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October 31, 2012

Washington Health Policy Week in Review Archive 62d03288-cde4-4bcb-b02d-01b121436e21

Newsletter Article


Recession Made People Adjust Health Choices, Spending

By Rebecca Adams, CQ HealthBeat Associate Editor

October 24, 2012 -- The percentage of families facing high medical costs during the 2007 to 2009 recession did not increase, in large part because many Americans switched from brand-name to generic drugs and may have chosen insurance plans with lower premiums, according to a new study released last week.

The research, published in the journal Health Affairs and conducted by the Center for Studying Health System Change, looked at the number of people whose medical costs exceeded 10 percent of their income. Although unemployment rose in the United States and family income declined from an average of about $65,000 in 2006 to about $61,000 in 2009, the share of their income that went to medical care did not grow during that time.

That differs from what happened earlier in the decade. In 2001, 14.4 percent of Americans under the age of 65 had high medical cost burdens. That proportion rose to 19.2 percent by 2006. However, in 2009 the percentage had trickled down slightly to 18.8 percent. Out-of-pocket spending on health services decreased from an annual average of $1,454 in 2006 to $1,231 in 2009, according to the study.

People began reducing their health care spending before the recession officially hit in December 2007. Between 2006 and 2007, out-of-pocket health spending fell while family incomes stayed about the same, according to the study. For that year, the percentage of people in families with high medical cost burdens went back down a bit, although not to 2001 levels. The share of people with high medical costs dropped from 19.2 percent in 2006 to 17.6 percent in 2007.

“Decreases in out-of-pocket spending for prescription drugs accounted for virtually all of the decrease in out-of-pocket spending on services between 2006 and 2009,” said the study.

Average out-of-pocket spending on prescription drugs decreased from $258 per person in 2006 to $162 in 2009 as several brand-name drugs came off patent and insurers or health plans encouraged people to use generics when available. Out-of-pocket spending did not change significantly between 2006 and 2009 for any other individual service, the analysis found, and patients did not fill significantly fewer prescriptions during that time.

The study noted that the percentage of all prescriptions filled with generic drugs had increased from about 35 percent in 2003 to almost 55 percent by 2008.

People also may have switched to different types of health coverage.

One unexpected finding was that during 2006–2009, people reported that their average out-of-pocket spending on health insurance premiums remained steady, at around $1,800 per year.

“This appears to contradict results from employer surveys that indicate employers shifted more of their health benefit costs onto employees in the form of higher cost sharing for both premiums and services,” the study said. “The fact that the MEPS data showed no change in what families actually spent on premiums may reflect a shift to plans with lower premiums by employees in order to offset the higher overall cost of coverage.”

The study also noted that annual increases in national health spending slowed to 3.8 percent by 2009.

The analysis was based on data from the Medical Expenditure Panel Surveys for 2001 and the period 2006–2009. The Medical Expenditure Panel Survey, with a sample size of about 28,000 people for each year, is sponsored by the Agency for Healthcare Research and Quality.

Rebecca Adams can be reached at [email protected].  

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Report: Curb Hospital Readmissions by Better Managing Meds After Discharge

By Jane Norman, CQ HealthBeat Associate Editor

October 26, 2012 -- The excess readmission of Medicare patients is strongly linked to patients’ difficulties with their prescription medications once they get home or are moved to a non hospital setting, says a new report by a national health policy research organization.

There are initiatives underway and models for change. Yet “there is much room for improvement and growth,” says the report by NEHI, an independent group formerly known as the New England Healthcare Institute. “Most hospitals have only just begun to confront the need to upgrade medication practices as part of their effort to reduce readmissions or face new government penalties.”

The problems are daunting and the system of medication management now is “fragmented and inconsistent,” says NEHI. When patients are admitted, hospital staff members struggle to put together accurate lists of their current medications. Some patients don’t have family members who can help manage their medications. And even when there are caregivers, they may be so overwhelmed by the patient’s hospital experience they may have difficulty comprehending directions for prescription use. Scheduling follow-up visits with doctors after discharge can be tough because doctors’ appointment schedules are packed.

