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Washington Health Policy Week in Review

Washington Health Policy Week in Review Archive b45534f8-6238-4f07-a91b-e5acbdd45d72

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CMS Says Many Medicare Drug Plans Will Charge Monthly Premiums $20 or Below

AUGUST 29, 2005 -- Medicare beneficiaries will be able to choose prescription drug plans with monthly premiums of $20 or less, the Centers for Medicare and Medicaid Services (CMS) announced Monday.

That means premiums are coming in considerably below the $35 per month Congress assumed for working purposes when it considered the Medicare drug law (PL 108-173). Plans in many states will charge premiums as low as $10 per month, HHS Secretary Michael O. Leavitt said in remarks to seniors at a Vienna, Va., senior center Monday.

Some plans also may include zero deductibles or deductibles lower than $250 annually, and some plans may offer coverage in addition to the standard drug benefit, officials said, including filling in part of the "donut hole" gap in coverage attacked by Democrats during the debate over enactment of the law.

"Choice and competition among prescription drug plans is working to reduce premiums across the country, making the drug benefit even more affordable for seniors and other Medicare beneficiaries," Leavitt said in a news release.

Earlier this month, CMS estimated the national average monthly premium for coverage equivalent to the Medicare standard coverage would be $32.20. That's still the estimated average, but Monday's announcement details the availability of a number of low-cost options that go into calculating the mean figure.

CMS highlighted some of the options that will be offered to beneficiaries as part of the new Medicare drug benefit. They include:

  • At least one prescription drug plan with premiums below $20 per month, and in some areas significantly below $20, in every region of the country except Alaska. All regions, CMS stated, have multiple plan options with premiums significantly below $30.
  • In every region, prescription drug plans will be available that have zero deductibles or deductibles lower than Medicare's standard $250 annual deductible.
  • Some prescription drug plans will offer coverage that exceeds Medicare's standard plan. This includes help for beneficiaries to pay for costs beyond $2,250 and before their out-of-pocket costs hit $3,600 a year—the "donut" gap in Medicare's standard coverage. Some plans, CMS stated, will cover generic drugs in the coverage gap.

Between 11 and 23 organizations will offer stand-alone prescription drug plans in each region of the country, agency officials said. CMS is now completing the review of stand-alone prescription drug plans and the drug plans to be offered by Medicare Advantage organizations. Plans available may change somewhat between now and the completion of plan reviews.

Leavitt expressed confidence that the large number of choices would not hopelessly befuddle seniors. "Seniors will figure this out. They're smart people," he told reporters after his appearance at the seniors' center.
Leavitt's appearance at the center was part of a country-wide bus tour during which CMS aims primarily to energize community efforts to counsel beneficiaries on choosing drug plans.

In a statement issued Monday, Sen. Edward M. Kennedy, D-Mass., reiterated his criticism of what he called a "fatally flawed" Medicare drug law.

"The truth is that his [Bush's] plan includes billions in subsidies for HMOs and big drug companies at the expense of the Medicare program that seniors know and trust, bars Medicare from negotiating discounts on drug prices for seniors, and puts a ban on importing cheaper medicines from Canada and other industrialized nations," Kennedy said.

But Senate Majority Leader Bill Frist, R-Tenn., a proponent of the new drug benefit, said Monday's announcement was "great news for all Medicare beneficiaries, and proves that injecting competition into the process makes care more affordable, available and dependable."

CMS officials said the agency will provide more comprehensive details on the prescription drug plans and Medicare Advantage plans available in each region as the plan review is completed—which is expected ahead of plan marketing in October. Enrollment begins Nov. 15.

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Even with Subsidies, Uninsured Unlikely to Purchase Individual Health Insurance, CBO Finds

AUGUST 30, 2005 -- Uninsured workers aren't likely to purchase individual health insurance, even if they are offered subsidies that would lower their premiums, a Congressional Budget Office report says.

The report, released Aug. 26, found that insurance prices do not have a significant impact on whether workers—who don't have health insurance available through their employers—purchase it.

