By Emily Ethridge, CQ Staff

November 10, 2010 — Making a pitch that physicians, lawyers and consumers must share the responsibility for reining in health care costs, the co-chairmen of President Obama's National Commission on Fiscal Responsibility and Reform on Wednesday called for reduced payment rates to physicians who participate in Medicare and increased cost sharing by the enrollees themselves.

In draft recommendations to reduce the nation's debt, Democrat Erskine Bowles and Republican Alan K. Simpson also urge the overhaul of medical malpractice laws, a longtime GOP goal, and paying lawyers less to reduce the cost of defensive medicine. The health care overhaul (PL 111-148, PL 111-152) passed this year mostly skimmed over the issue of "tort reform."

The report is the "chairmen's mark," meaning that it is a draft that has not been approved by the 18 members of the commission.

The co-chairmen set a long-term goal to contain the growth rate of federal health care spending after 2020 to no more than the gross domestic product plus 1 percent, with cost growth evaluated every two years. If health care costs grow more quickly, they recommend the president submit suggestions to Congress about how to lower spending, such as increasing premiums or adding a public option to the state-run insurance exchanges.

They recommend changing the widely criticized system used to calculate payment rates for physicians who see Medicare patients, known as the sustainable growth rate formula. They ask the Centers for Medicare and Medicaid Services to replace that formula by 2015, and make "modest reductions" in payment rates to physicians until then.

Since 2003, Congress has averted annual payment cuts to physicians called for under the formula, which is adjusted every year to reflect differences between actual spending and targets set to hold down Medicare spending on physician services. Doctor groups and lawmakers of both parties have called for repealing the formula, but the price tag for a long-term solution, estimated at $300 to $400 billion over 10 years, has been politically and fiscally prohibitive.

Other savings would come from increasing cost-sharing for Medicare enrollees and requiring plans to offer rebates for brand-name drugs as a condition of participating in Medicare Part D. The draft calls for replacing existing Medicare cost-sharing rules with a universal deductible and a cap on catastrophic coverage costs—which they estimate would save $85 billion between 2011 and 2020.

In total, they estimate that fixing the physician payment system would reduce the deficit by $282 billion from 2011 to 2020. Continuing to reimburse physicians at the rates they receive now would cost $276 billion over that time period, according to the draft.

The draft also relies on the new Independent Payment Advisory Board, created under the overhaul to make recommendations for limiting Medicare spending growth, to come up with cost savings. Republican lawmakers have targeted the board as one of their primary targets for repeal.

But the commission leaders said strengthening the board could lead to further cost savings, and suggested applying its proposals to all Medicare providers and to health plans in the state exchanges, and eliminating a provision in the law that allows Congress to discontinue the board.

In addition, the draft calls for expanding successful cost-containment demonstration programs by 2015 and identifying another $200 billion in federal health spending savings. It provides several areas to reduce spending, which are likely to be unpopular with lawmakers, state officials and consumers.

For example, the draft highlights savings from accelerating cuts to Medicare Advantage and home health programs under the health care law, increasing nominal copays for Medicaid recipients and reducing the taxes states can place on Medicaid providers. It also identifies reducing federal spending on Medicaid administrative costs and increasing cost sharing for military retirees under the Tricare program.

By Jane Norman, CQ HealthBeat Associate Editor

November 8, 2010 — The Obama administration on Monday will throw its weight behind a 13-month postponement of looming Medicare physician payment cuts while lawmakers work on a long-term fix.

Health and Human Services Secretary Kathleen Sebelius, in remarks prepared for delivery late Monday afternoon to the Association of American Medical Colleges, said the administration is committed to working with physicians to avert scheduled cuts.

"That starts with preventing the 23 percent cut in Medicare payments to doctors that's scheduled to take effect at the end of the month," Sebelius said in the prepared remarks, obtained by CQ HealthBeat. Such cuts could force doctors out of the program and jeopardize the care of seniors, she said. An additional 1.0 percent cut is slated to go into effect Jan. 1.

"The American Medical Association has proposed a 13-month extension," she said. "And I hope that Congress will act quickly to pass it so that our doctors and seniors can have some peace of mind while we work on a long-term fix."

However, she did not specify in her remarks where Congress should look for funds to pay for either the 13-month fix or a long-term remedy—a stumbling block that has kept lawmakers from reaching agreement on past proposals. The 13-month solution would cost an estimated $17 billion to $20 billion while a long-term fix would cost $300 billion to $400 billion over 10 years.

