January 26, 2007 -- Medicare officials Friday trumpeted year-two results from a pilot program testing bonus payments for higher quality hospital care as evidence that the Medicare payment system should be changed.

The results from the demo sponsored by Premier Inc., a hospital consortium, showed continuing improvements in quality of care in a program in which hospitals were paid more if they performed well on 30 measures assessing treatment for heart attacks, heart failure, bypass surgery, pneumonia, and hip and knee replacements. "The average improvement in the project's second year was 6.7 percentage points, for total gains of 11.8 percent points over the project's first two years," the Centers for Medicare and Medicaid Services (CMS) said in a press release. A Premier report submitted to CMS on the demo also found that hospital costs could be lowered as much as $1.4 billion if certain treatment practices were followed for all U.S. patients with four of the five conditions.

Herb Kuhn, acting CMS deputy administrator, tied the payment system to a reduction in deaths, hospital readmissions, and treatment complications, and hinted that CMS is considering mandating a quality-based payment system for hospitals generally in a report to Congress it plans to file this summer.

"The results look very promising and we're excited by what we're seeing," Kuhn said Friday in a telephone briefing of reporters. Kuhn said that quality improvements in the demo were "indisputable" but acknowledged that CMS hasn't independently verified a finding by Premier tying quality-of-care improvements in the demo to 1,284 fewer deaths from heart attacks.

Separately, the New England Journal of Medicine announced the early release Friday of findings comparing hospitals in the Premier demo to other hospitals that also publicly reported data on the quality of their care without being paid more if they had higher quality of care.

The conclusion: payment makes a difference. The 207 Premier facilities improved more on quality of care than the 406 facilities that were only involved in public reporting. The journal described the added improvements in quality as "modestly greater."

In an editorial accompanying the release of the findings, which will appear in the February 1 issue of the publication, the New England Journal said "the findings still leave us with many uncertainties concerning the level of financial incentives needed and the optimal formula for payment that might be used for attaining high levels of performance."

The editorial suggested that "rather than adopt a single new payment system for all of Medicare, a series of regional models could accelerate learning and allow Medicare officials to find out more about the effect of differing levels of incentives and formulas for payments."

By Mary Agnes Carey, CQ HealthBeat Associate Editor

January 23, 2007 -- Groups representing hospitals, consumers, labor, and health care providers said Tuesday that President Bush's proposals to expand health care coverage would do little to help the nation's 47 million uninsured Americans afford insurance.

The president's plan, included in his State of the Union address Tuesday night, would give tax deductions of $7,500 to individuals and $15,000 to families for purchasing health insurance, no matter what the cost or type of insurance or whether it is purchased through an employer. The president also will pledge to work with state governments to expand health coverage to the uninsured, including a proposal to redirect $30 billion of federal Medicare and Medicaid disproportionate share (DSH) and capital funds to help cover the uninsured.

In a statement Tuesday, American Hospital Association President Rich Umbdenstock praised Bush for focusing on the uninsured but said his proposals "are unworkable for many and not focused on those most in need."

President Bush's tax proposal would drive people to the small group insurance market, "a market that has proven unstable" and even with a tax break remains unaffordable, Umbdenstock said.

The hospital group also opposes any plan to reduce federal DSH funding, which Umbdenstock said "pulls the rug out from under safety-net hospitals that care for some of our nation's most vulnerable people." DSH funds are given to "disproportionate share hospitals," which treat a disproportionate number of uninsured or underinsured patients.

Families USA Executive Director Ron Pollack called President Bush's health plan "flawed, and if not dead on arrival, will certainly be wounded on arrival." Pollack said the proposal is "of very limited value" because it offers a tax deduction rather than a tax credit and does not provide enough financial relief for moderate-income people to purchase health care coverage.

Henry E. Simmons, president of the National Coalition on Health Care, a coalition of business, labor, consumer, and primary provider groups, said Bush's proposals "are not nearly bold enough or broad enough to make much of a dent in the health care crisis we face."

When 47 million Americans have no health coverage and health insurance premiums have leapt up 87 percent in just the past six years, "we need stronger medicine than what the president has prescribed," Simmons said.

Len Nichols, director of the New America Foundation's Health Policy Program, said Bush's plan to redirect existing federal funds to help states provide coverage to the uninsured stops far short of what is needed. "Real federal leadership would entail a commitment to covering all Americans, explicit new federal resources, and shared responsibility to make our health care system more efficient and sustainable for us all in the long run," Nichols said.

