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September 12, 2011

Washington Health Policy Week in Review Archive 95dc2e27-d4a3-4093-8c7b-fbf44e5043e8

Newsletter Article


Report Scores States on Long-Term Care Support

By Jane Norman, CQ HealthBeat Associate Editor

September 8, 2011 -- A new state-by-state scorecard on long-term care recently released shows eight states at the top when it comes to doing best at providing services and support for the elderly and people with disabilities.

Minnesota, Washington, Oregon, Hawaii, Wisconsin, Iowa, Colorado, and Maine are performing best in a variety of ways, though they still have room to improve, says the scorecard developed by AARP, The Commonwealth Fund, and The SCAN Foundation.

There's wide variation among states because there's no uniform way to approach long-term care in the United States, the report says. Most of the policy issues in play in long-term care involve Medicaid, a federal–state program that pays for nursing home care and other services for low-income people and allows states to determine how they will provide that care.

States have direct control over the extent to which low-income people and those with disabilities on Medicaid are supported in staying in their homes and avoid going into costly nursing home care, says the report.

Ways to improve the quality of Medicaid while reducing costs are also likely to figure in discussions about deficit reduction in a congressional supercommittee this fall.

The report's researchers say it is the first that takes a multidimensional approach in measuring performance in long-term care at the state level. It's designed to "begin a dialogue among key stakeholders so that lagging states can learn from top performers and all states can target improvements where they are most needed," says the report.

At the bottom of the list are Mississippi, Alabama, West Virginia, Oklahoma, Indiana, and Kentucky.

The scorecard looked at four aspects of long-term care:

  • Affordability and access—items such as the median annual nursing home private pay cost as a percentage of median household income for people over 65.
  • Choice of setting and provider. For example, the number of home health and personal care aides per 1,000 population.
  • Quality of life and quality of care, such as the percentage of high-risk nursing home residents with pressure sores.
  • Support for family caregivers, such as the number of health maintenance tasks that can be delegated to health aides.

States that fared the best on the scorecard improved access to services by transforming their Medicaid programs to cover more of the population in need and offer alternatives to nursing homes, the report said.

They also made it easier for people to obtain information about long-term care by developing a single point of contact system. And they helped stressed-out family caregivers by giving them legal protections and services to prevent burnout.

Poverty and high rates of disability make it tough for states to move forward, the report acknowledges. Many low-scoring states are in the South and have low median incomes.

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Commonwealth Fund Study: Having Insurance Does Not Prevent Medical Bill Stress

By CQ Staff

September 8, 2011 -- The number of underinsured adults—who often skip needed medical tests or don't fill prescriptions—increased by 80 percent between 2003 and 2010, according to a study released by The Commonwealth Fund.

The study found that 44 percent of U.S. adults—81 million people—either were underinsured or uninsured in 2010, up from 75 million in 2007 and 61 million in 2003.

Underinsured families are at nearly as high risk as the uninsured because, while they have health insurance, holes or limits in their plans exposes them to often unaffordable medical costs,'' said Cathy Schoen, senior vice president at The Commonwealth Fund and lead author of the study, which was published in Health Affairs.

The report says that the health care overhaul law (PL 111-142, PL 111-158) could provide significant relief to these who are underinsured. But Schoen cautions that the plans offered once the law takes full effect in 2014, must "keep deductibles and out-of-pocket costs low for essential, effective health care."

The data for the study comes from The Commonwealth Fund 2010 Health Insurance Survey, a telephone survey of 4,005 adults conducted by Princeton Research Associates International from July 14 to Nov. 30, 2010.

The study found that 46 percent of underinsured and 63 percent of adults without any insurance didn't fill a prescription, see a doctor when they were sick or went without a recommended medical test or treatment compared with 28 percent of those with more adequate health insurance.

And only slightly fewer underinsured (52 percent) people had trouble paying their medical bills, were contacted by a collections agency, had to change their way of life to pay medical bills or were paying off medical debt over time than those without coverage (58 percent). That compares with 27 percent of well insured adults who had such problems.