Sebelius noted that at a Nov. 4 Cabinet meeting, President Obama "stressed that preventing these potentially disastrous cuts must be one of our top priorities." The single biggest step to strengthen Medicare is to ensure the physician payment cuts don't go into effect, she said.

In a news conference Monday, American Medical Association (AMA) President Cecil B. Wilson said the physicians' group was "pulling out the stops" to persuade lawmakers to postpone cuts for 13 months during the lame duck session, during which time it could work out a permanent solution. The group published an ad in USA Today today featuring seniors, a veteran, and an active duty military members calling on lawmakers to prevent a disruption in care, which Wilson said will also run in Washington, D.C. publications next week when Congress reconvenes.

Previously, the AMA had reported that one in five physicians were limiting the number of Medicare patients in their practices because of concerns about a dramatic reimbursement cuts.

Medicare's sustainable growth rate (SGR) formula, mandated by law, triggers bigger and bigger doctor payment cuts as payments to doctors climb. Lawmakers have been scrambling for years to avert them.

To block pending cuts both political parties have piled the cost onto the deficit, but Republicans who will take over control of the House in January are leery. They want to explore ideas for a long-term fix that would require offsets elsewhere in the budget.

The cuts to doctor payments produced by the SGR formula have expanded not only because physician payments have exceeded yearly targets, but also because the costs of short-term legislative patches to block the cuts have not been offset with tax increases or cuts elsewhere in the federal budget.

The AMA long has sought a permanent fix, but that wasn't included in the health care overhaul, much to the distress of many doctors and state medical associations.

The administration and Democrats have faced intense criticism over the health care law during the campaign leading up to the midterm elections and can ill afford the uproar from seniors and the health care community that would result if the Medicare cuts were enacted.

"As the President has said many times, we will ultimately need a permanent fix, so that the livelihoods of the hard-working doctors who care for seniors and people with disabilities are no longer subject to politics," Sebelius said.

"But in the meantime, we don't want any doctor to be stuck in a limbo where they don't know week to week how much they'll be paid for the services they deliver. That's why we're urging Congress to act now to make sure that you can continue to provide the high quality care our seniors depend on every day."

By John Reichard, CQ HealthBeat Editor

November 11, 2010 — Joel Ario, the HHS official who is overseeing the creation of health insurance exchanges under the health care overhaul law, signaled Wednesday that guidance his office will release "within a few weeks" will encourage states to experiment with the menu of plans they will offer.

Speaking to health insurance executives in Chicago, Ario noted two different types of exchanges that illustrate opposite ends of the spectrum in terms of the menu of plans offered: Utah and Massachusetts. He suggested that the guidance will permit both approaches.

Ario told a conference on exchanges hosted by America's Health Insurance Plans that in Utah's exchange, "the emphasis is on unfettered competition and consumer choice." Utha's exchange has been likened to a "farmers' market" in which everyone who wants to sell their product can do so and charge whatever price they want. The state does not bargain with plans for lower rates.

Massachusetts, Ario noted, "is often cited at the other end of the continuum." That state's approach is to use the leverage of the exchange to negotiate for lower premiums and offer a more standardized set of products. "The point here is, the exchanges give a broad set of opportunities to the states" to experiment, Ario said.

The guidance document will also outline the "benchmarks" federal officials will consider in giving out grant money starting in February to establish exchanges. Under the health care overhaul law (PL 11-148, PL 111-152), the federal government must pay all necessary expenses to stand up exchanges. But to keep the funds coming, states must show progress in creating them.

The benchmarks include passing legislation to create exchanges, developing information technology systems, developing governance structures and creating tools to help consumers shop on exchanges.

Ario also said that HHS is going to help states by creating "technical assistance teams" to help set up the exchanges, Ario said. "We're not going to get into the middle of political decisions people are going to make" about their state's particular exchange, he added. But the teams will be ready to roll when states have decided on the exchanges they want and are ready to move ahead.

Conference attendees voiced concern about how quickly states must pass legislation to qualify for establishment grants. One audience member worried that southern states with short legislative sessions next year might feel pressure to pass exchange legislation before they are ready—just to keep grant money coming. But Ario said states will be able to demonstrate progress in other ways.

Ario also noted that assistance is coming from the National Association of Insurance Commissioners (NAIC). An NAIC committee reached agreement Tuesday on modifications to model exchange legislation, he said. The group is aiming to have the model act ready for states before their legislatures reconvene next year.

The HHS official also said some states want the federal government to operate their exchanges, but in a way that adapts to their particular marketplace. There's room for that to happen, he suggested.

