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Kaiser Daily Health Policy Report
The Latest Reports in Health Policy
Administration News
GAO, Congressional Research Service Say Bush Administration Improperly Issued Directive That Limits States' Abilities To Expand SCHIPs
[May 16, 2008]
The Bush administration improperly issued a policy directive last year that restricts states' abilities to expand their SCHIP programs, the Government Accountability Office and the Congressional Research Service said on Thursday during a House Energy and Commerce Health Subcommittee hearing, CQ Today reports. The Aug. 17, 2007, policy directive requires states to enroll 95% of children in families with incomes up to 200% of the federal poverty level before expanding coverage to children in families with incomes greater than 250% of the poverty level. During the hearing, Morton Rosenberg, a legal specialist for CRS, and Dayna Shah, managing associate general counsel for GAO, said the directive amounted to a regulation and should have been vetted in Congress using the same process as other administrative rules, according to CQ Today.
The opinions from GAO and CRS "lend weight to Democrats' efforts to nullify the directive, something they have promised to do since it was issued," according to CQ Today. Subcommittee Chair Frank Pallone (D-N.J.) is sponsoring legislation (HR 5998) that would reverse the directive. He said, "The Aug. 17 directive would impose strict new requirements on states and beneficiaries that are not only impossible to achieve but make little, if any, sense." However, according to CQ Today, "Many Republicans support the principle behind the [directive], so Pallone's bill stands little chance of passing the Senate, where it could be filibustered."
States have argued that meeting the enrollment requirement is impossible, and several states have filed lawsuits against the federal government to block the directive. The Bush administration says the directive is aimed at preventing families from dropping private health coverage to enroll in SCHIP.
During the hearing, Rosenberg said a disproval resolution probably could still be passed by Congress to nullify the directive. Unlike stand-alone bills, disapproval resolutions cannot be filibustered in the Senate. Pallone said he would prefer to pass his bill because it also would require CMS to reconsider a request from New York state to expand its SCHIP, which the agency previously denied. According to a House Democratic aide, CMS officials were invited to testify at Thursday's hearing but said they would only do so if the hearing were held behind closed doors. CMS spokesperson Jeff Nelligan said he was unaware that the agency had been invited to testify (Wayne, CQ Today, 5/15).
 The GAO opinion is available online.
Capitol Hill Watch
Senate Appropriations Committee Passes Bill With Provision To Block Medicaid Rules, Increase FDA Funding
[May 16, 2008]
The Senate Appropriations Committee on Thursday approved a $193 billion supplemental war appropriations bill that includes a provision to block for one year seven new Medicaid regulations proposed by the Bush administration, CongressDaily reports. The legislation, which has three parts -- war spending, policy conditions for the funds and domestic spending -- also includes $275 million for FDA. Before the passage of the bill, the committee unanimously approved an amendment proposed by Sen. Frank Lautenberg (D-N.J.) that would block for one year an SCHIP policy directive announced last year by the administration (Kivlan, CongressDaily, 5/15).
Senate Majority Leader Harry Reid (D-Nev.) said that he hopes to move the bill to the floor on Monday. The Senate plans to hold separate votes on each of the three parts of the bill. According to CQ Today, the "Senate will ... have to reconcile the House version with its own committee's language and muster some Republican support to get a final version through the chamber," which "will not be easy" (Rogin/Higa, CQ Today, 5/15). House Version
Meanwhile, the House on Thursday approved two parts of the bill -- the sections on domestic spending and policy conditions for war funds -- but rejected the part on war spending, CQ Today reports (Clarke/Higa, CQ Today, 5/15). The House version of the legislation, which would cost $183.7 billion, includes the provision to block the Medicaid regulations.
President Bush on Thursday said that he would veto the bill (Sanchez/Bourge, CongressDaily, 5/15). Bush threatened to veto the legislation because of the lack of war spending and the policy conditions for war funds (Taylor, AP/Baltimore Sun, 5/16). According to the Washington Post, although Bush also opposes the part of the bill on domestic spending, those funds "will garner considerable support in both parties," which makes the prospects for that section of the legislation more "unclear" (Weisman, Washington Post, 5/16).
