By John Reichard, CQ HealthBeat Editor

December 23, 2011 – The Senate, followed by the House, worked together to swiftly approve the payroll tax legislation blocking the 27 percent Medicare doctor payment cut scheduled for Jan. 1. President Obama signed the measure.

The physician payment patch lasts just two months. The measure (HR 3765) also extends for two months the following programs that would have expired at the end of 2011: the section 508 program to reclassify hospitals into different geographic regions to adjust payments based on wages; the "Medicare work geographic adjustment" floor; the exceptions process for the rehab therapy cap; certain physician pathology services; ambulance add-on payments; mental health add-on payments; outpatient "hold harmless" payments; minimum payments for bone mass measurement; the "Qualifying Individual" program to lower Medicare out-of-pocket costs; the Transitional Medical Assistance program; and the temporary assistance for needy families program.

American Medical Association President Peter W. Carmel issued a statement saying that Congress "now has to enact a real and fiscally responsible solution to this sorry cycle of scheduled cuts and short-term patches that compromises access to care for patients and drives up costs for taxpayers."

American Academy of Family Physicians President Glen Stream said that "last-minute, inadequate legislation is exactly what Congress has done with passage of an absurdly short reprieve from the 27.4 percent cut in physician payment mandated by the deeply flawed sustainable growth rate formula for Medicare."

Like Carmel, Stream called for a permanent overhaul of the Medicare payment formula.

Senate Majority Leader Harry Reid, D-Nev., said he wants to accomplish that, too. "I would hope to do something final to take care of this doc fix," said Reid.

But with legislation to get that done estimated to require $300 billion or more in offsetting spending cuts, revenue increases, or some combination thereof over a period of 10 years, that's going to be a tall order for lawmakers next year.

By John Reichard, CQ HealthBeat Editor

December 19, 2011 – The Centers for Medicare and Medicaid Services announced last week that its program to promote team-based care in traditional Medicare will launch with 32 "pioneer" accountable care organizations in 18 states, serving up to 860,000 Medicare beneficiaries.

"The pioneer ACO initiative will encourage primary care doctors, specialists, hospitals and other caregivers to provide better, more coordinated care for people with Medicare and could save up to $1.1 billion over five years," HHS said in a news release.

The pioneer program allows the Centers for Medicare and Medicaid Services to get off to a robust start in launching the ACO effort, which otherwise may be slow to develop. ACOs are the centerpiece of efforts by the Obama administration under the health care law (PL 111-148, PL 111-152) to implement new ways to control spending in traditional Medicare.

HHS officials said 160 organizations submitted letters of intent to CMS stating that they wanted to form pioneer ACOs. Eighty actually applied. From that group, CMS picked the 32, in some cases deciding that applicants were not ready. In other cases, applicants themselves decided they did not want to participate, officials said.

The $1.1 billion in potential savings may actually exceed projected savings achieved by other ACOs that come in through the standard program—even though a larger number of organizations could participate in that effort. The standard program, which gets off the ground next year, could save up to $1 billion in its first few years—but that's a best-case scenario.

Many provider organizations in the United States are not organized to work together to provide the kind of team-based care the administration is hoping will save Medicare money and boost its quality by reducing duplicative or unnecessary testing, eliminating medical mistakes and improving preventive care.

"We know that health care providers are at different stages in their work to improve care and reduce costs," said Marilyn Tavenner, acting CMS administrator. "That's why we've developed a menu of options for Medicare to meet doctors, hospitals and other health care providers where they are, and begin the conversation of how to enhance the care they are offering to people with Medicare."

The pioneer group stands out from ACOs that will come later in several ways. They'll be subject more quickly to penalties if they don't meet savings targets, but they also will be able to get higher payments if they do meet those targets, for example.

"The first two years of the Pioneer ACO Model are a shared savings payment arrangement with higher levels of savings and risk" than in the standard program, a CMS fact sheet said.

