Kaiser Daily Health Policy Report
Sen. Baucus To Send Bill Delaying Medicare Physician Fee Reductions Straight to Senate Floor
High Earnings at Some Not-for-Profit Hospitals Draws Criticism of Tax-Exempt Status
Forum Examines Potential Effects of Voluntary Employees' Beneficiary Associations on U.S. Health Care Industry
WellPoint To Stop Paying for Treatment of Preventable Hospital Errors, Injuries
CMS Issues Final Rule To Update Dialysis Center Standards
Minority Physicians Underrepresented in California, Study Finds
Maine Governor Supports Cigarette Tax Increase To Fund State Health Program
Pennsylvania Medical Malpractice Subsidy Program Lapses; Tennessee House Approves Malpractice Legislation
The Latest Reports in Health Policy
Study Examines Economic Burden of Providing Health Care on Businesses
Opinion Piece, Letters to the Editor Discuss Health Care Issues in Presidential Election
Capitol Hill Watch
Lawmakers, Administration Officials Discuss Medicaid Regulations at Hearing
[Apr 04, 2008]
Democratic members of the House Energy and Commerce Subcommittee on Health on Thursday criticized new Medicaid regulations proposed by the Bush administration and said they would pass legislation to block the regulations from taking effect, CQ Today reports (Wayne, CQ Today, 4/3). The regulations, proposed by the Bush administration, would prohibit states from using federal Medicaid funds to help pay for physician training, place new limits on Medicaid payments to hospitals and nursing homes operated by state and local government, and limit coverage of rehabilitation services for people with disabilities, including those with mental illnesses (Kaiser Daily Health Policy Report, 3/17).
The Congressional Budget Office estimates that the regulations would save about $17.8 billion over five years (CQ Today, 4/3). However, states say the regulations would cost them $50 billion over five years. Energy and Commerce Committee Chair John Dingell (D-Mich.) and Rep. Tim Murphy (R-Pa.) have introduced legislation (HR 5613) that would place a one-year moratorium on the regulations. The first regulation took effect March 3, and four others are under a moratorium that expires this summer (Johnson, CongressDaily, 4/3).
Dingell at the hearing said, "These regulations go beyond any justifiable point to curb any abuses in the system and instead would shift costs to the states and prohibit federal support for legitimate expenditures on behalf of Medicaid beneficiaries" (CQ Today, 4/4). He added, "When one reviews how [CMS] dealt with comments submitted on the regulations, it appears that there was no intention of working with states or other beneficiary groups to find common ground." Dingell noted that CMS has received thousands of comments protesting the regulations and that only a handful of the comments were identified as "positive" by the agency (CongressDaily, 4/3).
Barbara Coulter Edwards, interim director of the National Association of State Medicaid Directors, said, "These proposals appear to have unintended consequences on good programs and will limit legitimate services to vulnerable people" (CQ Today, 4/4). Administration Response
CMS Medicaid and State Operations Director Dennis Smith said the legislation would impede the administration's efforts to "apply fiscal accountability in Medicaid" because the measure "would not simply delay implementation of these regulations, but it could jeopardize policies and interpretations that predate these regulations" (CongressDaily, 4/3). He added, "These rules will help ensure that Medicaid is paying providers appropriately for services delivered to Medicaid recipients; that those services are effective; and that taxpayers are receiving the full value of the dollars spent through Medicaid." According to Smith, the administration "strongly opposes" the bill, an indication that President Bush might veto the legislation (CQ Today, 4/3). Prospects
According to CongressDaily, the bill "faces hurdles, including a $1.6 billion cost that must be offset and possible Senate opposition." Subcommittee Chair Frank Pallone (D-N.J.) said one option for moving the legislation would be to attach it to another must-pass measure, but he added that lawmakers "haven't made any decisions" (Johnson, CongressDaily, 4/3). Pallone said the subcommittee plans to mark up the bill "in the coming weeks."
A bipartisan group of senators on Thursday announced that they had introduced a bill (S 2819) to block the new regulations. The bill -- introduced by Sens. Edward Kennedy (D-Mass.), John Rockefeller (D-W.Va.) and Olympia Snowe (R-Maine) -- would postpone the seven regulations targeted in the House bill, in addition to two others. The bill also would provide states with $12 billion in emergency aid to cover budget shortfalls, including $6 billion for Medicaid (CQ Today, 4/3).
