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September 15, 2008

Washington Health Policy Week in Review Archive 59ff40c3-0ab5-4d82-8993-9ac5d8aac300

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Another Vote on Children's Health Insurance Expansion Unlikely this Year

By Alex Wayne, CQ Staff

September 8, 2008 -- House Democratic leaders likely will not hold another vote on an expansion of children's health insurance, figuring that they still cannot overcome President Bush's veto of the bill and that they do not want to give vulnerable Republicans an opportunity to change their positions on the issue.

Bush vetoed two bills (HR 976, HR 3963) last year that would have expanded the State Children's Health Insurance Program (SCHIP) by about $35 billion, to $50 billion over five years—enough to cover about 10 million children, Democrats say. Democrats came into the 110th Congress promising that an SCHIP expansion would be a top priority, and have said they expect voters to punish Republicans who opposed it.

SCHIP is intended to provide health insurance to children from families who are low income, but not poor enough to qualify for the larger Medicaid program. Before they left for their August break, Democrats were discussing holding another vote on an SCHIP expansion this fall, to increase pressure on Republicans ahead of the November elections. But several factors have conspired to make another vote infeasible.

For one, members of Congress want to leave the Capitol by the end of September to campaign, and already face a busy schedule working on bills to fund the government and possibly to stimulate the economy and respond to high gas prices.

For another, the cost of an SCHIP expansion has grown. The $35 billion cost of the bill last year was to be offset by a large increase in tobacco taxes, including bumping the cigarette tax from 38 cents to $1 per pack.

But now, the same tobacco tax increase alone will not cover the cost of the bill. That is because the five-year period the bill would cover has shifted from fiscal 2008–2012 to fiscal 2009–2013. In essence, Democrats lost a "cheap" year of the expansion—2008—and added an "expensive" year—2013—but without an increase in revenue.

"No final decision on SCHIP has been made, but it is looking more likely that there will not be a vote while we still have a president unmoving in his opposition and a critical mass of Republicans to back up his veto," said a House Democratic leadership aide.

But other aides said that as a result, vulnerable Republicans will be left to defend their votes last year against an expansion, without an opportunity to change their positions.

"Republicans have some explaining to do," said Nick Papas, a spokesman for House Democratic Caucus Chairman Rahm Emanuel of Illinois. "Voters across the country will demand to know why Republicans stood between 10 million children and their health care."

The House attempted to override Bush's vetoes of both bills, but both tallies fell short of the two-thirds majority necessary. The override attempt on HR 976 failed 273–156, and the vote on HR3963 failed 260–152.

There are 25 House Republicans who voted against the expansion last year and are identified by as facing something less than a "safe" re-election campaign. Many of them have face opponents who have tried to highlight their votes against an SCHIP expansion.

Most House Republicans opposed the bill last year because they thought it would allow too many middle-income families to enroll their children in SCHIP and because they thought it did not contain sufficient safeguards against illegal immigrants enrolling in the program. A House Republican leadership aide said that the public would perceive a vote now as "purely political," and that party leaders are confident that few, if any, of their members have changed their positions on the issue.

"All of them remained pretty comfortable with their positions," the aide said. "If they weren't going to flip after last fall, when it was vote after vote after vote and a barrage of ads, etcetera, I think that was as bad as it possibly could be."

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Bigger Rewards--and Stronger Penalties--May Help Improve Health Care Quality, Experts Say

By Mary Agnes Carey, CQ HealthBeat Associate Editor

September 9, 2008 -- Paying health care providers more to do quality work and insisting they abide by a set of minimum quality standards would go a long way toward improving the quality of medical care that patients receive, witnesses told the Senate Finance Committee Tuesday.

After his testimony, William Roper, chairman of the board of directors of the National Quality Forum, said he would tie as much as 5 to 10 percent of a provider's payment to the quality of care they delivered. Roper told the Finance panel that changing the health care industry's attitude about quality will take time but be well worth it.

Roper ought to know. The former director of the Centers for Disease Control and Prevention and former administrator of the Health Care Financing Administration (now the Centers for Medicare and Medicaid Services, or CMS), Roper has worked on the issue for 25 years and has seen institutions' focus on quality rise from being "the committee that met on Tuesday afternoons" to being a major concern among health care providers. "Now quality is everybody's problem," said Roper, who also is CEO of the University of North Carolina Health Care System and dean of the university's medical school.

