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Washington Health Policy Week in Review - September 12, 2005

Washington Health Policy Week in Review Archive 791e53cd-31fa-4756-ae0f-5a7166c9f0a8

Newsletter Article


Don't Recommend Lower Payments for Lousy Providers, MedPac Advised

SEPTEMBER 9, 2005 -- Any new system in Medicare that adjusts reimbursement levels based on quality of care shouldn't reduce payments to below-average performing providers, quality measurement specialists said Friday.

And above-average performers should get more than 1 or 2 percent in extra payments, one of the specialists said during a forum sponsored by the Medicare Payment Advisory Commission. That's the amount Washington policy makers typically propose as a reward for superior or improving care.

Both pieces of advice are at odds with recommendations MedPAC made to Congress earlier this year. MedPAC urged a "pay-for-performance" system in which the overall pot of money paid to hospitals, for example, would not grow under payment for performance. Instead, 1 or 2 percent more would be paid to better or improving performers—funded from savings from lower payments to below-average performers.

The specialists agreed on the need for a revised payment system. But Samuel Nussbaum, chief medical officer for the giant insurer Wellpoint, said payment reductions to poor performing doctors would lessen the odds of their investing in information technology systems that could help improve their care.

On the flip side, doctors need more of a reward than 1 or 2 percent, he said. "To envision that 1 or 2 percent will move the needle for physicians won't happen," he said.

Nussbaum urged bonuses of 10 percent for primary care physicians and 5 percent for specialists. The higher percentages are needed because of relative differences in the incomes of providers, Nussbaum said; 2 percent might be enough to spur investment in the case of hospitals because their revenues are far larger.

The pot of money paid to managed care plans under payment for performance should grow, said Jack Ebeler, CEO of the Alliance for Community Health Plans. Ebeler, whose members are among the nation's top performing health plans on quality measures, said shifting funds from the same pot of money could work too.

Ebeler said he thinks the better approach is to add "new money" to the system to fund higher payment. "Those who aren't going to get it perceive themselves as losing," he said, and so are motivated to perform.

Margaret O'Kane, president of the National Committee for Quality Assurance (NCQA), told MedPAC that adding money into the system is the better way to go, rather than reducing some payments. "I personally think it's hard to take money away," she said.

O'Kane is urging adoption of NCQA's measures as the basis of a payment-for-performance system for the health plans in the managed care side of Medicare, called Medicare Advantage. NCQA, an independent organization, developed the most widely used quality measures today.

O'Kane said in a statement released Friday that payment for performance systems in the private sector deliver quality improvements and savings of 10 to 15 percent. "Broad adoption of pay for performance at all levels of the Medicare system ...could be expected to yield similar benefits," the statement said.

Nussbaum likewise asserted that performance measures spur quality improvements and savings. He said Wellpoint has found that savings from reductions in hospital-based infections, for example, can be used to fund bonus payments for higher quality.

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Newsletter Article


PPOs to Cost Medicare $60 Billion Over Decade, Study Finds; Critics Say Findings Flawed

SEPTEMBER 6, 2005 -- Medicare will spend as much as $60 billion over the next decade to attract preferred provider options (PPOs) to offer coverage to beneficiaries in areas not now served by managed care plans, according to a study published on the Health Affairs Web site.

Critics of the research said the findings were premature and based on assumptions that would not prove to be true.

The article predicts the PPOs, created as a part of the new Medicare drug law (PL 108-173), will bid competitively to serve Medicare beneficiaries on a regional basis and avoid competing with existing Medicare health maintenance organizations (HMOs).

By sidestepping markets that have existing HMOs, those PPOs will be able to attract Medicare enrollees by offering a less generous, but also less costly, benefits package, according to Steven Pizer, health economist at the Department of Veterans Affairs Boston Health Care System. Pizer, an assistant professor of health services at the Boston University School of Public Health, wrote the article along with two colleagues.

