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May 16, 2005

Washington Health Policy Week in Review Archive 0a3205f7-208e-4cdd-8fd6-4f6ac9c5290d

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Clinton, Gingrich, Other Stars May Be Aligning for Health Care IT Bill

MAY 11, 2005 -- Any health care legislation with the names Kennedy, Gingrich, Clinton—and possibly Frist—listed as supporters is likely to get more than a second glance in Congress, particularly if it's a low-cost way to address a high profile policy issue: health care information technology.

That's why the 21st Century Health Information Act of 2005, HR 2234, is likely to grab a lot of attention in coming weeks. Unveiled Wednesday at a press conference by Reps. Patrick J. Kennedy, D-R.I., former Speaker of the House Newt Gingrich, Sen. Hillary Rodham Clinton, D-N.Y., and Rep. Tim Murphy, R-Pa., the bill aims to upgrade the quality, efficiency, and safety of health care by encouraging adoption of health care information technology through regional networks.

Clinton indicated that she expects the bill, or something similar, to be part of broader Senate legislation she plans to introduce with Senate Majority Leader Bill Frist, R-Tenn., in the next few weeks. Clinton declined to specify what other health provisions the bill would contain other than those pertaining to IT.

A Senate aide confirmed that Frist and Clinton are working on legislation similar to, but broader than, the Murphy-Kennedy bill. That effort also aims to enlist other key Senate GOP leaders as supporters, the aide said.

Kennedy stressed his bill reflects the thinking of a wide variety of people and organizations involved in furthering health care IT, including Dr. David Brailer, National Health Information Technology Coordinator at the Department of Health and Human Services. "I believe his insight is found within the pages of this legislation," Kennedy said.

Gingrich declared the bill "sets the stage for the House and Senate to do something decisive this year."

Without offering an explicit endorsement, HHS Secretary Michael O. Leavitt said the legislation is in line with the policy conversations that need to occur about furthering IT.

His remarks came at an event announcing announced the release of a report by the Lewin Group emphasizing the importance health care IT in maintaining U.S. competitiveness in the global economy. The message is that "message in health IT in urgent," Leavitt said.

The Murphy-Kennedy bill addresses important areas such as interoperability and payment incentives, Leavitt said. Brailer said the administration isn't offering legislation of its own and doesn't endorse any existing bill, but added that "nothing's hard and fast."

The bill names no specific dollar amounts to help pay for IT other than $50 million in fiscal 2006 grants to help regions develop and implement plans for health information technology networks. While it also provides for a program of loans to those networks to acquire IT, it does not specify how much money would be lent out.

And while it provides for Medicare payment "adjustments" to providers and suppliers who take part in the networks, it does not specify how much money would be involved.

Kennedy said many providers will be "disappointed" about the lack of subsidies in the bill. However, he said he hopes Frist's leadership will be able to secure Medicare money as well as federal matching payments to states to design and implement IT programs in their Medicaid programs.

The bill's supporters say it lays a groundwork for efficient investment. It would do so by ensuring that common interoperability standards are adopted to make sure the computer systems making up regional networks allow data and images to flow smoothly.

Under the bill, the Certification Commission for Healthcare Information Technology, an industry group formed to ensure standards, would be required to agree on interoperability standards for electronic health records within nine months of enactment.

If that deadline passes, HHS could adopt its own standards or designate another entity to do so. Networks would have to meet those standards to quality for federal assistance.
A central premise of the legislation is that IT should be adopted through formation of regional health information organizations—RHIOs. That also reflects the view of the Medicare Payment Advisory Commission (MedPAC) and the Bush administration, which sees RHIOs as building blocks for a national network.

In recommendations to Congress, MedPAC stopped short of advising the creation of a large loan program, but said that if one were adopted, it should lend money to community systems that brought in a wide range of providers and payers who planned carefully and put up their own money as well. The community systems would have to have detailed plans to assure privacy and interoperability, MedPAC said.

The $50 million authorization would fund 20 competitive three-year grants to 20 RHIOs. The bill also would authorize "such sums as necessary" for the grant programs for fiscal years 2007–2010. It also would provide $2.5 million each year from fiscal 2007 to 2010 for the creation of a national technical assistance center within the Agency for Healthcare Research and Quality to help doctors' offices make sound IT investments.

HHS would have to certify that networks meet privacy, interoperability, and other standards.

In addition to encouraging standards and regional planning, the bill aims to spur investments by the health care industry. Gingrich said it would encourage hospitals to provide doctor's offices with electronic health record systems by creating an exception to federal legislation barring hospitals from making such donations as a way of inducing referrals.

Gingrich claimed that because of IT's savings potential, hospitals would be willing to outfit up to 80 percent of physicians' offices around the U.S. with electronic health records if they could be assured of not running afoul of federal law on referral inducements.

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Groups Say AHPs Will Cause More Harm Than Good

MAY 12, 2005 –- Association health plans (AHPs) will do little to cover the uninsured and will erode state laws that require insurers to cover preventative health care services such as well-child care and mammography screening, insurance and health care groups said Thursday.