Tuesday's session was one of several hearings the Finance panel has held to discuss the complicated issues involved in overhauling the nation's health care system. Previous sessions have focused on controlling health care costs and expanding access to care. Quality is critical part of the equation, said Finance Chairman Max Baucus, D-Mont.

With health care costs growing at roughly seven percent a year, "we simply cannot afford to continue paying for inappropriate or inadequate medical care," Baucus said. "We need to encourage high-quality and high-value care. And we need to reward health care providers who deliver it."

Sen. Charles E. Grassley of Iowa, the panel's ranking Republican, agreed. "We need incentives for quality versus quantity," he said.

Panelists offered several approaches to improving health care quality. Peter V. Lee, executive director of national health policy for the Pacific Business Group on Health, urged the creation of a major national initiative to measure and compare the effectiveness of drugs, devices, and procedures with a process "that can be trusted by all stakeholders by being transparent and rigorous." Baucus and Senate Budget Committee Chairman Kent Conrad, D-N.D., have introduced legislation (S 3408) to create a public–private institute to perform comparative effectiveness research.

Lee also urged the development of "robust, independent systems" for collecting and reporting performance results on patients' outcomes, cost and patients' views of care and "whether the right processes of care are being delivered by doctors, medical groups, hospitals, nursing homes, and other providers."

The Finance witnesses also stressed that there must be widespread consensus among health care providers about how quality is measured, with the measures tested in pilot projects before they are more broadly implemented. One set of quality standards to follow, rather than different sets from private insurers and federal or state government health care programs, also would make it easier for providers to participate.

Financial incentives are critical as well, witnesses said. Greg Schoen, regional medical director of the Fairview Northland Medical Center in Princeton, Minn., said his facility earned $40,445 over three years for participating in a hospital quality incentive demonstration operated jointly by CMS and Premier Inc., a hospital consortium.

Receiving that money was an incentive for the facility to do well, as was discovering that his hospital's quality performance was in the bottom 10 percent of participating hospitals. His staff worked harder to correct problems. "It created a focus in our organization that had not existed previously," he said, adding that the facility had to bear additional start-up costs as part of the program.

While money is important, so are mandates for participation. Without that pressure, providers may not make the widespread health care quality changes that are necessary system-wide, witnesses told Finance members.

To implement broader use of health information technology, for example, Medicare could require it as part of participating in the program, Roper said. "Without that kind of vigorous push by people in Washington leading the charge, it's not going to happen," he said.

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Health Plans May Be 'Universal', But They're Not Global

By Jesse Stanchak, CQ Staff

September 11, 2008 -- The United States would be better off designing its own health care plan from the ground up rather than emulating the health systems of its neighbors, panelists at a forum hosted by U.S. Chamber of Commerce said Thursday.

Representatives hailing from France, Japan, Taiwan, and Switzerland—countries with universal health care systems that also are grappling with rising costs and aging populations—spoke highly of their respective country's plan, but were reluctant to suggest that the United States try to copy their methods. While there's clearly much domestic policy makers can learn from foreign health plans, the United States may need to come up with a uniquely American solution to the nation's health woes, they said.

"I spent a lot of time looking at other countries' health care systems," said Cato Institute Senior Fellow Michael Tanner. "And what I haven't found is ... that one perfect system where everyone has care and there is no waiting and you get to pick your doctor and everyone's happy. Regardless of country, everyone hates their health care system." Tanner said he favored a market-based approach to health care, arguing that some countries with universal coverage plans, such as France, are looking to control costs by adding free-market components to their systems.

Jacques Drucker, a representative of the French Embassy, discussed the virtues and pitfalls of France's national health plan, which is really three different plans that citizens pay into based on the kind of employment they hold, he said. Drucker, who comes from a country where the national health plan pays for more than three-quarters of all health care expenditures, acknowledged that France is running a $4 billion health care deficit, forcing it to pursue cost saving adjustments such as limiting prescription drug coverage. But he denied the notion that the French endure rationed care or harbor resentment toward their national plan.

"The French have 60 million opinions on everything. Except maybe this: we love our health plan," he said. According to Drucker, France's plan has a more than two-thirds approval rating. The future of the plan lies in electronic health records and other efficiency increasing measures, he said.

Just across the border in Switzerland, however, universal health care takes on a very market-based twist. Swiss embassy representative Henri Getaz explained that in Switzerland, the government does not control health care directly, but rather requires everyone to buy health insurance and then pay their own co-pays and user fees, similar to care in United States. Unlike other countries with universal plans, the Swiss government only accounts for 17 percent of the nation's direct health care spending, he said.

