Kaiser Daily Health Policy Report
CMS Pulls Federal Funding From Wisconsin's SeniorCare Prescription Drug Program
Effect of State Health Insurance Proposals on Small Businesses Remains Undetermined
More Small Businesses Offering High-Deductible Health Insurance Plans
Physicians Oppose UnitedHealth Group Policy To Fine Them for Out-of-Network Referrals
HHS Secretary Visits New Orleans Clinics To Assess Health Care Needs
Texas Officials Reach Settlement in Medicaid Lawsuit; Funding Increase Proposed
Merger of Pennsylvania Health Insurers Could Result in Lost Jobs, Witnesses Testify at Hearing
Sierra Health Services Drops Coverage for Brand-Name Medications in Medicare Prescription Drug Benefit 'Doughnut Hole'
Department of Veterans Affairs Electronic Health Records System One of Few Implemented Nationwide
The Latest Reports in Health Policy
Report Discusses How Pay-for-Performance, Quality-Reporting Programs Can Increase Disparities; Report Examines Physician Consideration of Out-of-Pocket Costs
Capitol Hill Watch
Leading Lawmakers From Both Parties Working To Reach Agreement on Legislation That Would Permit FDA Approval of Generic Biotechnology Drugs
[Apr 10, 2007]
Democratic and Republican congressional leaders "are working feverishly on legislation that could give consumers access to lower-cost copies of biotechnology drugs that now cost tens or hundreds of thousands of dollars a year," the New York Times reports (Pear, New York Times, 4/8). Companion bills (HR 1038 and S 623) introduced earlier this year by Rep. Henry Waxman (D-Calif.) and Sens. Charles Schumer (D-N.Y.) and Hillary Rodham Clinton (D-N.Y.) would allow FDA to approve "comparable" and "interchangeable" generic versions of biotech medications through an "abbreviated" process. Companies that seek to market comparable generic versions of biotech medications would have to prove that their treatments have active ingredients "similar" to those of the brand-name versions. Companies that seek to market interchangeable generic biotech medications would have to prove that their treatments have molecular structures "comparable" to those of the brand-name versions and that their treatments have the same effects as the brand-name versions in all patients. The legislation would not specifically require companies that seek to market comparable or interchangeable generic biotech medications to conduct clinical trials. However, the legislation would allow FDA to require trials on a case-by-case basis (Kaiser Daily Health Policy Report, 3/7). Cost, Safety Issues
Consumer groups, employers and health insurers support the legislation, which they maintain would make biotech medications more affordable and reduce health care costs. According to the Times, generic versions of biotech medications could cost 15% less than brand-name versions and could cost more than 60% less in the event that several rival generic versions reach the market. Arney Rosenblat, a spokesperson for the National Multiple Sclerosis Society, said, "Many patients are denied access to these important drugs because even the copayments can reach thousands of dollars a year." However, companies that manufacture brand-name versions of biotech medications "contend that biotechnology products, made from cells and living organisms, are so complex that a copy will never be identical to the original and therefore cannot be certified as safe without testing in humans." Susan Desmond Hellmann, president for product development at Genentech, said, "Some level of clinical testing should be required in all cases." Jay Siegel, a senior scientist at Johnson & Johnson, said, "I would never take a biologic that had not been tested in humans. The risks are too high." However, Janet Woodcock, chief medical officer of FDA, has said that FDA has the ability to determine which trials are necessary to ensure the safety and effectiveness of generic versions of biotech medications. Sen. Orrin Hatch (R-Utah) said he expects Congress to pass legislation that would allow FDA to approve generic versions of biotech medications later this year (New York Times, 4/8). Editorial
Efforts by lawmakers to pass legislation that would allow FDA to approve generic versions of biotech medications "is an attempt to fit a new problem into a framework for which it wasn't designed," a Wall Street Journal editorial states. The "high prices of biologics reflect the difficulty and expertise required to develop these medicines," according to the editorial. "It should be possible to preserve incentives to innovate while advancing legitimate public health goals like increased access," the editorial states, adding, "And generics can play a useful role in spurring the reformulation of existing medicines in more efficacious ways." The editorial concludes, "The challenge is to strike a balance between access and innovation, which Mr. Waxman and his allies fail to do. The real costs of this agenda might well be fewer new biological therapies" (Wall Street Journal, 4/10).
