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November 14, 2011

Washington Health Policy Week in Review Archive 3a978bf8-fa14-4016-a588-e36fe3acbcb6

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Sickest Adults in U.S. Fare Worse Than International Counterparts Because of Cost

By CQ Staff

November 9, 2011 -- A new international study shows that chronically and seriously ill adults fare the best when they have a stable relationship with a health care provider. And in the United States, the biggest problem revolves around the inability of these patients to get the care they need because they cannot afford it.

According to a Commonwealth Fund study being published last week, sicker adults in the United Kingdom and Switzerland—which have very different health systems—were most likely to have a medical home, with nearly three-quarters connected to practices that have characteristics of a medical home, compared to about 33 percent to 65 percent in the other nine countries. Chronically and seriously ill adults who received care from such a medical home were less likely to report medical errors, test duplication and other care coordination failures.

U.K. and Swiss patients also reported more positive health care experiences than sicker adults in the other countries: They were more likely to be able to get a same- or next-day appointment when sick and to have easy access to after-hours care, and they were less likely to experience poorly coordinated care, according to a release explaining the study.

The 2011 survey of more than 18,000 sick adults in Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom and the United States included people who reported they were in fair or poor health, had surgery or had been hospitalized in the past two years, or had received care for a serious or chronic illness, injury or disability in the past year. The study identified patients as having a medical home if they reported having a regular source of care that knows their medical history, is accessible, and helps coordinate care received from other providers.

For sick U.S. adults the problem is cost. Forty-two percent reported not visiting a doctor, not filling a prescription or skipping medication doses, or not getting recommended care—a significantly higher proportion than in all the other countries, and more than double the rates in Canada, France, the Netherlands, Norway, Sweden, Switzerland and the U.K.

"Despite spending far more on health care than any other country, the United States practically stands alone when it comes to people with illness or chronic conditions having difficulty affording health care and paying medical bills," Commonwealth Fund president Karen Davis said. She said such data points to the need for the coverage benefits in the health overhaul law as well as its provisions to control costs.

The survey was conducted by Harris Interactive, Inc. Telephone interviews were done between March 2011 and June 2011. The survey screened random samples of adults 18 and older to identify "sicker" adults—those who met at least one of four criteria: They rated their health as fair or poor; they reported receiving medical care for serious chronic illness, injury or disability in the past year; they had surgery or had been hospitalized in the past two years. The final study included 1,500 adults in Australia, 3,958 in Canada, 1,001 in France, 1,200 in Germany, 1,000 in the Netherlands, 750 in New Zealand, 753 in Norway, 4,804 in Sweden, 1,500 in Switzerland, 1,001 in the United Kingdom and 1,200 in the United States. 

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Seniors Face Uncertain Costs as Lawmakers Eye Market-Based Medicare

By John Reichard, CQ HealthBeat Editor

November 11, 2011 -- Congress faces enormous pressure to restructure Medicare after the next election regardless of how deeply the deficit reduction package ends up reducing the cost of the entitlement program.

That is because Medicare's costs are on track to jump at least a projected 6 percent a year, dwarfing whatever level of savings the budget control law (PL 112-25) produces through automatic cuts or a proposal being developed by the Joint Select Committee on Deficit Reduction. Lawmakers already are examining how best to slow the program's rising costs while preserving core benefits and not alienating the program's politically powerful supporters.

There is fairly widespread agreement that under a restructured Medicare, many beneficiaries will no longer have their pick of doctors and hospitals. Health care will be increasingly managed and beneficiaries will have less access to the most technologically advanced medical tests and procedures. Beneficiaries are likely to pay higher out-of-pocket costs, particularly if they want to stay in traditional Medicare. Some analysts foresee a market-based system in which competition among health plans slows cost growth but keeps beneficiaries' premiums affordable. Others say that system would shift too many costs onto enrollees.

Last spring, House Budget Chairman Paul D. Ryan, R-Wis., proposed transforming Medicare into a premium support program under which seniors would select their coverage from a menu of competing plans with a set payment to help defray premium costs. Others have sought to soften the impact of Ryan's plan on beneficiaries. Former Congressional Budget Office (CBO) Director Alice Rivlin and former New Mexico Sen. Pete Domenici developed a plan that has drawn a less hostile reaction from Democrats and gained more attention now that GOP presidential hopeful Mitt Romney has endorsed its broad outlines.

The Rivlin-Domenici proposal, like Ryan's, would have private insurers set premiums for a basic set of Medicare benefits. Premiums would vary based on factors such as the size of networks and quality of providers; beneficiaries would then pick from a menu of plans. Each year, the government would specify how much of the premium it would cover. Seniors would be on the hook for any charges above that, but they could save money by selecting a plan with a premium below the federal subsidy.