In addition, the Swiss government plays a much larger role in regulating insurance plans than the U.S. government does for domestic plans. Swiss plans are not allowed to make a profit, Getaz said. Instead, the government redistributes risky cases among insurance providers, so that no one company has worry about getting stuck with too many unhealthy clients.

"We Swiss are quite risk adverse," Getaz said.

Tsung Mei-Cheng of Princeton University's International Center represented Taiwan, a country whose single payer system has already incorporated health IT measures and other changes mentioned by France's Drucker. Mei-Cheng argued that in a system where the government will always be responsible for paying for a person's care, there's a far stronger incentive to invest in things such as preventative care, electronic records, and best practices research.

"With a cradle-to-the-grave system, there's an incentive to keep people healthy that doesn't exist in a private plan that might only have to care for you for a few years," she said. Rather than only going to the doctor when they're very ill, most Taiwanese see some sort of health care professional an average of about 15 times a year, she said. When pressed as to how that could be possible without ensuring very long wait times to see a doctor, Mei-Cheng acknowledged that most visits are only between three and 10 minutes long.

Mei-Cheng said her country's system also is underfunded. While it is not running huge deficits like France's plan, the Taiwanese are unwilling to pay higher premiums, which limits the sorts of programs the government can implement. The biggest problem with Taiwan's system is that it is susceptible to political whims, which can severally limit the program's adaptability, she said.

The Japanese system, as explained by Japanese embassy representative Tadayuki Mizutani, is similar to Taiwan's, but faces much greater financial pressures, Mizutani said. Japan faces a declining population whose average age is fast advancing. There are fewer and fewer young people working to pay for the care of older citizens, even as costs rise at a rate faster than that of the average income. Mizutani says that by 2055 there will be 1.2 people between the ages of 20–64 for every person over 65, down from 3 younger people per senior in 2005, he said.

With increased costs come long waiting lines, Mizutani said.

"Japanese hospital waiting rooms are just like spas for the elderly. They're always in there" waiting to see a [doctor]," he said. "The joke is if you look for an older person in a hospital waiting room and they're not there, then they must really be sick!"

The example of Japan and Taiwan, two countries whose similar health care systems produce very different results, drives home a recurring theme of panel's discussion: fixing American health care isn't as simple as importing another nation's solution.

"It's hard just to understand your own health system," Getaz said. "It's even harder to understand why it works for you. And it's important . . . that you don't tell other countries 'just do what we do.' All systems must be different," he said.

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Lawmakers Begin Heavy Lifting to Overhaul Doctor Payment

By John Reichard, CQ HealthBeat Editor

September 11, 2008 -- A House Ways and Means Health Subcommittee hearing Thursday suggested that after years of short-term patches to head off payment cuts, lawmakers at last may be taking on the heavy burden of trying to fundamentally overhaul Medicare's troubled physician payment system. Ironically, what may be driving them to finally confront the problem is the quiet recognition that they are going have to abandon the fiscal discipline involved in the system now in order to complete the overhaul of a payment formula widely viewed as no longer tenable.

Witnesses at the House Ways and Means Health Subcommittee hearing offered solutions ranging from switching to "capitated" payments—giving physician groups a fixed per-patient payment amount in advance to deliver certain services—to setting Medicare spending growth targets for individual physician practices.

Perhaps more likely than either of those approaches were other solutions offered by witnesses—such as finding ways to increase payments for primary care relative to specialty services and making single payments for a package of services involved in treating a specific medical condition.

Witnesses also agreed that moving to a system of large, multidisciplinary group practices would not only help control physician and other costs, but also improve quality. But changes envisioned by witnesses to foster closer cooperation among doctors and between doctors and hospitals are so sweeping that they may entail wrapping some elements of physician payment reform into an overhaul of the entire health care system.

As is his wont, Subcommittee Chairman Pete Stark, D-Calif., mused that doctors can't be suffering terribly under the current system given their relatively high incomes. "I don't hear of any Porsche dealers repossessing cars," he said.

Gibes aside, Stark knows that ever-deeper cuts in physician payment driven by the current formula are political poison because of threats by doctors to stop treating Medicare patients. American Medical Association President Nancy H. Nielsen warned Stark that doctor defections are a certainty with more cuts, particularly the 20 percent decrease scheduled for Jan. 1, 2010, the expiration date for the latest short-term fix to block cuts. Another witness, former Medicare and Medicaid administrator Gail Wilensky, told the panel, "I am very worried about what is going to happen to physician participation" under the current payment "SGR" system.