Another difference is that if pioneer ACOs deliver savings in their first two years, they will qualify in their third year for "population-based" payment. That is a "per beneficiary per-month payment amount intended to replace some or all of the ACO's fee-for-service payments with a prospective monthly payment," the fact sheet said. A third difference is that pioneer ACOs will have to develop contracts with other payers for team-based care that lowers spending and boosts quality. The intent is to spur organizations sponsoring ACOs to more fully commit to team-based care.

The Center for Medicare and Medicaid Innovation, the branch of CMS responsible for the pioneer program, said that pioneer ACOS must enter into ACO-type contracts with other public and private payers such that those payers account for more than 50 percent of the pioneer ACO's revenues by the end of its second year.

Hospitals have a very strong presence among the 32 organizations selected, although in a fair number of cases "individual practice associations"—networks of private doctors' offices—or big medical groups are sponsors.

The list of 32 includes multiple ACOs in Wisconsin, Massachusetts, Michigan and California.

Organizations on the list include the Beth Israel Deaconess Physician Organization and Partners Healthcare in eastern Massachusetts, the Dartmouth-Hitchcock ACO in New Hampshire and eastern Vermont; Fairview Health Systems and Park Nicollet Health Services in the Minneapolis metro area, the University of Michigan, and Sharp Healthcare System in San Diego.

Richard Gilfillan, head of the Innovation Center, predicted that pioneer ACOs would deliver bigger savings than did a precursor program called the CMS Physician Group Practice Demonstration Program. That's because participants in that earlier program weren't subject to financial penalties if they didn't meet savings targets, he said. Also, the requirement to contract with other public and private payers will help ensure that pioneer ACOs have stronger infrastructures to deliver savings, he said.

By Nellie Bristol, CQ HealthBeat Associate Editor

December 23, 2011 – While the proportion of people reporting problems paying their medical bills stayed relatively stable between 2007 and 2010, there also could be fewer people seeking care, the Center for Studying Health System Change concluded in a study released last week.

Overall, 20.9 percent of people reported difficulty paying medical bills in 2010, compared to 19.4 percent in 2007. Both rates are markedly higher than the 2003 rate of 15.1 percent.

"Given the severe 2007-2009 recession, the sluggish economic recovery and health care costs continuing to increase faster than incomes, it is somewhat surprising that the rate of medical bill problems did not increase between 2007 and 2010," wrote researchers Anna Sommers and Peter J. Cunningham. "The steady rate of medical bill problems may be a byproduct of decreased use of medical care—both by people who lost jobs and health insurance during the recession and others who cut back on medical care in the face of uncertain economic times."

Among the uninsured, those reporting medical bill problems are substantially more likely to have unmet medical needs.

The study notes that the number of uninsured increased from 42.8 million in 2007 to 51.7 million in 2010. Although it is the group consistently showing the largest number of people with medical bill issues, the percentage of uninsured people under age 65 reporting problems fell to 31.5 percent in 2010 from 34.4 percent in 2007.

Many families struggling with medical bills had "severe financial consequences from their medical debt," the report says, with about two-thirds saying they had trouble paying for other necessities and a quarter considering bankruptcy. About one-fifth of those considering bankruptcy actually filed for it, the report noted. Among the financial consequences of medical bill problems are putting off a major purchase, being contacted by a collection agency and taking money out of savings.

In other findings, the report identified a "significant upward trend" in the proportion of those 65 and older reporting medical bill problems—10.3 percent in 2010 compared to 6.9 percent in 2003. In addition, while a growing proportion of lower income non-elderly reported problems paying medical bills, the rate for higher income families is much lower and stayed relatively stable since 2003.

• Center Study (pdf)

By Jane Norman, CQ HealthBeat Associate Editor

December 22, 2011 – Seven senators from both sides of the aisle are asking the Institute of Medicine to do a thorough review of the nation's system of graduate medical education that funds medical residencies.

It's an indication of the growing interest in Congress in shaping the future of the physician corps as the health care law (PL 111-148, PL 111-152) is implemented with its emphasis on coordinated care and primary care. According to the Association of American Medical Colleges (AAMC), there's been "no appreciable increase" in the median number of active primary-care physicians per 100,000 population between 2008 and 2010.