The report says that nearly 20 percent of Medicare patients experience problems once they are discharged and must be readmitted. And readmissions are costly. The Medicare Payment Advisory Commission has estimated that each readmission costs $7,200 per case, says the report. Better management of meds is at the core of getting these numbers down, says NEHI.

In its “Thinking Outside the Pillbox” report, NEHI took a look at what’s known as medication adherence as hospitals begin to face penalties for too many patient readmissions.

Beginning this month, in line with requirements in the health care law (PL 111-148, PL 111-152), payments to hospitals will be reduced by up to one percent for excess readmissions for heart failure, heart attack and pneumonia.

By 2015, the maximum penalty will rise to three percent and the Centers for Medicare and Medicaid Services will be able to extend the penalty to other conditions, including chronic obstructive pulmonary disorder and certain cardiovascular procedures, according to the institute.

Managing medications correctly is essential to planning for discharges and providing care afterward. The report lists three givens. One is that adverse events, or negative changes in a patient’s health, are a major cause of avoidable health readmissions. The second is that most of these adverse events after discharge are related to prescription drugs. The third is that these events happen because, for one reason or another, the patient isn’t taking medications as prescribed.

It’s not hard to understand why difficulties develop as it’s laid out by NEHI. Years ago, doctors based in the community authorized a patient’s admission to the hospital, performed rounds and authorized the discharge. So the same provider was with the patient throughout the process.

Now, the cast of characters has grown and there are many patients with chronic conditions who see both primary care doctors and specialists, inside and outside the hospital. Hospitalists, or doctors who only work inside hospitals, see patients inside the hospital. If the patient goes home, the services of a visiting nurse may be required. Other patients instead go to long-term acute care hospitals or skilled nursing facilities. And on top of that, disease management advice may be provided to a patient over the phone on behalf of an insurance company.

Shorter hospital stays and complex conditions mean that patients after their discharge may need a lot of assistance. This all results in a need for much more communication and coordination among providers, says NEHI.

Team Care Could Help
New models of care are emerging and all involve health care teams, and share core attributes, says NEHI. There is one designated, accountable leader or manager on the team and there’s coordination among doctors, nurses, pharmacists and others.

Also needed are accurate lists of the prescriptions a patient was using prior to hospitalization, which can be difficult but are needed so that the patient can be given an explanation of the changes in medications as a result of the hospitalization. Without that explanation, the patient may not be clear on what drugs to use, potentially leading to adverse events.

The teams also need to talk with patients and their family members or other caregivers about the plan after discharge for medications and how they will fit into daily living, says NEHI. Patients who have just left the hospital may not be in the best condition to understand a drug regimen so communication with family members is key, says NEHI. And there should be follow up in the form of a home or office visit with a nurse or doctor soon after a patient is discharged.

NEHI also has advice for hospitals including:

  • Greater and more effective use of electronic prescribing systems, to improve the accuracy of medication histories.
  • Increased use after discharge of community nurses and pharmacists, and better communication among prescribing doctors or nurses and other providers.
  • Advancements in patient engagement and counseling that stress the need for patients to manage their own medications.
  • Improved use of technology to help with drug monitoring and reminders to patients who can’t cope on their own and don’t have family members or caregivers at hand.

The National Association of Chain Drug Stores Foundation applauded the NEHI report, saying that it highlights the role played by pharmacists in stemming hospital readmissions as well as use of teams that include pharmacists.

• Report on Medication Adherence (pdf)

Jane Norman can be reached at [email protected].  

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Improved Economy Eases Pressure on Medicaid

By Rebecca Adams, CQ HealthBeat Associate Editor

October 25, 2012 -- Lower-than-expected Medicaid enrollment growth led to an almost-record low in annual spending growth in the program in fiscal 2012, according to an annual Kaiser Family Foundation survey of 50 states released last week.