Sen. Baucus To Send Bill Delaying Medicare Physician Fee Reductions Straight to Senate Floor
[Apr 04, 2008]
Senate Finance Committee Chair Max Baucus (D-Mont.) on Thursday said he intends to send a bill addressing a scheduled reduction in Medicare physician fees straight to the Senate floor rather than have the committee do a mark up, CongressDaily reports. While Baucus said he wanted the committee to mark up the bill, other committee members and Senate leaders thought that a single floor debate would be more efficient.
The American Medical Association is lobbying for a bill sponsored by Sen. Debbie Stabenow (D-Mich.) that would increase physician fees by 1.8% for 18 months and would not include "balloon financing" language that would set up higher pay cuts in the future to compensate for a temporary delay. The bill would cost almost $40 billion over five years and $84 billion over 10 years, according to the Congressional Budget Office.
CBO estimates that a 1.5% to 1.7% fee increase would cost $8.7 billion over five years and that maintaining current payment levels would cost $8.1 billion over the same time period. Those estimates assume that a fee cut of at least 20% would take effect in 2010. CBO said that a 1% increase through 2009 without a later cut would cost $35.7 billion over five years and $80 billion over 10 years (Johnson, CongressDaily, 4/4). AARP Opposes Bush Medicare Proposal
AARP this week launched a campaign that urges lawmakers to oppose a Medicare proposal from President Bush that would raise premiums for the prescription drug benefit for higher-income beneficiaries, CQ HealthBeat reports. The campaign includes advertisements in several Capitol Hill publications and a Web site, at which visitors can send letters to members of Congress expressing their dissent. The Bush proposal is in response to "trigger" language in the 2003 Medicare law that requires the president to propose legislation to control spending if Medicare draws more than 45% of its funding from general tax revenues two years in a row. The House has until June 30 to amend Bush's bill and discharge it from committees for a floor vote.
AARP Senior Vice President David Sloane said, "We're halfway to the June 30 deadline, and Congress still has much to do. We hope to raise awareness about the fact that people in Medicare have already seen their premiums skyrocket and should not be hit with even higher bills" (Cooley, CQ HealthBeat, 4/3).
Health Care Marketplace
High Earnings at Some Not-for-Profit Hospitals Draws Criticism of Tax-Exempt Status
[Apr 04, 2008]
The Wall Street Journal on Friday examined how the "growing gap" between many not-for-profit hospitals' earnings and the amount of charity care they provide "is raising questions about the billions of dollars in tax exemptions they receive." Not-for-profit hospitals in exchange for tax exemptions are supposed "to provide a 'community benefit,' a loosely defined requirement whose most important component is charity care," according to the Journal. However, "many hospitals include other expenses in their community-benefit accounting to the Internal Revenue Service, including unpaid patient bills" and employee salaries, the Journal reports.
While some not-for-profit hospitals -- "particularly ones in inner cities that handle large numbers of uninsured patients -- remain under financial strain and are struggling to keep their doors open," data from the American Hospital Directory shows that the combined net income of the 50 largest not-for-profit hospitals in the U.S. increased nearly eight fold to $4.27 billion from 2001 to 2006, according to the Journal. According to AHD, at least 25 not-for-profit hospitals or hospital systems earn more than $250 million annually. Some not-for-profits are "faring even better than their for-profit counterparts," the Journal reports. Seventy-seven percent of the 2,033 not-for-profit hospitals in the U.S. earn money, compared with 61% of for-profit hospitals, according to the AHD data.
A December 2006 Congressional Budget Office report found that not-for-profit hospitals receive $12.6 billion in tax exemptions and $32 billion in federal, state and local subsidies annually. However, the Journal reports, according to studies by various counties and states, many not-for-profit hospitals spend less on charity care than they receive in tax breaks. "[M]uch of the industry's profit growth comes from strategies it honed to increase profits," such as demanding upfront payments from patients and increasing list prices for procedures and services to several times the actual cost, according to the Journal. Other reasons for the rise in profits include an increase in Medicare reimbursement rates and untaxed investment gains.