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Medicare Official Suggests Other Possibilities for Future Bundled Payment Experiments

By Rebecca Adams, CQ HealthBeat Associate Editor

September 6, 2011 -- The Center for Medicare and Medicaid Innovation will soon be experimenting with a number of new programs to test the idea of bundling payments to a team of medical providers, a top health official said in a conference call.

Valinda Rutledge, director of the Patient Care Models Group at the Innovation Center, said on a call hosted by The Advisory Board Co. that a new project announced Aug. 23 that will test the concept of bundled payments is just an initial step. Under bundled payments, providers who would normally receive separate reimbursements for each service given to a patient instead get a payment they would share for each treatment episode. Hospitals, physician groups and other providers can apply to receive bundled payments through the project announced in August.

Rutledge said that she is also collecting ideas about how to create other opportunities for bundled payments. Examples she cited include a potential initiative to bundle payments for treatment of a specific disease or for patients with chronic diseases.

"This is our first phase in bundled payments," she said. "We have some other phases that will be coming out."

The program announced Aug. 23 allows bundled payments under four different models of care. The first would be for acute care hospital stays, and providers who want to participate have to send health officials a nonbinding letter of intent by Sept. 22. The other models—which have a Nov. 4 deadline for a letter of intent—would combine payments for acute care hospital stays as well as post-acute care associated with a stay, or just post-acute care. Under the fourth model, which also has a Nov. 4 deadline, the Centers for Medicare and Medicaid Services, which runs the innovation center, would create a single, prospective bundled payment for all services provided by a hospital, physicians and other providers during an inpatient stay.

The Innovation Center is not limiting the number of applicants who will be able to participate in the program announced last month, Rutledge said. The guidelines are that the center needs enough participants to be sure that there is a sufficient number of diverse experiments conducted so that officials can gauge whether the idea of bundled payments can be expanded nationally.

Under the Aug. 23 program, Innovation Center officials can waive anti-trust rules such as anti-kickback statutes or rules prohibiting providers from referring patients to facilities in which they have an interest. Those waivers would be granted on a case-by-case basis, said Innovation Center officials. Providers would not have to get additional waivers from the Department of Health and Human Services or the Office of Inspector General.

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Appeals Court Decision on Health Care Law Gives Obama a Win—with an Asterisk

By Jane Norman, CQ HealthBeat Associate Editor

September 8, 2011 -- A federal appeals court shunted aside two challenges to the health care law on procedural issues, leaving the Obama administration with two fewer legal headaches in implementing a law that each day comes closer to being fully in force.

In a policy plus for Obama, the 4th District rulings by three Democratic appointees also give states no excuse to stall in setting up the health insurance exchanges needed for the sale of individual and small-group policies in 2014. The rulings provide no new fodder for members of Congress to renew debates over how the law might be changed. They might rob the outspoken Virginia Attorney General Kenneth T. Cuccinelli, who brought one of the suits, of a forum. And they give opponents in the GOP and the business community no fresh meat in their drive for repeal.

The decision by the Court of Appeals for the 4th Circuit to throw out the cases will be complex for the law's advocates to explain to the public and left the outlook as cloudy as ever as to how the Supreme Court may swing on a final decision on the law (PL 111-148, PL 111-152). Both of the losing parties—Cuccinelli and Liberty University—vowed to appeal the rulings to the Supreme Court.

The decisions also introduced yet another element of uncertainty swirling around the multiple lawsuits possibly bound for the high court. That's because two appeals court judges gave credence to an argument that the federal courts don't even have jurisdiction over the law until the law's penalties—which the judges said are taxes, not penalties—start to be collected from those who decline to buy insurance. Taxes can't be challenged until they are paid, under the Anti-Injunction Act.

Supporters of the law suggested that procedural argument could be so powerful that the Supreme Court could issue a decision on it alone and never get to the merits of the cases against the individual mandate. Courts could see the tax question as a barrier to any litigation before the law is fully in force, said Walter Dellinger, a supporter of the law and former acting solicitor general.