Medicaid spending in fiscal 2012, which ended June 30 in many states, grew by only 2 percent on average, which was slightly less than legislators expected. The main reason for the better-than-anticipated growth rates is that the economy improved and fewer people enrolled in the federal-state program. Enrollment grew by 3.2 percent, which the report noted was the lowest growth rate since the early days of the recession in 2008.

For fiscal 2013, legislators are planning for an average 3.8 percent total spending growth—a higher level than in fiscal 2012, but still one of the three lowest Medicaid growth rates in the past 15 years, according to the Kaiser analysis.

The reason for the higher growth expectation is that the economy is showing signs of recovery, which would bring in additional tax revenues and reduce demand for Medicaid services. About one-third of state officials said that they could face a Medicaid shortfall in fiscal 2013, compared to more than half of states that said so at the start of 2012, the report said.

Medicaid is a program with cyclical growth. When the economy is poor and people lose their jobs and insurance, more people become eligible, so enrollment increases and strains the system. A decade ago, spending growth was much higher than it currently is, reaching a rate of 12.7 percent in 2002 as rising enrollment produced greater demands for services. Then, in the middle of the decade, enrollment growth fell as the economy improved. In 2007, enrollment actually declined. But as people’s incomes fell during the recession and they lost insurance, enrollment growth picked up again. During the recession, Congress stepped in temporarily to provide additional funding for Medicaid and ultimately provided about $100 billion in higher federal payments from October 2008 through June 2011.

“While still a key priority, the singular focus on budget shortfalls and cost containment eased somewhat compared to prior years,” the report said.

Even though economic conditions are improving now, several states still cited concerns about Medicaid growth. The aging of the population was listed as a source of spending growth for 15 states as more people faced disabilities and health problems requiring long-term care needs.

State officials also reported continued action to lower costs, with 48 states in fiscal 2012 and 47 states in fiscal 2013 planning some type of change intended to lower costs. The most common strategy was lowering payments to medical providers. A total of 45 states cut provider payments last year, and 42 states said they plan to cut rates this year.

States also are considering trimming benefits. In fiscal 2012, 18 states eliminated or restricted benefits, while eight states in 2013 have plans to do so. The most common services that were targeted were dental, vision care, personal care services for the disabled, therapy and medical supplies.

Many states looked to trim benefits to save money because the 2010 health care law (PL 111-148, PL 111-152) restricts states from making major changes to eligibility or enrollment procedures through the law’s maintenance-of-effort provisions. Those restrictions will last until 2014 for adults and 2019 for children.

The use of managed care also continues to grow, the report said. In fiscal 2012, 20 states said they were expanding the use of managed care. In fiscal 2013, 35 states are expanding managed care—with 10 states saying that they use managed care to handle beneficiaries’ long-term-care needs.

State officials also are grappling with decisions about whether to expand their Medicaid programs starting in 2014 as the health care law allows. The law also requires states to streamline their enrollment procedures by 2014. The law offers a high federal payment matching rate of 90 percent if states put up 10 percent of the costs to upgrade or replace their Medicaid eligibility systems.

And almost all states said that they were taking advantage of that higher rate. (Currently, the federal matching rate for other services the federal government covers averages about 57 percent of costs).

The 130-page Kaiser report details Medicaid decisions in the states, including cost containment and enrollment changes to the use of managed care, based on a 20-question survey sent to all states. State policy makers have been known to turn to the report and its charts of state actions to track trends or find out what changes other states are making with their Medicaid programs. The analysis also includes a more detailed look at activities in Massachusetts, Ohio, Oregon and Texas.

Kaiser report (pdf)

Rebecca Adams can be reached at [email protected].

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Kaiser Study Says House Budget Medicaid Plan Chops $1.7 Trillion

By CQ Staff

October 23, 2012 -- Projected federal spending on Medicaid would fall by $1.7 trillion from 2013 to 2022 under the plan the House Budget Committee approved earlier this year, says an analysis released last week by the Kaiser Family Foundation.