By John Reichard, CQ HealthBeat Editor

January 25, 2007 -- Decrying a Washington scene he said cynically responds to bold proposals as a form of sport, presidential contender Barack Obama Thursday predicted a breakthrough in American politics that will lead to U.S. adoption no later than 2012 of a plan for universal health coverage.

Obama's address to a conference sponsored by the liberal advocacy group Families USA offered a somewhat detailed look at his thinking on health care as he jockeys for advantage against Sen. Hillary Rodham Clinton, D-N.Y., and other aspirants in the early going in the race to win the 2008 Democratic presidential nomination. But the Democratic senator from Illinois didn't commit himself to a specific plan for achieving universal coverage, saying after the speech that he would be working to develop one "over the next several months."

The speech appeared to give Obama a rhetorical jump on Clinton on the health care issue by saying the moment has arrived for a renewed effort to cover every American and by saying a plan to do so will become law no later than 2012.

Clinton recently began saying more and more about health care after the 1994 collapse of the universal coverage plan she developed for her husband Bill Clinton when he was president. But she hasn't set a timetable for universal coverage.

"There's a cynicism out there about whether this can happen, and there's reason for it," Obama said in his remarks to liberal activists. "Every four years, health care plans are offered up in campaigns with great fanfare and promise. But once those campaigns end, the plans collapse under the weight of Washington politics, leaving the rest of America to struggle with skyrocketing costs."

"For too long, this debate has been stunted by what I call the smallness of our politics—the idea that there isn't much we can agree on or do about the major challenges facing our country," he said.

"When we try to propose something bold, the interest groups and the partisans treat it like a sporting event, with each side keeping score of who's up and who's down, using fear and divisiveness and other cheap tricks to win their argument, even if we lose our solution in the process," Obama said. "It's not only tiresome, it's wrong."

He said the latest surge of interest in covering the uninsured has a different tenor because of its bipartisan nature and broad economic appeal. "From Maine to California, from business to labor, from Democrats to Republicans, the emergence of new and bold proposals from across the spectrum has effectively ended the debate over whether or not we should have universal health care in this country," he said.

"Plans that tinker and halfway measures now belong to yesterday," He said. "The president's latest proposal that does little to bring down cost or guarantee coverage falls into this category."

"In the 2008 campaign, affordable, universal health care for every single American must not be a question of whether, it must be a question of how. We have the ideas, we have the resources and we must find the will to pass a plan by the end of the next president's first term."

Obama exposed himself to some of those Washington potshots by revealing some of his thinking on the issue, but perhaps not enough to really draw heavy fire.

"At a time when businesses are facing increased competition and workers rarely stay with one company throughout their entire lives, we also have to ask if the employer-based system of health care itself is still the best for providing insurance to all Americans," he said.

Obama's call to consider moving away from that system opens him to criticism from those who attacked the Bush plan for potentially eroding employer-based health care.

Asked whether he is considering a single-payer system as an alternative to the employer-based system, Obama said, "No, I think there are a variety of ways to get there, but I think that one of the things that we're going to have to look at is portability. I don't think we immediately replace the employer-based system, but I think that setting up pools that provide a capacity for more and more people to not be dependent on an employer for their health care is important."

Obama also opened himself to criticism from the right by questioning the profits earned by health care companies. "I'm an American and I'm a capitalist," he said. "It's perfectly understandable for a corporation to make a profit." But a "controversial area we need to look at is how much of our health care spending is going toward the record-breaking profits earned by the drug and health care industry." When "those profits are soaring higher and higher each year while millions lose their coverage and premiums skyrocket, we have a responsibility to ask why."

Obama said times are different now because Republicans are proposing universal coverage plans, citing proposals advanced by Mitt Romney when he was governor of Massachusetts and current California Gov. Arnold Schwarzenegger as examples. Another difference is that corporations want action, saying "giants of industry like GM and Ford are watching foreign competitors based in countries with universal health care run circles around them."

"It is not in our character to sit idly by as victims of fate or circumstance, for we are a people of action and innovation, forever pushing the boundaries of what's possible," Obama declared.

Clinton's office didn't immediately respond to a phone call seeking comment on the speech. However, Clinton on Thursday was inviting comments on Yahoo! about health care, specifically asking "based on your own family's experience, what do you think we should do to improve health care in America?"

President Bush hit the road Thursday to pitch the health care tax deduction plan the White House unveiled earlier this week, appearing with Health and Human Services Secretary Michael O. Leavitt at a health care "roundtable" in Kansas City, Mo. Bush extolled health information technology and private insurance as the best way to make health care affordable to and accessible by all Americans.

Responding to Obama's characterization of the Bush plan as a "halfway measure," White House spokesman Tony Fratto said "the president's health care reforms are bold, serious proposals that will make health coverage more affordable, more accessible and fair for millions of Americans."

