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November 24, 2008

Washington Health Policy Week in Review Archive 36091821-4383-4c5c-ad12-4de2b1e21ae5

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Baucus: Health Overhaul Must Be Part of Economic Recovery Package

By Mary Agnes Carey, CQ HealthBeat Associate Editor

November 19, 2008 -- As some health care analysts express concern that the nation's economic problems will hurt chances next year for passage of major health care legislation, Senate Finance Committee Chairman Max Baucus said Wednesday that any economic recovery package must include health care overhaul legislation.

"Comprehensive health reform legislation must be part of any successful economic recovery plan," the Montana Democrat said at a hearing to discuss the economics of health care overhaul. "Health care costs and the economy are linked: The key challenges of our health care system are high costs, low quality, and insufficient access," and those factors affect family budgets, businesses' ability to compete abroad, and also impact government spending, he said.

Separately Wednesday, two major health insurers announced they would support covering individuals' preexisting medical conditions if individuals were required to purchase health insurance, known as the "individual mandate." Both America's Health Insurance Plans (AHIP), a trade group representing health care insurers, as well as the Blue Cross and Blue Shield Association announced their support for the idea. Baucus also included an individual mandate in a health care overhaul proposal released Nov. 12.

While the weakening economy is placing additional pressure on state and federal budgets, adding more funding to an economic stimulus package Congress is expected to consider early next year may be difficult, said the Finance panel's ranking Republican, Sen. Charles E. Grassley of Iowa.

"We face difficult choices. We have an economy in distress. Increasing the record-breaking deficit is not a legitimate option. Ignoring the burden inefficient spending in health care places on our economy is also not an option," Grassley said.

Baucus said a major overhaul of the nation's health care system was "central to restoring America's economy." He met Wednesday with Senate Health, Education, Labor and Pensions Committee Chairman Edward M. Kennedy, D-Mass., to discuss the two panels' plans for action on health care legislation next year.

"Yes, reforming health care will cost money. But investments now will reap savings a decade from now," Baucus said. "And spending now will also provide needed stimulus for the economy as well."

Witnesses at the Finance session, the tenth hearing the panel has held so far this year to discuss various ways to overhaul the nation's health care system, told lawmakers that overhauling the nation's health care system must be top legislative priority next year. President-elect Barack Obama made health care a centerpiece of his campaign and is expected to make it a priority of his presidency as well.

In prepared testimony, Verizon Inc. CEO Ivan Seidenberg told the panel that it is "critical that we focus on ways to improve efficiencies to reduce costs just as much as we focus on expanding access to health insurance coverage. If we fail to do so, we risk being able to maintain current levels of health insurance coverage and we may find expanding coverage to be unattainable." He also asked the panel to preserve the current employer-based health care system and not scrap it as part of any sweeping overhaul.

Princeton University economist Uwe Reinhardt called the health care sector "the locomotive in the economy" and said that greater investment in health care could not only help provide more coverage to the uninsured but also could increase job growth. Baucus said that as of October, health care is one of just two sectors of the economy—mining is the other—that is adding jobs rather than losing them.

The insurers' support for covering preexisting medical conditions and an individual mandate builds upon proposals the groups have introduced to improve health care coverage. It also may signal that the industry, which helped defeat former President Clinton's ambitious health care overhaul plan, may be more willing now to support legislative changes to the nation's health care system.

"Coupling a requirement that insurers must offer coverage to everyone regardless of health status with an effective requirement that everyone have insurance would enable insurers to offer coverage to everyone regardless of their health status—without the unintended consequence of premium increases," Blue Cross and Blue Shield President and CEO Scott P. Serota said in a statement.

AHIP President and CEO Karen Ignagni said her group's board of directors was "offering a workable solution to ensure that no one is left out of the health care system because of their health, age, income, or employment status."

Families USA Executive Director Ron Pollack called the insurers' announcements "helpful and a good step in the right direction" and added that they show the level of access to health care that must exist to give more Americans health insurance coverage.