House Committee Holds Hearing on Concerns About Nursing Home Ownership, Inspections
[May 16, 2008]
The House Energy and Commerce Oversight and Investigations Subcommittee on Thursday held a hearing to examine the effects that the "increasingly veiled nature" of nursing home ownership and problems with inspections have had on the quality of care for elderly and disabled residents, CQ HealthBeat reports (Reichard, CQ HealthBeat, 5/15). According to CongressDaily, more than 50% of nursing homes are part of chains, with many of those owned by private equity firms that establish "layered entities" to operate the facilities, "making it difficult" for CMS, states and consumers to determine their owners and operators (Cox, CongressDaily, 5/16).
At the hearing, Lewis Morris, chief counsel to the Inspector General for HHS, said that CMS operates a database called "Pecos" that includes some nursing home ownership information but added that the system does not address the issue adequately. The database includes ownership information on 70% of the nursing homes that participate in Medicare, according to acting CMS Administrator Kerry Weems. He said that CMS seeks to "populate Pecos 100%" and link ownership information to quality data on the Nursing Home Compare Web site but added that the agency must have "usable" ownership information (CQ HealthBeat, 5/15).
Subcommittee Chair Bart Stupak (D-Mich.) said, "CMS and the states lack the tools ... to know who actually owns the country's nursing homes and who should be held accountable for the residents in their care." Subcommittee ranking member Joe Barton (R-Texas) said, "A bright dose of sunshine into nursing home practices may be needed to expose offensive acts and discourage bad behavior" (CongressDaily, 5/16). Inspections
The hearing also addressed problems with nursing home inspections. Morris said that, based on data from 2006, one in five nursing homes has serious deficiencies that result in injuries to residents or place them at risk for injuries (CQ HealthBeat, 5/15).
According to a Government Accountability Office report released at the hearing, from 2002 to 2007, federal officials found that state inspectors had missed at least one serious deficiency at nursing homes in 15% of the inspections they checked. In nine states -- Alabama, Arizona, Missouri, New Mexico, Oklahoma, South Carolina, South Dakota, Tennessee and Wyoming -- federal officials found that state inspectors had missed at least one serious deficiency at nursing homes in 25% of the inspections they checked.
In response to the problems, Sens. Chuck Grassley (R-Iowa) and Herb Kohl (D-Wis.) have introduced a bill that seeks to improve nursing home care. The legislation, which the senators hope to attach to a Medicare bill, would increase fines for violations of federal standards at nursing homes. Under the bill, nursing homes would have to pay $25,000 for serious deficiencies, compared with $10,000 currently, and $100,000 for serious deficiencies that result in the deaths of patients. In addition, the legislation would require nursing homes to provide consumers and the government with more information about ownership and "affiliated or related parties" (Kaiser Daily Health Policy Report, 5/15). Reps. Pete Stark (D-Calif.) and Jan Schakowsky (D-Ill.) plan to introduce similar legislation in the House (CongressDaily, 5/16).
The GAO report is available online.
House Committee Calls for Immigration and Customs Enforcement Detainee Records in Response to Washington Post Series
[May 16, 2008]
House Judiciary Committee leaders on Thursday in a letter to Department of Homeland Security Secretary Michael Chertoff requested thousands of documents from Immigration and Customs Enforcement related to health care provided to immigrants in detention centers, CongressDaily reports. In the letter, committee Chair John Conyers (D-Mich.) and Immigration, Citizenship, Refugees, Border Security and International Law Subcommittee Chair Zoe Lofgren (D-Calif.) requested documents from as early as 2002 on the deaths of detained immigrants and on the medical and mental health care they received. The lawmakers said they made the request in response to a four-day Washington Post series, titled "Careless Detention," on the treatment of detained immigrants. They asked ICE to provide the same documents that the Post received from the agency, unredacted, within five days (CongressDaily, 5/15).
