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Kaiser Daily Health Policy Report
Thursday, August 28, 2008
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Medicare
Medicare Overpaid for Prescription Drugs With New Generic Versions Because of Delay in Incorporating New Prices Into Payment Calculations, HHS OIG Report Finds
[Aug 28, 2008]
Medicare overpaid for irinotecan, a cancer drug sold by Pfizer under the name Campostar, by $6.5 million in March because of a delay in updating its pricing formula, according to a report released on Tuesday by the HHS Office of Inspector General, Bloomberg/Los Angeles Times reports. A generic version of the drug was approved for sale on Feb. 20. However, a two-month delay in integrating the new generic prices into the agency's payment system resulted in the additional expense (Bloomberg/Los Angeles Times, 8/28). According to the report, Medicare was paying $126 per dose of irinotecan in March despite average generic prices of $41 for the drug. When sales of the branded version were factored in, the drug's average price in March was $52.
The report found that Medicare likely is overpaying for other drugs because of the delay in updating its pricing formula, according to the Wall Street Journal's "Health Blog." The report suggests that Medicare devise a way to "address pricing discrepancies arising from newly available generic drugs," including asking for changes in laws governing Medicare drug payments (Goldstein, "Health Blog," Wall Street Journal, 8/27).
 The report is available online (.pdf).
Election 2008
Interest Groups Promote Health Reform as Election Issue During Democratic Convention
[Aug 28, 2008]
Health care "may be taking a back seat" at the Democratic National Convention but "liberal activists are fighting to make sure it is center stage during the presidential campaign," The Hill reports. According to The Hill, Democrats had believed that health care "would be at the head of the domestic agenda this election year," but the economy and gas prices have emerged as more important issues in the campaign. Dozens of events have been held by advocacy groups, as well as corporate interests such as the drugmaker AstraZeneca and lobbying organizations such as the Pharmaceutical Research and Manufacturers of America.
Health care "has not been absent from the convention," The Hill reports. Both former Democratic presidential candidate Sen. Hillary Rodham Clinton (N.Y.) and Sen. Edward Kennedy (D-Mass.) "highlighted" health reform in their speeches, and Democratic presidential nominee Sen. Barack Obama (Ill.) likely will discuss the issue in his speech on Thursday.
Rep. Marion Berry (D-Ark.), a former pharmacist, said, "I don't think any Democrat can have a successful campaign and not address (health care)."
Families USA Executive Director Ron Pollack said, "It is important that the next president and the next Congress make health care reform a top and early priority." He said that some of the events have highlighted the "very significant difference" between the health care proposals of Obama and presumptive Republican presidential nominee Sen. John McCain (Ariz.).
Service Employees International Union President Andy Stern said, "McCain is repackaging the failed policies of the past."
"In spite of the enthusiasm of activists ... and the rhetoric of politicians, the left wing remains deeply divided about health care reform," with some supporting a single-payer system and others working to "preserve the private health care market," according to The Hill (Young, The Hill, 8/27). Presidential Agenda
Obama as president likely would approve several bills vetoed by President Bush -- such as legislation that would expand SCHIP -- "within days of the opening of the next Congress," the Washington Post reports. Bush twice vetoed legislation that would have expanded SCHIP (Weisman, Washington Post, 8/28).
In related news, Obama on Wednesday during a campaign event in Montana promised to expand nationwide a state pilot program that assesses the mental health of veterans. Under the program, the Montana National Guard tests veterans for post-traumatic stress disorder every six months for the first two years after they return from combat and once annually in subsequent years. The program exceeds national standards established by the Department of Defense (Newhouse, Great Falls Tribune, 8/28). Obama Should Focus More on Health Care, Op-Ed States
"If Obama is going to triumph, he needs to attract the middle-class voters who've watched their jobs, health care, retirement savings and family finances grow less secure," but "this will only happen if he sharpens and expands his economic message, without further delay," Jacob Hacker, a professor of political science at the University of California-Berkeley and a fellow at the New America Foundation, writes in a New York Daily News opinion piece.
"To do that, he must put three moves into his economic playbook so far mostly lacking," one of which is an increased focus on health care, according to Hacker. "Last year, Obama outlined a health plan light years better than McCain's -- and then pretty much stopped talking about it," Hacker writes, adding, "Democrats gain when health care is an issue" because "people see the economy and health care as intertwined" (Hacker, New York Daily News, 8/27).
Coverage & Access
Bankruptcy Filing Rate Among Seniors Increases Amid Rising Costs for Health Care, Consumer Goods, Analysis Finds
[Aug 28, 2008]
The rate of bankruptcy filings for people older than age 55 has increased since 1991 as a result of several factors, including rising costs for consumer goods and health care, according to a Consumer Bankruptcy Project analysis that will appear in the January edition of the Harvard Law and Policy Review, the AP/Washington Post reports. For the study, researchers from Harvard Law School examined a sample of more than 6,000 non-commercial bankruptcy filings in 1991, 2001 and 2007.
The study found that bankruptcy filings for the older-than-55 age group had increased from 8% in 1991 to 22% in 2007. According to the analysis, the bankruptcy filing rate per thousand people increased by 40% for seniors ages 55 to 64, by 125% for seniors ages 65 to 74 and by 433% for seniors ages 75 to 84. Researchers also found that the rate of bankruptcy filing for people younger than age 55 declined during the same period.
Elizabeth Warren, a Harvard Law professor and an author of the study, said, "There's no evidence that the problem is consumerism," adding that seniors are incurring debt to meet needs such as medical treatment. She said, "Older Americans are hit by a one-two punch of jobs and medical problems and the two are often intertwined," adding, "They discover that they must work to keep some form of economic balance and when they can't, they're lost" (Sedensky, AP/Washington Post, 8/27).
