Kaiser Daily Health Policy Report
House Approves Labor-HHS Spending Bill Without Veto-Proof Majority
Not-For-Profit Hospitals Face Increasing Scrutiny From Lawmakers; IRS Report Finds Many Hospitals Spend Less Than 3% of Revenue on Charity Care
Foster Children Do Not Receive Adequate Health Care, Witnesses Tell House Panel
House Lawmakers Propose Delay in Medicaid Tamper-Proof Prescription Pad Law
Contract Negotiations Between UAW, Big Three Automakers Begin
Disability Benefits for Veterans Vary Widely by State, Study Finds
Medical Errors Increase Physicians' Stress Levels, Study Finds
Newspapers Highlight Medicare Issues
Massachusetts To Revise State Law Mandating Residents Have Health Insurance
Tennessee Officials Criticize CMS Proposal To Cap Hospital Payments; TennCare Waiver Negotiations Continue
Louisiana Provides Details of Approaching SCHIP Expansion
Capitol Hill Watch
Senate Finance Committee Approves SCHIP Expansion Legislation That Would Increase Tobacco Tax
[Jul 20, 2007]
The Senate Finance Committee on Thursday voted 17-4 to approve legislation that would reauthorize SCHIP and increase funding for the program by $35 billion over five years, the Los Angeles Times reports (Alonso-Zaldivar, Los Angeles Times, 7/20). SCHIP expires on Sept. 30. Committee members on July 13 finalized an agreement on SCHIP reauthorization that would increase five-year funding for the program from $25 billion to $60 billion by raising the federal cigarette tax from 39 cents to $1 per pack.
Under the plan -- negotiated by committee Chair Max Baucus (D-Mont.), ranking member Chuck Grassley (R-Iowa), and members Orrin Hatch (R-Utah) and Jay Rockefeller (D-W.Va.) -- the 6.6 million children currently enrolled in SCHIP would continue to receive benefits, and an additional 3.3 million children could be enrolled in the program.
President Bush has proposed a $5 billion increase over five years for SCHIP, which would increase the program's total five-year funding to $30 billion. In recent days, Bush has said that he would veto the Senate bill (Kaiser Daily Health Policy Report, 7/19).
All 11 Democrats on the committee and six of the committee's 10 Republicans voted in favor of the bill. Republican sponsors of the legislation, in addition to Grassley and Hatch, include Sens. Mike Crapo (Idaho), Pat Roberts (Kan.), Gordon Smith (Ore.) and Olympia Snowe (Maine) (Johnson, CongressDaily, 7/19). Republican Sens. Jim Bunning (Ky.), John Ensign (Nev.), Jon Kyl (Ariz.) and Trent Lott (Miss.) voted against the bill (Pear, New York Times, 7/20). Baucus "confidently predicted Senate passage before Congress adjourns for its August recess," USA Today reports. "It's clear to me this will not be filibustered" by Republicans, Baucus said (Wolf/Jackson, USA Today, 7/20). Reaction
Despite bipartisan support for SCHIP reauthorization, the Senate's "modest attempt" to renew the program is "unexpectedly becoming a proxy for the next big battle over who pays for American health care," the Christian Science Monitor reports (Russell Chaddock, Christian Science Monitor, 7/20). Bush on Thursday said that the Senate proposal is "the beginning salvo of the encroachment of the federal government on the health care system" (Los Angeles Times, 7/20).
Baucus on Wednesday in a letter to HHS Secretary Mike Leavitt said, "The administration appears to be holding children's health insurance hostage to Congress' adoption of the ... larger health insurance tax and other health reform proposals." Baucus added, "Regardless of the merits of the administration's tax proposal, it has proved far too controversial a matter for the Congress to adopt this year" (Christian Science Monitor, 7/20).
Rockefeller said that Bush and Leavitt have been "pretty belligerent" in their criticisms of the bill. However, Rockefeller added, "It's not clear to me that the president has any intention of vetoing this" bill because the political consequences could be severe (New York Times, 7/20).