Pollack also agreed with Baucus' linking of health care overhaul with an economic stimulus package. "They have to come together as early priorities for the Congress and the administration," Pollack said.

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Daschle Picked to Lead Health and Human Services

By Alex Wayne, CQ Staff

November 19, 2008 -- Former Senate Majority Leader Tom Daschle is President-elect Barack Obama's choice to lead the Department of Health and Human Services, an appointment that many Democrats predict will greatly help with efforts next year to overhaul the health care system.

A Democratic congressional aide confirmed that Daschle would be nominated to head the department. The aide requested anonymity because the nomination has not been publicly announced by Obama or his office.

Sen. Kent Conrad, D-N.D., said Daschle did not deny he would be nominated in a phone conversation Wednesday afternoon. "I congratulated him and he didn't say, 'Hey, wait a minute.'"

Many Democrats and health-related interest groups expressed enthusiasm for the appointment.

"It's great news," said Sen. Christopher J. Dodd, D-Conn., who sits on the Health, Education, Labor and Pensions Committee.

"I think it's tremendous," said Sen. Max Baucus, chairman of the Senate Finance Committee, which has jurisdiction over Medicare and Medicaid. "He knows the rhythms of this outfit; he knows the players."

However, a government watchdog group, Public Citizen, warned that Daschle's work for a lobbying firm may put him at odds with Obama policies aimed at limiting lobbyists' influence on the government.

Daschle, 60, served three terms as a senator from South Dakota and led Senate Democrats from 1995 until he was ousted in 2004 by Republican John Thune. He was majority leader of the Senate for 18 months of the 107th Congress, but found the job frustrating: with just a one-vote majority, Democrats were unable to advance any notable legislation against opposition from Republicans and President Bush, and voters returned the chamber to firm Republican control in the 108th Congress. Daschle considered running for president in 2004 but changed his mind the night before the 108th Congress convened.

Since his defeat, Daschle has worked as an advisor for the lobbying firm Alston & Bird and has served as a senior fellow at the Center for American Progress, a Democratic think tank. In February, Daschle published a book, "Critical: What We Can Do About the Health-Care Crisis," with Jeanne Lambrew, a health policy expert who is an associate professor at the University of Texas and also a senior fellow at the Center for American Progress. In the book, the two propose expanding government health care programs to cover everyone in America.

Obama is close to Daschle, and reportedly considered him as his White House chief of staff, a job that instead went to Rep. Rahm Emanuel, D-Ill. But as HHS Secretary, Daschle is expected to be Obama's primary contact with Congress as lawmakers try to craft and pass an overhaul of the health care system.

Baucus says that an overhaul aimed at providing insurance coverage to all or most Americans and reducing the costs of health care will be his committee's top priority next year. It also is the top priority of Sen. Edward M. Kennedy, D-Mass., the chairman of the Health, Education, Labor and Pensions Committee. The two panels will share jurisdiction over any legislation that touches both private and public insurance programs.

"The appointment of Senator Daschle as Secretary of the Health and Human Services Department is the best news possible for those who want to achieve meaningful health care reform," Ron Pollack, executive director of Families USA, a left-leaning consumer interest group that focuses on health issues, said in a statement. "Senator Daschle has a deep commitment to securing high-quality, affordable health care for everyone in our nation. His new leadership position confirms that the incoming Obama Administration has made health care reform a top and early priority for action in 2009."

Democratic aides say Daschle is well suited to the role.

A health care overhaul, said a senior Senate Democratic aide, "is going to need someone who can work well with Congress. There's a lot of parties up here that want to be involved. It's going to take someone who can bring people together and build consensus.

"I think he can do that; he seems to have a good relationship with Obama, which means that he'll be involved. A lot of times that's what important—having the relationships to bring people together."

A senior House Democratic aide agreed. "I think it'll mean a lot of good things for health reform. I think it will definitely be a positive and will help immensely to get things done."

