By Mary Agnes Carey, CQ HealthBeat Associate Editor

May 7, 2007 -- The Blue Cross and Blue Shield Association Monday urged Congress to pass legislation to create an independent, public–private partnership to compare the effectiveness of medical treatments and technologies.

Up to 30 percent of health care spending is ineffective, inappropriate, or redundant care, Blue Cross and Blue Shield President and Chief Executive Officer Scott P. Serota said at a news conference. Finding which treatments work best would be "a major step forward for all of us in the health care arena," that could help cut costs and improve the quality of care, Serota said. The Agency for Healthcare Research and Quality within the Department of Health and Human Services currently conducts such research.

America's Health Insurance Plans, a trade group representing insurers, announced a similar public–private entity last month.

Under the Blue Cross plan, private insurers and federal government health care programs, including Medicare and Medicaid, would fund the entity, which would require approximately $500 million annually, Blue Cross estimates. The entity would support a broad range of research, especially clinical trials.

Physicians who relied on practice guidelines established through the entity's research would be given safe harbor for non-economic and punitive damages when faced with medical malpractice claims. Since 1995, the House has passed legislation eight times that would limit non-economic damage awards in medical malpractice suits to $250,000, but those measures have gained little traction in the Senate.

"I know this is a politically heavy lift but I think this is the right point to start the conversation," said John Fallon, senior vice president and chief physician executive of Blue Cross Blue Shield of Massachusetts.

By Alex Wayne, CQ Staff

May 10, 2007 -- The government's creation of a health insurance program for children in 1997 has caused them to leave—or lose—private insurance, the Congressional Budget Office (CBO) reported Thursday.

But the reasons for the phenomenon, called "crowd-out" by health policy experts, are unclear. And CBO Director Peter R. Orszag said it is unavoidable if Congress hopes to reduce the nation's rate of uninsured children.

"The uninsured and insured are swimming around in the same pool," Orszag said in a conference call with reporters. "It is very hard to sort of reach a little net into that pool and pick out the uninsured. You're almost inevitably going to pick out some of each."

For every 100 children who enrolled in the State Children's Health Insurance Program (SCHIP), between 25 and 50 left private health insurance plans, CBO reported. That is in line with the agency's predictions in 1996, before SCHIP was created, when CBO said it expected that about 40 percent of children enrolling in the program would leave private health insurance.

Senate Finance Chairman Max Baucus, D-Mont., and the committee's ranking Republican, Charles E. Grassley of Iowa, jointly requested the CBO study. But they had divergent views of its findings.

Baucus, who supports spending $50 billion over five years to expand SCHIP, said the report affirmed the program's value. CBO found that the rate of uninsured children—those living in families with income between 100 percent and 200 percent of the poverty level—fell from about 22.5 percent in 1996 to 16.9 percent in 2005.

"When the Finance Committee renews and improves SCHIP in new legislation, we'll find ways to cover more lower-income children who desperately need this health care," Baucus said in a statement. He expressed little concern about SCHIP replacing private health insurance; every public health program, he says, covers some people who might be able to obtain private insurance.

But Grassley called the findings alarming. "This report tells us that Congress needs to make sure that whatever it does, it should actually result in more kids having health insurance, rather than simply shifting children from private to public health insurance," he said.

The report said available evidence suggests the main reason for the shift is that the government program is cheaper, or offers better benefits.

"This is a necessary trade-off involved in any significant effort to reduce the ranks of the uninsured," Orszag said.

SCHIP covers about 6 million children. About 6 million more are estimated to be eligible but not enrolled. The program, funded at about $4 billion per year for the last 10 years, is set to expire Sept. 30. Baucus said he plans to have his committee vote on legislation to renew SCHIP in early June.

By John Reichard, CQ HealthBeat Editor

May 9, 2007 -- Health and Human Services Secretary Michael O. Leavitt announced Wednesday that he has lined up many, if not most, U.S. health care purchasers to fulfill his vision of a highly competitive and much more efficient health care marketplace.

Leavitt was joined by top White House official Al Hubbard, who is the director of the National Economic Council and who warned that the alternative is a government takeover of the health care system. Flanked by 13 other officials representing business, labor, state government, and the nation's health insurance industry, Leavitt announced that the federal government, health plans representing 100 million Americans, and 97 of the nation's top 200 corporations have pledged their support for his "four cornerstones" of a health system overhaul.

Also signing on are Medicaid programs in 18 states and the District of Columbia, which collectively represent some 26 million enrollees, HHS said.

