KAISER DAILY HEALTH POLICY REPORT
Friday, May 9, 2008

MEDICARE

     The Bush administration on Thursday proposed new marketing rules for Medicare Advantage comprehensive coverage and drug plans that aim to curb aggressive sales tactics, the Wall Street Journal reports. According to the Journal, health insurers have been criticized for their "overly aggressive marketing tactics, such as enrolling seniors without explaining what they are getting into." In some cases, beneficiaries lost supplemental coverage or access to their physicians, the Journal reports (Zhang/Fuhrmans, Wall Street Journal, 5/9). Since the Medicare drug benefit was launched in 2006, some beneficiaries and state insurance commissioners have said that some insurance agents use incorrect information to enroll people in certain plans, "particularly those offering comprehensive health insurance," the AP/Google.com reports (Freking, AP/Google.com, 5/8).

The proposal would:

• Prohibit cold-calling, door-to-door marketing and unsolicited marketing in places such as waiting rooms and senior centers (Wall Street Journal, 5/9). According to the AP, the proposal "essentially restricts face-to-face solicitations to those initiated by the customer" (AP/Google.com, 5/8);
  
  
• Ban cross-selling of non-health care products (Wall Street Journal, 5/9). Sales agents could sell non-health care products, such as life or disability insurance, if they were cleared with the beneficiary prior to the meeting (AP/Google.com, 5/8);
  
  
• Increase the government's ability to fine insurers that do not comply with the rules. The government currently can impose a civil fine of up to $25,000 for each violation, but the new rules would allow a fine of up to $25,000 for each beneficiary affected by a violation;
  
  
• Limit to $15 gifts and promotional items for potential customers. In addition, it would bar no-cost meals, regardless of value, which would "end a common practice" of holding sales presentations at family restaurants where meals are provided, according to the New York Times;
  
  
• Bar insurers from paying agents higher bonuses or commissions for the first-year enrollment of a beneficiary compared to a renewal, which creates a "financial incentive for agents to encourage beneficiaries to change plans each year," administration officials said. It also would prohibit insurers from paying more money to agents for enrolling beneficiaries in different plans of the same category; however, agents could receive a higher commission for enrolling a beneficiary in a comprehensive plan over a drug-only plan (Pear, New York Times, 5/9); and
  
  
• Add new restrictions on special needs plans, including requiring providers to "more clearly establish and clarify" that they are providing additional benefits to beneficiaries of the plans, CQ HealthBeat reports. Special needs plans serve so-called "dual eligibles," beneficiaries who qualify for both Medicare and Medicaid; beneficiaries with disabling or severe chronic conditions; and beneficiaries living in nursing homes or long-term care facilities (Carey, CQ HealthBeat, 5/8).

State Authority
The proposal does not address concerns by some consumers, lawmakers and state officials that states do not have enough authority to regulate marketing of the plans, according to the New York Times (New York Times, 5/9). The Los Angeles Times reports that the 2003 Medicare law, which created the drug benefit, "tightly limited the ability of state insurance regulators to police the plans" (Alonso-Zaldivar, Los Angeles Times, 5/9). According to the Journal, the "health insurance industry has tried to head off more state regulation ... by pushing for stronger federal oversight" (Wall Street Journal, 5/9). In addition, the lack of strengthened state regulation in the proposal "affirms the Bush administration's view that 'states do not have the authority to regulate the marketing' of private Medicare plans," the New York Times reports (New York Times, 5/9). According to Ap/Google.com, "The rule is unlikely to stop lawmakers' efforts to give states more authority to hold insurers accountable."

Comments
Acting CMS Administrator Kerry Weems said, "We want to make sure that beneficiaries aren't pressured into sales. In parking lots, waiting rooms and those kinds of places, a salesman can create a pressure environment or a threatening environment where a beneficiary will agree to anything just to get away."