But before Daschle is confirmed for the post, he and Obama may have to explain why his work for Alston & Bird does not disqualify him from working in the government. One of Obama's ethics rules forbids political appointees from working on "regulations or contracts directly and substantially related to their prior employer for two years."

Daschle is not and has never been a registered lobbyist; as a result, he has not had to file disclosure forms to Congress listing his clients or issues he works on. According to Alston & Bird's Web site, he advises clients on "issues related to all aspects of public policy with a particular emphasis on issues related to financial services, health care, energy, telecommunications, and taxes."

The firm's clients include many health care companies, including hospitals, drug manufacturers, drug stores, and insurers, according to the Center for Responsive Politics.

"This firm, on behalf of these companies, has specifically lobbied CMS and HHS," said Taylor Lincoln, a research director at Public Citizen, who blogged about Daschle's potential entanglements on Wednesday. "It just seems to me that if Daschle has involvement with much of any of them, then something he's going to do in the next two years is going to affect regulations and contracts involving these companies."

An Obama spokesman could not be reached Wednesday evening, and Daschle himself did not respond to an e-mail seeking comment.

Drew Armstrong, Lydia Gensheimer, Kathleen Hunter and Keith Perine contributed to this report.

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Finance Leaders Introduce Draft Bill to Link Medicare Hospital Payments to Quality of Care

By Mary Agnes Carey, CQ HealthBeat Associate Editor

November 19, 2008 -- Senate Finance Committee leaders Wednesday introduced a bipartisan draft of legislation that would link the level of Medicare payment to hospitals to the quality of medical care rather than the number of services provided.

In a news release, Senate Finance Committee Chairman Max Baucus, D-Mont., and the panel's ranking Republican, Charles E. Grassley of Iowa, said their proposal to establish "value-based purchasing" for inpatient hospital care "would re-focus the Medicare program on quality care, which will result in improved patient care and could lower costs throughout the entire health care system."

Many lawmakers and health care analysts have expressed support for the idea of linking Medicare reimbursement to the quality of care provided, also known as "pay-for-performance," as a way to improve health care quality and lower its cost. The senators' proposal would start the value-based purchasing program in fiscal 2012, phasing it in over five years with full implementation beginning in fiscal 2016. Payment levels would gradually increase from 1 percent in fiscal 2012 to 2 percent by fiscal 2016. The program would be budget-neutral and any savings would be kept in the hospital payment system in the form of increased payments to other hospitals, the lawmakers said.

Tom Nickles, senior vice president for federal relations for the American Hospital Association, said concerns his group has on the proposal include the level of discretion given to the secretary of Health and Human Services and the amount of money in play if the measures are not met. Chip Kahn, president of the Federation of American Hospitals, said the draft "includes all the right pieces of the puzzle but as it evolves it needs to be more specific . . . We really need to have everyone understand their roles."

The senators said their proposal builds upon a program created as part of the Medicare prescription drug benefit (PL 108-173) that gives more Medicare reimbursements to hospitals for tracking and reporting on a set of quality measures. The draft legislation introduced Wednesday also would link Medicare payment to how well the hospitals actually perform on the quality measures.

In most cases, Baucus and Grassley said, the measures will be chosen from a list that has been agreed upon by organizations including the National Quality Forum, as representing the best practices in inpatient hospital care. Initially, the program would measure performance in the treatment of heart attacks, heart failure, pneumonia, and surgical care. It also would measure overall patient satisfaction with hospital care. For example, the program would provide increased or decreased payment based on how frequently a heart attack patient receives aspirin upon admission to a hospital, according to the Finance news release.

Blair Childs, senior vice president of public affairs for the Premier Quality Alliance, said the draft legislation would "provide a framework for Congress as it continues to explore ways to financially reward hospitals for improved patient outcomes."

A pay-for-performance demonstration Premier has conducted with the Centers for Medicare and Medicaid Services (CMS) has proven "that a well-designed pay-for-performance program can improve quality and reduce costs," Childs said. In June, CMS awarded $24.5 million to the top performers in the first three years of a pay-for-performance demonstration project it conducted with Premier, a consortium of care providers.