The plan could leave 31 million to 38 million fewer people with Medicaid coverage in 2022, said the analysis, prepared for the foundation by the Urban Institute.

The Budget Committee plan, approved by that panel March 21, would repeal the 2010 health care law and convert Medicaid into a block grant program. The full House approved the plan March 29.

Of the $1.7 trillion—a 38 percent decline compared to current projected spending—$932 billion would come from repealing federal funding of the Medicaid expansion under the health care overhaul (PL 111-148, PL 111-152), and $810 billion would come from converting Medicaid into a block grant program. The cuts related to the block grant would become increasingly steep over time, said the report.

Seventeen million fewer people would be covered by Medicaid because of the repeal of the health care law, and 14 million to 21 million fewer would be enrolled because of block grants, the study said.

Medicaid payments to hospitals could drop by as much as $363.8 billion and those to nursing homes by $222 billion, a 22 percent cut. The study is an updated analysis of a study prepared by the Urban Institute in May 2011.

The states that would be hardest hit by the switch to a block grant alone are: Alaska, Hawaii, Montana, North Dakota, South Dakota, Wisconsin, and Wyoming. All would face a 24 to 25 percent reduction in expected spending, compared to the national average of 22 percent lower spending.

The states that would face the sharpest declines due to a combination of both the change to a block grant and repeal of the 2010 health care law are: Florida, North Dakota, Arizona, Georgia Texas, Colorado, and Nevada. That assumes that those states would have chosen to expand their Medicaid programs, although not all are expected to do so.

This year, Medicaid provides health and long-term care coverage to about 55 million low-income Americans in an average month. That number is expected to grow substantially starting in 2014 when states have the option of expanding their programs.

Under the idea of a block grant, federal spending would be capped each year and sent to each state based on a formula that would rise annually to account for population growth and inflation. That type of formula is expected to grow much more slowly than historical spending trends in Medicaid. Republicans have said that their plan would give states additional flexibility, but have not spelled out how that would work. State officials currently have the flexibility to ratchet back optional benefits, including prescription drugs, but must meet basic federal coverage requirements.

State by State data (pdf) | Chart Book (pdf) | Report (pdf)

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Duals Project Approved in Washington State

By Rebecca Adams, CQ HealthBeat Associate Editor

October 26, 2012 -- The Centers for Medicare and Medicaid Services(CMS) has approved its first managed fee-for-service demonstration in Washington state for people who are dually eligible for Medicaid and Medicare.

The CMS duals demonstration will launch in Washington state April 1, 2013, and continue until December 31, 2016. The goal of the project is to better coordinate the care of people who are eligible for both programs.

Nationally, the duals demonstration is an effort to allow states to experiment with different ways to better align the Medicare and Medicaid programs through managed care or managed fee-for-service. A total of 26 states have asked to participate.

Washington is the second state that CMS officials have given a green light to proceed. The first was Massachusetts—a managed care pilot that was approved two months ago.

The nationwide duals demonstration project has been controversial from the start, particularly the managed care aspect. A variety of policy experts and stakeholders, including the Medicare Payment Advisory Commission (MedPAC), have raised questions about whether the demonstration will involve too many patients or move too quickly. Some lawmakers worry that beneficiaries could be confused by changes.

CMS officials have approved just part of Washington state’s request so far and are still considering a plan to expand managed care for dually eligible beneficiaries in the state.

Supporters of the overall demonstration effort throughout the nation say that the status quo for dually eligible people is unacceptable because these patients may not have anyone coordinating care for their complex treatment needs. In many instances, they have a number of doctors and take a long list of medications, which can leave them vulnerable to dangerous drug interactions or unnecessary services. The fragmented care could mean that they don’t get preventive care that they need.

Under the approved initiative, patients can choose to enroll in a medical home that will be designed to coordinate all of the care that a beneficiary gets—including medical, mental health, substance use treatment, long-term services, and other social services such as housing and food assistance. Providers are expected to follow up after a patient has been in a medical facility, such as a hospital, and check on issues such as whether the beneficiary is taking his or her medication properly.