Paul Precht, policy director for the Medicare Rights Center, said, "CMS doesn't have the boots on the ground to enforce even good rules like this," adding that states need more authority (AP/Google.com, 5/8). Robert Hayes, president of MRC, in an e-mail wrote, "The final regulation will need to be much tougher if it is to have the desired effect," adding, "Even the Bush administration, which has so zealously promoted the privatization of Medicare, recognizes that it must repeatedly reaffirm its instructions to these private, for-profit insurance companies to get them to play by the rules" (Bloomberg/Boston Globe, 5/9).

Karen Ignagni, president of America's Health Insurance Plans, said, "Moving away from federal regulation toward 50 states approaching this in 50 different ways doesn't set a uniform standard for beneficiaries" (AP/Google.com, 5/8). Ignagni added that under the proposal, "The rules will be clear, they will be specific and there will be no questions about how they should be interpreted" (CQ HealthBeat, 5/8).

Senate Finance Committee Chair Max Baucus (D-Mont.) said, "America's seniors have been pressured, prodded, preyed on and ripped off by shady marketing too often," adding, "I intend to get these bans into the law to insure aggressive marketing tactics are quashed once and for all" (Wall Street Journal, 5/9).

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CAPITOL HILL WATCH

     During a hearing of the House Energy and Commerce Committee Oversight Subcommittee on Thursday, executives from Johnson & Johnson, Pfizer and a joint-venture between Merck and Schering-Plough defended TV prescription drug advertisements that lawmakers have claimed potentially misled consumers, the AP/Houston Chronicle reports. Democratic members of Congress to date have been unsuccessful in passing legislation that would prohibit direct-to-consumer ads in the first three years after a drug is approved. They have "intensified their scrutiny of the drug industry, energized by a recent discovery" that Merck and Schering-Plough continued to advertise the cholesterol drug Vytorin after a study showed it is no more effective than a lower-cost generic drug, the AP/Chronicle reports. Lawmakers are expected to propose similar legislation later this year (Perrone, AP/Houston Chronicle, 5/8).

The panel is focusing on three discontinued advertising campaigns that were "designed to deceive and mislead" consumers, Subcommittee Chair Bart Stupak (D-Mich.) said (Cohen, Newark Star-Ledger, 5/9). Stupak and House Energy and Commerce Committee Chair John Dingell (D-Mich.) asked Schering-Plough Vice President Deepak Khanna why the company continued to air ads for Vytorin after the study was completed in January 2006. Results were not released until January 2008. Stupak said, "Many consumers may not have taken Vytorin had they been aware of the study results." In response, Khanna said, "I saw a vigorous debate over the quality of that data," adding that the company "took steps to make sure the data was there and meaningfully analyzed before its release" (AP/Houston Chronicle, 5/8).

Lawmakers questioned J&J representatives about ads for the drug Procrit, manufactured by J&J subsidiary Ortho Biotech, which promoted the drug as a treatment for "cancer fatigue" that would improve the "quality of life" for patients, the Star-Ledger reports. FDA had not issued approval for such a use. Stupak said, "This was clearly an instance of off-label marketing practice that is prohibited by FDA." Ortho Biotech President Kim Taylor said, "Statements in the advertisements regarding the benefits of Procrit were true, responsible and substantiated by scientific studies" (Newark Star-Ledger, 5/9).

The panel also looked at Pfizer's ads for the cholesterol drug Lipitor, which featured Robert Jarvik, inventor of the first artificial heart, as a spokesperson, despite Jarvik not having a license to practice medicine. Democrats on the panel said Jarvik is not qualified to give medical advice, even though he went to medical school (AP/Houston Chronicle, 5/8). James Sage, a Pfizer marketing executive, said Pfizer and Jarvik are "confident that the statements included in the ads fairly represent the scientific data about Lipitor" (Newark Star-Ledger, 5/9).

Dingell requested that the drug company executives adopt new standards for marketing, but all three said they did not have the power to do so. Dingell said, "Maybe we need to have another hearing with someone who can really speak on behalf of the companies," adding, "Perhaps the company presidents would be able to respond in a more helpful fashion" (AP/Houston Chronicle, 5/8).