Senate Finance Committee ranking member Chuck Grassley (R-Iowa) said, "Some [not-for-profit] hospitals seem to forget that their operations are subsidized with generous tax breaks. They allow their priorities to get out of whack." Last year, Grassley considered introducing legislation that would have required not-for-profit hospitals to provide a minimum amount of charity care. In 2009, new standards will take effect that require not-for-profits to break down their community-benefit contributions, but hospitals will not be required to provide a minimum amount of charity care (Carreyrou/Martinez, Wall Street Journal, 4/4).
Forum Examines Potential Effects of Voluntary Employees' Beneficiary Associations on U.S. Health Care Industry
[Apr 04, 2008]
A panel of experts on Thursday at a conference examined the potential effects that a voluntary employees' beneficiary association plan established under contracts between the United Auto Workers and the Big Three automakers -- General Motors, Ford Motor and Chrysler Group -- will have on the U.S. health care system, the Detroit Free Press reports. More than 100 physicians from Michigan attended the conference, titled "VEBA is Shifting Michigan's Gears" and sponsored by the Michigan State Medical Society.
Under contracts negotiated last year, the automakers agreed to contribute about $56.5 billion to the VEBA, which UAW will manage. The VEBA, which will take effect in 2010 and remain operational for 80 years, will reduce retiree health benefit liabilities for the automakers by about $100 billion (Anstett, Detroit Free Press, 4/4). Over the next two years, UAW will set an administrative framework for the VEBA, and an independent panel of 11 members will make investment and coverage decisions for the plan, according to Mark Gaffney, president of the Michigan State AFL-CIO (Rogers, Detroit News, 4/4).
At the conference, experts said that the VEBA will affect federal and state health care policy because of the large size of the plan (Detroit Free Press, 4/4). Gaffney said that, outside of health insurers, the VEBA will rank among the top 20 health care purchasers nationwide (Detroit News, 4/4). "The VEBA will have an enormous influence on national health policy in the U.S.," Pat Richards, interim CEO of Health Alliance Plan, said.
Experts at the conference said that the VEBA will focus on efforts to contain costs to ensure that the plan remains solvent. Richards said that physicians, health plans, hospitals, health clinics and pharmaceutical companies will have to partner to improve health care delivery because of the importance of participation in the VEBA. John Billi, a professor of internal medicine at the University of Michigan, said that the VEBA "has the potential to design a plan that gives the most value to the most people" (Detroit Free Press, 4/4).
UAW also plans to use about $30 million contributed by the automakers to establish an institute for health care reform that will focus on expansion of health insurance to all residents, Gaffney said (Detroit News, 4/4).
WellPoint To Stop Paying for Treatment of Preventable Hospital Errors, Injuries
[Apr 04, 2008]
Officials from WellPoint and its subsidiary Anthem BlueCross BlueShield on Wednesday announced that, beginning Oct. 1, they will no longer reimburse hospitals for treatment of three preventable errors and eight avoidable injuries and infections that occur in the facilities, the St. Louis Post-Dispatch reports. The companies provide health coverage for about 35 million U.S. residents. The change comes after Medicare adopted a similar policy last year (Feldstein, St. Louis Post-Dispatch, 4/3).
The 11 errors under the new rule were defined as preventable by CMS and the National Quality Forum. The policy prohibits payments to hospitals for surgeries on the wrong body part, incorrect surgeries or surgeries on the wrong patient. The insurer also will not reimburse hospitals for avoidable errors, such as bed sores, surgical instruments left in the body after surgery and urinary tract infections linked to catheter use. The insurer will use several different methods to determine if errors were made, including comparing patients' diagnoses and conditions when they were admitted with the treatment they received in the hospital (Lee, Indianapolis Star, 4/3). Under the policy, patients also will not be charged for treatment related to preventable errors (St. Louis Post-Dispatch, 4/3).
 American Public Media's "Marketplace Morning Report" on Thursday reported on the policy. The segment includes comments from Sam Nussbaum, chief medical officer for WellPoint, and Atul Gawande, a surgeon at Brigham and Women's Hospital in Boston (Milen-Tyte, "Marketplace Morning Report," American Public Media, 4/3). Audio and a transcript of the segment are available online.