Fratto added that "we want all Americans to have health insurance coverage. The key is to provide coverage without sacrificing quality and putting the government between you and your doctor. Americans shouldn't be forced to make that trade-off. There are better ways and the president's plans get us closer to that goal while avoiding the pitfalls of government intrusion or lower quality."

By John Reichard, CQ HealthBeat Editor

January 23, 2007 -- The nation could save money and improve the quality of care by overhauling the way it pays primary care physicians, the professional association representing those doctors said Monday. A payment overhaul would boost preventive care in the U.S. and reduce the number of costly hospitalizations, said officials with the American College of Physicians (ACP), which represents 120,000 internists and medical students.

A premise of the overhaul is that the current U.S. system puts one doctor in charge of the overall care of a patient in relatively few cases, leading to treatment that is excessive in some respects and deficient in others.

Under the revisions proposed by ACP, "physicians would be paid for taking responsibility for coordinating the care of the whole patient," Robert B. Doherty, senior vice president for government affairs, told a Washington, D.C., press briefing Monday.

To qualify for the payments, physician practices would have to show an accrediting organization—ACP isn't saying yet which one—that they have systems in place to deliver what the association is calling "patient-centered care."

ACP caught flak from the press at the briefing for pitching the proposal using that and other jargony terms to explain how it would transform health care. Patient-centered care "provides continuous access to a personal primary or principal care physician who accepts responsibility for treating and managing care for the whole patient through an advanced medical home," an ACP statement explained.

In addition to accepting responsibility for the overall care of a patient by leading a medical "team," an "advanced medical home" increases efforts to improve safety and quality, ACP said.

Doherty boiled it down by saying that improved primary care can prevent unnecessary admissions to intensive care units (ICUs) and other forms of costly care.

And ACP said it will emphasize to Congress that there is nothing theoretical about the advantages of patient-centered care. Other countries have adopted the model and achieved better quality and more efficient use of resources, Doherty said. "States that rely more on primary care physicians consistently have lower Medicare expenditures, lower utilization, and fewer ICU deaths, fewer hospital admissions, and better composite overall quality scores," he said.

The payment changes proposed by ACP would address what its president, Lynne M. Kirk, described as the "collapse of primary care medicine in America." With higher incomes available in other types of medicine, fewer debt-laden medical students are going into primary care even as the need for coordinated care among the aging U.S. population increases.

"If our recommendations are accepted, Medicare would no longer pay physicians based solely on how many procedures or visits are billed," Doherty said. Practices accredited as offering patient-centered care would get payments ahead of time for delivering a defined package of services to a patient.

Doctors would have to show that they have systems in place to do things such as generate reminders to patients to practice certain forms of preventive care, track the care delivered to patients with chronic diseases such as diabetes, and give patients greater access to doctors through e-mail and phone calls.

Doherty suggested that savings from wider adoption of the model could help pay for the overhaul of the current Medicare physician payment formula, which is triggering a series of yearly payment cuts that can only be blocked through legislative action.

Although it said the approach would save money, ACP acknowledged that savings might take time to materialize. And spending on primary care should be increased, it advised. The new payment structure should result "in a substantial increase in payments to primary" care doctors, ACP said.

Among the legislative changes ACP is seeking is an expansion to the entire nation of the current pilot project in Medicare that pays doctors more in eight states if they provide a "medical home." The association also released other policy recommendations Monday calling for expanded coverage of the uninsured through expanding federal health insurance programs and allowing low-income Americans to buy into the Federal Employees Health Benefits Program.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

January 22, 2007 -- From presidential campaigns to business and consumer groups, more players in the health care scene are looking for ways to expand the State Children's Health Insurance Program (SCHIP) to cover more children.

The program, created in 1997 and up for reauthorization this year, has been hailed for its success but analysts say more must be done—through efforts such as greater public awareness and expansions—to cover the more than nine million children who are currently uninsured. Financing such an expansion, however, could prove difficult, since Democrats have pledged to follow "pay as you go" or PAYGO rules, which require that spending be offset by spending cuts or tax increases.

Sen. Hillary Rodham Clinton, D-N.Y., who over the weekend launched an exploratory committee for her widely expected 2008 bid for the presidency, told reporters she planned to raise the SCHIP income eligibility limit so that more children could enroll. For New York, where Clinton discussed SCHIP expansion at a campaign event, a family of four earning $75,000 would qualify for the program, according to published reports, which also stated that House Energy and Commerce Committee Chairman John D. Dingell, Jr., D-Mich., planned to introduce similar legislation.

