lehnhard, senior vice president of the Blue Cross Blue Shield Association, a group which has opposed AHPs.

"I feel all of our concerns have been listened to," Lehnhard said Thursday. "The process has been amazing." Her group is not supporting the measure but is not lobbying against it, either, Lehnhard said.

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