"Our findings indicate that regional PPOs will avoid competing with HMOs, focusing instead on traditionally underserved areas that will be profitable only because of overpayments," Pizer said in a news release. Some health analysts have complained that Medicare pays private health care plans more per beneficiary than for patients in traditional Medicare.

Critics of the Health Affairs study said it was based on flawed assumptions. Mohit Ghose, vice president of public affairs at America's Health Insurance Plans, a trade group representing insurers, said, "It is premature to attempt to evaluate the impact of payment methodology until some actual experience is available to do so."

A spokesman for the Center for Medicare and Medicaid Services (CMS) said PPOs were going to be "competitive" and be governed by the same requirements as other health plans offered to seniors.

The article, the spokesman said, "was too speculative and based on the wrong assumptions," including one that PPOs would be available in 11 regions. CMS has announced that the plans would be available in 21 regions.

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Residents Ill-Equipped to Handle Diverse Patient Pool, Study Says

SEPTEMBER 6, 2005 -- Many residency physicians —who will soon become doctors—are not equipped to provide care for a racially and ethnic diverse population, according to an article published in the Sept. 7 issue of the Journal of the American Medical Association.

The survey, whose research was supported by The Commonwealth Fund, revealed that about half of resident physicians in their last year of training had received little or no training to provide cross-cultural care" during their residency as the immigrant and ethnic population grows in the United States, the Fund said in a news release.

About one-fourth of the residents felt unprepared to deal with patients whose health beliefs do not coincide with Western medicine. About one-fifth said they were not prepared to care for patients whose religious beliefs may affect care.

"Although physicians recognize that cultural competency is a necessary component of high-quality health care, they are not being given the tools they need to provide this care," said Stephen C. Schoenbaum, executive vice president at The Commonwealth Fund.

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State Medicaid Officials Seek Clarity on Federal Reimbursement of Medicaid Services for Katrina Victims

SEPTEMBER 9, 2005 -- State Medicaid officials said Friday they want "simple and straightforward" answers from the federal government about financial reimbursement for health services provided to Hurricane Katrina victims.

They need to know, for example, how to proceed with Medicaid eligibility for Katrina victims whose Medicaid status cannot immediately be verified and for individuals who now qualify for the program due to losses suffered in the hurricane, Ohio Medicaid Director Barbara Edwards said Friday during a telephone news briefing sponsored by the Kaiser Commission on Medicaid and the Uninsured.

Centers for Medicare and Medicaid Services Administrator (CMS) Mark B. McClellan said Friday that officials are working on the answers.

The technical questions related to providing coverage for Katrina victims who relocated from their home states, made more complex by the numerous differences among the states' Medicaid programs, demand "simple and straightforward" answers from the feds.
Ruth Kennedy, Louisiana's deputy Medicaid director, said during the briefing the hurricane damage was sure to increase the demand for Medicaid-provided services. For example, elderly people previously cared for by family members at home will now require nursing home care. Evacuees have significant health needs and must be enrolled in Medicaid coverage as quickly as possible, Kennedy said.

"Time is of the essence," she said, adding that the more days that pass before state officials know what Medicaid will pay for, the more difficult it will be to provide needed health services.

While President Bush said Thursday that states would be reimbursed for "showing compassion" to Katrina victims, Edwards said it remained unclear how state Medicaid programs and their health providers would be compensated for delivering care to hurricane victims. Bush, in his remarks, said he would work with Congress to reimburse states for providing Medicaid services.

Democrats in the House and Senate have offered legislation that would provide full federal funding for Medicaid services to Katrina victims without requiring them to pass the program's asset or income tests.

McClellan said CMS officials were working with state Medicaid officials to provide a new category of eligibility for Medicaid and State Children's Health Insurance Program (SCHIP)—including for groups, such as childless adults, who usually would not qualify—for Katrina victims who either cannot prove they are currently eligible or whose eligibility cannot be verified in their home state.

"We're looking for a straightforward presumptive eligibility process," McClellan said. Individuals who think they may qualify for Medicaid should start the enrollment process, he said.

