NOVEMBER 21, 2005 -- While the Bush administration is pleased that the House budget reconciliation bill achieves "substantial" Medicaid savings, a Statement of Administration Policy (SAP) on the measure takes issue with other health care provisions of the legislation (HR 4241), which the House passed Nov. 18.

For example, the administration has offered its own plans for changing the basis for Medicaid prescription drug reimbursement or expanding the state long-term care partnership program. The administration is also concerned with provisions in the bill that "manipulate the Federal medical assistance percentage (FMAP)." The provisions, according to the administration, "may unnecessarily increase spending."

To help Hurricane Katrina victims, the administration said it prefers its approach to negotiate waivers with individual states instead of the funding provisions in the House budget bill. "The Administration believes that we can meet the needs of States without setting the precedent of guaranteeing 100 percent FMAP," officials said.

Even with those criticisms, the House budget bill won a warmer reception than its Senate counterpart (S 1932). In a SAP on the Senate budget reconciliation package dated Nov. 1, the White House said that if a final bill cuts a $5.4 billion fund to entice preferred provider organizations to offer coverage to Medicare recipients in underserved regions, "the President's senior advisors will recommend that he veto the bill."

The fund was created as part of the new Medicare drug law (PL 108-173).

NOVEMBER 23, 2005 -- The Centers for Medicare and Medicaid Services announced a proposal Wednesday to end Medicare coverage of "bariatric surgery" for beneficiaries 65 and older following a recent study showing an elevated risk to the procedure for older patients. However, the proposed "national coverage determination" could lead to more rather than less coverage of the procedure for Medicare's under-65 population.

Stomach-stapling and other forms of "bariatric" surgery have consistently helped patients achieve sustained weight loss and have become increasingly popular as the problem of obesity increases, according to a study published in October in the Journal of the American Medical Association.

Researchers concluded that mortality rates after a year were almost three times higher for beneficiaries 65 or older than for beneficiaries below that age (Medicare covers certain disabled Americans below the age of 64). And the odds of death were 1.6 times higher for patients whose procedure was done by surgeons who had performed a below-average number of bariatric procedures, researchers found.

CMS said that while its proposed national decision would end regional coverage of the 65-and-older group, it is seeking public comment on whether to cover bariatric surgery for older beneficiaries in clinical trials.

The proposed CMS decision would cover certain bariatric procedures for very obese beneficiaries under 65 whether or not they had complicating conditions such as diabetes, a CMS spokesman said. The specific procedures that would be covered for this group of patients are known as "open and laparoscopic Roux-en-Y gastric bypass and laparoscopic adjustable gastric banding" procedures.

But the surgery would have to be performed "in a facility meeting evidence-based standards" for bariatric procedures—an apparent reference to the study data showing better results in higher-volume facilities.

Medicare covered 8,000 bariatric procedures in 2004, 75 percent of them in the under 65 population. On average hospitals received $12,000 for the procedure and doctors $1,000. A total of 6.5 million Medicare beneficiaries are under age 65.

NOVEMBER 23, 2005 -- The new Medicare prescription drug benefit does not deliver on its promise of reducing drug prices for the program's more than 40 million elderly and disabled beneficiaries, according to an analysis prepared for Rep. Henry A. Waxman, D-Calif.

The report concluded that the average drug prices offered by 10 leading Medicare drug plans are higher than prices of the same drugs available from Canada, through the Department of Veterans Affairs, or from traditional U.S. retail pharmacies.

The prices are more than 80 percent higher than prices negotiated by the government for veterans and more than 60 percent higher than the prices available to consumers in Canada.

Even Drugstore.com and Costco can beat the Medicare drug plan prices by 3 percent, according to the report, which was prepared by the House Government Reform Committee's minority staff special investigations division. Waxman is the panel's ranking Democrat.

The report questions whether the drug benefit (PL 108-173) will offer "any tangible benefits to anyone but the drug manufacturers and the insurers themselves." The benefit will also cost seniors and taxpayers more if the plans do not deliver low drug prices, the report concludes.

Centers for Medicare and Medicaid Services spokesman Gary Karr said Waxman's report was "misleading, selective, and most of all it's disappointing." He said the analysis did not explain that there are other drugs available in the Medicare drug plans that may be just as effective and cost less than the drugs listed in Waxman's report.

Mark Merritt, president of the Pharmaceutical Care Management Association, which represents pharmaceutical benefit managers or PBMs, said the House Democrats' study was an "apples-to-oranges comparison that is riddled with inconsistencies."