Medicaid
CMS Pulls Federal Funding From Wisconsin's SeniorCare Prescription Drug Program
[Apr 10, 2007]
CMS last week rejected a request for a new Medicaid waiver for SeniorCare, a Wisconsin prescription drug program for low-income seniors, the Washington Post reports (Lee, Washington Post, 4/10). In 2005, before the implementation of the Medicare prescription drug benefit, HHS issued a waiver to allow Wisconsin to continue to operate SeniorCare until at least June 30. SeniorCare has no monthly premiums, lower copayments than the Medicare prescription drug benefit and no gaps in coverage. In addition, SeniorCare, unlike the Medicare prescription drug benefit, does not measure the assets of beneficiaries. Wisconsin Gov. Jim Doyle (D) requested a new waiver to allow the state to continue to operate SeniorCare for three additional years (Kaiser Daily Health Policy Report, 3/29). SeniorCare, which began in 2002, has enrolled more than 100,000 Wisconsin residents ages 65 and older with annual incomes less than 240% of the federal poverty level. Under SeniorCare, beneficiaries pay a $30 annual fee and copayments of $5 for generic medications and $15 for brand-name treatments after they reach an annual deductible based on income. SeniorCare beneficiaries with annual incomes more than $16,336 pay deductibles of $500 or $850, and those with annual incomes less than $16,336 pay no deductible. SeniorCare obtains medications at a discount through Medicaid, and Wisconsin officials negotiate additional rebates with pharmaceutical companies. CMS Comments
According to acting CMS Administrator Leslie Norwalk, the agency rejected the request for a new waiver because the state has not provided evidence that SeniorCare reduces costs for the federal government as required. Norwalk also said that, because SeniorCare does not measure the assets of beneficiaries, "I don't know whether or not these people would ever qualify for Medicaid." She said, "All they have done, basically, is shift costs to the Medicaid program that should not be borne there." In addition, Norwalk said that private plans under the Medicare prescription drug benefit can negotiate more comprehensive and affordable options for beneficiaries than SeniorCare (Lee, Washington Post, 4/10). CMS will allow Wisconsin to continue to operate SeniorCare until the end of the year to help with the transition to the Medicare prescription drug benefit. Reaction
According to Doyle, Norwalk and other CMS officials did not consider evidence that SeniorCare reduces costs for the federal government, the Dow Jones/Milwaukee Journal Sentinel reports (Walters/Forster, Dow Jones/Milwaukee Journal Sentinel, 4/5). Wisconsin officials said that SeniorCare has saved the federal government a total of $669 million in Medicaid costs and estimated that the program would save an additional $400 million over the next three years. Jason Helgerson, director of the Wisconsin Medicaid program, said that the federal government pays $617 annually for the average SeniorCare beneficiary, compared with almost $1,200 annually for the average Medicare beneficiary enrolled in the prescription drug benefit. Helgerson said, "We think the empirical evidence is extremely clear that SeniorCare is more cost-effective than Part D and for the simple reason that we negotiate with the drug companies and the federal government doesn't." Doyle said, "The Bush administration is making a terrible mistake. As a result, Wisconsin seniors will pay more and get less coverage, while drug companies make even larger profits. Our state won't be allowed to negotiate better prices on behalf of our seniors as we do now" (Washington Post, 4/10). Doyle, state lawmakers and advocates for Wisconsin seniors said that they will seek to establish supplemental coverage for the Medicare prescription drug benefit in place of SeniorCare (Dow Jones/Milwaukee Journal Sentinel, 4/5).
