OCTOBER 28, 2005 -- Centers for Medicare and Medicaid Services (CMS) Administrator Mark B. McClellan announced a new voluntary program Friday for physicians to report evidence-based, consensus quality measures.

In the first phase of the program, which begins in January, Medicare will allow physicians to submit data on 36 quality measures, such as beta blockers given when a patient suffering a heart attack enters the hospital or screening elderly patients for falls. The measures were developed with physicians, physician organizations, and other experts involved in reviewing the quality of the nation's health care, including the National Quality Forum and the RAND Corporation.

The information would not be public, McClellan said during a conference call with reporters, nor would physicians' Medicare compensation be increased.

"We don't think the administrative burdens will be large," McClellan said, adding that CMS staff would examine the issue. Medicare physicians are scheduled to receive a 4.4 percent payment cut January 1 unless Congress takes action to stop it.

Physicians may want to participate in the voluntary program, McClellan said, because they would receive information about how their performance stacks up against their peers' and because there is a clear trend toward "pay-for-performance" programs in both the public and private sector.

Promoting health care information technology and linking Medicare providers' payment to quality of service are top health care legislative priorities for many Republicans and Democrats. Many lawmakers view both measures as a way to curb rising government health care expenditures while improving the quality of care provided.

In June, McClellan sent a seven-page letter to two key House chairmen—Ways and Means Chairman Bill Thomas, R-Calif., and Ways and Means Health Subcommittee Chairman Nancy L. Johnson, R-Conn.—detailing his agency's plan to move forward on a "pay for performance" program for Medicare providers.

McClellan indicated Friday there "could well be" a link between reporting data and receiving higher Medicare payments next year, depending on the outcome of congressional action on the issue this year.

The American Physical Therapy Association said Friday it hoped to work with McClellan to expand the voluntary program to include physical therapists and other non-physician groups. "The transition to a payment system that assures high quality, effective health care services is vitally important to the beneficiaries that physical therapists serve under the Medicare program," the group's president, Ben F. Massey, Jr., said in a statement.

OCTOBER 28, 2005 -- The House Energy and Commerce Committee approved early Friday morning its budget package designed to cut about $9.5 billion from Medicaid over five years, after Republicans rejected Democratic proposals to trim Medicare instead.

Chairman Joe L. Barton, R-Texas, hinted, however, that Medicare cuts will be on the table during any conference negotiations with the Senate.

The committee voted 28–22 to adopt the package as amended and agreed to send the package to the Budget Committee by voice vote.

His comments offered the first inkling that House members might be open to provisions in the Senate's budget package aimed at carving billions of dollars from Medicare, the federal health insurance program for the elderly and disabled.

The Energy and Commerce package of proposed changes targets Medicaid, the $300 billion state-federal health care program for the poor, to slow the growth of spending. But Democrats want the panel to follow the lead of the Senate Finance Committee, which split its proposed $10 billion in savings between Medicaid and Medicare.

Barton voted against an amendment that would have more closely aligned the House measure with the Finance Committee proposal, but he said, "I'm not dismissing it out of hand."

"It's worthy of a review," the chairman said, noting the idea could be considered in conference later.

Committees in both chambers have been marking up recommendations for savings through fee increases and spending cuts in mandatory programs. The recommendations eventually will be rolled into a single bill in the House.

The Senate Budget Committee has already done that in its chamber, approving Oct. 26 a package that would save a net of $39.1 billion over five years. That draft legislation is expected to be debated on the floor next week.

The bill will need just 51 votes in the Senate, because special budget rules shield it from filibuster. But achieving that majority will not be easy.

To secure the votes of moderate Republicans Olympia J. Snowe of Maine and Gordon H. Smith of Oregon, Finance Chairman Charles E. Grassley, R-Iowa, agreed to divide the cuts his panel produced between the two health entitlement programs.

He also inserted a provision to provide new Medicaid assistance for Hurricane Katrina victims. The bill would include $2.5 billion to reimburse states for providing health care services to those in the path of the storm.

In so doing, he irked some Senate GOP conservatives.

Procedural Fight
In the House Energy and Commerce markup Thursday, Sherrod Brown, D-Ohio, offered an amendment that would have eliminated a fund created by the 2003 Medicare drug law (PL 108-173) to entice health plans to participate in Medicare. The amendment also included a plan to provide higher payments to insurers that cover sicker patients and lower payments to those that enroll healthier patients. Both are elements of the reconciliation package approved by Senate Finance.