Grassley said the White House should recognize that the committee's SCHIP proposal "is good policy" (Homan, CQ Today, 7/19). Grassley added that Bush's proposal to maintain the current number of SCHIP beneficiaries while increasing funding by only $5 billion over five years is "unrealistic" (New York Times, 7/20).
Hatch said, "It doesn't make me comfortable to advocate for such a large increase in spending. But it's important to note that (the program) has been tremendously successful. And one of the lessons we've learned is that it's going to cost more to cover additional kids" (Los Angeles Times, 7/20). Funding
Some Republican senators have criticized the bill for projecting only $3.5 billion in annual SCHIP spending starting in 2013, even though it projects nearly $16 billion in spending for 2012. Sen. Judd Gregg (R-N.H.) said, "They are already using gimmicks and loopholes to increase spending without paying for it" (USA Today, 7/20). However, Senate Budget Committee Chair Kent Conrad (D-N.D.) said that Republican lawmakers used similar budget strategies when they passed a $3 trillion tax cut, which he said "absolutely dwarfs what's been done here" (CongressDaily, 7/19). Broadcast Coverage
 NPR's "Morning Edition" on Friday reported on the committee approval of the bill. The segment includes comments from Grassley, Lott, Sen. Debbie Stabenow (D-Mich.), Kyl and Congressional Budget Office Director Peter Orszag (Rovner, "Morning Edition," NPR, 7/20). Audio of the segment is available online.
 Leavitt on Friday at 3:15 p.m. ET will answer questions about the Bush administration's health care agenda in an "Ask the White House" online chat ("Ask the White House" Web site, 7/20). Questions can be submitted online prior to the chat. A transcript will be available online after the chat.
House Approves Labor-HHS Spending Bill Without Veto-Proof Majority
[Jul 20, 2007]
The House on Thursday voted 276-140 to approve a fiscal year 2008 Labor-HHS-Education spending bill, the AP/Arizona Daily Star reports (AP/Arizona Daily Star, 7/20). The House Appropriations Committee on July 11 by voice vote approved the $607 billion bill, which includes $151.5 billion in discretionary funds, exceeding FY 2007 discretionary spending by $7 billion and topping President Bush's FY 2008 spending request by $10.6 billion. The House bill would increase spending on health care for the uninsured by 9% above FY 2007 levels and Bush's request for FY 2008.
Funding for the uninsured includes a 10% increase in spending for community health centers. The bill also includes $1.1 billion to prepare for a potential avian flu pandemic. Earmarks in the bill total $565 million -- a 50% reduction from earmarked funds in the appropriations bill that was approved two years ago (Kaiser Daily Health Policy Report, 7/19).
The bill did not receive the two-thirds majority of votes that would be necessary to override Bush's expected veto. House Minority Leader John Boehner (R-Ohio) expressed confidence that the Republicans would be able to sustain a veto. "We have other members who, while they may have voted 'yes' here, will vote to sustain a veto," Boehner said. House Appropriations Chair David Obey (D-Wis.) said, "It was a damn good vote. With all of the Sturm und Drang, they couldn't find anything in the bill that they wanted to change (in the GOP motion to recommit). I think that demonstrates that they think it's a pretty good doggone bill." The Senate might not consider its version of the bill until October, CongressDaily reports (Cohn, CongressDaily, 7/20).
Not-For-Profit Hospitals Face Increasing Scrutiny From Lawmakers; IRS Report Finds Many Hospitals Spend Less Than 3% of Revenue on Charity Care
[Jul 20, 2007]
Scrutiny of not-for-profit hospitals' tax exemptions is increasing, as an Internal Revenue Service report found that 45% of not-for-profit hospitals spend 3% or less of their revenue on uncompensated care and as state and federal lawmakers consider imposing restrictions on the hospitals, the Wall Street Journal reports. According to the IRS study -- which involved 487 hospitals -- from 2003 to 2005, nearly a quarter of not-for-profit hospitals spent less than 1% of revenue on charity care and one in five spent 10% or more. The Congressional Budget Office says that not-for-profit hospitals received more than $12 billion in tax breaks in 2002, and a recent CBO analysis of hospitals in five states found that not-for-profits provide only slightly more uncompensated care than for-profit hospitals.