The Ryan plan would increase the federal contribution each year by a percentage equal to the growth in the gross domestic product (GDP). That is well below the current rate of growth and would impose heavier costs on beneficiaries each year, the CBO has said. The Rivlin-Domenici plan would raise the contribution by GDP plus one percentage point—easing the pocketbook hit. Still, the federal contribution would be less than the projected growth in costs, and that, Rivlin says, would save Medicare $423 billion in the first decade and $1 trillion over 15 years.

Starting in 2016, beneficiaries would choose their health plan from regional Medicare exchanges. Unlike Ryan's plan, Rivlin and Domenici would include traditional Medicare as one choice. The federal contribution would be tied to the cost of the second-cheapest approved plan or to traditional fee-for-service Medicare in each area, whichever is lower. Rivlin said using the second-lowest bid would give seniors a chance to save money.

Resistance to Shifting Costs on Elderly

In some parts of the country, such as rural areas or the upper Midwest, where analysts say providers deliver care more efficiently, traditional Medicare would be the lowest-priced option on the exchange, says University of Minnesota economist Roger Feldman. But Feldman, coauthor of a similar bidding approach he says would save Medicare $500 billion over 10 years, says competitive pressure would lead bidders to offer only basic benefits, ending the relatively generous coverage now provided by plans in the Medicare Advantage program. In fact, beneficiaries could view the options offered by an exchange menu as either paying overly high premiums for traditional Medicare or settling for cut-rate medicine in a managed-care plan.

Paul Ginsburg, a consultant to Rivlin, said seniors are likely to feel the pinch. "If the net effect is to save money, I'm not sure that consumers will be that pleased by it," he says. He notes that the plan does have features consumers may like, such as tweaking Medicare benefits to add protection against catastrophic medical expenses. It would cap out-of-pocket costs, something that could limit the need for supplemental Medicare insurance. That would help shield seniors against exorbitant medical bills and save Medicare money, according to preliminary data from the Medicare Payment Advisory Commission.

But insurance industry analyst Robert Laszewski says the current proposals shift too much financial risk from the government to the beneficiary. "Everything's on the back of Grandma," he says. "How is Grandma going to do this?" Capping expenditures at GDP plus one would solve America's health spending problem, but, he says, insurers, doctors and hospitals also should have to absorb some costs if expenses increase. "Most of the risk needs to be with the big boys in the system."

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Medical Loss Ratio Rule Undergoing Final Review Before Publication

By Rebecca Adams, CQ HealthBeat Associate Editor

November 10, 2011 -- The Office of Management and Budget is reviewing a final rule for medical loss ratios that should give some guidance as to how the so-called mini-med limited benefit plans will be allowed to operate.

A review led by OMB officials is the last step before regulations are published in the Federal Register.

The final rule will build on information that HHS officials released almost a year ago, when they released an interim final rule. The regulation requires insurers in the individual and small-group markets to spend at least 80 percent of premiums on health care services and quality improvement. Insurers in the large group market must spend at least 85 percent on such costs rather than administrative expenses. The interim final rule implementing MLR requirements was published Dec. 1, 2010, and tweaked on Dec. 30, 2010.

Health industry lobbyists don't expect major changes for most plans in the final rule.

But one thing that the final rule is expected to change is the way that limited benefit plans such as mini-med plans work going forward.

Last year's interim final rule had a provision affecting mini-med and expatriate plans in 2011 so that insurers and employers would have time to adjust to the new requirements under the medical loss ratio rule.

Mini-med and expatriate policies offer limited coverage that would ordinarily run afoul of the new rules. But employers said that they offered them because the modest coverage was better than nothing.

Obama administration officials were persuaded to temporarily adjust the way that the administrative verses benefit spending of these plans were considered under the MLR requirements. Under a waiver process, HHS officials have allowed existing mini-med plans to continue in the short term.

Under last year's interim final rule, insurers were supposed to report data about the mini-meds' expenses and profits to HHS officials early in the year so that the administration would have better information about them before publishing a final medical loss ratio rule. The changes to the MLR formula that allowed mini-med plans to continue were supposed to apply only for 2011.

Rules are often, although not always, published within a week after OMB officials receive them. Sometimes the review process moves more quickly and sometimes, as was seen earlier this year with a proposed Medicare rule on accountable care organizations, OMB officials work on a rule for more than a month. OMB employees make sure that regulations comply with an administration's overall objectives and that any protests from officials at another agencies are addressed.

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CMS Says Parents Have High Marks for Medicaid, CHIP

By Dena Bunis, CQ HealthBeat Managing Editor

November 7, 2011 -- Parents whose children get their health services through Medicaid or the Children's Health Insurance Program (CHIP) say they have good access to doctors and that their children are getting good care, according to a federal survey that the Centers for Medicare and Medicare Services (CMS) will release this week.