Leavitt's cornerstones aim to revamp the health care marketplace. His four-point plan would feature a wider adoption of health information technology, standardized methods to measure quality of care, pricing information on individual medical procedures to allow their cost to be compared "apples to apples," and payment incentives for providers to dispense higher quality care and for consumers to choose care that offers the best "value"—the best combination of lower cost and higher quality.

Rising health care costs can be tamed if consumers are armed with good data on the cost and quality of care and their own pocketbooks are affected by the choices they make among competing providers, he said.

Leavitt made the announcement at an event that had all the trappings of a public relations extravaganza, featuring a master of ceremonies, dramatic lighting, a stage full of some of the nation's top executives, and a placard proclaiming that the participants are "Building a Value-Driven Health Care System Together."

Showy aspects aside, the coalition is diverse and potentially powerful—if it can agree on the fine points of system overhaul and a timeline for action. Among those pledging support were business and insurance groups allied with the Bush administration on many issues, but also a significant force in the labor movement, the Service Employees International Union (SEIU). "We totally support what you are trying to do," SEIU President Andy Stern told Leavitt. "We think it's absolutely essential that consumers have an opportunity to get the information they need to make good choices. People desperately need to know" the outcomes of treatment obtained by competing providers, he said.

Hubbard said President Bush "believes very strongly we are close to a tipping point in this country," with the nation on the brink of either adopting a "disastrous" single-payer government-run system, or moving "to a more consumer-directed system."

Leavitt said the initiative is poised to make rapid progress but the specifics on how it might occur and how quickly are unclear.

However, The Leapfrog Group and other employer coalitions announced two new guides at Wednesday's event that are designed to help state Medicaid programs and state employee benefit managers with "step by step" instructions on how to adopt the four cornerstones. The groups released a guide specifically for employers in February.

The guides offer suggestions, but not mandates. For employers, they suggest options they can pick to pursue each of the four cornerstones and advise them to choose at least one.

Leavitt also said Wednesday that HHS is accepting applications for "chartered value exchanges," which will provide consumers with report cards on the cost and quality of care. He also said Medicare is considering the adoption of "value-based purchasing" of hospital care but didn't offer specifics.

By John Reichard, CQ HealthBeat Editor

May 11, 2007 -- As the debate heats up over chopping Medicare payments to managed care plans, critics of those plans are charging that they don't deliver what they promise and so shouldn't be paid more than providers in traditional Medicare. The report details several problems it claims are "typical" of those faced by enrollees in Medicare Advantage plan.

The report, which focuses on Medicare Advantage plans, the private health plans that contract with the Medicare program to provide care, details several problems it claims are "typical" of those faced by enrollees in Medicare Advantage plan.

"The Bush administration and certain members of Congress must shed their ideological illusions about Medicare private health plans, stop the overpayments, and let the private health plans compete fairly with original Medicare on a level playing field," said Robert M. Hayes, president of the New York City–based Medicare Rights Center, in the recent report.

Insurance industry officials, meanwhile, say that the plans are growing in popularity, with tens of thousands of seniors joining an advocacy group called Coalition for Medicare Choices to protest cuts that could reduce their benefits.

The report fails to point out the many cost advantages enjoyed by Medicare beneficiaries in managed care plans, said Mohit Ghose, a spokesman for America's Health Insurance Plans.

The study alleges the following problems it said are based on calls received on its consumer hotline:

• Care under Medicare Advantage can cost more than under traditional Medicare. A New Jersey man was prescribed four rounds of chemotherapy for colon cancer. The man entered a hospital every 14 days for three days of treatment, paying his Medicare Advantage plan a $900 copayment for each hospital admission. Had the man stayed in traditional Medicare instead and bought the cheapest Medigap plan to cover his out-of-pocket costs, he would have spent some $2,000 less—$1,656 a year for the Medigap plan, instead of $3,600 in copayments.
• Benefits can change from year to year. A Medicare Advantage plan representative told a woman with polio that the plan would cover the full cost of a new wheelchair without charging a copayment. The woman ordered the wheelchair in 2006, but was told by its supplier it would not be ready until January of 2007. The plan then changed its coverage policy in 2007 to charge a copayment totaling $1,065.
• Difficulty can occur getting urgent care. A Medicare Advantage plan denied claims filed by an 80-year-old Tennessee man for hospital treatment of a heart attack, saying he failed to obtain prior authorization for care. The hospital bills totaled about $87,000. In another case, a New Jersey man called for an ambulance to take him to a hospital, which diagnosed him as having suffered a heart attack. After being transferred to another hospital better suited to treat him, his Medicare Advantage plan denied payment for the ambulance that took him there because he had not obtained prior approval.
• Members have to follow Medicare Advantage plan rules to get covered care. A North Carolina man getting treatment for a brain tumor at Duke University Hospital got denials for payment of his care from his Medicare Advantage plan because he had not obtained authorization for treatment by the facility.
• Promised extra benefits may not materialize. A New York City man was unable to eat solid food for years after a car crash several years earlier left him with a broken jaw and broken teeth. A sales person for a Medicare Advantage plan told him he would get the dental care he badly needed if he enrolled. After doing so, the man was told the plan would only pay for accident-related dental care within a year of the accident.