The so-called dual eligible population of beneficiaries in Washington is about 115,000 people as of June 2011. About 65,000 are people who are 65 or older and 50,000 are persons with disabilities under the age of 65. The demonstration is expected to operate in all but three counties in the state (King, Snohomish, and Whatcom counties, where the state is pursuing the managed care model allowed under the duals initiative). The state can expand its managed fee-for-service effort to those three counties anytime before Nov. 1, 2013.

Washington demonstrated its interest in the duals demonstration early on. It is one of 15 states that received an 18-month planning grant from CMS to develop a design and implementation plan for service delivery models that integrate care for people who are dually eligible for Medicare and Medicaid.

Rebecca Adams can be reached at [email protected].

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Medical School Enrollment Grows, but What About Residencies?

By Jane Norman, CQ HealthBeat

October 23, 2012 -- The good news for medical schools is that aspiring doctors are applying at a robust pace. More than 45,000 U.S. students applied for the fall 2012 class; that included a record number of black and Hispanic students, and both minority groups achieved new highs in enrollment, according to a report released last week.

The bad news is that a funding cap on federally funded residencies that Congress imposed as part of the 1997 Budget Control Act (PL 105-33) remains, and leaders of medical colleges continue to warn that, without some action, a major problem looms by the end of the decade.

Darrell G. Kirch, president and CEO of the Association of American Medical Colleges (AAMC), said in a conference call with reporters Tuesday that an annual enrollment report prepared by the association shows improvements in the number and diversity of applicants for first-year medical training. “This is important because we are facing a physician shortage,” Kirch said.

The group has projected that the United States faces a shortage of 90,000 doctors by 2020, as older practitioners retire, the population grows and the health care law (PL 111-148, PL 111-152) expands access to health care.

In reaction, the AAMC has called for a 30 percent increase in enrollment, and Kirch said that’s being boosted by the addition of 11 new medical schools that began admitting classes between 2007 and 2012. Four more are slated to open by the fall of 2013, he said.

Medical schools are also doing more to recruit applicants from underrepresented backgrounds, he said, including through social media.

The report by the AAMC, a nonprofit association that represents all 141 accredited U.S. medical schools, said total applicants for the medical school class that entered in the fall of 2012 increased by 3.1 percent over the previous year. Overall, there were 45,266 applicants.

Kirch said many med school hopefuls had research experience already or had backgrounds in community service, showing that the “best and the brightest” continue to be attracted to careers in medicine.

Of the applicants, 3,824 were black, the largest number ever. There were 3,701 Hispanic applicants, again the largest number on record.

The report said 1,416 black students and 1,731 Hispanic students ultimately enrolled in medical school this fall. “The reality is the American population is becoming more diverse, and we need the physician population to reflect that,” said Kirch.

However, he warned that the class that entered this fall will be graduating in 2016 and seeking residencies, and unless Congress acts there won’t be enough slots available for all the aspiring doctors. Residences can take from three to seven years. “We just can’t ignore this problem,” Kirch said.

But, so far, the funding picture for residencies is not bright. Both parties have targeted graduate medical education, which Medicare supports, for cutbacks. A House measure (HR 6352) proposed by Illinois Republican Aaron Schock and Pennsylvania Democrat Allyson Y. Schwartz would add 15,000 graduate medical education slots over five years (See related story CQ Today, Aug. 6, 2012). In the Senate, Majority Leader Harry Reid of Nevada and fellow Democrats Bill Nelson of Florida and Charles E. Schumer of New York proposed a similar bill (S 1627). Both remain in committee.

Kirch said it’s difficult to get lawmakers to focus on the residency issue with the November election looming. “It’s a very uncertain time in Washington,” he said. But he said medical school leaders can’t think of a more important issue than ensuring that there are enough physicians at hand to serve the U.S. population in coming years. There are already shortages of surgeons in many areas and specialists such as child psychiatrists, he said. 

AAMC Enrollment Report (PDF)

Jane Norman can be reached at [email protected]

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