Ario said he envisions "three buckets" of competitors in exchanges: insurers that compete nationally; Blue Cross Blue Shield plans operating at the state level; and provider-based insurance plans.

He told insurers that they'll find a friend in his office if they are sincere about competing on price and quality rather than on turning away bad risks as they have in the past.

AHIP President Karen Ignagni introduced Ario at the conference by praising him as a fair regulator. She noted that in addition to a law degree from Harvard, he also holds a degree in divinity from that institution—which "explains everything."

By John Reichard, CQ HealthBeat Editor

November 9, 2010 —The number of Americans—including those in the middle class—who have had periods without health coverage has risen considerably in recent years. That has led people with hypertension, diabetes and asthma to skip care, thus increasing their odds of developing costly complications, according to the findings of an extensive government survey released on Tuesday.

An estimated 59.1 million Americans in the first quarter of 2010 were uninsured for at least part of the year before they were interviewed, according to the National Health Interview Survey. U.S. Census Bureau officials interviewed 90,000 people in 35,000 households.

The analysis was released by CDC as part of its "Vital Signs" reports, which highlight a different public health issue each month.

The 59.1 million figure represented an increase of 400,000 compared with 2009 and 2.7 million compared with 2008, according to CDC.

The lack of coverage strikes many in the middle class, Centers for Disease Control and Prevention Director Thomas Frieden said in a telephone press briefing Tuesday. Among people 18 to 64 years old with family incomes two to three times the federal poverty level, 9.7 million, or 32.1 percent, said they'd had a period without insurance during the previous year. Among people in that age group with incomes three to four times the poverty level, 5.2 million, or 20.6 percent, reported a period of no coverage in the prior year.

The data also showed that the number of Americans without coverage for more than one year grew by 1.3 million in the first quarter of 2010 to a total of 30.4 million. The comparison was with 2009 figures.

"Gaps in insurance coverage are associated with delaying or forgoing health care, irrespective of family income level," the analysis found. "These findings are particularly important for persons with chronic diseases. Approximately 40 percent of persons in the United States have one or more chronic disease, and continuity in the health care they receive is essential to prevent complications, avoidable long-term expenditures, and premature mortality."

People between 18 to 64 without insurance for at least a year were much more likely to skip medical care. But that problem also occurred frequently among those who only went for one to three months without coverage in the prior year.

Those without coverage during the prior year were seven times as likely (27.6 percent versus 4 percent) to forego needed health care because of cost compared with those who were continuously uninsured. They were six times as likely to forego needed care if they had hypertension or diabetes, and five times as likely if they had asthma.

Skipping care for hypertension can lead to stroke and costly rehabilitation, Frieden noted in the briefing. Skipping it for asthma can lead to hospitalization. And for diabetes, the result could be organ failure, blindness, and amputation.

Those with a one-to-three month gap in coverage during the preceding year were three times as likely (26.5 percent versus 7.1 percent) to skip care because of cost. And they were three times as likely to skip needed care if they had hypertension, diabetes or asthma.

The findings illustrate the importance of continuous coverage, the report said, noting that the number of Americans with such coverage is expected to grow under the health care overhaul law. But sharp increases in coverage are increasingly uncertain with Republicans opposed to the law gaining strength in Congress and court challenges of its constitutionality.

By Jane Norman, CQ HealthBeat Associate Editor

November 12, 2010 — The Department of Health and Human Services (HHS) is working on regulations that would allow it to publish additional in-depth health insurance data, including the number of people enrolled in each insurance plan, an agency official told reporters on Friday.

Karen Pollitz, director of the Office of Consumer Support at HHS, said the "secret sauce" of transparency is what's needed to best help consumers understand their choices among insurance plans as the health care law (PL 111-148, PL 111-152) is implemented.

So, she said, HHS will seek to make public the detailed data from insurance companies that has been provided to the government for www.healthcare.gov, a new Web portal authorized by the health care law that allows consumers to compare plan premiums, benefits and more. On Monday the number of plans on the site will double to about 8,000, she said.

Consumers now may compare plans by ZIP code on the Web site, which will continue to grow as more information is added. "There's a lot of interest in the data that underlie what's on healthcare.gov," Pollitz said at a Washington briefing sponsored by Health Affairs magazine.

"A lot of what we know now about the insurance market you can see, but some of it you can't see exactly," she said. "You can rank plans, for example, by enrollment, the most to the least popular plan in a ZIP code. But you can't actually see the enrollment numbers.