By setting a yearly "sustainable growth rate" for Medicare spending on doctor care, the current formula aims to keep doctors from ordering too many tests and services and scheduling unnecessary visits to the doctor. The SGR is meant to counter the incentives doctors have in the current "fee-for-service" payment system in traditional Medicare to order lots of care to boost their incomes. Stark refers to the payments as a "piecework" system that allows doctors to make good money even though their basic payment rates have lagged rising practice expenses for the past half-a-dozen years.

The SGR punishes overprescribing of care by requiring yearly Medicare physician outlays in excess of the SGR spending target to be recouped through payment cuts. Each time Congress intervenes to block a cut, the pile of money that must be recouped grows ever larger, requiring bigger and bigger cuts.

Wilensky told the subcommittee that the current system makes no sense because individual doctors who do the responsible thing and don't overprescribe can't exert enough influence on overall spending to avoid payment cuts. By setting 100,000 "individual" SGRs tailored to individual medical practices, the Medicare program would give doctors the power to influence their payment rates by ordering services judiciously, she said.

Wilensky suggested that the Centers for Medicare and Medicaid Services could handle the job with more funding. But if lawmakers don't go that route, they should turn to "bundling," Wilensky said, and laid out a specific timetable for doing so. And even with individual SGRs, a "more aggregative way" of paying for physician services is needed to reward doctors who produce high quality, efficient care, she said.

"Payments could be developed that would cover all services provided by a physician to a particular patient during a discrete period of time—presumably a one-year period—for the care of a chronic disease," Wilensky said. The idea is that doctors would be more careful about ordering those services because their payment wouldn't be any higher if they were more lax. These payments preferably would also include "all ancillary services provided by the physician as part of the treatment of the chronic disease."

Also, single payments could be developed covering all the physician services provided in the hospital by a doctor for selected high cost or high volume "DRGs"—the diagnosis-based payment categories for which Medicare pays fixed sums of money for inpatient care. "Consideration also should be given to including the cost of the hospital stay as well," Wilensky said. Using a single payment for doctor and hospital services is seen as a way of encouraging doctors and hospitals to work together to provide treatment more efficiently, because they can share what is left over if the cost of their services is less than the payment.

Such payments "could be developed by CMS to begin by July 1, 2010, to cover all of the services provided for the most important chronic diseases, singly or for multiple diseases, provided to a patient over the course of a year."

At the same time, CMS should pursue other, more ambitious forms of bundling payment by issuing a request for proposals on how to do so, Wilensky advised. "A selection of one or two of these proposals should be selected for further development, with a final report due no later than June 30, 2011. Implementation of the new system could be set for Jan. 1, 2013. I don't think a new system could be implemented faster than this," Wilensky said.

Donald Crane, CEO of the California Association of Physician Groups, made a strong pitch for paying doctors under a capitated system. "Capitation incents frugality," he said. "That is its chief virtue." Crane said medical groups paid that way place a strong emphasis on prevention and early treatment to keep a lid on their costs. He said the payment approach is associated with organized systems of care, observing that "systems are more efficient than non-systems." Medical groups paid on a capitated basis invest in information technology to manage care and treatment costs, he said. Health IT has been adopted more widely in California because of the prevalence of capitated payment, he said.

The fee for service system on the other hand induces "churning"—too many doctor visits, for example—to boost incomes and keeps doctors operating in fragmented "silos" rather than together in systems, he said. Capitated groups provide "more affordable, really higher quality care," he said.

Bruce Vladeck, who served as head of the Medicare and Medicaid programs in the Clinton Administration, emphasized steps to strengthen primary care as a strategy for controlling Medicare physician spending. Stronger primary care means more attention to the overall health of a patient, better preventive care, and better coordination of services, advocates say.

"It has long been established that most of the countries that outperform the United States in health care quality and costs have higher ratios of primary care to total physicians than we do," testified Vladeck, now a senior health policy advisor with Ernst & Young. "Yet over the last decade, the proportion of American medical graduates pursuing primary care careers has fallen alarmingly," he said.

