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May 2006

Washington Health Policy Week in Review Archive eb761973-4f0c-4fc0-ac7d-39af2a9d68fe

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From the CQ Newsroom: Grassley Bill Would Waive Penalty for Late Enrollment in Drug Benefit

MAY 16, 2006 -- One day after the deadline for seniors to sign up for a Medicare prescription drug plan without incurring a late fee, key senators backed legislation to waive the penalty for those enrolling later this year.

Finance Chairman Charles E. Grassley, R-Iowa—one of the architects of the 2003 Medicare law (PL 108-173)—introduced a bill Tuesday, saying he hoped to get a unanimous consent agreement and move it through the Senate.

The draft bill would waive the penalty charged to seniors who enroll in a drug plan during the next open enrollment period, which begins in mid-November. It also would authorize $18 million for outreach efforts to help seniors learn about the benefit and be ready to sign up this fall.

Under the 2003 law, seniors who are eligible for Medicare but signed up for a plan this year after May 15 would be charged an additional 1 percent of their premiums for each month they delay enrolling. If the penalty is not waived, that would mean seniors who sign up during the next enrollment period would have to pay a lifetime surcharge of 7 percent.

Grassley, joined by bill cosponsors Mike DeWine, R-Ohio, Max Baucus, D-Mont., and Bill Nelson, D-Fla., at a news conference Tuesday, said he had not endorsed a waiver of the penalty fee earlier because he wanted to encourage people to avoid procrastinating and get drug coverage as soon as possible.
He acknowledged that seniors who rushed to sign up by the May 15 deadline might be upset at the reprieve for latecomers. "Seniors could legitimately see this as unfair," he said. "But on the other hand, we are dealing with a brand new program and we want to give people the opportunity to get acquainted with it."

The Bush administration has backed a firm May 15 deadline, but Centers for Medicare and Medicaid Services Administrator Mark B. McClellan has said the decision will ultimately be up to Congress. On May 9, the administration announced that low-income seniors would not be charged a penalty if they sign up after the deadline this year.
The bill is expected to cost about $1.7 billion, which would be offset by funds provided in the 2003 law intended to entice preferred provider organizations to offer Medicare coverage in under-served regions.

The senators said they expect broad backing for their bill. A similar measure by Nelson won 49 votes on the Senate floor when he tried to attach it as an amendment to the fiscal 2007 budget resolution (S Con Res 83). Now, with Grassley's support, the proposal is expected to face little resistance.
In the House, Nancy L. Johnson, R-Conn., chairwoman of the Energy and Commerce Subcommittee on Health, said she will introduce a bill this week that would waive the late penalty for seniors signing up later this year.

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Leavitt Calls Drug Benefit Enrollment 'An American Success'

MAY 16, 2006 -- Against a backdrop of Democratic complaints about the design and implementation of the program, seemingly exhausted but exhilarated Department of Health and Human Services (HHS) officials Tuesday sought to cast the Medicare drug benefit enrollment process that drew to a close Monday at midnight as a victory for the American people.

"It needs to be noted what a remarkable American experience this was," HHS Secretary Michael O. Leavitt told an afternoon press briefing. "The American people ought to be proud of themselves," he said, calling attention to a wide network of volunteers that helped seniors enroll in the program. "There was a network of caring that was observable during the past six months," Leavitt declared.

Centers for Medicare and Medicaid Services (CMS) Administrator Mark B. McClellan added that the enrollment process was "a historic success" and predicted that the network of thousands of volunteers and outside groups that aided the enrollment effort would stay in place to educate seniors about getting the most out of the benefit by taking prescription drugs properly, for example.

McClellan said CMS is "very confident" that "38 million plus" of the program's 43 million enrollees now have drug coverage.
McClellan noted that the most recent tally for enrollment in stand-alone Medicare prescription drug plans was about 9 million, with an added million or so signing up in Medicare Advantage plans with drug coverage since the start of the drug benefit in January. The combined sum of 10 million or so likely expanded by one million or more in the final days of the enrollment period, McClellan added.