"Some folks are interested to see that. A lot of folks are interested to see that. You should be interested to see that. I can see it. It's really interesting."

Pollitz said the still-secret enrollment numbers show how dominant some insurance companies are in certain markets. "Our data show that markets are highly concentrated," she said. "We kind of knew that before. Now we can see just how concentrated they are."

The government is working on a regulation to create public use files for the data, she said. The rulemaking process will require an analysis of data that can be released, but Pollitz said the desire is to get the regulations finished soon so consumers will have access to the information.

"Transparency is all about transparency and everybody should be able to look and apply their own smarts to sort of figuring out what it is we have and understanding how the market works," said Pollitz.

"It's a priority and I really want that out there as quickly as we can," she added.

Robert Zirkelbach, a spokesman for America's Health Insurance Plans, said it's not yet clear to the industry how the information will be presented. It will be important that any publicly distributed health insurance data is accurate, up to date and useful for consumers, he said.

Robert Laszewski, a longtime health insurance analyst and president of the firm Health Policy and Strategy Associates, said plan enrollment numbers might be compiled by state insurance regulators or from government filings for publicly traded companies, but are not now in one central location available for public view.

"For all practical purposes that information does not exist anywhere," he said. "Karen's got it because she requested it of them. My educated guess is she's the only person on earth who's got it."

Laszewski questioned how useful enrollment numbers will be to consumers. It may be important to know that 500,0000 people have bought a certain policy, but the point is whether the product is suitable for the individual enrollee, he said. Consumers also know already which are the biggest insurance companies in their community, he said.

"You can jam in so much information here you actually make it more difficult for the man on the street to find value," he said.

But Pollitz said more information is on the way and it will assist consumers who until now have had to try to wade through confusing policy jargon. HHS, for example, is also authorized under the law to gather data from insurers on items such as how often claims are denied or paid and the reasons why.

"We'll use that to certainly inform oversight but also develop other kinds of measures of plan performance for consumers," she said. "You see two products and one's a whole lot cheaper, but wow, that one denies your claims a whole lot more often."

By Rebecca Adams, CQ HealthBeat Associate Editor

November 8, 2010 -- The Department of Health and Human Services (HHS) is planning a soft launch in December of a Web site—www.healthdata.gov—that will offer government health information that entrepreneurs can use to create new mobile applications, software, Web sites, analytical tools, and other ventures.

HHS officials hope to emulate the model of the National Oceanic and Atmospheric Administration, which provides weather information for free to the public. Companies such as the Weather Channel then package the information in different ways—and make money doing so.

Developers can turn the information "into super-cool applications to make better decisions," said HHS Chief Technology Officer Todd Park.

Companies would be able to use the data to create online educational games, community health Web sites, and online resources to supplement personal health records.

The project builds on President Obama's Open Government Initiative, which requires agencies to make information more interactive and easily accessible to the public.

As part of the project, HHS officials last month also launched their Blue Button Initiative, which allows Medicare beneficiaries and veterans to access and print their personal health records and claims data. HHS officials also have started to provide mobile phone text messages to patients with certain conditions who sign up for the service. For instance, more than 100,000 soon-to-be or new mothers have signed up to get HHS messages reminding them of ways to take care of themselves during pregnancy.

HHS officials are putting more information online and are organizing data better. Some of the data that is or will soon be linked from the agency's open government page include detailed Medicaid documents; HHS Community Health Data Initiative information on the prevalence of disease, quality, costs and service use among Medicare patients; an interactive tool that allows the public to browse Medicare fee-for-service expenses and volumes by state and procedure; clinical trial information; and Food and Drug Administration performance measurements.

In December, that information will be supplemented with several new features as the healthdata.gov website becomes public. One new aspect will be an online community in which people can ask federal officials to make new data available and discuss the resources that are online. The new domain will also include a list of the growing number of public and private applications that use HHS data.

Already, some companies and public health agencies have begun using HHS information to create online health-related programs. In a game called Community Clash by the Boston-based company MeYou Health, players can compare statistics about their community's health on issues such as obesity, smoking rates or high blood pressure, with rates from other communities. In a mobile application called Asthmapolis, asthma patients can track their asthma symptoms, triggers and use of medicine. Community health departments can also use HHS information.

The new HHS Web site will build on those efforts. Park said he and other HHS officials are "super-enthusiastic about the power" of mobile technology to improve patients' health care. Many company executives may be just as excited about the potential to improve their businesses' profits, too.