Medicare
CMS Issues Final Rule To Update Dialysis Center Standards
[Apr 04, 2008]
CMS on Thursday released a final rule that updates requirements and standards of care for the more than 4,700 Medicare-approved dialysis facilities nationwide, CQ HealthBeat reports. The updated requirements, which reflect clinical and scientific advances since the current requirements were first published in 1976, will focus on patient rights, safety and participation, according to CMS officials (Reichard, CQ HealthBeat, 4/3).
The new rule affects 336,000 Medicare beneficiaries who receive dialysis treatments, Bloomberg/Arizona Daily Star reports (Marcus, Bloomberg/Arizona Daily Star, 4/4). Facilities will be required to conduct a comprehensive health examination of patients when they begin dialysis treatments and establish an "interdisciplinary team" -- consisting of a physician, a nurse, a social worker and possibly the patient -- to create a care plan, according to Barry Straube, CMS' chief medical officer. In addition, facilities will be required to develop a quality assessment and performance improvement program and to track patient treatment outcomes, Straube said.
The update also reduces "detailed and burdensome requirements" that dialysis facilities previously were required to meet, including employing a medical records supervisor and preparing annual long-term plans for patients. As a result, the new requirements will not add to facilities' costs, according to Straube (CQ HealthBeat, 4/3).
Dialysis centers will have up to 180 days to comply with the new requirements, rather than the regular 60 days, because of the scope of the changes, Straube said (Bloomberg/Arizona Daily Star, 4/4).
State Watch
Minority Physicians Underrepresented in California, Study Finds
[Apr 04, 2008]
While blacks and Hispanics make up 40% of California's population, fewer than 10% of practicing physicians are black or Hispanic, according to a report released on Wednesday by the University of California-San Francisco Center for California Health Workforce Studies, the San Francisco Chronicle reports (Fernandez, San Francisco Chronicle, 4/3).
According to the report, minority physicians are more likely than other doctors to practice in urban or underserved communities, which helps address health disparities between whites and minorities (Krieger, San Jose Mercury News, 4/3). Kevin Grumbach, director of the Center for California Health Workforce Studies, said, "It's not just a civil rights issue, but a public health issue. Research shows clearly that having more minority physicians improves access to care for the U.S. population because they are more likely to take care of patients who have no insurance or who are covered by Medi-Cal." Medi-Cal is California's Medicaid program (Griffith, Sacramento Bee, 4/3).
The report is based on data from the California Medical Board. A 2001 state law mandated that the board gather data on physician specialties, work hours, ethnicity, practice location and spoken languages (East Bay Business Times, 4/2). Of the state's nearly 62,000 practicing physicians:
- About 39,000, or 61%, are white, while about 48% of the state's population is white;
- About 26% are Asian or Pacific Islander, while 11% of the population is Asian/Pacific Islander;
- About 3,300, or 5%, are Hispanic, while about 33% of the state's population is Hispanic; and
- About 2,000, or 3%, are black, while 7% of the state's population is black (San Francisco Chronicle, 4/3).
The study also found some disparities among the Asian population. For example, fewer than 0.5% of the total physician population is of Cambodian, Loatian, Hmong and Samoan descent (Darcé, San Diego Union-Tribune, 4/3). Experts attributed the disparities in physician ethnicity to court decisions that have blocked the use of affirmative action policies for admissions to state university medical schools, as well as the high cost of medical schools ( San Jose Mercury News, 4/3). The report recommended ways to boost the number of minority physicians, such as: - Increasing investments in minority education;
- Promoting diversity in state medical education;
- Holding health professional schools accountable for their diversity, recruitment and retention of underrepresented minorities; and
- Increasing incentives for working in underserved communities (San Francisco Chronicle, 4/3).
Claire Pomeroy, dean of the University of California-Davis School of Medicine, said that health disparities will persist unless the health work force becomes more representative of the population. She added, "Medicine is not just technical skills, but connections between doctors and patients. Those connections are made by having a diverse work force" ( Sacramento Bee, 4/3).  The report is available online (.pdf).