Vladeck called for measures such as financial assistance to medical students choosing primary care and higher Medicare payments for primary care services, including heavier payment "weights" for "evaluation and management" billing codes and add-on payments "to increase the fees of physicians who are really providing primary care." Higher payments for primary care would lead to savings because patients would stay healthier and have less need for costly specialty care, he suggested.

Vladeck also defended the current fee-for-service payment system. He said that "most of the other nations that provide high-quality medical care to their citizens at lower cost than we do, in part by relying more heavily on primary care services, continue to employ some variant of fee-for-service in their methods for most physician payments." U.S. insurers including HMOs have increasingly moved away from capitation, he said. "They've learned, at a minimum, that capitation-based systems have their own limitations and shortcomings, especially in an environment in which most of the physician community is still organized around relatively small, single-specialty practices."

Vladeck joined other witnesses in urging a move to multi-specialty group practices. Over time, "we will never develop adequately satisfactory alternatives to our current payment methods until a far larger proportion of American physicians are organized in multi-specialty group practices, whether free-standing or hospital-based," he said. Data "confirm that such practices outperform other models of physician organization in cost, quality, and care coordination."

Witnesses and lawmakers didn't spend much time addressing the elephant in the room—how on earth the subcommittee will come up with the tens if not hundreds of billions of dollars needed under current scoring rules to scrap the current payment system and replace it with modest yearly payment updates. Wilensky did address it however, saying that "rebasing"—changing projections of physician spending in a way that doesn't trigger requirements for enormous offsetting savings under current budget rules—is inevitable. A committee aide didn't dispute that assessment after the hearing.

Wilensky said, however, that any rebasing would have to be tied to fundamental changes in physician payment. While rebasing gets Congress off the hook for big offsetting cuts elsewhere in Medicare, it would be no simple matter because big increases in Medicare spending on physicians would add to the growing federal deficit. But without rebasing big changes in physician payment may be virtually impossible, Wilensky and other analysts suggest.

Stark didn't say much about where he wants to head on the issue, but it's clear he wants to get an early start with 20 percent cuts looming just 16 months from now.

The panel's top Republican, Rep. Dave Camp of Michigan, made a pitch for private health plans in Medicare, complaining that the most recent doctor payment patch led to changes that will trim enrollment growth in the private plan Medicare Advantage program by two million. Camp elicited testimony by Crane that the Medicare Advantage program is key in coping with the costs of an influx of baby boomers into Medicare. "We have a platform in Medicare Advantage that could be built on and improved" to cope with that influx, Crane said.

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Rhode Island Medicaid Plan Arouses Liberal Ire

By John Reichard, CQ HealthBeat Editor

September 8, 2008 -- Congressional Democrats and liberal analysts are taking aim at a proposed transformation of the Rhode Island Medicaid program, saying it would set a dangerous precedent that would end Medicaid as an entitlement if widely followed by other states.

"Rhode Island's waiver proposal is a marked departure from any Medicaid waiver ever approved," the left-leaning Center on Budget and Policy Priorities said in an analysis of the plan. "The waiver would radically transform Medicaid's current federal–state funding partnership into a block grant without federal supervision or oversight, " said the Center's Judith Solomon in the analysis.

The proposal would establish a "global budget" for the various Medicaid services delivered to Rhode Island residents rather than allowing outlays to vary with the number of people qualifying for Medicaid under eligibility criteria and the use of a fixed package of benefits. While the latter approach helps assure that basic health care needs are met for those who qualify, its cost to states typically exceeds their revenue growth, leaving a smaller chunk of state budgets for education and other non-health care needs.

"Rhode Island is already feeling the pressure of the national economic downward spiral, with increased unemployment and decreasing general revenues, said Republican Gov. Donald L. Carciere in announcing the plan Aug. 8. Approval by the Centers for Medicaid and Medicare Services (CMS) of the "Global Medicaid waiver allows the state to implement reforms to protect the long-term viability of the program."

Rhode Island boasts that it is the first state to seek approval for a five-year test using global budgeting as a financing mechanism for all Medicaid populations and services. The fixed allotment of federal dollars involved "provides a measure of fiscal predictability to both the federal government and Rhode Island that would otherwise be lacking during what is expected to be a period of significant uncertainty," the waiver proposal states.

But the Center analysis warns that the approach would "radically transform" Rhode Island's Medicaid program. Under the plan, the state "would get no additional federal funds to help address unanticipated increases in health care costs or enrollment," Solomon said. If such increases occurred, "the state would have to increase its own spending or cut eligibility, benefits, or provider payments."