The decisions followed two other appeals court decisions this summer, one in the 11th Circuit that found the individual mandate unconstitutional but left the law intact and one in the 6th Circuit that upheld the law. That second case, brought by the Thomas More Law Center, already has been appealed to the Supreme Court.

As usual, those who back the law found many elements of victory in the court decisions, while opponents stressed that the issues centered only on judicial procedure and not whether the law is constitutional.

"This decision is another victory for the Affordable Care Act and the tens of millions of Americans already benefiting from this landmark law," wrote presidential assistant Stephanie Cutter on the White House blog, noting that two judges in the Liberty case said they think the law is constitutional.

But Robert Alt, an analyst with the conservative Heritage Foundation, said those judges' statements are irrelevant. "That, my friend, is dicta," he said. "That's not a holding of the court." He also said he believes the tax jurisdiction issue is an outlier and won't hold much influence over Supreme Court decisions on the law.

Two separate decisions were recently issued, following May 10 arguments at the appeals court in Richmond, Va. A suit filed by Cuccinelli, based on a Virginia law enacted shortly after the federal law was signed, was dismissed for lack of standing by all three appeals judges—Diana Gribbon Motz, Andre M. Davis and James A. Wynn, Jr.

The Justice Department had appealed a Dec. 13 ruling by U.S. District Court Judge Henry E. Hudson of the Eastern District of Virginia striking the law's requirement that all Americans have health insurance. Hudson was the first federal judge to find the individual mandate unconstitutional.

Allowing states to pursue such suits would make them into "roving constitutional watchdogs," the appeals court said.

The second decision went against Liberty University of Lynchburg, Va., but was much more layered. Motz and Wynn both said that the case should be dismissed for lack of jurisdiction in the 2-1 decision, while Davis disagreed.

Motz did not make a statement on whether she believes the law is constitutional. But Wynn and Davis both said they believe it is. Davis said that "I would hold that the challenged provisions of the act are a proper exercise of Congress' authority under the Commerce Clause to regulate the interstate markets for health services and health insurance."

Ian Millhiser, an analyst of judicial policy at the liberal-leaning Center for American Progress, said that the statements by Wynn and Davis constitute a victory for the law because they are two more federal judges in favor of it, even if the ruling was not on that basis. "The most important point is that a majority of the 4th Circuit panel said yes, the law is constitutional," Millhiser said.

But Matthew Staver, the law school dean at Liberty who argued the case before the appeals court, said the decision was surprising because no one involved in arguing the suit had contended it was relevant. Staver said that Liberty plans to ask the Supreme Court for a writ of certiorari to hear the case, rather than requesting an "en banc" hearing of the case by all the appeals judges on the 4th Circuit.

Grace Marie Turner, a policy analyst who opposes the law, said it was not a victory for the administration because there was no decision on the merits. "But neither does it help those opposed to the law," she wrote in National Review Online.

Cuccinelli also said in a statement he would ask for certiorari. "Our disappointment stems not only from the fact that the court ruled against us, but also that the court did not even reach the merits on the key question of Virginia's lawsuit—whether Congress has a power never before recognized in American history: the power to force on citizen to purchase a good or service from another citizen," he said.

But the judges in oral arguments on the case repeatedly raised the standing issue, and in their ruling they said that the individual mandate "imposes no obligation on the sole plaintiff, Virginia."

Analysts said the lack of standing found for Virginia won't affect the 11th Circuit suit filed by 26 states. That's because the states are accompanied by other plaintiffs who do have standing—two individuals and the National Federation of Independent Business.

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Health Care Consolidation Worries Ways and Means Members

By Rebecca Adams, CQ HealthBeat Associate Editor

September 9, 2011 --- Ways and Means Committee Republicans and Democrats alike expressed concern about consolidation in the health care industry, saying that mergers and acquisitions can drive up medical prices.

Health Subcommittee Chairman Wally Herger, R-Calif., said at a hearing that the session was intended to be "a starting point for further assessment of the consolidation issue." He said that "all health care costs need to be closely examined, especially in this challenging economy."
Herger and some other GOP members of the panel seemed less inclined to let the market work its will and were open to stronger federal oversight of consolidation.