Among the flaws in the study, Merritt said, was the comparison of federally negotiated prices, such as those negotiated by the Veterans' Administration, to prices negotiated by Medicare prescription drug plans.

The VA model would be "unacceptable" to most Medicare seniors, Merritt said, because it provides coverage for only 34 classes of drugs. Medicare prescription drug plans are required to cover at least 146 categories and classes of medication, and provide access to nearly 55,000 pharmacies nationwide.

NOVEMBER 21, 2005 -- As the first session of the 109th Congress enters its final few weeks, appropriators are close to achieving their goal of passing all of the fiscal 2006 spending bills individually. But the last steps could prove the hardest.

President Bush on Nov. 19 signed into law the energy–water development bill (HR 2419), along with a second continuing appropriations resolution (H J Res 72) to keep funds flowing through Dec. 17 to agencies whose spending bills have not yet been enacted.

Only the Defense (HR 2863) and Labor-HHS-Education (HR 3010) bills remain to be completed when Congress returns from its Thanksgiving recess. The last time Congress passed all appropriations bills individually and didn't group any into a multibill omnibus was 2001. Before that it had not occurred since 1997.

Completing work on those measures will not be easy. The defense measure has been stalled for weeks by a fight over a Senate amendment by John McCain, R-Ariz., adopted 90–9, that would bar cruel and inhumane treatment of detainees in the war on terror and require interrogators to rely on an Army field manual that complies with standards set by the Geneva Conventions. The White House has threatened to veto the bill unless an exception from the abuse ban is made for CIA operatives.

The House last week rejected the conference report (H Rept 109-300) accompanying the Labor-HHS bill by 209–224, after 22 Republicans rebelled against the measure. Leaders attributed the defeat to a variety of issues. Some of the dissenters were upset about the lack of earmarks in the bill; others criticized cuts to rural health care programs and insufficient money for education. Ways and Means Chairman Bill Thomas, R-Calif., voted "no" because of changes the bill would make to Medicare, which falls within his panel's jurisdiction.

House and Senate Appropriations Chairmen Jerry Lewis, R-Calif., and Thad Cochran, R-Miss., respectively, vowed at the beginning of the year to avoid another omnibus after nine spending bills last year were combined. The two—who were taking the reins of the spending panels for the first time—pledged a fresh start this year.

Some sort of year-end catchall bill may yet prove unavoidable, with the Defense bill the likely vehicle. It is widely seen as the last must-pass bill of the year, and GOP leaders may opt to use it to carry a variety of items—including President Bush's proposed reallocation of hurricane rebuilding funds and his spending rescission proposals, funding to prepare for a potential flu pandemic, and an across-the-board cut sought by GOP conservatives.

Labor-HHS also may have to hitch a ride on Defense if GOP leaders refuse to permit appropriators to renegotiate the failed conference report. They could add the bill, untouched, to the Defense bill and simply dare opponents to vote against the package. House Minority Leader Nancy Pelosi, D-Calif., has already predicted that the majority will choose that approach—and succeed.

However, it is still possible House-Senate negotiators could return to the table and report out a new conference report. In the hope of reopening the conference, the Senate on Friday voted 66–28 to instruct its conferees to designate the bill's $2.2 billion in Low Income Home Energy Assistance Program (LIHEAP) spending as emergency funding (to open up funding under the bill's spending cap for other activities), and it voted 58–36 to instruct conferees to seek another $797 million for the National Institutes of Health.

NOVEMBER 22, 2005 -- The cost of health benefits is predicted to increase 6.7 percent next year, continuing a three-year slowdown in cost increases, according to an annual study of employer-sponsored health plans.

The report, compiled by Mercer Health & Benefits LLC, also shows that employers limited their health plan increases to 6.1 percent in 2005 through a variety of initiatives, such as cost-shifting and changing vendors.

Nearly 3,000 employers participated in the survey, with results representing about 600,000 employers and more than 90 million full- and part-time employees.

Other highlights of the report include:

• Fewer small employers offered health care coverage in 2005 despite the availability of low-cost consumer directed health plans.
• Employers with 20,000 or more workers were most likely to offer consumer-directed health plans.
• Employers relied on cost shifting in the form of higher deductibles and co-payments for employees to keep health care costs low.
• Employers are seeing cost savings from disease management programs for employees with chronic medical conditions, such as diabetes or heart disease. Two-thirds of large employers now offer one or more disease management programs, the study found.