"The state acknowledges that the combination of federal and state spending under its proposals would be well below its own forecast of Medicaid costs for each of the next five years and that this gap would grow each year."

With Medicaid gobbling up more and more of its budget, Rhode Island is determined to clamp down. It aims to limit Medicaid outlays to 23 percent of its budget, the portion consumed in 2007. The federal government meanwhile would kick in its share of the state–federal program based on an assumption Medicaid spending would rise 9.2 percent each year, a figure that assumes a 6.8 percent annual increase in health care costs and a 2.3 percent annual increase in enrollment.

The Center's analysis calculates that by 2013, the sum of the federal block grant and the state's outlays that year would total $467 million less than the state's forecast for Medicaid spending than under current law. In exchange for the fixed sum of federal dollars, Rhode Island "is asking for permission to make significant changes in eligibility and benefits without federal approval or oversight." The state would gain authority to put various groups on waiting lists for eligibility and services and to limit benefits in ways not now permitted, Solomon said.

"Rhode Island could pick and choose what benefits to provide for different groups of beneficiaries," she said. "For example, it could provide physical therapy to seniors but not to people with disabilities. It could restrict the number of visits allowed for mental health treatment even if that would limit the treatment's effectiveness." It also could charge higher out-of-pocket payments than are now allowed.

However, the state asserts that the administrative flexibility it would acquire under its proposal would generate savings. It defends the plan as "responsible and appropriate" because it would make care more efficient in the state.

"The simplest way to balance the budget would be to eliminate programs and reduce eligibility," Carcieri said. "That may save a few dollars in the short run, but it does not address the problems that only systemic change can solve."

A key principle of the plan is that it provides "the right services, at the right time, and in the right setting," according to the waiver application. Frail and disabled beneficiaries would get care in their homes and in community settings rather than in costly nursing homes. Steps would be taken to prevent the use of emergency rooms for primary care services. Payment of providers would vary according to the quality of their treatment services.

The experiment is likely to be closely watched because of the budget implications—particularly its feature limiting state Medicaid outlays to a fixed percentage of the state's budget. "Would the governor of every state like to be able to do that? You betcha," said Barbara Coulter Edwards, a Medicaid consultant with Health Management Associates who formerly headed the Ohio Medicaid program. Edwards make her remarks at a Washington, D.C., conference Monday sponsored by the American Network of Community Options and Resources.

But the impact of such a major restructuring is poorly understood, said Donna Martin of Rhode Island's Community Provider Network, an association in the state that represents organizations in the state that delivers services to the developmentally disabled. "Stakeholders" in Rhode Island's health care system have been cut out of the process of reviewing the proposal before it was submitting to CMS for approval, Martin said at Monday's forum.

Meanwhile, the opposition of key Democrats raises questions about the viability of the plan. In an Aug. 21 letter to Health and Human Services Secretary Michael O. Leavitt, Senate Finance Committee Chairman Max Baucus of Montana and Sen. John D. Rockefeller IV of West Virginia said the proposed funding structure "puts beneficiaries, providers, and the entire state at risk should health costs or enrollment rise faster than expected." The senators added that "no block grant like this has ever been allowed under Medicaid; indeed, we are not certain there is authority in the Medicaid statute to permit such a block grant even under a waiver."

A similar letter from House Energy and Commerce Committee Chairman John D. Dingell, D-Mich., and Democrats Patrick J. Kennedy and Jim Langevin of Rhode Island said the plan would shift costs from the state to the federal government without sufficient oversight or accountability.

But the Bush administration has demonstrated a willingness to try to chop Medicaid spending increases in controversial ways. "We are optimistic that we will get a favorable response from CMS that will allow us to delve into the detailed planning of how best to deliver the services that Medicaid supports," said Adelita Orefice, deputy secretary of Rhode Island's Executive Office of Health and Human Services.

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Wonks' Medical Dream Home: Easy to Design, Tough to Build

By John Reichard, CQ HealthBeat Editor

September 10, 2008 -- Panelists at a Washington, D.C., forum Wednesday offered a sober assessment of the prospects for redesigning the health care system around the concept of a "medical home," but at the same time offered some evidence of its tantalizing potential.

Much discussed in policy circles of late, the medical home idea aims to make a long-term relationship with a trusted primary care doctor or team of primary care doctors the foundation of care for the chronically ill. The idea entails sorting through the complex treatment needs of the patient to figure out the most efficient way of getting the best possible medical outcomes.