A 10 percent cut in insurance premiums would only increase health insurance coverage in the individual market by 5.7 percent, according to the report.

Government efforts for getting uninsured people to jump onto health insurance plans have targeted the private insurance market, including tax credits and other price-based incentives. The Bush administration in its 2006 budget has proposed offering tax credits for lower-income individuals looking for individual health insurance in its 2006 budget.

Out of the 1,718 individuals surveyed in the report, only 16 percent have individual health insurance plans, most of whom are women, white, older and with higher income and education level. Self-employed individuals are more likely to get nongroup insurance.

The report found that lower insurance prices would attract poorer individuals, who face a lower initial coverage rate. Individuals with nongroup insurance have premiums that are 10 percent to 25 percent lower than premiums for uninsured people.

However, less-healthy individuals and those whose incomes do not fall below 200 percent of the federal poverty level would be less responsive to changes in individual health insurance prices, the report found.

A study released Monday by America's Health Insurance Plans, which represents companies providing health insurance, said the individual insurance market provides coverage and financial support for individuals who do not receive insurance through their employers. The study found that individual health insurance offers products that attract individuals purchasing coverage on their own.

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Health Problems Cost $260 Billion in Lost Productivity, Study Finds

AUGUST 31, 2005 -- Sickness and health problems among working-age Americans and their families cost the United States $260 billion in lost productivity each year, according to a study released Wednesday by The Commonwealth Fund.

Researchers said that figure reflects economic losses from three different groups: 18 million adults ages 19 to 64 who have a chronic disease, disability, handicap, or other health problem and are not employed as a result; 69 million workers who reported missing days due to illness; and 55 million workers who said they were unable to concentrate at work because of their own illness or that of a family member.

Karen Davis, the lead author of the study and president of The Commonwealth Fund, said policymakers focused on health insurance "have neglected to consider the costs sustained by those who are too sick to work or function effectively."

Davis and her co-authors suggest steps policymakers and business leaders could take to stem economic losses due to illness, including adopting disease management and health promotion programs, providing health insurance coverage for all workers to increase the use of preventative care, and providing sick leave and paid time off to see a physician.

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Medicaid Commission Releases Report

SEPTEMBER 1, 2005 -- The Bush administration's Medicaid Commission released its recommendations Thursday for reducing the growth in Medicaid spending by $11 billion over the next five years.

The proposals, which include tougher asset transfer rules, changing the way states pay for drugs, and establishing tiered co-payments for beneficiaries, were approved by the commission Aug. 19.

As part of the budget reconciliation process, the Senate Finance Committee and the House Energy and Commerce Committee must compile a list of potential cuts to the program by Sept. 16 to meet a $10 billion savings target for Medicaid, the federal-state health insurance program for the poor.

Senate Finance Committee Chairman Charles E. Grassley, R-Iowa, said the recommendations were "constructive" and would be considered as the committee works to develop legislation to met its budget reconciliation target. But Grassley did not say which of the commission's recommendations might be included. "That decision will be made by members of the committee," he said in a statement.

The panel's ranking Democrat, Sen. Max Baucus, D-Mont., said while he did not believe all of the $10 billion in savings should come from Medicaid, "I believe some of the commission's ideas have merit, and may warrant consideration."

Last month, a spokeswoman for Grassley said the chairman prefers a Medicaid-only approach to hitting the $10 billion target.

Leighton Ku, a senior fellow at the left-leaning Center on Budget and Policy Priorities, said the proposal to allow states to increase beneficiaries' co-payments for some drugs "could be a very serious obstacle" to some beneficiaries receiving medical care. "The commission is essentially...making it harder for some people to get medications," Ku said.

Currently, co-payments of up to $3 can be imposed for prescription drugs, doctors visits and other services, but certain categories of beneficiaries, such as pregnant women and children, are not charged co-payments. The recommendation to increase those co-payments would save Medicaid $2 billion over the next five years, according to the Centers for Medicare and Medicaid Services, which oversees the Medicaid program.