But McClellan and Leavitt were non-committal about bipartisan legislation proposed Tuesday by Sen. Charles E. Grassley, R-Iowa, that seeks to boost the enrollment total further by waiving for the remainder of the year a financial penalty for late enrollment in the Medicare drug benefit. And McClellan expressed doubts about the method Grassley would use to pay the $1.7 billion five-year cost of dropping the penalty, namely taking money from a "stabilization fund" intended to ensure that health plans participate in the Medicare Advantage program.
Leavitt said of the proposed legislation, "There will be value in waiting to see whether or not it is needed. We don't have a lot of the facts, yet. We don't know yet what the exact number of enrollment will have been."

But Leavitt said that of the remaining 4.5 million Medicare beneficiaries without some form of drug coverage, about 3 million are eligible for low-income drug coverage for which no late penalty will be assessed. So at issue in the legislation are fewer than two million people.

"You're talking about a million and a half people or so," Leavitt said. "That'll be Congress' decision, but it might be well for them to determine what it looks like a week from now."

"When you have new legislation, you always have to find a new way to pay for it," McClellan cautioned. The administration would not want to do so by taking away from other "important health care priorities," he said. Next year Medicare Advantage plans "are going to see a much smaller increase than in the past years" — about 1.1 percent on average — "so it . . . won't be a good time to tighten down on payments to those health plans that are already saving more and more seniors a lot of money."

The two officials announced a remarkable surge of applications in the hours leading up to the midnight deadline. On Monday, more than 143,000 people enrolled online, Leavitt said, adding that "in the last few days we've had more than 500,000 online enrollments." And on Monday, he said, Medicare logged more than 640,000 calls on its 1-800 line. "There are so many people who have worked tirelessly," McClellan said. "Our staff cared about making this program work."

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McClellan Says Preventive Care Next Focus for CMS

MAY 19, 2006 -- With the May 15 Medicare prescription drug plan enrollment deadline over, program officials are gearing up for another major campaign — increasing beneficiaries' use of preventive services, Centers for Medicare and Medicaid Services Administrator Mark B. McClellan said Friday.

At a luncheon briefing co-sponsored by the Galen Institute and the Council for Affordable Health Insurance, McClellan said CMS officials are now tracking how beneficiaries use the program's preventive services to make sure that beneficiaries who need those services are receiving them. One possible improvement would be to increase screenings for diabetes and heart disease among beneficiaries in minority groups, McClellan said.

With Medicare now covering prescription drugs, "we've closed the benefit gap. The next step is to close the prevention gap," McClellan said.

Preventive services within Medicare include a one-time physical for new enrollees, cardiovascular screening, cancer screenings and flu shots. To increase the awareness and use of these benefits, McClellan said he envisions CMS officials working with community organizations throughout the country, just as they did to promote enrollment in the drug benefit.

"The grassroots approach in Medicare is here to stay," he said.

Improving beneficiaries' use of preventive services is part of McClellan's larger vision of personalizing Medicare benefits for enrollees. The program must do more to help beneficiaries manage their medical care rather than just paying the bills for it, he said.

McClellan also told the health policy analysts and journalists in attendance that health savings accounts, or HSAs, including both drug coverage and health benefits, are likely to be part of the coverage choices offered to Medicare beneficiaries next year.

The accounts, which were created in the 2003 Medicare drug law (PL 108-173), allow individuals who sign up for high-deductible health plans to contribute and withdraw funds to cover health care costs tax-free. Proponents of HSAs say that when patients are forced to pay more costs out of pocket, they will begin to comparison shop and request quality data, eventually driving down health care costs.

McClellan said 90 percent of Medicare beneficiaries enrolled in the drug benefit selected a plan that was different than the standard benefits package designed in the Medicare drug law. According to McClellan, beneficiaries are selecting plans with lower or no deductibles or plans that fill in the gap in coverage known as the "doughnut hole"—the part of the benefit in which Medicare picks up none of the costs of a prescription until yearly out-of-pocket prescription drug outlays grow large enough to trigger "catastrophic" protection, in which Medicare pays 95 percent of prescription costs.