That means deciding which specialist to see and when, whether to go to a clinic or a doctor's office or a hospital for tests and procedures, and ensuring the patient takes the right mix of medications to prevent complications from conditions such as diabetes, depression, congestive heart failure, and other cardiovascular disease.

It means much more frequent contact with the patient through expanded hours and the use of e-mail messages and the telephone. The freer communication is intended to answer questions, issue reminders to get tests, take medications, exercise, and eat properly and to more closely monitor the patient's medical condition.

But doing all that is a tall order for doctor's offices, many of which consist of only a single doctor or just a few doctors. In many cases, they lack computer systems to keep detailed medical histories of patients, to send e-mail messages to patients in a way that protects their privacy, consult the latest treatment guidelines, issue reminders to the patient for tests and procedures, and measure and improve their own treatment methods—all activities that medical home advocates say are needed to address the nation's looming fiscal health cost crisis.

A study released at Wednesday's forum reported that in many cases even the largest medical practices lack the elements needed to provide patients with a medical home. The findings "highlight the gap between the current state of medical practice and widespread adoption of the patient-centered medical home," said the study led by Diane R. Rittenhouse, an assistant professor of family medicine at the University of California, San Francisco. The study, which was limited to practices that treat asthma, diabetes, congestive heart failure, or depression, was published in the September/October issue of the policy journal Health Affairs.

In surveying 1,162 medical practices with 20 or more doctors, researchers found that under half—42 percent—reported that most of their doctors used electronic medical records "with basic functionalities." Only about a third used primary care teams at the majority of their practice sites. Under a third maintained registries of patients with specific diseases to better manage treatment of those conditions. Only one of four used nurses to routinely manage care for patients with severe illness.

While 65 percent of the practices ran some form of quality improvement program, only 34 percent provided doctors with feedback on their performance for at least four of five clinical conditions measured. Fewer than half did much in the way of issuing reminders to patients and assessing their health risks. "Only 10 percent reported that most of their physicians would 'strongly agree' with statements that the group regularly incorporates feedback from patients in improving care and developing new services," the researchers wrote. Only about 30 percent said doctors communicated with patients by e-mail message even occasionally.

But Glenn D. Steele, president of Pennsylvania-based Geisinger Health System, told the forum sponsored by Health Affairs that results from a Geisinger pilot test of the medical home concept were "probably one of the most dramatic things I've seen in 30 years of practice and leadership." Geisinger's use of the model delivered a 20 percent reduction in hospital admissions at two pilot sites according to very preliminary data cited by another study in Health Affairs authored by Geisinger chief technology officer Ronald Paulus, Commonwealth Fund President Karen Davis, and Steele. The data also showed a 7 percent total reduction in medical costs. Geisinger now plans to expand the program to 10 more clinical sites.

The Geisinger model entailed monthly payments of $1,800 per doctor to recognize the expanded scope of practice. Monthly stipends of $5,000 for every 1,000 Medicare patients are also paid to the practice to help finance additional staff and extended hours. The program features round-the-clock access to primary and specialty care, a "personal care navigator" to respond to patient inquiries, and the use of nurse care coordinators.

There are other signs of the medical home concept making small inroads into actual medical practice. The National Committee for Quality Assurance, an industry-based standards-setting group, has begun a program to recognize medical practices as medical homes. The Rittenhouse study also noted that advocates of the medical home concept are encouraged by the use of the concept in the North Carolina Medicaid program, quoting an estimate that it saved the state government $231 million in fiscal years 2005 and 2006.

But Rittenhouse warned that a transformation based on the medical home won't happen overnight. "Medical groups are being asked to make fundamental changes in the way they deliver care and make up-front investments in electronic systems and personnel, which are not routinely compensated."

Urban Institute analyst Robert Berenson cautioned the forum that the concept is at risk of becoming the latest "failed silver bullet" in health care because of the challenges involved in implementing it and high expectations surrounding it. He warned that it is no substitute for separate efforts needed to build up the nation's primary care workforce. And Harvard Business School lecturer Richard Bohmer warned that system planners will get things wrong if they focus too much on the resources needed to make the medical home concept work and not enough on the nature of the work providers must perform. Steele noted that widespread adoption would have a major impact throughout the system. A dramatic reduction in inpatient admissions would entail a fundamental change in the services delivered by hospitals, he said.

It would involve paring away services and staff layoffs—"a tough thing," Steele noted.

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