"I recognize that, at least in theory, consolidation can lead to greater efficiencies and improved outcomes," Herger said. "Unfortunately, research has shown that higher prices are more often the result."

Several witnesses at the hearing said that increased consolidation—of health insurance plans, different hospitals, pharmaceutical benefit management companies, and hospitals with other types of providers such as physician practices—can decrease competition and give larger players more leverage in price negotiations.

"Providers in more concentrated markets charge higher prices to private payers, without accompanying gains in efficiency or quality," said Martin Gaynor, a professor at Carnegie Mellon University.

Those higher prices can drive up prices for employers, who often pass those costs on to their workers through higher cost-sharing.

The hearing did not include any representatives of companies that have recently merged with or acquired others. But these companies often defend consolidation as a way to cut waste and duplication.

An example of one major merger that is in the works is between pharmacy benefit manager giants Express Scripts Inc. and Medco Health Solutions Inc., which was announced in July. The proposed merger would combine the largest and third-largest pharmacy benefit managers to create a company that is twice as large as the next biggest competitor.

At the time, George Paz, president and CEO of Express Scripts, said in a statement that companies like his and Medco "have a responsibility to provide the leadership and resources required to drive out waste in health care and provide the best care in the world." 

There were a large number of hospital mergers and acquisitions in the 1990s, with the pace slowing down in the early 2000s, Gaynor said. In the past few years, the activity has increased again, with high number of merger and acquisitions in 2004, 2005 and 2007.

Paul B. Ginsburg, president of the Center for Studying Health System Change, also noted that some hospitals have been driven out of business by their competitors, which is another way that markets have become more concentrated in recent years.

Subcommittee ranking Democrat Pete Stark, R-Calif., said he hopes more hearings will be held to bring attention to congressional concerns by members of both parties.

Herger did not spell out when he plans additional hearings or other action, but said the issue is a priority for him.

"At a time of elevated unemployment, Congress must ensure that it's doing all it can to foster a more competitive environment that promotes growth, not one that adds additional cost burdens and sticks it to employers, and by extension, to their employees," Herger said.

Members of another committee also signaled concern about this topic, specifically the Express Scripts and Medico merger proposal. Top Democrats on the House Energy and Commerce Committee wrote to Federal Trade Commission Chairman Jon Leibowitz about their issues with that consolidation proposal. The letter noted that the proposed merger would combine the largest and third-largest pharmacy benefit managers to create a company that is twice as large as the next biggest competitor. The new combined pharmacy benefit manager would control one-third of total market share and 60 percent of the market share for mail-order drugs, wrote Henry A. Waxman of California, Frank Pallone Jr. of New Jersey and Diana DeGette of Colorado.

"The proposed merger would affect hundreds of millions of Americans with private health insurance and have a potentially significant impact on drug cost for government programs including Medicare Part D, Medicaid, the Federal Employee Health Benefits Plan, and TriCare," said the letter, and "the impacts of this merger could be significant."

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Ways and Means Democrats Outline Possible Medicare Cuts for Debt Panel

By John Reichard, CQ HealthBeat Editor

September 7, 2011 -- The House Ways and Means Democratic staff has prepared a list of possible cuts to the Medicare program totaling more than $500 billion over 10 years, according to documents obtained by CQ HealthBeat.

Sarah Baldauf, a spokeswoman for California Democratic Rep. Pete Stark, the top Democrat on the Ways and Means Health Subcommittee, said the cuts are for "internal" use and that the list does not represent an endorsement of such reductions.

The list is being circulated among Democrats to prepare them for possible cuts that will be considered by the Joint Committee on Deficit Reduction. The committee is charged with recommending $1.2 trillion in cuts over 10 years as part of the debt ceiling law. If the recommendations do not become law, a trigger mechanism will cut two percent from Medicare payments as part of an overall package of reductions. The law also permits a combination of legislation from the committee and automatic reductions to reach that savings figure.