The "scrutiny is fueled in part by the hospital industry's strengthening finances," the Journal reports. However, according to the Journal, many not-for-profit hospitals operate on "razor-thin margins," with more than 200 reporting "cash and investments valued at less than a day's operating expenses."
Sen. Chuck Grassley (Iowa), ranking Republican of the Senate Finance Committee, on Thursday released a report suggesting that Congress mandate the amount of uncompensated care hospitals must provide to qualify for tax exemptions as not-for-profits. Grassley's report suggested that to qualify for tax benefits, hospitals must spend 5% of patient operating expenses or revenue, whichever is greater, on charity care. Grassley also proposed limiting the number of insiders and physicians who could hold seats on the board of a hospital receiving tax benefits.
In addition, states are looking at the tax status of not-for-profit hospitals. In Illinois, for example, regulators have revoked property tax breaks for several hospitals after the state determined the hospitals did not provide enough charity care. Other states require standardized reporting from not-for-profit hospitals and, in many cases, compare hospitals' charity care and tax breaks (Francis, Wall Street Journal, 7/20). Comments
Lois Lerner, director of IRS' Charities and Other Non-Profits division, said, "The lack of consistency or uniformity in classifying and reporting uncompensated care and various types of community benefit often makes it difficult to assess whether a hospital is in compliance with current law." Lerner added that greater analysis is needed.
Melinda Hatton, American Hospital Association senior vice president and general counsel, pointed out that hospitals surveyed by IRS provide $9.3 billion in community benefits, with $5.2 billion going to uncompensated care. "It shows that hospitals are spending an awful lot of money" on such care, Hatton added (Carey, CQ HealthBeat, 7/20).
Foster Children Do Not Receive Adequate Health Care, Witnesses Tell House Panel
[Jul 20, 2007]
CMS and state child welfare officials are failing to provide adequate access to physical and mental health services to children in foster care, witnesses on Thursday said at a House Ways and Means Subcommittee on Income Security and Family Support hearing, CQ HealthBeat reports. Panel Chair Jim McDermott (D-Wash.) said studies show that between 30% and 80% of foster children have chronic health conditions, including mental illnesses in many cases.
According to McDermott, The National Survey of Child and Adolescent Well-Being found that three of four child welfare beneficiaries with significant mental illnesses were not receiving care within 12 months after an investigation into child abuse and neglect. Foster children in most cases are eligible for Medicaid, but "many still do not receive adequate health services, especially for mental health conditions," McDermott said.
Erin Sutton -- director of child safety at the Minnesota Department of Human Services, who testified on behalf of the American Public Human Services Association -- said Medicaid payments for "targeted case management" help ensure foster children receive needed care. A 2005 study found that children with case managers were more likely to receive care for physical illnesses, as well as dental and clinic-based care, Sutton said. Thirty-eight states offer at least some targeted case management services, and in at least 40% of those states, foster children enrolled in Medicaid receive such services, Sutton added.
However, under the Bush administration's fiscal year 2008 budget proposal, federal matching rate for targeted case management would drop from up to 77% to no more than 50%. The provision, signed by President Bush last year, also requires CMS to define "direct care services," for which targeted case management funding could not be used -- a "seemingly minor" change that could have a significant impact if the definition is too broad, Sutton said. CMS is auditing targeted case management programs in several states. The agency also is auditing Medicaid-funded "Rehabilitation Services" benefits, which are reducing the cost of foster children's mental health care received outside of hospitals.
Seattle pediatrician Abraham Bergman, who called the foster care system "state-sponsored child abuse," recommended that the House adopt a bill that would require states to coordinate health care for foster children. According to Bergman, the services involved "are all covered by Medicaid," so improvements in access to care could by achieved "without new money" (Reichard, CQ HealthBeat, 7/20).