McClellan predicted that a strong market would remain for Medicare prescription drug plans offered to beneficiaries in Medicare's traditional fee-for-service programs, but he said he also is seeing "a lot of growth" in Medicare Advantage plans that offer drug coverage and other health care benefits.

"You're going to see plans making their reputation over the next year," McClellan said.

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Medicaid Officials Warn Dual Eligibles Could Face More Coverage Disruptions

MAY 18, 2006 -- Coverage disruptions that occurred for "dual eligibles" who were moved from Medicaid to Medicare for their drug coverage could happen again next year, according to interviews with state Medicaid officials conducted on behalf of the Kaiser Commission on Medicaid and the Uninsured.

Changes in plan options and in the low-income subsidy benchmark premium could result in the need for many duals to select or be auto-enrolled into new plans, raising administrative, fiscal and access issues similar to those encountered when six million duals who had been receiving drug coverage from Medicaid were switched to the Medicare prescription drug program on Jan. 1, according to findings that were released at a Kaiser Family Foundation forum Thursday.

Other problems the Medicaid officials cited in the report include:

  • While implementation problems were anticipated, the Centers for Medicare and Medicaid Services (CMS) was unable in some cases—due to statutory limitations—or unwilling in others to respond to issues that states had raised in advance about transferring all duals to Medicare for drug coverage.
  • While the downward revision of the "clawback" amount in February 2006 may have been good news for states, the fiscal impact remains unclear for many states. The Medicare drug benefit requires the Medicare program to pay prescription costs for people in Medicaid who had previously been partially covered by the states. In turn, states are required to pay back to the government a smaller contribution—known as a clawback—from some of the money they save. While lower clawback amounts could reduce expected costs and result in state savings faster than previously anticipated, more evaluation is needed.
  • Concerns remain that CMS' process to repay states for costs they incurred during the transition of duals to the Medicare drug program may not be applied consistently across all states. State officials remained concerned about their financial obligation under the clawback.
  • An array of concerns remain with duals and implementation of the Medicare drug benefit, including the ability of duals to meet copayment requirements and the possible health consequences and the Medicaid "spend down" eligibility process, which refers to beneficiaries eligible for "medically needy" programs who have high medical expenses and are allowed to "spend down" income that would otherwise exceed Medicaid thresholds in order to attain eligibility.

CMS spokesman Peter Ashkenaz said the agency has addressed many of the concerns raised in the report and improvements are ongoing. "People are getting their prescriptions filled," Ashkenaz said, adding that the Medicare drug program is filling 3 million prescriptions a day.

Ashkenaz also said states will be reimbursed for their costs after they submit their information to CMS in the format they have agreed to.

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Panel Recommends Removing 'Lock In' Policy for Medicare Drug Plans

MAY 19, 2006 -- A panel of Medicare experts at a presentation on May 12 touted ending locked-in enrollment in Medicare Advantage plans and allowing beneficiaries to switch plans.

At the presentation, hosted by the Alliance for Health Reform, panelists discussed the enrollment numbers for Medicare Advantage plans, the out-of-pocket costs of beneficiaries and proposed changes to the plan. The most discussed recommendation was changing the "lock in" provision for Medicare plans.

Under the new Medicare drug law (PL 108-173), Medicare beneficiaries are not able to switch back and forth between drug plans and are locked into one plan for a year at a time.

Brian Biles, a professor in the Department of Health Policy at George Washington University, said that with the potential regarding the many Medicare Advantage plan benefit packages and the risk of out-of-pocket costs, enrollees should not be locked into a Medicare Advantage enrollment plan for an entire year.

Biles argued the lock-in should be suspended until new limits on out-of-pocket costs and improved risk adjustments are implemented.

He presented data showing that out-of-pocket costs vary depending on the state and health of the patient. The sickest 5 percent of the elderly pay 43 percent of the total cost and an average of $63,000 a year, while the healthiest 50 percent pay 4 percent of the total costs and an average of $550 a year. Thus, Medicare overpays for the healthy enrollees by $180 per year and underpays for the sickest enrollees by $4,200.

