Kaiser Daily Health Policy Report
CMS Extends Medicare Prescription Drug Benefit Enrollment Deadline for Some Low-Income Beneficiaries
Medicare Plans To Reduce Payments for Heart Devices
President Bush at Small-Business Conference Asks Congress To Approve Tax Breaks To Encourage Expansion of Health Savings Accounts
Senate Panel Members Question Reduction in Medicare Payments for Long-Term Care Hospitals
Automaker GM To Spend $3B in Q1 To Establish Fund for Future Retiree Health Costs
Boston Globe Examines Whether Massachusetts Health Insurance Requirement Could Be Model for Other States
North Carolina House Committee Makes Recommendations To Improve State's Health Care System
The Latest Reports in Health Policy
Issue Brief Compares Medicaid Hospital Waivers; Kaiser Medicare Q&A Column Addresses Part D Assistance Programs
Special Notice
Kaiser Daily Reports Will Not Publish Monday, April 17
[Apr 14, 2006]
The Kaiser Daily Health Policy Report will not publish Monday, April 17, in observance of the Easter holiday. The report will resume publishing Tuesday, April 18.
Medicare
CMS Extends Medicare Prescription Drug Benefit Enrollment Deadline for Some Low-Income Beneficiaries
[Apr 14, 2006]
CMS officials have announced that the agency will allow some low-income Medicare beneficiaries additional time to enroll in the prescription drug benefit without financial penalty, the Wall Street Journal reports. Under a new policy announced this month, CMS will allow "ongoing" enrollment in the Medicare prescription drug benefit for beneficiaries who qualify for a low-income subsidy. Medicare beneficiaries who qualify for the subsidy and missed the May 15 deadline would have had to wait until January 2007 to enroll in the prescription drug benefit without the new policy, according to the Wall Street Journal. CMS estimates that 8.2 million Medicare beneficiaries qualify for the subsidy, which is available to individual beneficiaries with annual incomes of less than about $15,000 and assets of less than $11,500. However, only 4.7 million Medicare beneficiaries had applied for the subsidy as of March 31, and only about 1.6 million of those have qualified (Wall Street Journal, 4/14). NAACP Efforts The AP/Philadelphia Inquirer on Friday examined how the NAACP and other advocacy groups have to encourage minority Medicare beneficiaries to enroll in the prescription drug benefit. Although NAACP officials opposed President Bush during his re-election campaign, the group has helped the Bush administration "promote what has become one of the administration's signature programs," the AP/Inquirer reports. Myisha Patterson, national health coordinator for NAACP, said, "We have to separate the benefit from the politics and the administration, and take it for what it is. It's access to prescription drugs for people who didn't have it before." The National Alliance for Hispanic Health also has helped the Bush administration promote the Medicare prescription drug benefit, NAHH Vice President Adolph Falcon said. Kathleen Harrington, director of external affairs for CMS, said the agency has asked advocacy groups, churches and civic organizations to help organize Medicare prescription drug benefit enrollment events in minority communities. "In some of these communities we've faced some culture barriers where there is a lack of trust in government, a natural suspicion, in addition to language barriers," Harrington said, adding, "That's why we've established these partnerships with people who have the trust of the community" (Freking, AP/Philadelphia Inquirer, 4/14). Anti-Fraud Program Senate Finance Committee Chair Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.), ranking member of the committee, have asked CMS officials about the lack of anti-fraud programs for the Medicare prescription drug benefit, CQ HealthBeat reports. Grassley and Baucus said that Congress has allocated more than $100 million to CMS to establish such a program. "There's no excuse for anything but an aggressive, organized initiative by the federal government," Grassley said in a statement. He added, "Medicare officials need to get the anti-fraud program off their desks and on the ground." CMS spokesperson Peter Ashkenaz said that the agency has begun a "multipronged" effort to detect fraud in the Medicare prescription drug benefit, such as the use of the Medicare Rx Integrity Contractor since November 15, 2005. MEDIC has detected a number of fraud cases, such as a scam in which telephone callers attempt to obtain bank account numbers from Medicare beneficiaries and promise prescription drug coverage for $299, he said. Ashkenaz added that CMS will hire more contractors in future months to detect fraud among Medicare prescription drug plans, contractors and beneficiaries. The contractors will refer fraud cases to state, local and national law enforcement officials, he said (Carey, CQ HealthBeat, 4/13). Editorials, Opinion Piece Summaries of two editorials and an opinion piece on the Medicare prescription drug benefit appear below. - Burlington Free Press: The telephone hotline established by Vermont to address problems with the launch of the Medicare prescription drug benefit had "an unexpected benefit," according to a Free Press editorial. "Callers to the Medicare hotline sometimes mentioned other concerns they had about state programs," and the hotline "in essence became one-stop shopping for information on a variety of issues," the editorial states. "It's probably not practical or economical to pull so many workers from around the state to one central location too often," but the state Human Services Agency "should consider staffing such an effort once or twice a year and publicizing the hotline," the editorial states (Burlington Free Press, 4/13).