House Lawmakers Propose Delay in Medicaid Tamper-Proof Prescription Pad Law
[Jul 20, 2007]
Reps. Charlie Wilson (D-Ohio), Marion Berry (D-Ark.) and Mike Ross (D-Ark.) on Thursday introduced a measure that would delay implementation of a law that will require physicians to write prescriptions for Medicaid beneficiaries on tamper-proof pads, CongressDaily reports (Edney, CongressDaily, 7/20). Pharmacist groups in a recent letter to lawmakers wrote that millions of Medicaid beneficiaries might not be able to obtain their medications after Oct. 1, when the law takes effect. The provision was included in a spending measure for the Iraq war.
The law was designed to make it more difficult for patients to obtain controlled substances through forged prescriptions and to save the government money. Most doctors are not aware of the law and do not use the pads. Several states already require such use of tamper-resistant pads, often only for controlled substances. Those states typically gave doctors at least a full year to comply with the law (Kaiser Daily Health Policy Report, 7/19).
The legislation would require that prescriptions for Class II narcotics such as OxyContin be written on tamper-proof pads. Wilson said, "This will prevent the most dangerous fraud without preventing those in need from receiving their everyday medications." The lawmakers introduced the new bill to generate interest in pushing back the law's implementation date and are willing to have the measure attached to other legislation, according to an aide (CongressDaily, 7/20).
Health Care Marketplace
Contract Negotiations Between UAW, Big Three Automakers Begin
[Jul 20, 2007]
Newspapers recently examined contract negotiations between United Auto Workers and the Big Three U.S. auto manufacturers on possible solutions to fund retiree health care. Auto manufacturers General Motors, Ford Motor and Chrysler cover the health expenses of more than 1.1 million current and former union members and their dependents, at a cost of about $12 billion annually. About 600,000 of those members are retirees. In recent months, the automakers have been weighing an agreement reached late last year between Goodyear Tire & Rubber and the United Steelworkers of America. Under the agreement, Goodyear transferred retiree health care obligations to an independent trust fund known as a voluntary employee beneficiary association, to be managed by the union. In exchange, Goodyear established a $1 billion fund to pay health care costs and agreed to invest at least $550 million in manufacturing facilities represented by the union. The VEBA solution could cost the automakers between $60 billion to $65 billion in upfront costs. Chrysler begins talks on Friday, while Ford and GM will begin on Monday. The current UAW contract expires Sept. 14 (Kaiser Daily Health Policy Report, 7/19). Summaries of the coverage appear below.
- AP/Chicago Tribune: The AP/Tribune reports that whether "the companies get what they want depends largely on UAW President Ron Gettelfinger, who has said the union will not go into the talks in a 'concessionary mode.'" All three automakers will seek to reduce costs to $48 per hour in wages, pension and health care costs for hourly workers. Currently, Ford pays $70.51, GM pays $73.26 and Chrysler pays $75.86, according to the companies' annual reports (Krisher, AP/Chicago Tribune, 7/19).
- USA Today: USA Today examined how it is "expected" that contracts reached with UAW will "revamp how the industry deals with big issues such as wage packages and retiree health care, as well as smaller ones, such as work rules and break times" (Silke Carty, USA Today, 7/20).
- USA Today: USA Today also examined how the negotiations with the Big Three automakers will be Gettelfinger's "biggest challenge" since he became president of UAW in 2002 (Gallagher, USA Today, 7/20).
- Wall Street Journal: The Journal examined how "[b]lue-collar retiree health care obligations will be a central issue" in contract negotiations that begin Friday and how the "nitty-gritty details ... pose significant and potentially costly hurdles" (Stoll, Wall Street Journal, 7/20).
Broadcast Coverage
NPR's "Morning Edition" on Friday included a discussion with Len Nichols, an economist at the New America Foundation, about UAW negotiations and employer-sponsored health benefits (Wertheimer, "Morning Edition," NPR, 7/20). Audio of the segment is available online.