Marsha Gold, senior fellow at Mathematica Policy Research, presented findings on the Centers for Medicare and Medicaid Services' landscape. According to November 2005 data, 8 percent of Medicare Advantage enrollees paid no premium for regional PPOs and 43 percent paid no premium for HMOs.

Biles said his research found some plans with $100 to $300 a day copays for hospital care.

Karen Ignagni, president and chief executive officer of America's Health Insurance Plans, argued that data from a study by the Commonwealth Fund found that out-of-pocket costs are instead lower. According to Ignagni, the costs are lower for those in good health in all 88 Medicare Advantage plans studied, for those in fair health in 86 out of the 88 studied and for those in poor health for 69 out of the 88.

While Ignagni said she supports a suspension to the lock-in policy, she pointed to a high satisfaction among enrollees, with less than 2 percent of enrollees disenrolling from Medicare Advantage plans.

"It's clear that a number of individuals looked at Medicare Advantage plans and made a judgment based not on experience but on a political basis," Ignagni argued.

According to Ignagni, the current lock-in policy dissuades beneficiaries from signing up with a plan. Simplifying the information beneficiaries receive could assist in overcoming this barrier, she said.

She admitted that "Medicare Advantage was on life support in 2005" but touted rebuilding since.

Suspending the annual lock-in policy would reinstate previous Medicare policy that was in place for Medicare+Choice and Medicare Advantage programs from 1997 through 2005.

Abby Block, director of the Centers for Beneficiary Choices at CMS, would not state a position on the lock-in but instead touted the large number of Medicare Advantage plans available.

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QIOS Need Clean Bill of Health Before Broader Role, Grassley and Baucus Say

MAY 16, 2006 -- The leaders of the Senate Finance Committee are urging Medicare to hold off on broadening the role of organizations hired by the program to improve quality of care. Questions about possible financial improprieties involving Quality Improvement Organizations (QIOs) need to be answered before that happens, say Committee Chairman Charles E. Grassley, R-Iowa, and ranking Democrat Max Baucus of Montana.

In addition "to these potentially serious problems, there is still a need for more thorough evaluation of the QIOs' effectiveness in improving the quality of health care," the senators said in a May 12 letter to Mark B. McClellan, administrator of the Centers for Medicare and Medicaid Services (CMS).

"We would like our staffs to discuss legislative and administrative changes necessary to ensure that QIOs improve the quality of health care for Medicare beneficiaries, use resources judiciously and adhere to ethical business practices," the senators wrote.

The lobby that represents QIOs recommended to CMS on April 27 that the agency lengthen from three years to five years the contracts awarded to the organizations to assess efficiency and quality in Medicare. The American Health Quality Association (AHQA) also urged that QIOs receive more money to carry out broader responsibilities.

QIOs have grown over the years in terms of the quality improvement programs they are supposed to carry out for Medicare, ranging from helping nursing homes adopt work processes to prevent bedsores to prodding doctors to use health information technology. Grassley, however, has raised a number of questions about salaries paid to QIO executives and board members and payments for their travel expenses.

"Medicare shouldn't promise to pay more for a pig in a poke," Grassley said in a May 12 press release. The Department of Health and Human Services Office of the Inspector General, the Government Accountability Office and the Finance Committee are still gathering facts in investigations of QIOs, he said.

An AHQA official said that QIOs agree that reforms are needed and that any further problems uncovered by the various federal investigations should be addressed by the industry.

"We've stepped up to the plate and say we need to respond to this," said Todd Ketch, AHQA's vice president for government affairs.

Ketch added that 50 of 53 QIOs have adopted standards developed by the industry governing how boards are structured, executive and board compensation, and appropriate travel. He added that AHQA has proposed administrative and legislative changes to CMS to improve QIO accountability.

Ketch said AHQA's call for extending the contract is consistent with the recommendations of a recent Institute of Medicine (IoM) report. Longer contracts would make it easier to evaluate how effective QIO programs are, he said. Ketch also noted that the IoM report said the assistance QIOs provide to improve quality should be available to all providers. That requires more funding for QIOs, he said.

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