Other Testimony
Nancy Nielsen, president-elect of the American Medical Association, said DTC drug ads are "neither balanced nor educational." Ruth Day, a researcher at Duke University, noted that consumers rarely have a complete understanding of the risk warnings included in ads. Government Accountability Office representative Marcia Crosse testified that FDA does a poor job of overseeing the growing number of DTC drug ads.

However, Rep. John Shimkus (R-Ill.) said Congress last year established standards for drug ads and gave FDA permission to fine drug makers for airing misleading ads. He added that rules to implement the law are being written (Newark Star-Ledger, 5/9). "It's all about politics, not advertising," John Kamp, director of the Coalition for Healthcare Communication, said. He added, "They hold a hearing so they can pretend their guys would do a better job of running the agency than the Republicans" appointed by President Bush to run FDA (AP/Houston Chronicle, 5/8).

Mollyann Brodie, vice president and director of Public Opinion and Media Research for the Kaiser Family Foundation, also testified about the public's views of prescription drugs, the pharmaceutical industry, and direct-to-consumer drug advertising. A copy of her prepared testimony is available online.

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     The Senate Appropriations Committee on Thursday delayed a scheduled mark up of 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, as well as additional funds for FDA, CQ Today reports. According to CQ Today, committee Chair Robert Byrd (D-W.Va.) decided to move the mark up to May 15 at the request of Senate and House leadership after "dissension forced House Democrats to delay until next week bringing the supplemental [bill] to the floor."

The Senate version of the bill includes $275 million for FDA, $400 million for NIH to fund about 700 research grants, $437 million for the construction of polytrauma centers administered by the Department of Veterans Affairs and $350 million for hospitals in Louisiana and Mississippi as part of relief from Hurricane Katrina.

In addition, the legislation includes a provision that would ban construction of new physician-owned specialty hospitals. The provision also would require the 100 to 200 specialty hospitals currently in operation to disclose their ownership interests to patients. According to a Senate Republican aide, the provision would save $2.4 billion over 10 years, in large part through decreased growth in the number of medical procedures billed to Medicare (Higa/Clarke, CQ Today, 5/8).

According to the Washington Post, the bill might "face a Republican filibuster because of its price tag, raising the possibility that the Senate would turn to the House bill," but, "if Democrats can round up the 60 votes needed to fight off GOP objections," the Senate will "send a bill with war funds and domestic spending back to the House" (Kane, Washington Post, 5/9).

Grassley Seeks Removal of Medicaid, Specialty Hospital Provisions
Senate Finance Committee ranking member Chuck Grassley (R-Iowa) on Thursday asked Byrd and Senate Appropriations Committee ranking member Thad Cochran (R-Miss.) to remove the Medicaid provision and the specialty hospital provision from the Senate version of the bill, CongressDaily reports. In a letter to Byrd and Cochran, Grassley wrote that the provisions "should only be considered by the Finance Committee," which has "done significant work on this issue over the years including holding hearings and conducting investigations."

However, Senate Finance Committee Chair Max Baucus (D-Mont.) supports the inclusion of the provisions in the legislation, according to a Senate aide (Edney, CongressDaily, 5/9).

Blue Dog Coalition Opposition
In the House, a "revolt" by the Blue Dog Coalition has prompted Speaker Nancy Pelosi (D-Calif.) to delay a floor vote on the House version of the bill until next week, CQ Today reports. The coalition opposes the legislation because of a lack of offsets for some of the funds that the bill would provide.

Coalition leader Rep. Allen Boyd (D-Fla.) said that he has begun to work with the House Ways and Means Committee to find offsets for the funds. Mike Ross (D-Ark.), coalition co-chair for communications, said that an "overwhelming majority" of coalition members will oppose the legislation without the offsets (Higa/Clarke, CQ Today, 5/8).

According to the Post, without the votes of "most of the 47 Blue Dogs, the domestic spending provisions would have great difficulty passing the House" (Washington Post, 5/9). House Democratic leaders plan to move the bill to the floor on May 14 (Higa/Rogin, CQ Today, 5/8).

