By Cheyenne Hopkins, CQ Staff

October 26, 2006-- Inaction by the federal government will sway states to take the lead on overhauling health care, said former Department of Health and Human Services Secretary Tommy Thompson on Thursday.

Thompson, speaking to reporters, said that if Democrats take control of the House or both chambers, he expects any health care legislation to be stalled by a divided government. However, he remained hopeful that a health information technology bill would be passed. The Senate passed its health IT bill, S 1418, on Nov. 18, 2005, and the House passed its version, HR 4157, on July 27. No conferees have been named.

In the absence of federal action, Thompson said he expects states to take the lead with their own health care proposals and he even predicted that at least 20 states would follow the lead of Massachusetts.

In April, Republican Massachusetts Gov. Mitt Romney signed a law that will require the state's 6.4 million residents—550,000 of whom are uninsured—to obtain health care coverage by July 1, 2007. The law also will subsidize premiums on a sliding scale for people earning below 300 percent of the federal poverty level. Thompson said he also wants to require all uninsured to get coverage but not through a national universal plan.

Thompson, now chairman of the Deloitte Center for Health Solutions and a partner at the law firm of Akin Gump Strauss Hauer and Feld, has continued to push health care issues since leaving the federal government.

He predicted action on health care to be stalled until the 2008 presidential election, when he expects health care and energy to be the leading issues in the election. He also cited 2013 as a critical year for health care. By 2013, he expects Medicare to deplete its surplus and start drawing money from the Treasury.

Thompson was speaking to reporters on Thursday to push his "Medicaid Makeover" plan he introduced in August. His proposal would shift more of the costs for caring for the elderly—including long-term care, one of the most costly services covered by Medicaid—to the federal government, with state governments assuming the acute care needs of all Medicaid beneficiaries under 65. In the interview on Thursday, Thompson called Medicaid, a state–federal partnership, a "failed program."

Thompson discussed his plan at the National Governors Association meeting in August. Formerly the governor of Wisconsin, he said the response to his plan has been slow because governors are waiting until after the elections to act on health care.

Since the speech, he has met with Romney as well as Republican governors Jeb Bush of Florida and Haley Barbour of Mississippi.

Of President Bush's work on Medicaid, Thompson said, "I think the Bush administration has done more than any other to bring Medicaid to the forefront." But he added, "Am I satisfied? No, I'm not."

He again attributed slow federal action on Medicaid to politicians waiting until after the election to act.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

October 25, 2006 -- Rising health care insurance costs are cutting into Americans' ability to pay for basic necessities and save for retirement, according to a survey released on Wednesday.

The health confidence survey, supported in part by The Commonwealth Fund and published by the nonpartisan Employee Benefits Research Institute (EBRI), found that half (52 percent) of Americans are unhappy with the cost of their health care coverage, a record high in the nine years that EBRI has compiled the annual report. In addition, nearly half (48 percent) of those surveyed said they were unhappy with costs that insurance did not cover.

Most of the dissatisfaction among consumers was focused on health care cost rather than quality. More than half of Americans surveyed reported they are extremely or very satisfied with the quality of medical care they receive, the survey found.

"Health care cost increases are catching up to people," said Paul Fronstin, director of EBRI's Health Research and Education Program. "You see an increase in dissatisfaction and you see an increase in the percentage of people who are reducing their savings."

More than one-third (36 percent) of those surveyed said they have reduced their retirement savings to help pay for health care insurance, up from 25 percent in 2004, the survey reported. More than half (53 percent) have cut other savings to finance health insurance costs, and 28 percent of those surveyed said that higher health care costs have hurt their ability to pay for basic necessities such as food, heat, and housing, an increase from 24 percent.

Also, more than half of those surveyed (55 percent) said addressing rising health care costs should be a top priority for Congress and more than eight of 10 said they would favor tax breaks to help people pay for coverage they purchase on their own or through their employer.