Ghose said that "survey after survey" show that Medicare Advantage enrollees are "overwhelmingly satisfied with their coverage." Ghose added that, "it would be nice to have groups that are politically motivated to end the better benefits and lower out-of-pocket costs for eight million seniors provide examples of other 'typical' situations in Medicare Advantage."

He said that there is no overall cap on out-of-pocket costs in traditional Medicare, including for inpatient treatment. In contrast, 95 percent of beneficiaries have access to Medicare Advantage plans that do have a cap for inpatient care. In addition, 73 percent of all Medicare beneficiaries have access to Medicare Advantage plans that require no cost-sharing whatsoever for inpatient hospital stays, he said.

Almost 60 percent of beneficiaries have access to Medicare Advantage plans that require no cost-sharing for cancer and other drugs, Ghose said. Beneficiaries must pay 20 percent of the cost of Part B drugs, an expense that can cost them thousands of dollars. He added that 80 percent of Medicare Advantage plans offer better coverage than traditional Medicare for radiation therapy.

In addition, some 450 "special needs plans" in Medicare Advantage specifically address the needs of those who are severely ill or disabled with conditions such as AIDS, diabetes, kidney disease, and congestive heart failure, he said.

Ghose added that Medicare Advantage plans have programs missing from traditional Medicare to promote healthy lifestyles as well as "disease management" programs to carefully coordinate care for those with chronic illnesses.

By John Reichard, CQ HealthBeat Editor

May 10, 2007 -- The Medicare program has the data and the computer capacity to identify individual doctors who are inefficient compared with their peers and may begin contacting them as soon as mid-2008 to goad them to become more efficient, a top federal official testified Thursday.

"It's an ambitious goal, but I think we need to set ambitious goals if we're moving forward in this important reform area," said Herbert Kuhn, acting deputy administrator for the Centers for Medicare and Medicaid Services.

Kuhn testified at a hearing called by House Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif., to find new ways to control the growth in the volume of office visits, tests, and procedures that doctors order for Medicare beneficiaries. There's widespread agreement that the current method for doing that—cutting payments if volume exceeds a yearly spending target—isn't working.

"To churn the data is probably the smallest part" of the job, Kuhn said when asked by Stark whether CMS has the resources to identify inefficient doctors. Kuhn suggested that the bigger job will be using the data to educate doctors about how to practice more efficiently and who to enlist in that effort, whether they be medical societies or "Quality Improvement Organizations" that contract with Medicare to improve care.

Called "profiling," the evaluations would involve seeing how many tests and procedures a doctor orders for a particular type of patient compared with his or her peers while getting the same treatment outcome.

Stark voiced interest in quickly getting information out to doctors about how their efficiency compares with that of other groups or other individual doctors.

Backers of profiling say doctors often become more efficient when presented with comparative data on their care giving, since it encourages them to conform to the ways in which their more efficient peers treat patients.

Also testifying in support of profiling was Glenn Hackbarth, chairman of the Medicare Payment Advisory Commission, and Bruce Steinwald, director of health care at the Government Accountability Office.

Steinwald agreed that CMS has the capacity to begin profiling doctors and said Medicare could see savings as a result. But fully realizing profiling's ability to restrain volume growth would involve tying payment to efficiency, he said. Taking that step would almost surely require legislation to give CMS the appropriate authority, Steinwald said.

Recent reports by the GAO and MedPAC "really begin laying out a roadmap about how we can get that kind of information out there," Kuhn said after the hearing. He said he thought CMS could provide feedback to doctors without new legislative authority, and that the measuring effort would be "broad scale," reaching as many physicians as possible, "if not all physicians."

"We'd be happy" to talk to Stark and his staff about legislation this year taking the further step of tying payment to efficiency, Kuhn said.

Questions remain, however, about the feasibility of profiling, including whether CMS will have the resources to do the job and the reaction of the physician community. Steinwald said profiling would be resource-intensive, indicating that CMS would need more funding to support the effort.