The Finance committee will take comments on the draft bill until Dec. 15.

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Orszag at OMB: Better Odds for a Health Overhaul?

By John Reichard, CQ HealthBeat Editor

November 20, 2008 -- Congressional Budget Office alumni were divided Thursday over whether a move by agency director Peter Orszag to the top spot at the White House Office of Management and Budget would move the ball forward on overhauling health care or push it back. But they agreed that the appointment would be a strong addition to President-elect Barack Obama's inner circle as it confronts the twin challenges of a faltering economy and a dysfunctional health care system. Orszag could prove to be a forceful advocate for controlling Medicare spending, they added.

Sources on and off Capitol Hill say that the 39-year-old Orszag, a veteran of the Clinton White House, is the leading contender to become OMB's new director. He served at the White House on both the National Economic Council and the Council of Economic Advisers. Before becoming CBO director in January 2007, he headed the Hamilton Project at the Brookings Institution, a Washington think tank. The project conducts research and develops proposals to spur economic growth. While Orszag is a former Clinton appointee and Brookings is viewed as moderate to liberal, his budget and health policy expertise carries weight on both sides of the aisle.

At CBO, Orszag has labored to build an analytical team and a policy "tool kit" to help Congress and the White House assemble an overhaul plan to rein in health care spending Orszag depicts as the leading threat to the nation's long-term fiscal health. Universal coverage appears to fit into Orszag's vision of a more efficient system, making many Democrats comfortable with his current position atop CBO. But they also seem happy at the thought of someone with Orszag's skills advising the Obama White House.

Signaling Change at CBO?
Joseph Antos, a scholar at the American Enterprise Institute who was assistant director for health and human services at CBO from 1994 to 2001, expressed surprise at the possibility of Orszag moving. "It's a puzzle for me," Antos said Thursday in an interview. "I had thought that the best thing all along for Democrats is to keep Peter at CBO." Antos said the budget office has been a "chokepoint" for those arguing that health system changes would produce savings.

He was referring to CBO's refusal over the years to score savings from a variety of health proposals such as health information technology that proponents insisted would save money. CBO on the other hand asserted that convincing evidence of savings had yet to be developed. Orszag "at least a little bit sent a message through various reports that they were willing to take more seriously what some people call 'investments'" in overhauling health care, Antos said.

For example, Orszag said in a Sept. 5, 2007 letter to House Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif., that a program in a House bill to compare the effectiveness of medical treatments would eventually produce modest savings for the health system. "That was a major change for CBO," Antos said. Were the savings "the moral equivalent of zero? Maybe. But that was a signal," Antos asserted. "It broke new ground by saying you didn't need 100 percent proof of everything in order to do a reasonable estimate."

CBO observers also laud Orszag's efficiency in producing reports and estimates, a trait that also could keep the agency from becoming a bottleneck in a new Congress expected to be heavy on health care proposals. "It's really going to be hard to top him" on that score, said Antos.

Robert Reischauer, CBO director from 1989 to 1995, opined that an Orszag appointment to head OMB "is basically a wash" in terms of its effect on overhaul prospects. CBO has already done a lot of analytical work under Orszag—its report on overhaul options is due out soon, for example. It's also possible that someone with Orszag's interest in health policy would replace him, Reischauer added, though he also noted the possibility that Orszag's exit could weaken CBO if the process of finding a successor drags on too long.

On the other hand, hiring Orszag at OMB "seems like, quote, 'a good thing,' from the standpoint of doing health reform." But Reischauer questioned how much time Orszag would have to devote to health care as OMB director. The move "certainly wouldn't hurt, and would probably be a small positive" in improving overhaul prospects.