Rep. John D. Dingell of Michigan, the ranking Democrat on the House Energy and Commerce Committee, said the EBRI study provides further evidence that the rising cost of health care insurance is hurting patients.

"Medical debt is one of the leading causes of personal bankruptcy, but instead of making the health care system more affordable for patients, the Republicans have made it profitable for the HMOs and health insurance companies," Dingell said in a statement.

The National Center for Policy Analysis, a conservative think tank, said that if consumers switched to health savings accounts (HSAs) or high-deductible health plans they would save money that they could put toward retirement or other expenses. "HSAs allow patients to take control of their health and their financial future," the group's senior fellow, Devon Herrick, said in response to the EBRI survey.

Other findings of the EBRI report include:

• Three-quarters of those surveyed said they preferred having $6,700 in employer-based health care coverage instead of an additional $6,700 in taxable income.
• Six of 10 Americans surveyed rate the health care system as fair (28 percent) or poor (31 percent). The percentage of individuals rating the system as poor has doubled since the inception of the survey in 1998, when the figure was 15 percent.
• While most of the individuals surveyed said they have enough knowledge to talk to their doctors about their health care, just over one-third (37 percent) felt extremely or very confident they know enough to purchase health insurance on their own.

By John Reichard, CQ HealthBeat Editor

October 26, 2006-- The Bush administration is using the "Medicare and You" handbook as a marketing tool for private plans rather than making sure it gives seniors and the disabled a balanced view of their 2007 coverage options, four Democrats charged in a letter to HHS Secretary Michael O. Leavitt this week.

Mailed to some 43 million Medicare beneficiaries to explain their coverage options for next year, the handbook sugarcoats the costs associated with HMOs, PPOs, and other private plans offered in the Medicare Advantage (MA) part of Medicare, the Democrats said.

The handbook hypes cost savings associated with MA plans as compared with "Original Medicare," but it does not point out that the plans can require cost-sharing amounts higher than amounts in the traditional part of the program, said the letter, which was sent Wednesday. Sens. Max Baucus of Montana and John D. Rockefeller IV of West Virginia and House members Charles B. Rangel of New York, John D. Dingell of Michigan, Pete Stark of California, and Sherrod Brown of Ohio signed the letter.

MA plans can charge more for services than traditional Medicare, the Democrats claimed. "A recent study by the Commonwealth Fund found that some MA plans charge as much as $300 per day for hospital care and $5,600 for cancer chemotherapy," the letter said. "For beneficiaries in poorer health who get admitted to a hospital several times a year or need cancer care, MA costs could be far higher" than in traditional Medicare, the letter said.

A statement in the handbook that beneficiaries who are happy with current coverage need not make a change in 2007 is "improper" because "virtually all plans make changes to their premiums, covered benefits, and cost sharing from year to year," the letter adds.

The wording of the handbook also might make seniors less vigilant than they should be about potential changes in prescription drug plan formularies of covered drugs, the letter suggested. It implies that changes only occur "as a result of changes in drug therapies or as new medical knowledge becomes available," the letter said. "This is untrue. Drug plans can and do change their formularies for business and other reasons, and beneficiaries should know this," the Democrats said.

Although the language in the handbook is too late to change, "equally biased and problematic" language on Medicare Web sites "could be corrected virtually overnight," according to the letter.

The Centers for Medicare and Medicaid Services issued a statement Thursday saying that the handbook was tested extensively with beneficiaries to ensure that it presented material "in a clear, comprehensive, and objective manner." The agency said that in preparing the handbook, it relied on advice from various groups including outside organizations that help beneficiaries enroll in the drug benefit.

HHS spokeswoman Christina Pearson added that "throughout this process, we've sought and incorporated input from those outside the department and are always willing to consider constructive suggestions. That said, the characterization of the language in the 'Medicare & You' handbook runs counter to the comments we've received from hundreds of beneficiaries, organizations and officials."

By Libby George, CQ Staff

October 24, 2006 -- Racial disparities in outcome measures linked to some of the deadliest and costliest diseases, including diabetes and heart disease, are prevalent for patients in Medicare managed care plans, according to a new study published in the Journal of the American Medical Association.