Other recommendations in the panel's report include:

  • Allowing states to establish pharmaceutical prices based on the average manufacturer price rather than based on the published average wholesale price, a move that will save $4.3 billion over the next five years, according to CMS.
  • Giving Medicaid managed care health plans access to the drug manufacturer rebate program now available to other Medicaid health plans. CMS estimates that will save $2 billion over the next five years.
  • Making it tougher for beneficiaries to transfer assets to avoid paying nursing home costs, with savings at about $1.6 billion.

The Medicaid commission report released Thursday is one of two the panel must prepared for Congress. The second, which is due Dec. 31, 2006, will focus on long-term recommendations to help make Medicaid sustainable for future generations.

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Medicare Begins Posting Data Comparing Hospitals on Efforts to Prevent Surgical Infections

SEPTEMBER 2, 2005 -- Centers for Medicare and Medicaid Services (CMS) officials said Friday they've loaded more data onto their Hospital Compare Web site, including information that for the first time allows users to compare efforts by local facilities to prevent surgical infections.

The data added to the site ( also shows how individual facilities stack up against statewide and national averages on surgical infection prevention.

One measure indicates the percentage of surgery patients who receive preventative antibiotics one hour before incision, and the other the percentage of patients whose preventative antibiotics are stopped within 24 hours after surgery. Getting antibiotics an hour before surgery helps prevent infection, but taking them more than 24 hours later can increase risks of side effects and antibiotic resistance.

Data collection on the measures is still in its beginning stages. For example, users in the Washington, D.C. area will find that the site does not include data on the surgical infection measures for Johns Hopkins Hospital in nearby Baltimore or Holy Cross Hospital in suburban Maryland.

For Maryland facilities that have begun reporting the data, the statewide average for the percentage of surgical patients receiving preventative antibiotics an hour before incision is 76 percent. The national average is 69 percent. As of now, information on surgical prevention is available on the site for some 600 facilities nationwide.

The new measures are the first of a larger set of patient safety measures that hospitals will collect as part of the public-private voluntary Surgical Care Improvement Project. The initiative aims to reduce post-operative complications at U.S. hospitals by 25 percent.

Hospital Compare, which went live in April, now includes data on 20 quality measures. Reporting on some of the measures remains light, but the volume of quality data on the site is growing overall. More than 90 percent of the participating 4,048 hospitals in the United States report data on 10 "starter kit" measures; doing so entitles them to higher Medicare reimbursement.

Reporting is voluntary, but increasingly is tied to reimbursement. "Pay-for-performance" bills (S 1356, HR 2791, HR 855) pending in Congress likely would tie reporting on performance on a growing number of measures to higher—or lower—payment, depending on how well facilities do.

Friday's upload includes two more quarters of data on previously posted measures. CMS Administrator Mark McClellan expressed some frustration at improvement efforts. Among the "starter set" measures, only vaccination to prevent pneumonia showed notable, though a small improvement as compared to the April posting, a CMS press release said.

"Certain processes appear to be well ingrained in U.S. hospitals—rates for aspirin at arrival and [patient] discharge and beta blocker at discharge for heart attack patients and assessment of blood oxygen levels for pneumonia remain high—but the rates for other measures indicate a continuing need for improvement efforts at the national level," McClellan said.

But Nancy Foster, vice president for quality at the American Hospital Association, said, "what you're seeing is the beginning of the reporting. We wouldn't expect to see the results of quality improvement efforts in the data yet."

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Number of Uninsured Americans Increases in 2004

AUGUST 30, 2005 -- The number of Americans without health insurance rose 800,000 to 45.8 million in 2004, but the percentage of the nation's population without health insurance remained unchanged at 15.7 percent, the U.S. Census Bureau reported Tuesday.

In addition, the number of people with health insurance rose by 2 million, to 245.3 million, between 2003 and 2004, the government reported.

The Census Bureau also reported that fewer people received health care coverage from their employer in 2004—down to 59.8 percent from 60.4 percent in 2003—while the percentage of people covered by government health insurance programs rose from 26.6 percent to 27.2 percent. The number of Americans enrolled in Medicaid, the federal-state health insurance program for the poor, increased from 12.4 percent in 2003 to 12.9 percent in 2004.