Fitting Health Care Into a 'Fiscal Box'
Dan Mendelson, associate OMB director for health from 1998 to 2000, noted that Orszag at OMB would be able "to shape both the policy and the budget that will be proposed to Congress." The challenge will be about fitting health care into a fiscal box, Mendelson said. "He will be able to very deftly balance the budget and the policy issues." Mendelson said appointing Orszag would be a wise move but shied away from saying overhaul prospects would be better or worse if the CBO director headed to OMB. "It's a different lever" on health policy, Mendelson said of the OMB position. He likened the OMB and CBO spots to the accelerator and the steering wheel of a car, saying both are necessary to drive it.

Alice Rivlin, who served as CBO director from 1975 to 1983 and as OMB director from 1993 to 1996, said, "It's very important to have leadership in the administration." Rivlin expressed some impatience with the notion of characterizing Orszag as someone whose contribution would be developing an overhaul plan with relatively favorable scoring by CBO. It's not so much about favorable scoring, she said—"We've got to actually get a plan that works," indicating that Orszag would be a big asset in that department.

Mendelson noted though that "what he would lose would be the ability to have the final say on what it costs." When there are differences between OMB and CBO, "it's CBO that matters," he said.

Douglas Holtz-Eakin, who advised the McCain campaign on economic issues and ran CBO from 2002 to 2005, said that, "Peter's got obvious talents and skills" but that his impact "depends on the other moving pieces—who replaced Peter at CBO and what the administration actually does." Would Orszag have too little time as OMB director to have a big impact on a health overhaul plan? "The question is where the administration wants him to spend his time," Holtz-Eakin said.

Apart from health systems changes broadly, Orszag could be a big player on Medicare, former analysts agreed. Orszag has definite ideas on how Medicare should be changed, noting its big geographical variations in spending and the absence of a link between higher spending and higher quality. Democrats have been slammed for shying away from entitlement reform. But Orszag would allow Democrats to talk forcefully about improving the operations of the Medicare program, Antos said.

Reischauer said Orszag could be effective at OMB in pushing the Centers for Medicare and Medicaid Services to obtain more data on the actual costs providers incur in delivering care. There "are lots of prices that are sort of excessive," Reischauer said. "We don't update things as frequently as we should." Tougher requirements for cost reporting would exert downward pressure on payments, a step Reischauer said an Orszag-led OMB might take to help pay at least some of the costs of overhauling physician payments in Medicare to eliminate scheduled cuts that most analysts say are too severe.

"I think OMB is much more likely to push CMS pretty hard with Peter there," Reischauer said.

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Senators Meet to Discuss Health Care Overhaul

By Drew Armstrong, CQ Staff

November 19, 2008 -- Key Senate health care players from both sides of the aisle met for the first time Wednesday to discuss their plans for a health overhaul bill next year.

Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Edward M. Kennedy, D-Mass., Christopher J. Dodd, D-Conn., the second ranking Democrat on HELP, and Senate Finance Chairman Max Baucus, D-Mont., gathered with their ranking Republican colleagues and other key committee members and said after the meeting that Congress would lead the way early in 2009.

"We all agreed that there has not been a better time in modern American health care to get meaningful health care reform," Baucus said after the meeting.

The meeting was held in Kennedy's new office, just off the Senate floor. Kennedy did not emerge to speak with reporters. He returned to the Senate this week, after being largely absent since being diagnosed in May with brain cancer.

Health overhaul is a priority for the Obama administration, but Congress is expected to lead on the issue and take general cues from the White House.

To that end, Kennedy and Baucus have been working furiously with staff to pull together policy.

"I think we have to move very quickly to seize the opportunity and build momentum, because it's difficult to anticipate what else is going to come up next year that will involve the Congress," Baucus said.

Baucus and Kennedy are making an effort to include Republicans in the planning process, despite Democrats' vastly expanded majority of 58 seats next year.

"Nothing's going to get done in the Senate if it's not bipartisan," said Finance Committee ranking Republican Charles E. Grassley of Iowa, who was in the meeting as well. Also in attendance was HELP Committee ranking Republican Michael B. Enzi of Wyoming, Sen. Orrin G. Hatch, R-Utah, and Sen. John D. Rockefeller IV, D-W.Va.