The Blue Cross and Blue Shield Association, along with an array of patient groups such as the American Diabetes Association and the American Academy of Pediatrics, released a report that concluded AHPs would destroy an array of state-mandated consumer protections that include limiting how much and how often an employer's premiums can increase when an employee gets sick and requiring independent, external review when care is denied.

The groups said AHPs would also allow insurers to drop coverage for medical services that many states now require insurers to cover, such as diabetes supplies and education and colorectal cancer screening.

And AHPs would not have to abide solvency standards as rigorous as those set by many states, so some may not have enough cash reserves on hand to pay claims.

AHP legislation (HR 525),which President Bush and congressional Republicans have promoted as a way to encourage small businesses to band together to buy health insurance for their workers, passed a House panel in March and the Senate has held hearings on companion legislation.

AHP supporters say the complexity of complying with many different state insurance laws has discouraged small businesses from joining together to negotiate better prices for health insurance. Bypassing the state laws, they say, would help clear the bureaucratic path for AHPs and make health coverage available to more workers.

But Democrats and others who oppose the legislation have said they are concerned that insurers would have no incentive to cover preventive care or some expensive procedures if the law did not require them to do so. Kate Sullivan Hare, executive director of health policy at the U.S. Chamber of Commerce, said insurers offering AHPs would have to provide a comprehensive benefit package in order to be competitive with plans already on the market.

If a certain treatment or medical procedure is proven to be cost-effective "of course a health plan is going to be covering it," she said. She also said the plans would be required to be certified by the Department of Labor and pay annually into a fund that would cover claims of self-insured AHPs that became insolvent.

Opponents of AHPs predict that insurers will "cherry-pick" the healthiest individuals to cover, which will remove them from the greater risk pool and drive up health care insurance for everyone.

"Rather than lowering premium costs, research has found that a majority of small businesses will see their premiums go up under AHPs," said Debra L. Ness, president of the National Partnership for Women & Families. "Far from expanding coverage, AHPs could actually increase the ranks of the uninsured."

AHP opponents also point to findings from the Congressional Budget Office (CBO) that say while about 8.5 million people would obtain coverage from AHPs, under current law AHP enrollees would have been insured in the state-regulated market rather than being uninsured. CBO also estimates that about 10,000 people would lose coverage in response to rising premiums in the small-group market.

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Medicaid Caps Would Increase Uninsured, Erode Recession Buffer, Study Says

MAY 9, 2005 -- Preliminary results of a study released Monday by the Economic and Social Research Institute say if Medicaid had been capped at enrollment levels that existed in the program in 1999, the number of uninsured would stand at 50 million rather than 45 million. Capping Medicaid spending "could create a serious risk of deepening future recessions," said Stan Dorn, a researcher at the institute.

Although the Bush administration denies that it aims to shift into block grants the optional part of the program, which accounts for two-thirds of its overall spending, critics say the proposal to give states flexibility in managing optional populations and optional benefits amounts to much the same thing. The administration counters that it is trying to find ways to extend basic coverage to more people as states rein in Medicaid spending by clamping down on coverage of optional populations.

"Medicaid may play a crucial role in helping the country recover from recession," Dorn said at a Washington forum sponsored by the Joint Center for Political and Economic Studies. Under Medicaid's entitlement structure, enrollment and outlays rise as the economy worsens, providing a buffer against rising lack of insurance and an automatic economic stimulus to counter a downturn.

Citing U.S. Labor Department data, Dorn said that during recessions, the Unemployment Insurance (UI) program reduces the total loss of real Gross Domestic Product by 15 percent to 17 percent. Based on his analysis of data gathered by the U.S. Commerce Department and the Urban Institute, Dorn added that "during recent economic downturns, Medicaid and UI appear to have provided economic stimulus of comparable magnitude.

"The African-American community has a large stake in this issue. Among African-Americans, Medicaid covers 44 percent of all children, 72 percent of poor children, 38 percent of poor adults, and 38 percent of poor seniors," Dorn said, citing U.S. Census data. Dorn also said unemployment rates rise faster for African-Americans during economic downturns—three times faster, for example, from 2001 to 2004, based on U.S. Labor Department data. "African-Americans disproportionately suffer from health problems like hypertension and diabetes," he said. "The health consequences from losing Medicaid or losing employment can thus be quite severe."

Dorn said caps on spending or enrollment would eliminate much of this automatic feature, leaving it to policymakers to decide whether they should intervene with stimulus spending, and that process likely would occur too slowly, causing any possible fiscal intervention to come too late.

Dorn said Medicaid cost growth can be reduced without capping spending or enrollment, and he credited the Bush administration for offering specific proposals to do so, such as limits on asset transfers and curbs on the ability of states to increase federal Medicaid matching funds through dubious accounting practices. He also cited greater use of home- and community-based care, tighter payment rules for drugs and integrated systems of care for those eligible for both Medicare and Medicaid.