Elements of that waiver, McClellan said, will include waiving of normal document requirements verifying an individual's Medicaid or SCHIP status in their home state. Host states, at a minimum, will provide their own Medicaid and SCHIP benefit packages to evacuees. States should submit both their administrative costs and the cost of delivering medical care to CMS for reimbursement, McClellan said.

McClellan also said there were no plans to delay the Jan. 1 start of the new Medicare prescription drug benefit due to concerns that displaced Katrina victims, including "dual-eligibles" who qualify for both Medicaid and Medicare coverage, will not receive enrollment information. Dual-eligibles will lose their Medicaid drug coverage as of Jan. 1 as part of the drug law (PL 108-173).

"We will be working out the details so everyone can take advantage of the drug coverage on Jan. 1," McClellan said. The Democrats' Katrina legislation would lift some of those time restrictions, including financial penalties for those who do not enroll by Jan. 1.

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Uncertainty Grows About Passage This Year of Health Care IT Bill

SEPTEMBER 8, 2005 -- Legislation to promote the adoption of health care information technology (IT) has moved down Congress' priority list as new concerns about spending and responding to Hurricane Katrina have moved to the forefront, congressional aides said Thursday.

And Katrina's budgetary hit—more than $60 billion to date but expected to rise far higher—creates new doubt about finding money to prevent Medicare payment cuts to doctors and thus their ability to invest in health care IT if the cuts take effect, aides suggested at a Washington D.C. conference.

But HHS Secretary Micheal O. Leavitt and other speakers said the devastation caused by the storm is a powerful argument for promoting health care IT.

Katy Barr, an aide to Senate Health, Education, Labor and Pensions Committee Chairman Michael B. Enzi, R-Wyo., said her boss had hoped to get floor time this month to pass a bill promoting health IT, which Congress is counting on to make health care safer and less costly. "But right now, with so many things on the plate, that doesn't look too likely," she said at the Health Information Technology/HIPAA Summit.

She said it is hard to predict if health IT bills can get through both chambers, clear a conference committee, and be signed into law this year.

Momentum appeared to be growing for health IT legislation when Enzi's committee passed The Wired for Health Care Quality Act shortly before the August recess. The measure combined the efforts of Enzi, Senate Majority Leader Bill Frist, R-Tenn., Sen. Edward M. Kennedy, D-Mass, and Sen. Hillary Rodham Clinton, D-N.Y., and appeared headed for rapid floor action.

At the same time, action was heating up in the House, with Rep. Nancy L. Johnson, R-Conn., floating a draft bill and the Energy and Commerce Committee beginning work on legislation as well. Johnson aide Dan Elling said Thursday that in light of the demands on Congress this fall, "the end of this year is certainly an aggressive goal" for House passage of legislation.

The pending House and Senate measures would promote the adoption of standards to ensure that computer systems function together efficiently and authorize limited grant money to ease the costs of adopting the technology.

Elling said Johnson remains hopeful, despite Katrina's costs, that Congress will act to prevent a projected Medicare cut of about 5 percent in payments to doctors next year.

"Obviously anything that costs a significant amount of money is going to be affected by the budgetary constraints we're working under," he said. But at the same time, Katrina makes a strong case for preventing Medicare cuts to doctors, given the public health needs created by the hurricane.

Key to prospects for a costly permanent fix to the Medicare physician payment formula is administrative action by the Centers for Medicare and Medicaid Services. Those administrative changes in the payment formula would sharply reduce the costs of a payment fix. Johnson met at the White House with Office of Management and Budget Director Joshua B. Bolten shortly before the August recess to encourage him to agree to the administrative changes, Elling said.

Leavitt said 1 million people have been displaced by Katrina and that in most cases their medical records are gone. A system of electronic medical records could prevent that from happening in the future, he said.

Leavitt also said Katrina raised the question in his mind of U.S. readiness to deliver the widespread emergency care that would be needed in 48 states in a pandemic. A national health IT system would perform the critical function of allowing public health officials to quickly detect local outbreaks of disease in that situation, he suggested.

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