Grassley said after the meeting that how lawmakers would pay for the package would be an issue for Republicans.

"I think that for a lot of us, pay-go is a big issue," he said, referring to pay-as-you-go budget rules that require any new spending be offset.

Kennedy and Baucus have both said that a sweeping health overhaul package was not likely to be fully offset.

"You have to invest in order to reap long-term savings," Baucus said. "That's understood by senators, that's understood by outside groups. I talked to Peter Orszag . . . that's understood clearly by him."

Orszag is currently the head of the Congressional Budget Office, and has been tapped by Obama to head the White House Office of Management and Budget.

Health and the Economy
At a Senate Finance Committee hearing earlier in the day, Baucus pushed the message that a health care overhaul is a key part of any economic recovery. Health care costs make up a growing part of business and personal spending.

"Comprehensive health reform legislation must be part of any successful economic recovery plan," the Montana Democrat said at a hearing to discuss the economics of health care overhaul. "Health care costs and the economy are linked: The key challenges of our health care system are high costs, low quality, and insufficient access," and those factors affect family budgets, American businesses' ability to compete abroad, and also impact government spending, he said.

"Health care reform is central to restoring America's economy," said Baucus, who on Nov. 12 released his own plan to overhaul the nation's health care system. The plan includes a requirement for individuals to purchase health care coverage

Mary Agnes Carey contributed to this report.

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Study: Hospitals Designated for Quality Care Had Lower Readmission Rates for Cardiac Patients

By Leah Nylen, CQ Staff

November 18, 2008 -- Cardiac patients experienced lower readmission rates and lower overall costs if they were treated at hospitals that had been designated for quality, according to a study released Tuesday at a briefing by the Blue Cross and Blue Shield Association.

In 2005, BCBSA—a federation of local Blue Cross and Blue Shield companies—began an initiative to promote quality and cost efficiency by awarding hospitals a "Blue Distinction" if they met certain objective criteria. The group offers designations for four categories: cardiac care, complex and rare cancers, transplants, and bariatric surgery. About 800 specialty care centers in 45 states have received the distinction.

The study, conducted by HealthCore Inc., examined 24 Blue Cross and Blue Shield facilities, and found that patients who had bypass surgery at Blue Distinction centers experienced a 26 percent lower readmission rate after 30 days. Those who had an angioplasty at one of the centers had a 37 percent lower readmission rate.

The overall costs for a 90-day episode of care also were lower at designated centers; 5 percent for a bypass or 12 percent for an angioplasty procedure, the study found.

Based on information from Blue's plans, BCBSA said that patients who received heart transplants at a designated center had a significantly lower one-year mortality rate—11 percent—compared with 19 percent at a non-designated facility. For bariatric surgery, only 5 percent of patients at a Blue Distinction center experience major complications; at other hospitals, that rate was 8 percent.

"What I like best about [Blue Distinction] is it aligns the best of the medical profession with the interests of patients and that is a win-win," Carolyn Clancy, director of the Agency for Healthcare Research and Quality, said at Tuesday's briefing.

In awarding a hospital the Blue Distinction, the association takes into consideration quality improvement standards, experience and training programs, case volumes, and clinical data on process and outcomes, according to Carole Redding Flamm, the executive medical director of the association. Once a hospital receives the designation, they must reapply between every 18 to 36 months.

While the association supports incentives for quality care, Flamm said the individual plans would make the decision at the local level to incorporate incentives for Blue Distinction centers. For example, some plans offer lower co-pays or change the benefit differential if patients use a designated center, she said.

Some plans already seem to be moving in that direction. Ed Caillier, the vice president for benefit design at U.S. Bancorp, a financial services firm headquartered in Minneapolis, Minn., that uses Blue Cross and Blue Shield, said his company's plan already decided that patients who need specialty care must use Blue Distinction centers.

The association hopes to expand the distinction to spine surgery, knee and hip replacement, and additional cancers in the coming months, Flamm said.

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