Barton moved to rule the amendment out of order, arguing it was not germane to the bill. But the amendment had already been read by the clerk, so Barton had to bring it up for consideration.

Barton asked Brown to withdraw the proposal, saying he "would not support the amendment at any point today," but that it could be debated later.

Brown refused, and his amendment was defeated, 21–27.

The GOP plan for reining in spending would change the way Medicaid pays for prescription drugs, including changing a formula for determining the cost of drugs to take into account factors such as bulk discounts. That and other steps would save $1.2 billion over five years, according to preliminary Congressional Budget Office (CBO) estimates.

Another provision would allow states to raise some Medicaid beneficiaries' cost-sharing over a three-year period from $3 to $5 and allow states to collect co-payments at emergency rooms. These changes would save an estimated $2.6 billion, according to the CBO.

The measure would also put in place stricter guidelines for seniors who transfer assets and then qualify for Medicaid coverage for a five-year savings of $2.3 billion.

A provision that gives states the flexibility to structure their Medicaid coverage more like private health plans would save an estimated $2 billion.

The package of spending cuts has not yet been officially scored, but the CBO estimates a savings of $9.5 billion over five years.

Amendments Shot Down
Democrats offered a series of amendments designed to strip many of the Medicaid changes proposed in the GOP package.

One by Jan Schakowsky, D-Ill., rejected by voice vote, would have deleted a provision that would make seniors with more than $500,000 in home equity ineligible for long-term care provided by Medicaid.

Another, by Ted Strickland of Ohio, defeated 21–26, would have removed language that gives states more flexibility in designing benefits packages.

An amendment by Edward J. Markey of Massachusetts that would have eliminated the entire section of the bill that addresses Medicaid was defeated, 24–30.

A rare break in the GOP ranks came when Rep. Steve Buyer, R-Ind., offered an amendment that would exempt mental health drugs from a provision that allows states to create a formulary that would result in higher costs for non-preferred drugs. Nine Republicans joined 22 Democrats to adopt the amendment, 31–20, over the vehement objections of Barton.

OCTOBER 27, 2005 -- A new bill introduced Thursday by two House subcommittee chairmen would allow the Department of Health and Human Services (HHS) to set national medical privacy standards that would trump state laws. The bill would also ease restrictions on hospitals' donations of information technology equipment to doctors.

The legislation (HR 4157), sponsored by Republican Reps. Nancy L. Johnson of Connecticut and Nathan Deal of Georgia, is heavy on regulatory spadework to dig a channel for the flow of money into federal development of health care information technology. But the bill comes up dry on the dollars themselves, according to a summary of the legislation.

Johnson is chairwoman of the Ways and Means Health Subcommittee. Deal is chairman of the Energy and Commerce Health Subcommittee.

House GOP aides said it would be ill advised to fold a big federal grant program into the bill. "We've got some structural pieces we've got to put into place," said one Republican aide. Those changes could open the way for major private sector investment without the need for federal dollars, another GOP aide said.

The bill supports many of the key Bush administration efforts to advance health care IT, including the key role played by the Office of the Information Technology Coordinator at HHS. But it goes further than the administration's proposed regulation in easing restrictions on information technology donations to doctors. And it moves toward uniform federal privacy standards, unlike current administration initiatives.

Known as the Health Information Technology Promotion Act of 2005, the bill is much the same as a version floated by Johnson's staff this summer. The bill adds some donor restrictions that weren't in the earlier proposal.

With the possibility that the House may wrap up its work for the year before Thanksgiving, prospects for passage of the bill this year appear tentative. The chances of its success may improve up if Congress comes back in December.

A Pat on the Back for Brailer
The bill would codify the office of the National Coordinator for Health Information Technology at Health and Human Services, a position now occupied by David Brailer. The legislation gives the office authority to coordinate federal efforts to develop and maintain standards used to exchange medical data. The measure does not create deadlines, however, for standards to ensure "interoperability," or the capacity of information hardware and software to work efficiently together to allow the speedy transmission of electronic health records, prescriptions, test results, MRI scans, and other diagnostic imaging.