Coverage & Access
Effect of State Health Insurance Proposals on Small Businesses Remains Undetermined
[Apr 10, 2007]
As several states "look to shrink the swelling ranks" of the uninsured, the "crucial test for one approach gaining favor with policymakers is likely to be its impact on small business," the Wall Street Journal reports. Massachusetts, Vermont, California, Pennsylvania and Illinois are among the states that are considering, or have considered, plans to require employers either to provide health benefits to their workers or to make annual payments to help cover the uninsured. Many business groups oppose the plans, saying that the requirements could hurt small businesses by forcing them to raise prices or lay off workers. However, a "closer look suggests that while some small businesses might be squeezed, a great number would be exempt from the rules," the Journal reports. In addition, "many businesses and self-employed workers could even benefit by dropping their current health plans and picking up cheaper coverage through state-sponsored programs," according to the Journal. Stuart Altman, dean of the Heller School for Social Policy and Management at Brandeis University, said, "The new reforms actually help small business a lot more than hurt them." He added that companies "that don't have insurance often don't have it because it's too expensive. This gives them another option" (Spors, Wall Street Journal, 4/9).
More Small Businesses Offering High-Deductible Health Insurance Plans
[Apr 10, 2007]
The Wall Street Journal on Monday profiled ITAGroup, an Iowa-based marketing and incentives company that is one of a "growing number of small businesses that are adding high-deductible plans in a push toward 'consumer-driven' health care." According to a 2006 survey conducted by the U.S. Chamber of Commerce, 15% of U.S. companies with between 100 and 499 employees have begun to offer high-deducible health plans, which have lower premiums than traditional plans and in some cases include health savings accounts and health reimbursement arrangements. In 2005, ITAGroup, which has 450 employees, began to offer a high-deducible health plan in addition to a traditional plan, and about 17% of employees have enrolled in the high-deducible plan. ITAGroup might offer HSAs with the high-deducible health plan in the future. ITAGroup CFO Dick Rue said that the company decided to offer the high-deducible health plan as part of an effort to encourage employees to consider the cost of their health care decisions for themselves and the company (Covel, Wall Street Journal, 4/9).
Physicians Oppose UnitedHealth Group Policy To Fine Them for Out-of-Network Referrals
[Apr 10, 2007]
Many physicians are voicing opposition to a new UnitedHealth Group policy that threatens to fine doctors who repeatedly refer patients to out-of-network laboratories for tests, the Wall Street Journal reports. UnitedHealth in 2006 reached a 10-year deal to make Laboratory Corporation of America Holdings the insurer's national in-network laboratory. "To squeeze as much savings as possible out of the LabCorp deal, UnitedHealth sent a not-so-friendly reminder to doctors to play along," the Journal reports. The letter states that as of March 1, UnitedHealth will reserve the right to fine physicians $50, cut their fees or eliminate them from the UnitedHealth network if they consistently refer patients to out-of-network labs. The insurer has not yet imposed any financial sanctions. According to the American Medical Association, the policy marks the first time that physicians face fines for referring patients for out-of-network care or testing. AMA and several state medical societies have requested that UnitedHealth terminate the policy, and the New Jersey Department of Banking and Insurance has said that it might be illegal. The company has temporarily suspended the policy in New Jersey. Many physicians argue that the policy disrupts patient care, particularly with regard to certain blood and tissue tests that have different methodologies at different labs. In addition, many allergists say that LabCorp rival Quest Diagnostics -- which previously had a contract with UnitedHealth -- is the only national commercial lab that provides the leading blood test for allergies. Some physicians also argue that the policy violates PPO agreements, which give enrollees the choice to go out of network as long as they pay a larger share of the cost. UnitedHealth says that the policy is intended to prevent beneficiaries from paying out-of-network costs, which can be more than seven times higher than in-network copayments. UnitedHealth spokesperson Tyler Mason said that contracts between physicians and insurers always have required adherence to referral protocols, and he added that the company plans to apply the penalties "sparingly" after first speaking with doctors (Fuhrmans, Wall Street Journal, 4/10).