On Jan. 18, advocates representing insurers, hospitals, physicians, drugmakers, and consumer groups proposed an expansion of Medicaid and SCHIP, along with new tax credits to offer health insurance coverage to half of the nation's 46.6 million uninsured. The first phase of the proposal would expand SCHIP funding by $45 billion; however, a Children's Defense Fund analysis said that would still leave a few million uninsured children without coverage.

The plan came under fire from the Children's Defense Fund, which said the proposal did not take several critical steps—such as increasing eligibility levels, guaranteeing coverage for SCHIP children, or requiring states to automatically enroll children—that are critical to reaching currently uninsured children.

Earlier this month, the Children's Defense Fund unveiled its own proposal to combine Medicaid and SCHIP into a single program that would guarantee children in all 50 states and the District of Columbia all medically necessary services. Children with family incomes at or below 300 percent of the federal poverty level ($60,000 for a family of four in 2006) would be able to buy into the program, with premiums and co-pays based on income.

In addition, pregnant women at or below 300 percent of the federal poverty level would be eligible for prenatal, delivery, and post-partum care for at least 60 days after birth.

The federal government, rather than states, would cover the costs of the child coverage expansion and enhanced benefits, with reimbursement rates for health care providers increased to the same level as Medicare, according to the plan.

An estimate prepared by the Lewin Group stated that the Children's Defense Fund proposal would cost $26.1 billion annually.

By John Reichard, CQ HealthBeat Editor

January 23, 2007 -- Democrat Pete Stark of California told an Urban Institute confab Tuesday that there's little alternative this year to cutting payments to private plans in the Medicare Advantage program.

But other gray-haired Medicare policy pros at the event suggested it ain't likely to happen, at least not to the point where payment rates in traditional Medicare and private plan Medicare are the same. The fast-growing Medicare Advantage program is developing powerful political constituencies, the other analysts said.

Stark, who chairs the Health Subcommittee of the House Ways and Means Committee, told the forum "depending upon what we're called upon to do in the budget, the overpayment of the plans looks like an attractive pot of money." If tax increases are off the table, and Stark said he suspects they are, "we don't have a whole hell of a lot of room to go out there finding funds to meet our budget targets," he said. Passing new legislation to prevent scheduled cuts in physician payments would cost a "good bit of money," Stark noted.

Urban Institute President Robert Reischauer, who appeared on the panel with Stark, noted an estimate that if enrollees of Medicare Advantage plans, the private health plan side of Medicare, were plunked back into the traditional fee-for-service part of the program, savings would total some $5 billion a year, based on an analysis of 2005 data by George Washington University analyst Brian Biles. "It's not chump change," Reischauer said.

Reischauer also cited estimates prepared by the Medicare Payment Advisory Commission that Medicare spends 10 percent more on average on enrollees in HMOs than on beneficiaries in traditional Medicare. The corresponding figures for PPOs and private fee-for-service plans in the Medicare Advantage program are 17 percent and 19 percent more respectively, he added.

But Reischauer noted that some 700,000 Medicare beneficiaries are enrolled in private fee-for-service plans in Medicare Advantage. Those plans are like traditional Medicare in that they do not restrict choice of provider, but are different in that they offer extra benefits. "In a sense, we've created a monster" by establishing private fee-for-service plans, Reischauer said, adding they would be hard to eliminate because of their large enrollment.

Fellow Urban Institute analyst Robert Berenson also noted difficulties slicing into Medicare Advantage rates. He said he sees a "political dynamic" now in which Democrats defending the extra benefits in Medicare Advantage plans counter other Democrats who pressure for rate cuts.

John Gorman, who helped oversee managed care plans as a Medicare official in the Clinton administration, said "we should never lose sight of the fact that [Medicare Advantage] has been an absolutely key safety net for low-income, unsubsidized Medicare beneficiaries." Gorman added "we know that a majority of African-American and Latino beneficiaries are already enrolled in Medicare Advantage. This program brings the only hope of reducing racial disparities among the elderly."

Gorman, who now runs a consulting firm that advises Medicare Advantage plans, also defended current payment rates in Medicare Advantage for managed care plans. He said they should be regarded as an investment in systems of coordinated care that can help tame the costs of caring for the chronically ill. "This is an investment we are making in infrastructure that really offers the only hope against the explosion of expenditures that we're going to see" in Medicare, he said.

But with Democrats trying to raise money to fund wider coverage of children and facing the cost of fixing physician payments, it's likely to be a dicey year for managed care lobbyists, even if Congress decides to save money by trimming payments for hospitals, home health care agencies and other providers.