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COVERAGE & ACCESS

     The number of children in the Gulf Coast region after Hurricane Katrina who complained of symptoms of bronchitis, pneumonia and other lower respiratory illnesses rose in the years after the storm, according to a 49-page CDC report released on Thursday, the Washington Post reports. CDC researchers developed the report based on an analysis of medical charts and interviews with 144 children ages two to 12 in Mississippi's Hancock County who received treatment between August 2004 and August 2007 at the Hancock Medical Center and four physician clinics.

The report found the proportion of physician visits by children who displayed cold-like symptoms declined from 63% to 52%, while the rate of complaints of bronchitis-like symptoms rose from 22% to 31%. The report also found there were 414 total visits by the children to the five facilities in 2007 compared to 411 visits in 2004.

The study did not report data from 2006, the year after the storm, because there were severe community disruptions and damage to medical facilities in the state. A summary of the report stated, "Basic medical information systems in Hancock County were severely compromised ... creating a particularly challenging environment for performing a retrospective investigation," adding, "The nature and ... effects resulting from these issues are unmeasured and remain unknown."

The researchers noted that they could not determine the reasons or full validity of the study's results due to several factors. Researchers did not know how many children lived in the county prior to the hurricane. In addition, the study included only children who experienced health problems before Katrina. Researchers also were unsure if the number of physician visits was affected by the announcement in February that travel trailers provided by the federal government to families who had been displaced by the hurricane had toxic levels of formaldehyde, which can cause respiratory and other health problems.

'Broader Concerns'
According to the Post, the study's "limited conclusions did not resolve broader concerns raised by health officials and pediatricians, who previously reported heightened complaints of breathing problems among children on the Gulf Coast after Katrina."

Michael McGeehin, director of the CDC unit that developed the report, said the results of the study do not apply to children living in travel trailers and homes along the Gulf Coast region. He said, "I don't want this study generalized," adding, "The numbers were very small." Ed Thompson, a Mississippi state health officer, said, "The issue of what, if any, effects did the hurricane -- and the changes that occurred in its aftermath -- have on the children of the Gulf Coast is one that we remain very much interested in." Thompson also noted, "People whose children were not part of the study can't draw any conclusions, positive or negative, from it," adding, "It did not answer whether exposure to indoor air contaminants, including formaldehyde, has any effect on health" (Hsu, Washington Post, 5/9).

Trailer Move-Out
In related news, New Orleans Mayor Ray Nagin last week urged residents living in the nearly 5,700 federally issued temporary travel trailers in the city to move out of them amid concerns for their health and the approaching hurricane season, the AP/Kansas City Star reports. Nagin said, "We need to get everybody out," adding, "We need to find out if anybody's health has been harmed and how do we deal with that, and find the housing that's necessary so these people can get their lives together."

Andrew Thomas, a spokesperson for the Federal Emergency Management Agency, which provided the trailers, on Wednesday said that the agency will cooperate with parish officials and residents to determine their "long-term housing plan" and move people out of the trailers. However, Thomas said the agency is "not just going to take the trailer away because of a date on the calendar, if they're making progress in getting back into their home" (Bohrer, AP/Kansas City Star, 5/7).

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STATE WATCH

     Georgia Gov. Sonny Perdue (R) on Wednesday signed into law two measures intended to make high-deductible health insurance plans more affordable and accessible, the Atlanta Journal-Constitution reports.

Under one bill (HB 977), insurers are exempt from taxes on premiums for high-deductible plans that include health savings accounts, for which they previously paid a tax of at least 2.5% (Gould Sheinin, Atlanta Journal-Constitution, 5/7). The bill also provides a $250 annual tax credit for small businesses that spend at least $250 to enroll workers in HSAs. The second bill (SB 383) states that arrangements that include only Health Reimbursement Accounts -- set up to allow for the use of pre-tax dollars for health-related expenses -- do not qualify as insurance if they are not packaged with individual insurance policies. The measure also requires that HSA plans comply with the any willing provider provision in current law, provided they pay any increases in premiums and cost (Atlanta Business Chronicle, 5/7).