Sixty-six percent of the parents surveyed said they were very satisfied with the Medicaid and CHIP programs, compared with 48 percent who have employer-sponsored coverage, according to a news release obtained by HealthBeat. In terms of quality of care, 66 percent of Medicaid and CHIP parents were very satisfied compared to 55 percent of those with employer coverage.

Knowledge Networks conducted the online survey and randomly sampled 9,000 households from its online panel. Respondents were then screened to include only those who are the parent or guardian of at least one child under the age of 19 and live in a household whose income is at or below 250 percent of the federal poverty level. The margin of error was plus or minus 2.2 percentage points.

"These results show how Medicaid and CHIP are making a positive difference in providing high-quality care and peace of mind for families," CMS Administrator Donald M. Berwick said in a statement that will soon be released. CMS official Marilyn Tavener is scheduled to release the data at the National Association of Medicaid Directors conference in Arlington, Va.

Highlights of the survey include:

  • Seven in 10 surveyed rated Medicaid and CHIP programs as very or somewhat good.
  • 57 percent of parents were very satisfied with how quickly they could get an appointment with a medical doctor under Medicaid and CHIP, compared to 53 percent with employer coverage.

"This survey amplifies the voice of consumers, and we are listening," said Cindy Mann, director of the Center for Medicaid and CHIP Services. "We continue to work on streamlining the enrollment process and on providing families a variety of ways they can apply for Medicaid and CHIP coverage. A growing number of states are offering online applications, which parents say they want. CMS is supporting efforts to create and refine online applications so that we can offer the best customer service possible."

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Medicaid Likely Target for Savings Far into the Future, Panel Says

By Rebecca Adams, CQ HealthBeat Associate Editor

November 10, 2011 -- Health policy experts recently warned that deficit reduction efforts affecting Medicaid are only just beginning.

"Think of it as the first play of the Super Bowl," said Tony McCann, a Georgetown University professor who used to run the Maryland Medicaid program. "This is the first step in a very long process."

McCann spoke on a panel at a briefing by the Alliance for Health Reform.

Another panelist, former federal Medicaid director and House Democratic aide Tim Westmoreland, said that now would be a terrible time to cut Medicaid.

"Any cuts today will be tomorrow's workability problems," he said. Cuts would be counterproductive, Westmoreland said, not only because Medicaid creates jobs, but also because if growth reductions are too low, then the program will not be able to function. For instance, many Medicaid patients have a difficult time finding a doctor who will accept Medicaid. That problem would only grow worse if provider payments were cut, he said.

At the end of the briefing, an aide to Republican Sen. Charles E. Grassley of Iowa asked the panel whether it would make more sense to restructure the program.

The aide, Rodney Whitlock, said that a major problem for Medicaid is not that program officials spend too much, although he said he believes the program does spend "a lot." Rather, Whitlock said, the issue is that the program tries to do too much by serving a disparate range of people, including children, people with disabilities and nursing home patients.

"Medicaid is the only program in America that puts all of those people under one program," he said. "Medicaid would be better served if we broke it into its constituent populations."

Westmoreland, after engaging in a brief debate with Whitlock about whether that would produce any savings, finally said: "You might be right."

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Comparative Effectiveness Should Focus on 'Real World' Circumstances, Policy Consultant Suggests

By Nellie Bristol, CQ HealthBeat Associate Editor

November 7, 2011 -- While some European countries are ahead of the United States in influencing drug prices through judgments on how their effectiveness compares with existing products, they may be making determinations prematurely because they don't adequately take into account patient experiences with the therapies, a health policy consultant said.

Some European countries, including the United Kingdon and Germany, have programs to determine the value added of potential new products, but they largely use only clinical data for the determinations and make judgments when the product is launched, Ian Spatz of Manatt Health Solutions said at a Capitol Hill forum sponsored by the Alliance for Health Reform and The Commonwealth Fund.

That approach, he said, may miss advantages that only show up over time when patients are dealing with their own health care providers and in true life situations. "It's much more complicated in the real world," Spatz said. If comparative-effectiveness determinations are made based only on clinical data, "we could make some substantial mistakes," he added.

International participants at last week's briefing event discussed drug comparisons and pricing in several European countries as well as the United States. Drug prices in the United States are substantially higher than in other member countries of the Organisation for Economic Co-operation and Development, reaching $956 per capita in 2009 versus $750 in the next-highest country, Canada, and a low of $254 in New Zealand.

Comparative-effectiveness efforts bolstered by the stimulus law (PL 111-5) and the health care overhaul(PL 111-148, PL-111-152) give the United States an opportunity to determine which therapies are the most effective and under what circumstances. Spatz said new mechanisms for performing the studies will be useful, but he called on other countries to provide relevant data as well.

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