Proposed Task Force Would Look Into Solutions for Looming Insolvency of Entitlement Programs
[May 16, 2008]
Sens. Kent Conrad (D-N.D.) and Judd Gregg (R-N.H.) on Monday held a panel discussion at the Woodrow Wilson International Center for Scholars, where they proposed creating a new bipartisan task force to address the growing costs of large entitlement programs, CQ HealthBeat reports. The task force, which would comprise members of Congress and Bush administration officials, would draft legislation focused on the rising costs of the programs and on major tax issues.
Conrad also introduced several potential policies to increase the efficiency of Medicare and Medicaid. He said that comparative effectiveness research would help determine why different regions of the U.S. achieve different results on identical medical procedures and that coordinated care for chronically ill patients would reduce unnecessary prescriptions and treatments.
Neither Conrad nor Gregg detailed potential revenue sources to reduce entitlement spending. Gregg said, "We are not representing ideas," adding, "Will we be expanding revenue? I suppose that's why we put it all on the table. I suspect there will be a revenue component." Conrad said, "As soon as you get into specifics, you get opposition. We really have to get this set up first."
Panelist Kimberly Morgan, assistant professor of political science and international affairs at George Washington University, said Conrad's policies would not do enough to significantly address spending for either program. NPR correspondent Julie Rovner, another panelist, noted past failures of commissions to implement meaningful change to Medicare and Medicaid (McCarthy, CQ HealthBeat, 5/14).
Health Care Marketplace
Two California Health Insurers Agree To Reinstate Coverage for 1,200 People Whose Policies Were Rescinded After Incurring High Medical Bills
[May 16, 2008]
California health insurers Kaiser Permanente and Health Net on Thursday agreed to reinstate coverage to about 1,200 individuals whose policies were improperly rescinded, the San Francisco Chronicle reports. The insurers reached the agreement with the California Department of Managed Health Care, which has been investigating insurers that retroactively cancel health coverage for some plan members who incur high medical costs (Colliver, San Francisco Chronicle, 5/16). Under state law, health insurers can legally rescind coverage if it is determined that a member intentionally lied or withheld information on an application. However, insurers have been accused of improperly canceling coverage after a person gets sick, citing minor or inadvertent mistakes on applications (Kaiser Daily Health Policy Report, 4/18).
Kaiser has agreed to reinstate policies for 1,092 members whose coverage was rescinded between 2004 and 2006, when the company ended the practice. Health Net has agreed to do the same for 85 members whose policies were dropped. Both insurers also must pay a $300,000 fine (Perkes, Orange County Register, 5/15). DMHC is pursuing similar settlements with PacifiCare, Blue Shield of California and Anthem Blue Cross to reinstate about 4,000 other rescissions.
According to the Los Angeles Times, the agreements come about three months after a state resident with cancer won a $9 million lawsuit against Health Net for rescinding her coverage while she was undergoing chemotherapy, which halted her treatment. In addition, DMHC Director Cindy Ehnes last month threatened to order the state's top five health insurers to immediately reinstate coverage for more than two dozen individuals and to review all cases of policy rescissions since 2004 (Girion, Los Angeles Times, 5/16).
Kaiser officials said that in the coming weeks, the company will begin contacting former members who have unresolved disputes and offer them the option of purchasing individual coverage without a medical review (Glover, Sacramento Bee, 5/16). The Kaiser agreement also establishes a process through which former plan members can seek reimbursement for medical expenses up to $15,000. Larger and disputed bills and other types of claims will be submitted to an arbitrator selected by DMHC and the health insurers, the Times reports. Former members also could opt out of the settlement and take their claims to court (Los Angeles Times, 5/16). Health Net agreed to the same terms, but the settlement is not yet final (San Francisco Chronicle, 5/16). Comments
Jerry Fleming, senior vice president and national health plan manager for Kaiser, said, "This program will provide those persons with the option to purchase individual health insurance coverage going forward and provide a fair and expeditious process to resolve any disputes that may remain," adding, "We want to clear up past issues so we can move forward toward a longer-term solution addressing the larger issues of affordable health care coverage" (Sacramento Bee, 5/16).
Ehnes said, "Our goal is to get all consumers, not only those within Kaiser, covered again without having to go through a long process that may not be decided in their favor" (San Francisco Chronicle, 5/16).