State Watch
HHS Secretary Visits New Orleans Clinics To Assess Health Care Needs
[Apr 10, 2007]
HHS Secretary Mike Leavitt on Thursday visited three health clinics in New Orleans that are part of the Partnership for Access to Health Care -- a consortium that seeks to provide primary care services to the uninsured -- to assess the health care needs of the area, the New Orleans Times-Picayune reports. The Deficit Reduction Act earmarked $2 billion for health care in states affected by Hurricane Katrina, $1 billion of which went toward funding Medicaid in affected areas and to local hospitals that treated uninsured patients. Leavitt said he is preparing to allocate the remainder of those funds, $200 million, to health clinics in Louisiana. Leavitt has said he supports a plan that would redirect funds used for the state's Charity Hospital system to provide residents with annual incomes less than 200% of the poverty level with an insurance voucher. Residents would be able to use the voucher to receive care from the provider of their choice. "My interest was to ask the average citizen being provided health care what their thoughts were about" the charity system, Leavitt said, adding, "Repeatedly they said they would like to choose where they go and avoid the long waits that happen in emergency rooms." Louisiana officials maintain that there is not enough funding to cover all uninsured residents in the state and that charity care is needed to serve as a safety net for the uninsured (Moran, New Orleans Times-Picayune, 4/6). Blanco Discusses Health Care
In related news, Louisiana Gov. Kathleen Blanco (D) on Thursday in her final annual governor's luncheon address said she would work to expand health insurance options for state residents, the Times-Picayune reports. Blanco also said she will request an additional $120 million for reimbursements to hospitals in Jefferson Parish that have been treating more uninsured people after Charity Hospital closed. "We recognize that hospitals are caring for an additional number of uninsured people and are bearing the costs." She added, "We have a very large share of uninsured people, and I think in many cases it is because their employers do not provide the care" (Kirkham, New Orleans Times-Picayune, 4/6).
Texas Officials Reach Settlement in Medicaid Lawsuit; Funding Increase Proposed
[Apr 10, 2007]
Texas state House Speaker Tom Craddick (R) and Lt. Gov. David Dewhurst (R) on Thursday announced a settlement with plaintiff's attorneys in a class-action lawsuit involving Medicaid benefits for children, the Austin American-Statesman reports. The lawsuit was filed in 1993 by Texas mothers who alleged that their children did not receive federally mandated Medicaid benefits (Embry, Austin American-Statesman, 4/6). A source familiar with the agreement, which requires approval from U.S. District Judge William Wayne Justice, said that it would require the state to spend more than $500 million in additional general revenue during the next two-year budget period. Susan Zinn, a plaintiff's attorney, said that Justice -- who has scheduled a hearing on Monday for the case -- will "wait until he's sure the Legislature comes through with the funding before deciding whether to approve the settlement." Zinn declined to confirm the agreement's total cost to the state but said that it would increase the Medicaid reimbursement rate by 25% for physicians who treat children and by 50% for dentists who treat children (Fikac/Robison, Houston Chronicle, 4/5). She said the agreement will call for as much as five years of state action, involving the state's obligation to provide transportation for Medicaid beneficiaries, managed care improvements and outreach. Craddick and Dewhurst in a statement said, "With this agreement, dental and medical access will dramatically improve for our neediest children," adding, "We look forward to working with our colleagues in the House and Senate to identify the sources of these new funds" (Austin American-Statesman, 4/6).