While Medicaid now has a counter-cyclical economic effect, that impact is lessened by state constitutional requirements for balanced budgets, Dorn said. The result is that states must cut Medicaid spending just when laid-off workers need the most help and the economy needs the most stimulus. A fix for that problem would be to boost federal matching rates automatically by up to three percent during economic downturns, he said.

Gary Karr, spokesman for the Centers for Medicare and Medicaid Services (CMS), said states already are limiting enrollment of optional populations as they cope with rising Medicaid budgets. The administration aims through its flexibility proposals to give states more power to shape benefit packages for optional populations, a strategy that will mean more people will have basic coverage than if states drop entire categories of optional populations.

Karr said it is a positive development that other groups including the institute endorse proposals to limit asset transfers and expand home and community-based care. The administration's overall goal is not "an arbitrary cap," Karr said, but less rigid rules that allow more people to be covered at a lower cost.

Dr. Louis Sullivan, who moderated the event, noted that things were much the same 15 years ago when he was Health and Human Services secretary in President George Bush's administration. "We are still trying to expand coverage and rein in costs," he said, but today the concern is that reining in costs will harm coverage.

The Economic and Social Research Institute describes itself as "a nonprofit, nonpartisan institute that conducts research and studies directed at enhancing the effectiveness of social programs."

The center says its mission is to illuminates the major public policy debates through research and analysis, and information dissemination in order to "improve the socioeconomic status of black Americans and other minorities."

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Poll: 'Pay For Performance' Best Way to Cut Health Care Costs

MAY 13, 2005 -- Tying providers' pay to the quality of the medical care is the most effective way to cut health care costs, according to a Commonwealth Fund poll released Friday.

More than half of those surveyed, or 57 percent, rated "pay for performance" as an "extremely or very effective way" to reduce health care costs.

Federal officials and policy wonks are touting pay for performance as a way to improve medical care for Medicare beneficiaries and spend federal health care dollars efficiently.

"Pay for performance has been gaining attention as an effective strategy of improving quality of care," Commonwealth Fund President Karen Davis wrote in a column posted on the Fund's website. "Health care opinion leaders view pay for performance not just as a way to reward quality, but as a strategy to raise efficiency in health care delivery."

In another sign Medicare is moving toward a pay for performance system, on May 3, Centers for Medicare and Medicaid Services administrator Mark B. McClellan trumpeted the preliminary results of a pilot program showing that the lure of higher payments goaded hospitals into improving their quality of care. Separately, federal official and medical society representatives have announced a "starter set" of measures of care given by physicians outside the hospital.

The Medicare Payment Advisory Commission (MedPAC), which advises Congress on payment issues, has urged lawmakers to establish a "quality incentive payment policy" for hospitals, home health agencies and doctors. MedPAC's recommendations include setting aside 1 percent of current payments and giving it to caregivers who improve the quality of their care or meet quality benchmarks.

As part of the Medicare drug bill (PL 108-173), hospitals were given higher Medicare payments to report data on quality performance measures. Performance data is also available for skilled nursing facilities, home care agencies, and managed care plans. Lawmakers could use that data to move to pay for performance systems for each of those health care sectors.

The Commonwealth Fund Health Care Opinion survey, an online survey of U.S. experts in health care practice and policy, asked respondents to rate the effectiveness of several strategies to reduce health care costs.

Fifty-six percent said improving disease management and primary care case management would be extremely or very effective, while 52 percent said that using evidence-based guidelines to determine when a test or procedure should be done would help lower costs.

Other cost-saving strategies included expanding the use of information technology (46 percent) and having all health care payers, including Medicare and Medicaid, adopt common payment methods and rates (44 percent). Less than one-third, or 31 percent, of those surveyed said that having patients pay a substantially higher share of their health care costs would help lower health care costs.

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Study: Medicaid Patients Can't Always Pay for Prescriptions

MAY 13, 2005 -- The Center for Studying Health System Change (HSC), a nonpartisan policy research organization, reported that in 2003 more than one-fifth of all adult Medicaid enrollees reported that they couldn't afford to get at least one prescription filled.

Although all states offer prescription drug coverage for most Medicaid beneficiaries, 22 percent of Medicaid beneficiaries aged 18 and older said they couldn't afford to get a prescription filled in the previous year, according to findings from HSC's Community Tracking Study Household Survey.

The poll was a nationally representative survey involving 46,600 people in 2003 and 60,000 people in 2001, HSC said.

The percentage of Medicaid beneficiaries reporting that they couldn't afford at least one prescription in the previous year was about the same as the comparable figure for uninsured Americans—22 percent versus 26 percent. In contrast, about 9 percent of adults with employer-sponsored health coverage said they couldn't afford a prescribed drug in the previous year.

While Medicaid cost-containment methods vary from state to state, the most common include imposing nominal co-payments, setting dispensing limits that restrict the number of prescriptions, mandating substitution of generic drugs for brand-name drugs and requiring prior authorization for certain drugs.

The HSC findings were reported in the May/June edition of the journal Health Affairs.

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