- Orlando Sentinel: "It's clear" that many Medicare beneficiaries "bought into the argument that the program was simply a boon to the pharmaceutical industry and was too complicated for average Americans to understand," but "those brave souls who have enrolled like" the program, a Sentinel editorial states. "The complaint that drives the political agenda is that the program is too complex," the editorial states, adding, "Making any choice can be difficult, but having more options is good" (Orlando Sentinel, 4/14).
- Richard Stefanacci, Philadelphia Inquirer: CMS should extend the May 15 enrollment deadline for the Medicare prescription drug benefit by eight weeks, Stefanacci, founding executive director of the Health Policy Institute of the University of the Sciences, writes in an Inquirer opinion piece. Over that time, "let seniors change plans if they're finding their first choice inappropriate," he writes, adding that the "government should get health care providers involved in the selection process" because "the expertise needed to assess the options and make evaluation is often outside" the ability of family members and friends. In addition, providers should have the ability to write "specific prescription medically necessary" on prescriptions to "require drug plans to fill the prescription as written, regardless of their favored product," Stefanacci writes (Stefanacci, Philadelphia Inquirer, 4/14).
Broadcast Coverage Leslie Norwalk, deputy administrator for CMS, is scheduled to discuss the Medicare prescription drug benefit on Friday at 4 p.m. ET in an "Ask the White House" chat. A transcript of the chat will be available online.
Medicare Plans To Reduce Payments for Heart Devices
[Apr 14, 2006]
CMS in a report released on Wednesday proposed a rule that would reduce Medicare reimbursements for implanted cardiac devices -- such as stents, defibrillators and pacemakers -- the Wall Street Journal reports. The rule could reduce reimbursements for stents by more than 30% and could reduce reimbursements for defibrillators by as much as 20%, according to Morgan Stanley analyst Glenn Reicin. In addition, the rule would include a smaller reduction in reimbursements for orthopedic products, such as replacement hips and knees. CMS proposed the rule to close loopholes used by specialty hospitals -- such as cardiac, orthopedic and surgical facilities --and reduce costs. By 2008, the proposed rule would reduce reimbursements by 11.7% for cardiac hospitals, 9.4% for orthopedic hospitals and 7.2% for surgical hospitals (Kamp/Koons, Wall Street Journal, 4/14). CMS will accept public comments on the proposed rule for 60 days (McCartney, St. Paul Pioneer Press, 4/14). CMS likely will implement a final rule in October (Kamp, Dow Jones Newswires, 4/13). According to the Boston Globe, hospitals and medical device companies likely will "lobby heavily for modifications, and some of the cuts are likely to be less dramatic when the final version is published in August." Medical Device Industry Reaction Advamed, which represents medical device companies, in a statement released on Thursday said that the proposed rule would have "disproportionately negative effects on patients receiving advanced medical treatments." Boston Scientific spokesperson Paul Donovan said, "We will recommend changes designed to ensure that the final regulation preserves the fullest possible beneficiary access to innovative technologies and therapies" (Heuser, Boston Globe, 4/14). Medtronic spokesperson Rob Clark said the proposed rule would place "undue pressure" on some hospitals, adding, "There are significant reductions in certain procedures that, if fully implemented, could have a negative effect on a hospital's ability to deliver state-of-the-art care for their patients." Mary Ellen Wells, vice president of cardiovascular services at Allina Hospitals & Clinics, said, "When reimbursement rates are cut, it makes it difficult to provide the level of care that our patients expect" (St. Paul Pioneer Press, 4/14). Analyst Comments "There is room for negotiation, and the final codes will likely be less dramatic," Leerink Swann analyst Jason Wittes said. Morgan Stanley analyst Reicin said, "We think it is unlikely that these changes will modify purchasing and demand characteristics of medical devices. Hospitals have traditionally had little leverage in reducing device costs" (Wall Street Journal, 4/14). Reicin added, "[W]e think that changes will be scaled back and have little likelihood for implementation." Bank of America analyst Glenn Novarro said some of the proposed rule "would serve as a significant negative" for medical device companies (Dow Jones Newswires, 4/13). Bruce Nudell, a medical device analyst for Sanford C. Bernstein, said, "I don't suspect that this is the end of the world for everyone. It's just a tougher world." He added said that hospitals likely would seek lower prices from medical device companies as a result of the proposed rule (Boston Globe, 4/14).