Anmol S. Mahal, president of the California Medical Association, drew a distinction between a program that "provides confidential feedback to physicians as a tool for self-improvement and a comparison program that ties reimbursement to efficiency." California doctors support the educational aspects of peer comparison, but because of the complexity of making accurate comparisons, Medicare should test efficiency-based payment in a pilot project before adopting it widely, he said.

John E. Mayer, president of the Society of Thoracic Surgeons, expressed doubt that Medicare could accurately account for differences in the health status of patients when comparing physicians on their efficiency of treatment.

Witnesses at the hearing also expressed support for other methods of controlling volume growth, including paying for "bundles" of services rather than individual services, improving the accuracy of payments, and paying doctors to coordinate the care of chronically ill patients.

Mayer said that bundled payment for treating a particular condition "would shift the incentives from the current system that pays 'a la carte' for each service or test," which encourages "ever more to be performed." A bundled payment also would create an incentive "to keep the patient healthy while performing only the most appropriate and helpful tests and procedures."

MedPAC's Hackbarth faulted "large errors" in Medicare payment accuracy for fueling some volume growth. For example, Medicare payments for imaging may be too high because they do not account for lower costs that come with high usage rates for imaging devices, he said.

Robert Berenson, a senior fellow at the Urban Institute, agreed. "Because of the failure to consider that the cost of providing a service such as an MRI scan is reduced with every scan performed, Medicare's reimbursements overpay and create an incentive for ordering and providing too many such scans," he said.

Hackbarth also expressed concern about underpayment of family physicians for providing cost-effective care. Those underpayments are leading too few medical students to go into primary care, he said.

Hackbarth urged another step to control the volume of services, investing money in research comparing the effectiveness of various types of drugs, devices, and medical procedures. There's no panacea for rising volume, he said—"there's much to be done on many fronts."

By David Clarke, CQ Staff

May 11, 2007 -- White House Budget Director Rob Portman warned Congress Friday that he will recommend that President Bush veto fiscal 2008 spending bills if they exceed the administration's request.

Congress is in the process of finalizing a fiscal 2008 budget resolution (S Con Res 21) that is expected to set an overall discretionary spending cap for the 12 appropriations bills that will be more than $20 billion above the president's $932.8 billion adjusted request, a figure that does not include any Iraq war funding.

"I will recommend the president veto any appropriations bill that exceeds his request until Congress demonstrates a sustainable path that keeps discretionary spending within the president's topline of $933 billion and ensures that the Department of Defense has the resources necessary to accomplish its mission," Portman wrote in a letter dated May 11 to the chairmen and ranking minority members of the House and Senate Budget committees.

In the letter Portman also urged Democrats to produce a plan that sets the stage for extending the president's 2001 and 2003 tax cuts (PL 107-16, PL 108-27) before they expire in 2010.

"We oppose the budget resolutions passed by the House and Senate because they would threaten the economic and job growth of the past four years through massive tax increases, increase federal spending by hundreds of billions of dollars, and fail to address the unsustainable growth in entitlement spending," Portman wrote.

The House version of the budget resolution (H Con Res 99) made no allowance for extending Bush's 2001 and 2003 tax cuts beyond 2010, when most currently are set to expire. The Senate version allowed for extension of some, but not all.

Republicans have maintained that both five-year budget plans would lead to tax increases because fully offsetting extensions of the 2001 and 2003 tax cuts, as required under new pay-as-you-go rules, would be difficult.

The Senate budget resolution proposes devoting about $180 billion over five years toward extending popular tax breaks such as the reduced 10 percent bracket, the child credit, and changes to the estate tax. Conference negotiators on the budget are debating how to handle this proposal in the final budget resolution.

House Budget Committee Chairman John M. Spratt Jr., D-S.C., and Senate Budget Chairman Kent Conrad, D-N.D., maintain that failing to offset the cost of tax cuts has led to a dramatic increase in the nation's debt since Bush took office in 2001.

Informal budget negotiations between House and Senate Democrats are expected to continue over the weekend, with a final deal on the fiscal 2008 budget resolution expected early next week.

No decisions were made at Thursday's formal meeting of the full House–Senate conference committee, which was dominated by opening statements and discussions regarding the proposed budget.

Negotiators may adopt a trigger mechanism for the tax-cut extensions, although the Portman letter appeared hostile to that idea. Spratt has suggested making only 80 percent of any projected 2012 surplus available for the tax cuts. But he acknowledged the House's pay-as-you-go rule would have to be "relaxed," since extending the tax cuts would reduce a projected 2012 surplus.