Some of the cuts, but certainly not all, were based on previous recommendations by the Medicare Payment Advisory Commission.

The summary lists the various cuts, policy rationale, and likely reaction of interest groups. Among the biggest reductions is $125 billion achieved by raising the eligibility age in Medicare over time to 67. Other major cuts include saving $120 billion by requiring drug companies to pay rebates for drugs now covered by Medicare that are provided to beneficiaries eligible for both Medicare and Medicaid; and $62 billion by bringing rural facilities known as critical access hospitals, sole community hospitals, and Medicare-dependent hospitals into the standard Medicare hospital payment system.

The leak of the list is like taking a baseball bat to a hornet's nest—it's full of controversial cuts that will set off frenzied lobbying activity on Capitol Hill.

Skilled nursing facilities, home health agencies, inpatient rehabilitation facilities and long-term care acute hospitals would absorb up to $28 billion in cuts over two years through a freeze on their Medicare rates over that period. Adding a co-payment to the first 20 days of a skilled nursing facility stay would raise $21 billion. Recouping fiscal 2011 "overpayments" to skilled nursing facilities would raise $4.5 billion—more than what was contained in a final payment rule recently issued by the Centers for Medicare and Medicaid Services.

A "value-based purchasing" program would cut reimbursements to skilled nursing facilities by collecting payments from them to form a pool of money to pay for higher-quality facilities' increased rates. While some of the facilities would receive more, the net effect of the program would be to reduce their payments overall. The list did not specify how much money would be saved.

Greg Crist, a spokesman for the American Health Care Association, said, "This is what happens when you only look at numbers, and not the policies or the implications."

Crist added that skilled nursing facilities "have already faced three rounds of cuts this year. There's only so much that can be absorbed or passed on. Access to our facilities would be jeopardized the way these proposals are structured now." The nursing home industry also has predicted job losses from the cuts.

Skilled nursing facilities and hospitals would see cuts of up to $30 billion through fewer reimbursements for the losses they sustain when Medicare patients don't pay the out-of-pocket charges they are supposed to pay.

A 10 percent co-payment per episode of illness treated by home care agencies would raise $40 billion. Resetting payment levels to those agencies to reflect the fact that they now make fewer visits to patients per bout of illness would save $3 billion.

Teaching hospitals would lose up to $15 billion from lower payments for graduate medical education.

Hospitals in general would get to $5 billion in cuts through a recouping of previous overpayments from "coding creep"—classifying patients into higher paying categories when a new payment system took effect categorizing patients based on the severity of their illnesses.

About $24 billion would be raised from charging new co-payments and deductibles for clinical lab services. Medical imaging providers would take reductions of up to $2 billion from changes including "prior authorization"—requiring doctors to get permission from Medicare to order a specific imaging test.

Trimming payments for diabetic testing supplies would raise $800 million. Specifically, payment rates derived from competitive bidding for mail-order diabetic testing supplies would be instituted in retail pharmacies.

Another $3.2 billion would be saved by cutting payments for drugs administered in doctor's offices, such as drugs used in cancer chemotherapy. About $700 million would be garnered through tougher fraud-fighting efforts, including closer scrutiny of the sale of power wheelchairs.

Almost $3 billion would be raised by recovering erroneous payments to Medicare Advantage plans, the private health plans in Medicare. About $14 billion would be brought in by charging higher premiums to high-income Medicare patients for Part B doctor care and Part D prescription drug benefits.

Taxes or other changes to Medigap plans that pick up out-of-pocket Medicare charges would raise between $12 billion and $53 billion. Use of the "chained CPI" to set certain Medicare payments would save $7 billion.

The Democrats' list also noted that Republicans will likely propose budget savings by cutting back subsidies in the health care overhaul law. The list also notes a change in that law many Democrats would favor that would add a public option to insurance exchanges—a government-run health plan that the uninsured could enroll in. That would produce $88 billion for deficit reduction, the list says. But that has essentially no chance of becoming law.

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