In a letter to the IOM, the senators said they would like to see an independent review of the governance and financing of the GME system, including inequities in funding across states based on their needs and capacity.

"We believe our GME system is under increasing stress and the projections for our health care workforce are of significant concern," the letter said. "There is growing concern that the United States is failing to adequately match medical training with our medical needs on a national level."

It was written by Democrats Jeff Bingaman and Tom Udall of New Mexico and Mark Udall and Michael Bennet of Colorado, and Republicans Jon Kyl of Arizona, Charles E. Grassley of Iowa and Michael D. Crapo of Idaho.

Western states, such as those represented by the senators, tend to have fewer physicians and fewer students enrolled in GME programs compared with states in the Northeast, according to data from the AAMC.

Funding for GME and the training of doctors has been a hot topic especially after the Medicare Payment Advisory Commission (MedPAC) made recommendations on how training could be improved to upgrade the nation's physician corps.

Commissioners have raised questions about whether the way doctors now are trained is effective at producing physicians who focus on information technology, integrated care and other approaches needed for changes in the health care delivery system.

This year GME came under scrutiny again when President Obama in his 2012 budget proposal eliminated the children's hospital GME program, which provides funds to 56 children's hospitals across the nation and trains pediatricians as well as pediatric subspecialists.

The program, however, was spared in the 2012 omnibus spending bill (HR 2055). The AAMC has appealed to lawmakers to avoid further cuts to training.

The letter from the senators says that changes to GME are under discussion in Congress, at MedPAC, at the Accreditation Council for Graduate Medical Education and at various foundations.

In September, the Josiah Macy Jr. Foundation reported that a "compelling case" is made for changes in how training is conducted. "Changes in demographics and disease patterns and increasing health disparities create new health care needs, requiring new approaches to physician education that emphasize collaboration, communication, and transitions in care," the report said.

"The public expects the GME system to produce a physician workforce of sufficient size, specialty mix, and skill to meet society's needs," the report said. "Many observers from both public and professional vantage points feel it is currently falling short in each of these dimensions."

The senators echoed that conclusion. "It is time to redesign health care workforce education and training in a manner that improves access to and delivery of health care services and enables the future generation of health care professionals to actively participate in creating high-quality, lower-cost health care," they said.

They also said they want analysis of areas including accreditation, reimbursement policy and the care of the underserved, and they would like to see recommendations from IOM by the third quarter of 2012.

According to AAMC, there were 258.7 active physicians per 100,000 population in the United States in 2010. The figures ranged from 415.5 in Massachusetts to 176.4 in Mississippi. States in the Northeast had the highest concentrations of physicians.

There were 90.5 primary-care physicians per 100,000 population nationally, with the highest number per population in Massachusetts and the lowest in Mississippi.

• AAMC State Physician Workforce Data Book (pdf)

By Rebecca Adams, CQ HealthBeat Associate Editor

December 22, 2011 – A poll released by the Harvard School of Public Health found that 67 percent of Americans believe the government or health insurers refuse to pay for expensive treatments because of cost, while only 38 percent of people in the United Kingdom say that's the case in their country, even though some in the United States have criticized the British system as one that rations care.

The poll, which surveyed more than 2,500 people in four nations, including 1,017 Americans, found that Americans were more skeptical about the idea of government involvement in decision-making about health treatments than respondents in the United Kingdom, Italy or Germany. About 34 percent of Americans said they trust the federal government's decisions on health care, compared to 54 percent of respondents in Britain and Italy and 42 percent in Germany.

In the United States, the 2010 health care law (PL 111-148, PL 111-152) created a lively debate about the role of government in health care decisions. A nonprofit created in the 2010 law, known as the Patient-Centered Outcomes Research Institute (PCORI), became a lightning rod during the congressional debate because it funds research that compares different treatments for the same condition. Republicans and some advocacy groups said that the findings of studies financed by PCORI could be used by the federal government to deny coverage under Medicare, Medicaid, and other health programs for less effective or more costly services, even if they work for some people.

Joe Selby, the executive director of PCORI, said on a recent phone briefing about the poll that PCORI is most interested in studies that compare the clinical effectiveness of similar treatments rather than their relative cost-effectiveness.