California Gov. Arnold Schwarzenegger (R) said, "This important settlement should pave the way to similar agreements with other health plans to reinstate health coverage. Patients should not live in fear of losing their health care coverage when they need it most."
William Shernoff, an attorney representing hundreds of members whose coverage was dropped, said he would advise his clients to "accept the reinstatements because that's wonderful to get the medical care -- that is important," adding that "as far as damages for past harm, there's no doubt in my mind that the best place for them to get their full damages will be in court rather than in an arbitration process" (Los Angeles Times, 5/16).
Please note: The Kaiser Family Foundation is not associated with the Kaiser Foundation Health Plan, Kaiser Permanente or Kaiser Industries.
Michigan Judge Rules Against Blue Cross Blue Shield Rate Hikes, Cites Large Surplus
[May 16, 2008]
A Michigan administrative law judge on Wednesday ruled that Blue Cross Blue Shield of Michigan would not be justified in increasing premiums by 24% to 42% for individual health insurance plans, the Detroit Free Press reports. BCBS of Michigan, a not-for-profit company, is the state's insurer of last resort and must seek state approval for all premium rate increases. BCBS filed a petition in October 2006 to raise rates for seven of 12 individual policies, which would affect about 22,000 state residents, according to Joe Aoun, the attorney representing the Ann Arbor, Mich., couple who filed suit against the proposed rate increases in 2006.
In his ruling, Judge David Lick said the insurer's $2.4 billion in reserves is "very high by any standard" and "subscribers should receive the entire benefit of the power and the financial position" of BCBS. He also cited a 1980 state law governing BCBS that states the insurer's money and property "shall be acquired, held and disposed of only for the lawful purposes of the corporation and for the benefit of the subscribers of the corporation as a whole." The ruling also said that BCBS should use its earnings and surplus to help expand access to health care for the state's uninsured residents and Medicaid beneficiaries. In addition, Lick said BCBS' annual administrative cost growth should be reduced to 3% from the 5% the company estimated. BCBS also should not assess a 1% charge to individuals to subsidize supplemental Medicare and group conversion policies for people who previously had employer-sponsored health coverage, according to the ruling.
BCBS spokesperson Helen Stojic said the insurer is losing money on individual policies, adding, "This has gone on for longer than a year. No other insurance company has to go through this exceedingly long process to make their rates reflective of the medical costs of insurance." According to Stojic, BCBS' reserves are less than the maximum allowed by the state and are needed to handle potential emergencies. She added that Lick's ruling is "part of a bigger process" and "not a final judgment." Aoun said the ruling could have implications for businesses and the 4.6 million state residents with BCBS coverage.
The ruling must be approved by the Michigan Office of Financial and Insurance Regulations. BCBS and Aoun have 30 days to contact Lick with any concerns they have about the decision (Anstett, Detroit Free Press, 5/15).
Coverage & Access
Cleveland Clinic Medical School To Offer No-Cost Education for Students Pursuing Academic Careers
[May 16, 2008]
The Cleveland Clinic Lerner College of Medicine of Case Western Reserve University on Thursday announced that all future students entering the school will be given full scholarships in an effort to promote academic medicine as a career path among medical students, the Wall Street Journal reports. The scholarships, valued at $43,500 annually, originally will be funded by money generated by Lerner's operations and endowment and eventually fully funded by the endowment. Current students will receive scholarships equal to half of their annual tuition. The scholarships are not contingent on graduation or choice of medical specialization.
According to the Journal, the medical profession "has worried for years" about the high cost of medical education and the effect it has on students deciding which field of medicine to pursue. Medical school graduates have an average debt of $140,000, and debt influences one-third of them in their choice of specialization, according to a American Association of Medical Colleges survey. The average annual salary in clinical practice is $161,000 for family physicians, $380,000 for radiologists and $413,000 for orthopedic surgeons, compared with $140,038 for family physicians, $205,904 for orthopedic surgeons and $272,737 for radiologists in academic medicine, according to data from Merritt Hawkins and the Medical Group Management Association.