The study also found that the disparities between black and white patients cannot be attributed to high- or low-performing health plans or specific regions of the country.

As the first study to examine outcome measures based on race, rather than the quality or types of care received, the Harvard and Brown University findings could have a significant impact on future reporting policies and treatment plans.

Lead author Dr. Amal Trivedi, an assistant professor of community health at Brown Medical School, said the findings have important implications for health care plans in America.

"This study indicates that most health plans have substantial opportunities to improve their outcomes for African-American enrollees on these measures," Trivedi said.

Co-author Dr. John Ayanian, an associate professor of medicine and health care policy at Harvard Medical School, said the study also highlights the need for more health plans to collect data on patients' racial and ethnic backgrounds.

"We can only improve care if we have good measures of current care," Ayanian said.

The Centers for Medicare and Medicaid Services currently collects racial and ethnic data on patients, but most health plans do not.

Additionally, all health care plans participating in Medicare have been required to report on the quality of care using specific performance measures since 1997.

The doctors used that data from enrollees in 151 health plans for their study.

According to the study, any number of factors, from the communication between doctors and patients to different lifestyle and diet habits, could contribute to disparities. But without further data, it would be difficult to pinpoint a cause—and therefore difficult to determine how plans can improve treatment.

Peter Bach, a senior adviser at CMS, said the study shows that the government is working to improve care and close the outcome gaps for those of different racial backgrounds.

"The fact that the plans have these sorts of quality measures in place . . . is really a sign that they're moving in that direction, that we're getting there," Bach said.

He added that the study "begs the question of what barriers blacks and whites face in managing the conditions."

"It tells us where we need to focus, and it's exactly where we're trying to focus," Bach said.

The study measured four so-called "outcome measures" for diabetes, hypertension, and heart disease, which are prevalent among Medicare beneficiaries of all backgrounds.

While the measures are not health outcome measures—things that affect a patient's quality of life or longevity—they are intermediate or surrogate measures of disease outcome, Bach said. They include: control of blood sugar and cholesterol among enrollees with diabetes; blood pressure control among enrollees with hypertension, and cholesterol control among enrollees after suffering a heart attack or undergoing heart surgery.

Bach pointed out that since these diseases are also among the costliest to treat, it is also in the government's financial interest to improve outcome measures for all patients. And because the delivery of preventive services is similar within the plans for blacks and whites, the next step for CMS will be examining what barriers blacks and whites face in managing the conditions, Bach said.

"It just means that we have more work to do," Bach said. "What do we need to do to help black Americans in managed care get what they need?"

Susan Pisano, a spokeswoman for America's Health Insurance Plans (AHIP), a trade group representing health insurers, said the issue of addressing health care disparities "is a top priority for many AHIP member health insurance plans and for the association."

AHIP, she said, has taken a multi-pronged approach to the problem, including encouraging data collection on race and ethnicity of members as a necessary foundation for quality improvement, fostering training and education on cultural competency, and publishing an online guide to creating a culture of cultural competency within organizations. AHIP also is establishing a clearinghouse of approaches that have worked to reduce gaps in quality of care, Pisano said.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

October 24, 2006 -- Consumer-directed health plans might help curtail overuse of health care services and reduce health costs, but they also might deter consumers from getting the care they need, according to a RAND Corporation study released Tuesday.

"We know people are going to reduce their use of health care under these plans," the study's lead author, Melinda Beeuwkes Buntin, said in a statement. "But what we don't know is how this will affect overall health care quality and patients' health."

Consumer-directed health plans are often paired with health savings accounts (HSAs), which were created in the 2003 Medicare overhaul law (PL 108-173). HSAs allow individuals who sign up for high-deductible health plans to contribute and withdraw funds to cover health care costs tax-free.