The office would also be given responsibility for overseeing efforts to certify and inspect health care IT products to ensure their compliance with interoperability and other standards. The office would have to maintain and update "a strategic plan to guide the nationwide implementation of interoperable health information technology to improve health care quality, reduce medical errors, increase efficiency of care, and advance the delivery of appropriate evidence-based health care services," according to a summary of the bill.

"This legislation will make sure the national health IT coordinator's post is a permanent one, and it will overcome some of the key obstacles that have slowed our progress toward adoption of a national, interoperable electronic system," Johnson said Thursday in a written statement.

Privacy Standards and Prospects
The bill would require HHS to study state privacy laws and data transaction standards, and the way in which those laws affect the flow of medical data. Health industry executives say a "patchwork" of varying state laws on medical privacy will prevent the creation of an efficient national health information system. HHS would have 18 months to report back to Congress on "whether state and federal privacy laws should be conformed to a single set of federal standards."

If HHS concluded such standards were needed, and Congress failed to enact them within three years of passage of the Johnson-Deal bill, their measure would give the HHS secretary the power to create a uniform standard for privacy and security of patients' health information, the summary says.

The bill also includes requirements for adopting data transaction standards and billing codes. It mandates that HHS develop a plan to coordinate efforts to develop those standards.

Eased Limits on IT Donations
The bill would carve out new "safe harbors" in existing laws that allow "hospitals, group practices and other entities to provide physicians with hardware, software or information technology training and support services that are used primarily for the electronic exchange of clinical health information," the summary says.

The bill would place some constraints on donations. These constraints were not included in the proposal floated by Johnson's staff in July.

Specifically, a hospital or other donor couldn't require the doctor to limit use of technology to the donor's patients, nor could donors keep the doctor from linking the technology to other IT systems.

Also, hospitals' donations of software to doctors couldn't be related to the volume or dollar value of patient referrals that a doctor would send back to the hospital.

The bill would pre-empt state laws to ensure that the federal exceptions to the so-called "Stark" and anti-kickback laws can be implemented. It would also require that any donated technology comply with HHS technology standards or certification procedures.

The bill would require that the HHS Secretary report to Congress in three years on the effect of these safe harbors on the adoption of information technology and "any impact it has had on business relationships between providers." The secretary would then be able to issue new regulations establishing new criteria for the safe harbor.

OCTOBER 28, 2005 -- Two former congressional health policy staff members said Friday that Congress and the nation must develop a consensus on how to cover the uninsured to give the issue a higher priority on Capitol Hill.

"Covering the uninsured is simply not a priority for this administration or for congressional leaders," said Liz Fowler, former chief health and entitlements counsel for the Senate Finance Committee, who worked with ranking Democrat Max Baucus of Montana.

"Ideology has no place in this. It is a hindrance to the debate on the uninsured instead of helping to reach a solution," added Fowler, now a principal at Health Policy Alternatives, a health care consulting firm.

Dean Rosen, former chief health care advisor to Senate Majority Leader Bill Frist, R-Tenn., and now director of the health care practice at Mehlman Vogel Castagnetti Inc., agreed the problem will not be solved through partisan bickering. Instead, he said, there needs to be a national consensus and that right now the uninsured are at the bottom of the legislative agenda.

"We have philosophical differences between parties," he said. "We also have a lack of focus."

Fowler and Rosen made their comments during a panel discussion on the uninsured sponsored by the Alliance for Health Reform, a nonpartisan, nonprofit group. According to the Alliance, an estimated 45.8 million Americans do not have health insurance, and two-thirds of these people have incomes at or near the poverty level.

Fowler said that while health insurance may be a popular concern of the American people, they cannot agree on a single solution to the problem and fear having to pay more taxes or losing their current coverage. While she believes federal action is necessary, she criticized Congress for not being able to decide on how to deal with uninsured victims of Hurricane Katrina.

"If we can't even agree on Katrina relief, I don't see how we can find any common ground on a broader initiative," she said.

Rosen also added that in order to get the issue on the federal agenda, there needs to be more of an outreach to the public, suggesting that interest groups should try to raise awareness of the issue.

"It is not the number one health policy concern of the general public," he said. "Whether it's an evening show that has an uninsured character, it's going to take insertion into the popular culture to get people informed."

In turn, Rosen believes having informed voters will help congressional lawmakers bring the issue to the floor.

"I'm just a realist here—but voters express themselves in elections whether you have a change in leadership or not," he said.