According to former U.S. Speaker of the House Newt Gingrich (R-Ga.), founder of the Center for Health Transformation, as many as 500,000 state residents could gain health coverage through the bill. Gingrich said the bill is "ideal" and "moves us in the right direction."

The House bill is expected to provider insurers with $146 million annually in tax breaks. Employers are expected to save $64.8 million, and workers are expected to save $6.7 million, according to an independent analysis by the Georgia Budget and Policy Institute. Sen. Judson Hill (R), sponsor of the Senate bill, said insurers would pass savings along to consumers.

Critics of the bills say low-income state residents would still have trouble paying the lower premiums offered by high-deductible plans and would not have extra money to deposit into an HSA (Atlanta Journal-Constitution, 5/7).

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     The New Hampshire House on Wednesday voted 259-93 to approve a bill (SB 540) that aims to lower health costs for employees of small businesses, the Manchester Union Leader reports. The bill follows a recommendation by Gov. John Lynch's (D) Citizens Health Initiative, which was charged with developing a new health insurance plan by fall 2009 that will save businesses with 50 or fewer workers an estimated 15% on health costs.

The plan -- called HealthFirst -- will be priced at 10% of the state's median wage, or approximately $262 per month. The plan would include a cap on out-of-pocket medical expenses. According to the Union Leader, if one insurer agrees to offer the plan, then all insurers with 1,000 or more policyholders would be required to offer it as an option to all small businesses. In addition, an advisory committee of lawmakers and small employers would be required to update the plan every three years.

The bill also calls for the committee to finish the plan and make it available to residents by Oct. 1, 2009. According to the Union Leader, the bill would make it illegal for an insurer to offer a similar plan "aimed at undercutting the HealthFirst plan." The bill now goes to the state Senate, which approved an earlier version of it in March (Fahey, Manchester Union Leader, 5/7).

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OPINION

     An expansion of health insurance to more U.S. residents -- with "business, patients and government sharing the cost" -- is important, but unless "we find cures, American families will continue to be plagued by costly and debilitating fatal diseases such as cancer, diabetes and Alzheimer's" disease, former Rep. Harold Ford (D-Tenn.), chair of the Democratic Leadership Council, and Al From, founder and CEO of the council, write in a Memphis Commercial Appeal opinion piece.

According to the authors, although "we're delighted" that both Democratic presidential candidates Sens. Hillary Rodham Clinton (N.Y.) and Barack Obama (Ill.) have "offered constructive plans" to expand health insurance, with "interesting ideas for keeping costs down and increasing the efficiency of the system as a whole," the next president also should establish an American Center for Cures -- a "Cabinet-level authority charged with fighting life-threatening" diseases. The center would "pay for high-risk, high-reward research, fund small businesses that have created possible cures but lack the money necessary to test drugs in clinical trials, and work to streamline the clinical trial process," according to the authors.

They write that "every illness that we cure or eradicate will reduce suffering, save American lives and cut the nation's health care bill by billions and billions of dollars," which would "make it far easier to ensure that everyone has access to health care." The authors conclude, "For that reason alone, the center should be a central element of the next president's health care agenda" (Ford/From, Memphis Commercial Appeal, 5/8).

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THE LATEST REPORTS IN HEALTH POLICY

     Issue Module: Health Care as a 2008 Election Issue, Kaiser Family Foundation: The issue module on kaiserEDU.org provides information on health care in the 2008 election, including public concerns about health care and the candidates' reform proposals. It also offers links to key resources for additional research, including public opinion surveys, as well as summaries and analyses of presidential candidates' positions and health care proposals (Kaiser Family Foundation release, 5/8).

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Kaiser Daily Health Policy Report
The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a website of the Kaiser Family Foundation. (c) 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

For access to the Kaiser Family Foundation's policy research, analyses, reports and fact sheets, and media partnerships, visit the Foundation's main website at http://www.kff.org.