Selby said that the group "is not setting out to find comparisons where one is more costly and one is less" and use that information to deny patients the more costly care. He said that cost may be one factor that research funded by PCORI considers, but that the emphasis will be in trying to figure out which treatments work the best and which types of patients benefit the most from various treatments.

The phone briefing was organized by the Alliance for Aging Research, which commissioned the poll. The British respondents were not asked to differentiate between the care they get under the national health system and the care received under any private health insurance they might also have.

Selby was asked by the Alliance for Aging Research president and CEO Dan Perry whether research that compares various treatments might end up hurting innovation, because a company might fear investing millions in creating a treatment but finding that if it does not outperform existing treatments, the federal government and health insurers might decide not to pay for it.

Selby said he has the opposite view.

"I think a lot of people in industry have come around to see it in this converse way as well," said Selby. "What taking a more comparative perspective might do is dampen incentives to create 'me, too' type drugs that have about the same benefits and can be sold at higher prices." But if companies can identify a subpopulation of patients who benefit more from a new drug than an existing drug, Selby said, comparative effectiveness research "actually is a boon to innovation, because it helps us understand where we want to go."

PCORI was controversial in the beginning, but since its creation, the institute's leaders have taken a low profile and have funded a relatively small number of studies so far, none of which have sparked a debate.

The poll did not ask about PCORI specifically but provided information about how people in different countries seem to view their health care coverage and the role of government in making decisions about which treatments to pay for.

Americans reported being less satisfied with the nation's health care system than British or German respondents. About 38 percent of Americans were very or fairly satisfied with the overall health care system. That compared to 68 percent of the British, 52 percent of Germans, and 40 percent of Italians (although 14 percent of Americans said they were "very" satisfied, compared to 5 percent of Italians).

Americans were the most skeptical about the idea of government involvement in decision making about health treatments. About 54 percent of Americans who responded said they would oppose having a government entity decide whether government programs should pay for treatments based on cost, while 48 percent of Britons, 23 percent of Italians and 21 percent of Germans had a similar response.

The poll was conducted in June and July. The sampling error among U.S. respondents is 3.9 percent, while the sampling error was 5.4 percent for the Britons, Italians and Germans surveyed.

By Jane Norman, CQ HealthBeat Associate Editor

December 21, 2011 – Democratic members of the Texas congressional delegation urged the Department of Health and Human Services to turn down a request from their state's insurance officials for a phase-in of medical loss ratio regulations.

"Once again, some in Texas are more interested in protecting insurance companies than protecting consumers," said the letter from Lloyd Doggett and seven other House members. "Granting this request would be a tremendous mistake and increase the cost of health care to consumers."

Under the health care law (PL 111-148, PL 111-152), insurers in the individual and small group market must spend at least 80 percent of the premiums they collect on health care and quality improvements. If they can't meet that standard, they will have to pay rebates to customers.

States, however, are allowed to ask for temporary "adjustments" so that insurers don't leave the market. The Texas Department of Insurance earlier this year asked to set its MLR standard at 71 percent for 2011, 74 percent in 2012 and 77 percent in 2013.

"After careful examination of the potential impact of the MLR requirement on the individual health insurance market in Texas, I have concluded that the immediate implementation of an 80 percent MLR is likely to stifle competition in the market and constrain many Texans' access to coverage," Mike Geeslin, Texas commissioner of insurance, wrote on July 28.

Doggett and others said, however, that immediate implementation of the 80 percent standard is necessary to make companies accountable and keep pressure on them to hold down premiums. They said in its submissions to HHS, that Texas failed to make the case for a phase-in of the MLR rule. And, they said, a survey by state officials found that 90 percent of insurers plan to stay in the market whether or not the standard is phased in.

HHS has not yet announced its decision on the Texas application but faces a deadline of Dec. 28, unless the agency extends the time.
Other Democrats signing the letter were Silverstre Reyes, Al Green, Rubén Hinojosa, Charlie Gonzalez, Gene Green, Eddie Bernice Johnson and Sheila Jackson Lee.