Maine Governor Supports Cigarette Tax Increase To Fund State Health Program
[Apr 04, 2008]
Maine Gov. John Baldacci (D) on Tuesday announced that he supports a proposed 50-cent-per-pack cigarette tax increase to fund the state Dirigo Health program, Blethen Maine/Portland Press Herald reports. In March, Baldacci had said that while he supported the language of the bill, the timing was not right to discuss the matter. However, Baldacci now said he is prepared to work with lawmakers on the bill because the state's budget is balanced, Blethen Maine/Press Herald reports.
Dirigo provides coverage for about 14,000 state residents and is funded by premiums paid by employers and their employees, as well as a so-called offset payment from insurance companies. The program also covers 5,600 Medicaid-eligible adults at a cost of about $5 million (Cover, Blethen Maine/Portland Press Herald, 4/2). Survey
Health Policy Partners of Maine -- a coalition of heart, lung and cancer groups -- on Tuesday announced the results of a survey that found 76% of Maine residents support a cigarette tax increase, the Portland Press Herald reports. The group is urging lawmakers to increase the cigarette tax by $1 per pack in an effort to fund health programs and encourage people to quit smoking (Portland Press Herald, 4/2).
Pennsylvania Medical Malpractice Subsidy Program Lapses; Tennessee House Approves Malpractice Legislation
[Apr 04, 2008]
- Pennsylvania: A tax-subsidized program that helps Pennsylvania physicians pay medical malpractice insurance premiums lapsed on Monday, the AP/Philadelphia Inquirer reports. The five-year, $1 billion MCare abatement program was established in 2003 and provides subsidies to more than 35,000 physicians and other medical professionals. The subsidy on average has saved primary care physicians $1,500 per year and specialists on average $15,000 annually, according to Amy Kelchner, a spokesperson for Gov. Ed Rendell (D). The program was paid for through a 25-cent-per-pack increase in the cigarette tax and money from an insurance fund generated by traffic ticket surcharges (Levy, AP/Philadelphia Inquirer, 4/1). Rendell supports a 10-year extension of the abatement program but has said that he will not approve an extension unless lawmakers show progress in making affordable health coverage available to the uninsured (Fahy, Pittsburgh Post-Gazette, 4/1). The Democratic-controlled House on March 17 approved a bill (SB 1137) that would expand subsidized health coverage to an additional 220,000 uninsured adults at a cost of about $1 billion. Rendell has announced his support of the House bill (AP/Philadelphia Inquirer, 4/1). However, Senate Republicans have expressed concerns about the cost of the measure and have noted that Democrats have not identified a funding source (Pittsburgh Post-Gazette, 4/1).
- Tennessee: The state House on Thursday voted 93-1 to approve a bill that would require defendants in medical malpractice lawsuits to be given 60 days notice before a lawsuit is filed, the AP/Tennessean reports. The bill also would require that an independent medical expert evaluate the merits of a case before the lawsuit is filed, according to bill sponsor state Rep. Doug Overbey (R). Overbey said the 60-day requirement "would allow the proposed defendant to say, 'No, it wasn't me, you've got the wrong person, or you're misreading the medical records,'" adding, "So, it may lead to suits not even being filed." State Rep. Henry Fincher (D), the single dissenter, said he does not believe the legislation is necessary because "our courts already have rules to weed out bad or weak cases." He said, "I'm a strong supporter of the jury process," adding, "Although I'm pleased with the compromise, I don't feel ... this was really necessary." According to Russ Miller, vice president of the Tennessee Medical Association, the legislation is necessary because roughly 80% of malpractice lawsuits in the state result in no payouts to the plaintiffs. The legislation will now go to the Senate for its consideration. Last year, the Senate unanimously passed similar legislation (Johnson, AP/Tennessean, 4/4).
The Latest Reports in Health Policy
Study Examines Economic Burden of Providing Health Care on Businesses
[Apr 04, 2008]
"The Economic Burden of Providing Health Insurance: How Much Worse Off Are Small Firms?" RAND: The study found that the economic burden of providing health insurance to employees increased more for small businesses than for large ones from 2000 to 2005, but that the spike did not cause a significant number of small-business employers to eliminate health coverage. According to the data, typical businesses offering health insurance spent 7% and 10% of their payrolls on coverage, but small companies saw their share grow from an average of 8.4% in 2000 to 10.8% of payrolls by 2005, an increase of nearly 30%. The growth rate was higher for larger companies. Based on surveys from 2,500 small, medium and large companies, the study also explores trends in the economic burden of providing health care, the distribution of the burden for small and large businesses, and the quality of the health plans offered (RAND release, 4/4).