Telemedicine Showing Promise for Increasing Health Care Efficiency, Cutting Costs
[Aug 28, 2008]
The St. Louis Post-Dispatch on Wednesday examined how the "burgeoning" field of telemedicine has "spurred a growing interest in home-health strategies that can help curb costs by minimizing office visits and hospitalizations -- and may lead to better patient outcomes." According to the Post-Dispatch, "telemonitoring and telehealth services" are "[h]eralded as both time and money savers," and are "gaining a foothold in the increasingly costly health care market" as a way to "treat a wide array of patients, from those suffering from congestive heart failure and diabetes to mental health patients and complex maternity cases."
More than 200,000 U.S. residents use telemedicine home-monitoring services, according to American Telemedicine Association estimates. Recent studies suggest telemedicine can reduce costs from office visits and hospitalizations by hundreds of millions of dollars annually. Carol Bickford, a senior policy fellow in the department of nursing practice and policy at the American Nursing Association, said, "It's getting a lot of attention now in mainstream health care to help cut down on costs," adding, "It's been very successful when it's done well in reducing the hospitalization of patients, because you can reach something early."
According to the Post-Dispatch, some people can be "overwhelmed by the technology," and "questions remain among some health care providers about who will be paid for which services" (Birk, St. Louis Post-Dispatch, 8/27).
Health Care Marketplace
Cost Increases Incurred by U.S. Hospitals Slows To 0.9% in 2006, According to Report
[Aug 28, 2008]
The costs incurred by U.S. hospitals in 2006 increased by 0.9%, compared with the average annual increase of 4.8% from 1997 through 2006, according to a study released Wednesday by the Agency for Healthcare Research and Quality, Bloomberg/Denver Post reports. Claudia Steiner, a research physician for AHRQ, said the slower rate of increase in 2006 likely reflects pressure from health insurance companies to encourage more outpatient care and negotiate provider discounts. The AHRQ report also found that costs after inflation rose by more than half in 2006 to $329.2 billion, up from $216.3 billion in 1997.
According to Bloomberg/Post, while employer-sponsored health plan enrollment has declined since 2003, enrollment in Medicare Advantage plans has increased to 10.1 million, mostly in health plans that negotiate provider discounts (Goldstein, Bloomberg/Denver Post, 8/27).
Wall Street Journal Examines Concerns Over Large Not-for-Profit Hospital System in Southwestern Virginia
[Aug 28, 2008]
The Wall Street Journal on Thursday profiled Carilion Health System, a large not-for-profit hospital system in southwestern Virginia that critics maintain has created a monopoly on health care services in the area.
According to the Journal, not-for-profit hospitals, which account for the majority of U.S. hospitals, receive tax exemptions and "are supposed to channel the income they generate back into operations, while providing benefits to their communities." However, not-for-profit hospitals have "come under fire from patient advocates and members of Congress for "stinting on charity care, even as they amass large cash hoards, build new facilities and award big paychecks to their executives," the Journal reports.
In the case of Carilion, the Department of Justice in 1989 filed a failed antitrust lawsuit in an effort to block a merger between Carilion and a local hospital over concerns that the move would create a monopoly on health care services in the area. Almost 20 years later, health care costs in the area are "soaring," and health insurance premium rates in the area have increased from the lowest in the state to the highest, the Journal reports.
Carilion charges four to 10 times as much for some health care services as other providers in the area, but, with eight hospitals, 11,000 employees and $1 billion in assets, residents in most cases must seek care through the hospital system or travel outside the area. In addition, although Carilion receives about $50 million annually in tax exemptions, the hospital system spent only $42 million in charity care in 2007 and only $30 million in 2006.
Carilion officials maintain that the hospital system does not have a monopoly on health care services in the area because of competition from Lewis-Gale Medical Center, a hospital owned by for-profit chain HCA. In addition, "Carilion says it charges more for certain procedures because it has to subsidize operations such as an emergency department and treatment for the uninsured," according to the Journal. Carilion CEO Edward Murphy also said that the increase in health care costs in the area is part of a national trend and has resulted from overuse of services (Carreyrou, Wall Street Journal, 8/27).
Opinion
Census Report Shows Need for More Freedom in Health Insurance Market, Less Regulation, Opinion Piece States
[Aug 28, 2008]
The "good news" from Tuesday's Census Bureau report was that the number of U.S. residents with insurance increased by 3.6 million in 2007, but the "bad news is that nearly three million of them got their coverage through government programs," according to a Wall Street Journal opinion piece by Galen Institute President Grace-Marie Turner. Turner states, "The slide toward a government-dominated taxpayer-supported health sector will continue" until uninsured U.S. residents "are given more opportunities to buy private coverage."
According to Turner, "States could help by lightening their regulatory burdens to encourage greater competition for more attractive and affordable coverage." She continues, "More regulation and less competition generally means less affordable coverage." Turner states that "[f]reeing Americans to buy health insurance across state lines would give people more choices in health care."
In addition, Turner writes that the federal government "needs to do its part by updating today's policies to better fit a mobile 21st-century economy." According to Turner, Congress could "make health insurance more portable" by shifting tax subsidies away from people who have employer-sponsored health coverage to refundable tax credits, which could "help millions of people buy coverage who can't afford it now." In addition, it could "help people keep their health insurance when they lose their jobs or move." Turner states that providing tax credits for health insurance to individuals would create "armies of consumers to work to find affordable policies."
Turner concludes, "The complex problems in our health sector are best cured by a bigger dose of market competition, not more government intervention" (Turner, Wall Street Journal, 8/27).
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