Coverage & Access
Disability Benefits for Veterans Vary Widely by State, Study Finds
[Jul 20, 2007]
Disability pay for injured veterans varies widely from state to state, according to a new study conducted by the Institute for Defense Analysis, the AP/Arizona Daily Star reports. The 50-page report, which is the first to examine scientifically the cause of variance in veteran disability pay, was made available to the Associated Press. The examination was launched after reports in 2005 showed wide disparities in payments to veterans by the Department of Veterans Affairs. The study was conducted over a period of about 18 months.
The study found that average annual disability payments varied from $7,556 in Ohio to $12,395 in New Mexico. The nationwide average was $8,890, according to the study. The study found that about one-third of disparities in disability payments could be attributed to poor agency standards and inadequate training. The VA has in the past mostly attributed the problems to factors outside of its control, such as the number of Vietman veterans in a state -- who on average receive higher payments -- and whether a veteran had legal assistance while making a claim. As a result of poor standards and training, VA regional offices often had too much authority and discretion over how much pay a veteran received, the study found. The study also reached several other conclusions:
- Post-traumatic stress disorder claims accounted for the highest disability pay, averaging $20,000 annually to more than 200,000 veterans;
- Veterans who receive legal help or aid from advocacy groups received on average $11,162, compared with $4,728 for those who had none;
- About two-thirds of veterans received advocacy help, with the highest representation in North Dakota, at 81.9%, and the lowest in Maryland, with 44.8%;
- Vietnam veterans received annual compensation of $11,670, compared with $7,410 for veterans of other wars; and
- Veterans of the Gulf War received the lowest average payments of $6,506 per year (AP/Arizona Daily Star, 7/20).
Medical Errors Increase Physicians' Stress Levels, Study Finds
[Jul 20, 2007]
Physicians who make or come close to making medical mistakes often experience an upswing in occupational stress, according to a survey released on Wednesday, the AP/San Jose Mercury News reports. Results of the survey will be published in the August edition of the Joint Commission Journal on Quality and Patient Safety.
For the survey, 3,171 physicians in St. Louis, Seattle and Canada responded to surveys that researchers mailed or e-mailed to them. Of the physicians participating in the survey, 2,909 said they had been involved in a serious or minor medical error or a near miss. Sixty-one percent of those physicians said they experienced increased stress about the possibility of future errors, while 44% said they lost confidence in their professional capabilities. In addition, 42% reported having sleep problems, and the same percentage said they grew less satisfied with their jobs after the incident.
According to the survey, physicians involved with a serious medical error were most likely to report higher levels of occupational stress, although one-third of physicians involved in near misses also reported higher stress. Amy Waterman, a psychologist at Washington University in St. Louis and lead author of the study, said the survey findings highlight the need for hospitals to provide support to physicians after medical errors, which she said could push them to quit, become depressed or commit other errors. Among physicians participating in the survey, 10% said hospitals offered sufficient resources to help them manage stress stemming from medical errors (Tanner, AP/San Jose Mercury News, 7/18).
Medicare
Newspapers Highlight Medicare Issues
[Jul 20, 2007]
Several newspapers recently published articles about Medicare. Summaries of the coverage appear below. - Errors: About 138,000 Medicare beneficiaries nationwide are "stuck in bureaucratic gridlock" while prescription drug plan premiums are "erroneously" deducted from their Social Security checks, the Milwaukee Journal Sentinel reports. The problem stems from a computer glitch between CMS and Social Security Administration databases. An additional 141,000 beneficiaries who owe drug plan premiums are having difficulties getting the money deducted from their Social Security checks. CMS said it expects to have most of the deduction problems fixed within a few months and those owed money will be reimbursed (Gabler, Milwaukee Journal Sentinel, 7/18).
- House calls: Medicare has "taken the lead" in providing coverage for physician house calls to frail and elderly beneficiaries, as well as those with disabilities, the Dallas Morning News reports. Medicare covers 80% of the cost of house calls to homebound beneficiaries, and Medicaid or private supplemental insurance covers the remainder for some beneficiaries. Medicare is conducting a three-year project to determine whether house calls to the sickest beneficiaries improve care and reduce health care costs (Moos, Dallas Morning News, 7/18).