Opinion
Opinion Piece, Letters to the Editor Discuss Health Care Issues in Presidential Election
[Apr 04, 2008]
Elizabeth Edwards, wife of former Democratic presidential candidate and former Sen. John Edwards (N.C.), last week "bluntly pointed out" that neither she, who has cancer, nor presumptive Republican nominee Sen. John McCain (Ariz.), who has had cancer in the past, could obtain health insurance under the health care proposal he has offered, a statement that highlights the problems with the plan, New York Times columnist Paul Krugman writes. The proposal would not require health insurers to accept applicants with pre-existing medical conditions, Krugman writes, adding, "It's about time someone ... made the case that Mr. McCain's approach to health care is based on voodoo economics" -- the "foolish claim" that the "magic of the marketplace can produce cheap health care for everyone."
In response to the comments from Elizabeth Edwards, the McCain campaign said that the proposal would use the "power of competition to produce greater coverage for Americans" through a reduction in costs that would make health insurance affordable for residents with pre-existing medical conditions, Krugman writes. However, according to Krugman, such a claim is "nonsense on multiple levels" because, "even if you buy the premise that competition would reduce health care costs," the "idea that it could cut costs enough to make insurance affordable for Americans with a history of cancer or other major diseases" is "sheer fantasy."
Meanwhile, although McCain is "offering a completely wrongheaded approach" to health care, the "way the campaign for the Democratic nomination has unfolded" raises "questions about how effective his eventual opponent will be in making that point," Krugman writes. Democratic candidate Sen. Barack Obama (Ill.) has criticized a requirement that all residents obtain health insurance included in the health care proposal opponent Sen. Hillary Rodham Clinton (N.Y.) has offered, "using conservative talking points about the evil of having the government tell you what to do," Krugman writes. He adds that such criticism will "make it hard" for Obama, in the event that he becomes the Democratic nominee, to "refute McCain when he makes similar arguments." Krugman also notes that while Elizabeth Edwards "focused her criticism" on McCain, she said she prefers Clinton's approach to Obama's. According to Krugman, Clinton's plan "closely resembles" the approach John Edwards proposed, while Obama has laid out a "watered-down plan that falls short of universality" (Krugman, New York Times, 4/4). Letters to the Editor
USA Today on Friday published several letters to the editor written in response to a March 26 article that examined the positions of the candidates on health care. Summaries of two of the letters appear below. - Linda Lawrence: A "vital component is missing from the debate" over health care in the presidential campaign: "how to solve the crisis that exists in America's emergency departments as a result of our broken health care system," Lawrence, president of the American College of Emergency Physicians, writes. According to Lawrence, "patients -- insured and uninsured -- are suffering and dying as a result of emergency department overcrowding," and the "problem" will not "be solved by simply providing everyone with health care coverage." EDs, the "safety net in the health care system," are "too overwhelmed by too many patients and are closing in unprecedented numbers as a result," Lawrence writes. She adds, "What America needs to know" is how the candidates "propose to address overcrowding and its related issues" and "how the candidates will tackle the lack of reimbursement from the government for care provided." She concludes, "As the health care reform debate continues, let's hope" that the candidates will "expand their proposals to include how to resuscitate emergency care before it's too late" (Lawrence, USA Today, 4/4).
- David Sundwall: The article was "informative and provocative" but "left one feeling that none of the candidates has a plan that would prevent an implosion" of the health system, Association for State and Territorial Health Officials President Sundwall writes. He writes, "Regardless of which candidate prevails," none seems to have considered that the U.S. "must reduce the need for costly health care by preventing illness and disease in the first place ... through effective public health systems and preventive medicine." According to Sundwall, the U.S. does not "spend enough of its health care dollars on public health programs and activities," and that "imbalance must be corrected." He concludes that, by "strengthening and increasing our investment in public health," the U.S. could "moderate the growth of health care spending while maintaining our economic competitiveness and quality of life" (Sundwall, USA Today, 4/4).
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