OCTOBER 28, 2005 -- Members of the Bush administration's Medicaid advisory panel began grappling this week with the enormity of their challenge: Give expert advice on controlling the program's costs but also determine how to help the growing number of uninsured.

Democrats contend the panel is no more than a "sham" commission controlled by people hostile to Medicaid. But during a two-day meeting in Washington this week, members of the panel displayed the kind of concentration, curiosity, and passion that suggested their concern about the stakes involved.

Focus too narrowly on dollars and commissioners risk adding unnecessarily to the suffering of some, if not many, people. Pretend dollars aren't an issue and they risk having states not amenable to tax hikes forced to cope with fast-rising Medicaid costs by dropping large numbers of people from the program.

But whether the panel is up to the job is an open question. Its level of Medicaid expertise is uneven and it will meet only about a half dozen times before filing its recommendations, which are due December 31, 2006.

Time Bind
The Medicaid Commission, appointed in July, has shifted its attention from making recommendations on short term changes to the program to developing recommendations for longer term changes.

At their meeting Wednesday and Thursday, members repeatedly expressed concern about the limited meeting time and with the need to master a complex program that includes more than two dozen eligibility categories.

One commissioner said the topic of which populations should be covered in Medicaid deserves a full two-day meeting in December. But Commission Chairman Don Sundquist, former governor of Tennessee, said the commission can't find the time to meet then.

Sundquist added the panel is limited by law to six meetings a year and suggested dealing with the time crunch by adding a third day to two-day meetings and by having more working lunches.

Carol Berkowitz, president of the American Academy of Pediatrics, said working groups should be organized on specific topics to build expertise. But Sundquist said it's hard to define what the work groups should cover and urged a delay in deciding whether to proceed in that manner.

"We need to look at some pretty big solutions," observed commissioner Bill Shiebler, former president of Deutsche Bank. "We don't just owe something to recipients of Medicaid," but also to "kids and schoolteachers," he said, referring to the impact of rising Medicaid outlays on state spending on education. Shiebler expressed skepticism that such challenges could be handled by meeting every other month.

Learning Curve
While panel members aren't strangers to health care, Medicaid is a world unto itself. To develop a common base of current knowledge about the program, former New Mexico Medicaid Director Charles Milligan led the commission through a series of learning "modules" over much of the two days, ranging from "Medicaid Eligible Populations" to "IT, Fraud and Abuse, and Financing."

Asked his assessment of the members' knowledge of Medicaid, Milligan said commissioners began with "varied levels of knowledge, but they're ramping up very quickly." One of the goals of the organizers of the commission was to include "thoughtful outsiders," he said. "Individuals who put the commission together wanted to make sure that the membership included people who would bring in fresh thinking." Members include insurance, hospital, and drug store executives, as well as analysts who focus broadly on health care rather than specifically on Medicaid.

Findings a Foregone Conclusion?
The questioning of Milligan was sharp and detailed and interspersed with commentary that reflected a range of opinion on long term changes. Shiebler declared the $11 billion in Medicaid cuts advocated by the commission this summer was not enough.

Noting projections that the cuts would only shave the projected yearly percentage increase in Medicaid spending from 7.4 to 7.2, Shiebler said that level of growth simply could not continue. Quoting the late economist Herbert Stein, Shiebler said, "'All unsustainable trends stop.' It's going to stop one way or another. We want to bring this in for a soft landing."

Berkowitz, on the other hand, emphasized wider coverage. She termed the lack of coverage in the United States "a disgrace" and called for a plan that would "make sure that everyone who needs coverage has coverage."

The varied opinions on display suggested the possibility the commission may not be the "sham" its critics say it is. Liberals have suggested that a recommendation to dismantle much of the Medicaid entitlement is a foregone conclusion because of the commission's administration-appointed membership.

But one liberal analyst noted Republicans are often "shocked" to learn what Medicaid doesn't cover, including childless adults with incomes well below the poverty level. "In Republican states they've had commissions that say we need to do more, not less" in Medicaid, he said.

But the same analyst added that the commissioners who appeared friendlier to Medicaid in its current form were non-voting members. And the appointments of two more voting members announced Oct. 21—Florida Governor Jeb Bush and West Virginia Governor Joe Manchin—add to the voices on the commission arguing that the Medicaid status quo cannot continue.