- Reimbursements: Reductions to Medicare physician payments in 2008 could cause physicians to limit the number of new beneficiaries they treat, a spokesperson for the American Medical Association said on Wednesday, the Minneapolis Star-Tribune reports. Medicare reimbursements are scheduled to be reduced by 10% in January 2008. Rebecca Patchin, an anesthesiologist and member of AMA's Board of Trustees, said three-fifths of 9,000 physicians surveyed by AMA said they would stop accepting Medicare beneficiaries if the cuts take effect (Draper, Minneapolis Star-Tribune, 7/18).
State Watch
Massachusetts To Revise State Law Mandating Residents Have Health Insurance
[Jul 20, 2007]
The Massachusetts Legislature in several months likely will make changes to a state law that requires all residents to obtain health coverage, state Joint Committee on Health Care Financing co-Chair Richard Moore (D) said, the Boston Globe reports. The joint committee on Wednesday heard testimony from health care advocates, medical providers, patients and self-employed residents about changes to the law, such as the amount employers should be required to contribute toward workers' health care. More than 75 state lawmakers have sponsored a bill to modify the law.
Moore at the hearing said that he supports increasing from 33% to 50% the amount employers must contribute to workers' health care to avoid a $295-per-employee penalty. Moore has asked the administration of Gov. Deval Patrick (D) to make the proposed change, but if the administration does not, he said he would push for the change to be added to the revision bill. According to the Globe, another proposed change to the law would limit to 10% of income the maximum amount residents would have to pay out of pocket under health insurance, which differs from the current law that bases the limit only on premiums (Dembner, Boston Globe, 7/19).
Tennessee Officials Criticize CMS Proposal To Cap Hospital Payments; TennCare Waiver Negotiations Continue
[Jul 20, 2007]
Tennessee Gov. Phil Bredesen (D) on Wednesday said he would become personally involved in negotiations with CMS to renew TennCare and accused the federal government of placing "unreasonable demands" on the state, the Memphis Commercial Appeal reports. TennCare was set to expire June 30, but the state received two extensions for the program to Aug. 15 while it negotiates a waiver with CMS.
TennCare Director Darin Gordon last week said CMS proposed new caps on Medicaid payments to hospitals before contract negotiations were finalized. According to Gordon, other states with similar Medicaid funding structures would not be subject to the caps. State officials say the caps could cost Tennessee up to $400 million over three years and would "severely reduce" funding for the program at a time when the state is planning to expand enrollment to more adults. The payment caps particularly would affect not-for-profit hospitals that provide large amounts of charity care, according to the Commercial Appeal.
Bredesen said, "We're not asking for anything different from what other states are getting. At the same time, Massachusetts, California and Florida have all gotten huge sorts of additional benefits. We have saved [the federal government] a lot of money, and they are still trying to pull us back even further, and I just don't believe it's fair and appropriate" (Locker, Memphis Commercial Appeal, 7/19).
Louisiana Provides Details of Approaching SCHIP Expansion
[Jul 20, 2007]
The Louisiana Department of Health and Hospitals no later than January 2008 will launch a program that allows children in families with annual incomes between 200% and 300% of the federal poverty level to enroll in LaCHIP, the state's version of SCHIP, the Baton Rouge Advocate reports. The state Legislature appropriated $7.3 million for the LaCHIP expansion, and an additional 9,000 children will be eligible under the expanded program.
Families with incomes between 200% and 300% of the poverty level will contribute to their children's premium costs on a sliding scale based on income. DHH has not yet determined what the costs for parents will be. The state will pay the remaining costs. Families with incomes less than 200% of the poverty level will not pay premiums. DHH Secretary Fred Cerise said that the state also will start a new marketing effort to enroll in the program an estimated 68,000 uninsured Louisiana children who are eligible for SCHIP. Cerise added that the department will write safeguards to discourage parents from dropping private insurance for their children to receive SCHIP coverage (Shuler, Baton Rouge Advocate, 7/19).
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