Health Care Marketplace
Merger of Pennsylvania Health Insurers Could Result in Lost Jobs, Witnesses Testify at Hearing
[Apr 10, 2007]
The planned merger of not-for-profit health insurers Highmark and Independence Blue Cross could result in the loss of 1,000 jobs from the combined company, Highmark CEO Kenneth Melani said on Monday after a Senate Judiciary Committee field hearing in Philadelphia, the Pittsburgh Post-Gazette reports (Toland, Pittsburgh Post-Gazette, 4/10). Melani said that the combined company would eliminate most of the jobs through attrition but added that most of the jobs would return because of expected growth (Von Bergen, Philadelphia Inquirer, 4/10). The planned merger, which Pittsburgh-based Highmark and Philadelphia-based Independence announced on March 28, would create the third-largest health insurer in the nation and account for more than half of the health insurance market in Pennsylvania. The combined company would employ 18,000 workers in the state and an additional 10,000 nationwide and would maintain headquarters in both Pittsburgh and Philadelphia. The boards of directors of both companies have approved the planned merger. The companies said that they would use improved efficiency to produce "$1 billion in economic benefits" for Pennsylvania residents. In addition, the companies said that they would not increase administrative fees for two years, "resulting in direct savings to customers of $300 million"; would use increased leverage in negotiations with pharmaceutical companies to save members an additional $280 million; and would extend state commitments to contribute millions of dollars to community health care programs. The planned merger requires approval from the state insurance department and Office of Attorney General, regulators in other states in which the companies operate, the Department of Justice and the Federal Trade Commission (Kaiser Daily Health Policy Report, 3/29). Competition Concerns
At the hearing, held at the National Constitution Center, witnesses raised concerns that the planned merger would result in reduced competition in the health insurance market in Pennsylvania. State Sen. Don White (R) said, "While economies of scale and efficiencies may be achieved by this merger and result in positive short-term benefits, there must be concern over its long-term effects," adding, "Creating the third-largest insurer in the nation with a specifically defined geographic territory is not (in) the best interests of competition." C. Richard Schott, chair of the Pennsylvania Medical Society, said, "It's possible that a merger of this size could deter new competition ... causing insurance premiums to increase at a more rapid rate than we are already experiencing" (Pittsburgh Post-Gazette, 4/10). Lawton Burns, a health care economics professor at the Wharton School of the University of Pennsylvania, said, "Econometric evidence shows that in the managed care field, an increase in the number of competitors is associated with lower health plan costs and premiums; conversely, a decrease in the number of competitors is associated with increases in plan costs and premiums." He also raised concerns that Highmark and Independence have "failed to provide a convincing rationale and game plan for extracting" value from the planned merger (Philadelphia Inquirer, 4/10). Independence CEO Joseph Frick said that the planned merger would not reduce competition because Highmark and Independence currently do not compete in the same markets (Pittsburgh Post-Gazette, 4/10). Gov. Ed Rendell (D) said it is important that the planned merger reduce health insurance premiums for employers and ensure physicians and hospitals receive adequate reimbursements. Melani said that he hoped to complete the planned merger in one year, but Rendell estimated that the process would take two years (Philadelphia Inquirer, 4/10).
Medicare
Sierra Health Services Drops Coverage for Brand-Name Medications in Medicare Prescription Drug Benefit 'Doughnut Hole'
[Apr 10, 2007]
The Dallas Morning News on Sunday examined Sierra Health Services' recent announcement that next year it will terminate a Medicare prescription drug plan that covers the cost of brand-name drugs during the benefit's "doughnut hole" coverage gap (Moos, Dallas Morning News, 4/8). Las Vegas-based Sierra in 2007 introduced a plan offering comprehensive coverage of brand-name medications for beneficiaries during the coverage gap in exchange for high monthly premiums. However, the plan lost $3 million in the first month of operation. Sierra in February announced that it no longer would cover brand-name drugs in the doughnut hole (Kaiser Daily Health Policy Report, 4/2). The insurer said it is losing $100 per month for each beneficiary in the plan. According to the Morning News, "the same fate befell Humana" in 2006 when the insurer canceled a plan covering brand-name drugs during the doughnut hole after reporting significant losses. As a result of the cancellation of both plans, "seniors who depend on costly medications to treat chronic or serious illnesses are left to wonder ... where to turn for comprehensive drug coverage next year," the Morning News reports. Deane Beebe, director of public affairs for the Medicare Rights Center, said, "There's no stability here. A lot of people were counting on Humana, and then on Sierra, to protect them through the gap. Now what are they to do?" Peter O'Neill, vice president of public and investor relations for Sierra, said the company underestimated how much seniors would use the coverage. O'Neill said, "Two companies have tried to serve this niche of the market, and neither of us has gotten it right," adding, "Given our experience, I question whether other companies will try" (Dallas Morning News, 4/8).