Proponents of the plans say the accounts will make consumers more cost-conscious and they will begin to comparison shop and request quality data, eventually driving down health care costs. But opponents say HSAs will attract healthy young people and wealthy Americans who use fewer health care services, leaving traditional plans with more costly enrollees who drive up premiums.

According to the RAND study, last year 10 percent of privately insured, nonelderly American adults were enrolled in a consumer-directed plan. Of those, only 10 percent had an HSA.

But interest in HSAs is growing as both elected officials and employers look for ways to control rising health care costs. More than 3 million people are covered by HSAs, according to America's Health Insurance Plans (AHIP), a trade group representing health care insurers.

HSAs are one of several choices AHIP plans offer to consumers, said AHIP spokesman Mohit Ghose. "They are suitable for some people, but not suitable for others," he said. "We also must note, as do the RAND researchers in their own summary, that the evidence needed to draw firm conclusions about [consumer-directed health care's] overall effects does not yet exist."

Grace-Marie Turner, president of the Galen Institute, a conservative Alexandria, Va.–based research group that promotes free-market health care ideas, said some of the concerns pointed out in the RAND study exist in many other insurance plans as well.

"Basically, they're saying that people aren't getting preventative care and they're not taking their meds. Well, people don't take their meds and don't get their prescriptions filled when they have traditional plans, and I don't see anywhere that they compared the two of those," Turner said. "Basically, they're saying the jury's out, we don't know if people are going to do any better or worse as far as health outcomes" in consumer-directed health care plans.

The RAND researchers estimate that if all privately insured, nonelderly Americans were moved from low-deductible health insurance plans to consumer-directed plans, the result would be a one-time health care cost reduction of 4 percent to 15 percent. But they also noted that pairing such high-deductible plans with HSAs could offset those reductions by as much as half.

The RAND analysis, published Tuesday on the Web site of the journal Health Affairs, said early results suggest that when people pay more out of pocket for health care, they tend to spend less on what could be called "inappropriate" care, such as demanding an antibiotic for a viral infection or going to the emergency room for a non-urgent health problem.

What is not known, the researchers note, is whether consumer-directed health plans will deter people from getting the health care they really need. For example, some consumer-directed plans waive or reduce the deductible for preventive care and often provided financial incentives for consumers to enroll in disease management and other "wellness" programs.

Other conclusions of the study—a review of existing research on the accounts—include that individuals enrolled in consumer-directed plans tend to have higher incomes and be in better health and that consumers are struggling to find reliable information on the quality and price of health care.

The RAND report is part of a four-year, $4 million study co-sponsored by the California HealthCare Foundation and the Robert Wood Johnson Foundation to examine the effect of high-deductible health plans—with and without spending accounts—on areas such as use and quality of care, health status, income, and other factors.

By CQ Staff

October 27, 2006 -- How accurate are the rates Medicare pays for surgery outside the hospital? With a hospital stay no longer required for so many different types of surgery, patients often can get the same type of procedure in an outpatient department, an ambulatory surgery center, or a doctor's office.

But Medicare pays different rates depending on where the procedure is performed, and with so many more procedures shifting to outpatient settings, Medicare's advisers increasingly worry about the degree to which those payment differences make sense.

To get a better idea of whether there are differences tied to the site of care that should be taken into account in setting payment rates, the Medicare Payment Advisory Commission (MedPAC) hired the RAND Corporation to poke through Medicare claims data.

RAND based its conclusion on an examination of colonoscopies, cataract surgery, and magnetic resonance imaging of the head and neck: "No single setting had consistently higher rates of characteristics that might increase the cost of the procedure."

Thus when taking all three types of surgery into account, no one type of site had consistently more medically complex patients, for example.

RAND also found that "rates of adverse outcomes were very low in all settings," adding that to the extent differences were statistically significant, those differences were small.

"Because the study examined only three procedures, it is difficult to draw general conclusions," MedPAC concluded. "Nevertheless, this study demonstrates that claims data can be used to evaluate differences among sites of care and is thus an important step in addressing whether payment variations among settings are appropriate," it said.