Analysts said the new figures show that rising health care costs are causing more employers to drop health coverage for workers, who in turn are seeking health coverage from Medicaid and other public programs.

"Health care costs have grown so much faster than wages for so long that an increasing fraction of our workforce cannot afford health insurance as most of us know it," said Len Nichols, director of the health policy program at the New America Foundation, a centrist think-tank. "If not for our low- income Medicaid program, uninsurance would have risen far more."

Robert Greenstein, executive director of the left-leaning Center on Budget and Policy Priorities, called Tuesday's figures "disappointing, as they follow three years of successive deterioration in health insurance coverage. It is sobering that 6 million more people lacked health insurance in 2004 than in 2000."

Bill Vaughan, senior health policy analyst with Consumers Union, said the figures should persuade Congress to "immediately rededicate itself to helping all Americans access affordable health coverage. . .The census numbers tell us what we've known for years—that soaring health care inflation is making health insurance unaffordable, so more folks go uninsured, and those who can afford it find their policies cover less and less," Vaughan said.

Kathleen Stoll, health policy director of the consumers group Families USA, said the rise in the number of uninsured Americans should cause the Bush administration to reconsider its plan to reduce the growth of Medicaid spending by $10 billion over the next five years.

"Cutting Medicaid funding puts the most vulnerable children, seniors and people with disabilities at risk of joining the ever-growing ranks of the uninsured," she said.
Karen M. Ignagni, president and chief executive officer of America's Health Insurance Plans, a group representing health care insurers, said the industry has offered several approaches to help expand access to health insurance, such as tax credits, high-risk pools and improvements to government programs.

To help reduce the number of uninsured, Ignagni also urged lawmakers to "focus on reforming the medical liability system, aligning incentives with the quality of care delivered and ensuring the delivery of care that is based on the best scientific evidence."

Other highlights of the Census report include:

  • The proportion and number of uninsured children did not change in 2004, remaining at 11.2 percent or 8.3 million.
  • The Midwest had the lowest uninsured rate in 2004 (11.9 percent), followed by the Northeast (13.2 percent), the West (17.4 percent) and the South (18.3 percent).
  • The uninsured rate in 2004 was 11.3 percent of non-Hispanic whites and 19.7 percent for blacks, both unchanged from 2003. The uninsured rate for Asians declined from 18.8 percent to 16.8 percent.
  • The uninsured rate for Hispanics was 32.7 percent in 2004, unchanged from 2003.
  • The proportion of foreign-born population without health insurance was 33.7 percent, unchanged from 2003, but the rate for the native-born population increased from 13.0 percent in 2003 to 13.3 percent in 2004.

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Report Finds Health Care Costs Remain a Major Concern for American Families

SEPTEMBER 1, 2005 -- The rising cost of health care continues to be a challenge for many American families, according to a report released Thursday.

The survey of 1,531 adults, released by USA Today, the Kaiser Family Foundation, and Harvard School of Public Health, found that nearly one-fourth of Americans have had problems paying medical bills in the past year, even though 61 percent of those people were covered by health insurance.

Eighteen percent of Americans say health care costs are their biggest monthly expense, excluding rent or mortgage payments.

Almost one-third of adults reported that they or someone in their household skipped medical treatment, cut pills, or did not fill a prescription in the past year because of the high cost. Sixteen percent surveyed tried to buy insurance on their own, but only one-third of those were able to do so. About three-quarters of those who did not purchase insurance said the main reason was the cost.

Meanwhile, 44 percent of respondents said they have a chronic condition such as heart disease, cancer, asthma or diabetes. Of these people with chronic health conditions, almost 40 percent report they or someone in their household has skipped medical treatment because of the cost.

In addition, 35 percent said their doctor has never explained the costs associated with recommended medical procedures.

About 40 percent of Americans say they are very worried they will not be able to pay for medical costs when they are elderly.

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