Administration News
Department of Veterans Affairs Electronic Health Records System One of Few Implemented Nationwide
[Apr 10, 2007]
The Washington Post on Tuesday examined VistA, or Veterans Information Systems and Technology Architecture, the electronic health records system used by the Department of Veterans Affairs. VistA, established in 1999, allows authorized VA personnel to view EHRs for all of the 5.3 million patients treated at the 155 hospitals, 881 clinics, 135 nursing homes and 45 rehabilitation centers operated by the department. According to the Post, EHRs "make confusing and physically unwieldy masses of data instantly available, portable and searchable -- altogether more useful than when the information was stored on paper" -- and allow physicians to detect trends in physiological variables such as serum chemistry, cell counts, blood pressure and weight. In addition, EHRs "bridge one of the more perilous chasms in medicine" -- the transfer of health care when patients leave hospitals -- and help improve physician performance and prevent medication errors, the Post reports. EHRs also could reduce health care costs by as much as $162 billion annually, according to one estimate. President Bush has called for a nationwide EHR system by 2014, but VA currently is one of the few health care systems that has implemented such a system. Many health care systems have not implemented EHR systems because of the initial costs, which can range from a few million dollars to $60 million, Pat Wise, an executive with Healthcare Information and Management Systems Society, said (Brown, Washington Post, 4/10).
The Latest Reports in Health Policy
Report Discusses How Pay-for-Performance, Quality-Reporting Programs Can Increase Disparities; Report Examines Physician Consideration of Out-of-Pocket Costs
[Apr 10, 2007]
- "Will Pay-for-Performance and Quality Reporting Affect Health Care Disparities?" Health Affairs: In a Health Affairs Web exclusive, Lawrence Casalino, an assistant professor of health studies at the University of Chicago, and Arthur Elster, director of the medicine and public health division at the American Medical Association, discuss how pay-for-performance and quality-reporting programs can unintentionally exacerbate racial and ethnic health disparities if they are not designed with attention to these issues. The authors describe how these programs could lead to increased disparities, and they suggest ways to prevent adding to disparities and, in some cases, how to reduce them (Casalino/Elster, Health Affairs, 4/10).
- "Physician Consideration of Patients' Out-of-Pocket Costs in Making Common Clinical Decisions," Archives of Internal Medicine: The study by researchers at the Center for Studying Health System Change and the University of Chicago Hospitals examines physicians' consideration of out-of-pocket costs for insured patients when prescribing drugs or recommending hospitalization or diagnostic tests. According to the study, nearly 80% of physicians prescribe a generic drug when available, while 40.2% consider patient costs when deciding what diagnostic tests to recommend and 51.2% consider out-of-pocket costs when deciding whether to hospitalize a patient when outpatient treatment is an option (Center for Studying Health System Change release, 4/9).
Looking for a Daily Report on a specific date? Click here for instructions on how to find it.
...... ...... ...... ...... ......
...... ...... ...... ...... ...... ...... ...... ......
...... ...... ...... ...... ...... ...... ...... ......
...... ...... ...... ...... ...... ...... ...... ......
...... ...... ...... ...... ...... ...... ......
...... ...... ...... ...... ...... ...... ...... ......
...... ...... ...... ...... ...... ...... ...... ......
...... ...... ...... ...... ...... ...... ...... ......
...... .....
|