About 15% of incoming medical students expressed interest in academic, or research, medicine over the last decade, but the percentage declined to 9.4% of students in 2007 for unknown reasons, according to Gwen Garrison, director of student and applicant studies for AAMC. Lerner Executive Dean Andrew Fishleder said, "We hoped that debt would not hinder their ability to pursue their careers." Fishleder added that the scholarship program will increase competition for enrollment among the most qualified prospective students.
However, some experts believe medical school graduates forgo academic medicine for other reasons, including work-life balance, the amount of direct contact with patients and the nature of daily work. The University of Central Florida, which is launching a medical school, announced in April it will offer scholarships that completely cover tuition and expenses to its first class. In addition, Yale University and some other universities are increasing financial aid for medical students, the Journal reports (Wang, Wall Street Journal, 5/15).
State Watch
More Than 10,000 Beneficiaries Enrolled in Oklahoma Insurance Premium Assistance Program
[May 16, 2008]
Enrollment in the Oklahoma Employer/Employee Partnership for Insurance Coverage, the state's health insurance premium assistance program, has exceeded 10,000 beneficiaries for the first time in the program's three-year history, the Oklahoman reports. The most current count of beneficiaries is 10,776, up from 1,557 beneficiaries 15 months ago. State residents with incomes up to 200% of the federal poverty level are eligible for the program, and the Oklahoma Health Care Authority has requested permission from the federal government to increase the income eligibility threshold to 250% of the poverty level.
Under the employer portion of the program, which began in 2005, the authority provides subsidies to businesses with up to 50 employees to offset the costs of health plan premiums. Employees contribute a maximum of 15% of the cost of premiums. The authority also administers the portion of the program that provides premium assistance for individual policies, which started in March 2007. The authority contributes 60% or more of premium costs. The program is funded through state tobacco taxes (Raymond, Oklahoman, 5/14).
Malpractice Coverage Rates For Massachusetts Physicians Lower Now Than in 1990s, Study Finds
[May 16, 2008]
Physicians in Massachusetts pay lower premium rates for malpractice coverage than they did in 1990, despite previous claims that high rates are causing them to leave the state, according to a study published in the current issue of Health Affairs, the Boston Globe reports. For the study, researchers at Suffolk University's Law School, led by health policy scholar Marc Rodwin, examined data on state physicians from 1975 to 2005. The data were provided by ProMutual Group, which offers insurance for about half the physicians in the state.
The study found that Massachusetts ranked fourth in the U.S. for the amount paid out for malpractice-related settlements. While higher payments could lead to higher premium rates, the premium rates for coverage in 2005 averaged $17,810, compared with $17,907 for similar coverage in 1990, after the rates were adjusted for inflation, the study found.
In addition, the study found that physicians who specialized in obstetrics/gynecology, neurological surgery and orthopedics involving spinal surgery, who accounted for 4% of practicing physicians in the state, experienced the greatest fluctuations in premium rates. Average rates for physicians in those specialties in 1990 increased from $66,220 to $95,045 in 2005 after they were adjusted for inflation.
Rodwin said, "If you don't find a crisis here, you're probably not going to find one nationally," adding, "Clearly there are some increases in premiums and high premiums for a small percentage of doctors in three specialty groups, but that's entirely different for the rest of doctors."
Bruce Auerbach, president of the Massachusetts Medical Society, said that malpractice premiums are one of the many pressures that the state's practicing physicians face. Auerbach said, "The issue of the malpractice crisis is not purely a premium-based issue, although we certainly have documented the high cost of liability insurance is a major factor in (physicians') perspective on the practice environment," adding, "I think to some degree looking at malpractice premiums ... may provide an unfair picture of what is really going on" (Cooney, Boston Globe, 5/15).
An abstract of the study is available online.
The Latest Reports in Health Policy
Tutorial Examines Health Care Quality in the U.S.
[May 16, 2008]
Tutorial: Measuring Health Care Quality, kaiserEDU.org: The slide tutorial -- narrated by Carolyn Clancy, director of the Agency for Healthcare Research and Quality -- provides an overview of the state of health care quality in the U.S. Clancy explains how quality is measured, discusses the federal roll in tracking and measuring health care quality, and suggests opportunities for system improvement, as well as areas for future research and development (Kaiser Family Foundation release, 5/15).
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