Administration News
President Bush at Small-Business Conference Asks Congress To Approve Tax Breaks To Encourage Expansion of Health Savings Accounts
[Apr 14, 2006]
President Bush on Thursday said that Congress should pass legislation to provide tax breaks to promote the expansion of health savings accounts and reduce health care costs, CQ HealthBeat reports. At the National Small Business Week Conference in Washington, D.C., Bush said that Congress should pass legislation that would make premiums for high-deductible health plans associated with HSAs deductible from income taxes and eliminate taxes on out-of-pocket spending through the accounts -- two proposals included in his fiscal year 2007 budget plan. Bush said, "Congress needs to end discrimination in the tax code and give Americans who buy HSA policies on their own the same tax breaks that those who get their health insurance from their employers" receive, adding, "Small businesses can save money under this plan." However, opponents maintain that the HSA proposals will not reduce health care costs. According to a Commonwealth Fund analysis, HSAs will make consumers more responsible for their health care costs but might not make them more effective purchasers of medical services. Congress likely will not pass the HSA proposals this year, CQ HealthBeat reports (McGrane, CQ HealthBeat, 4/13).
Capitol Hill Watch
Senate Panel Members Question Reduction in Medicare Payments for Long-Term Care Hospitals
[Apr 14, 2006]
A bipartisan group of 11 members of the Senate Finance Committee in a letter has asked CMS to reconsider a proposed regulation that would reduce Medicare reimbursements for long-term care hospitals, CQ HealthBeat reports (CQ HealthBeat, 4/12). The regulation, which CMS proposed on Jan. 27, would reduce Medicare reimbursements for "short-stay outliers," or beneficiaries who stay at LTCHs for relatively short periods of time. According to CMS, under the regulation, Medicare would reimburse LTCHs for short-stay outliers at the same rate as the program reimburses acute care hospitals. CMS has estimated that the regulation will reduce Medicare reimbursements for LTCHs by 11% for the 12-month period that begins on July 1 (Kaiser Daily Health Policy Report, 4/7). Sen. Max Baucus (D-Mont.), ranking member of the committee, said that, although CMS should seek to "develop a system of care that makes sense for very ill patients and taxpayers alike," the regulation "goes too far." A CMS spokesperson said that the comment period for the regulation has ended but added that the agency is "always glad to hear from Congress about what it thinks." Earlier this month, a bipartisan group of lawmakers sent a letter to HHS Secretary Mike Leavitt that raised concerns about the regulation (CQ HealthBeat, 4/12).
Health Care Marketplace
Automaker GM To Spend $3B in Q1 To Establish Fund for Future Retiree Health Costs
[Apr 14, 2006]
Officials for General Motors on Thursday announced that the company will report a first-quarter pretax charge of as much as $3 billion to establish a fund for future retiree health care costs, the Detroit Free Press reports. The fund is part of an October 2005 agreement with United Auto Workers that will require more than 475,000 union retirees and their dependents to pay part of their health insurance premiums for the first time (Detroit Free Press, 4/14). Under the agreement, GM will contribute $1 billion annually in 2006, 2007 and 2011 to the fund to help offset the cost impact (Kosdrosky/Hawkins, Wall Street Journal, 4/14). Over seven years, the agreement likely will decrease health care liability for GM by $15 billion and reduce health care costs for employees by $3 billion on a pretax basis (Dow Jones/New York Times, 4/14). The first-quarter charge will include the $1 billion contribution for 2006, and the Securities and Exchange Commission might require GM to include the $1 billion contributions for 2007 and 2011. GM spokesperson Toni Simonetti said that the company and SEC have begun discussions on the issue. David Healy, an analyst for Burnham Securities, said the amount of the first-quarter charge will not affect the cash position of GM, although a larger charge might affect public perception of the company (Wall Street Journal, 4/14). Opinion Piece "Health care costs are destroying our nation's economic edge," International Brotherhood of Teamsters President James Hoffa writes in a Detroit News opinion piece. The "cards are stacked against American companies as they try to compete with low-cost, low-wage foreign producers," and the "only real solution to this crisis is national health care," Hoffa writes. He writes that GM and other companies should "stop fighting" against unions and "start fighting alongside us," adding, "It's time for all Americans to join this fight for a country that rewards hard work and where working families don't have to choose between going to the doctor and paying the rent" (Hoffa, Detroit News, 4/14).
State Watch
Boston Globe Examines Whether Massachusetts Health Insurance Requirement Could Be Model for Other States
[Apr 14, 2006]
The Boston Globe on Friday examined whether the Massachusetts law that requires residents to have health insurance could "serve as a national model." According to the Globe, Massachusetts "has relatively few uninsured residents," with about 10% of the population lacking health insurance, compared with an uninsurance rate of about 18% nationwide. While at least seven other states are considering expansions of health insurance, according to the National Conference of State Legislatures, Massachusetts "vaulted into the forefront ... because the [law ] bridged longstanding differences between health care advocates and employers over the issue," the Globe reports. However, the plan also has drawn criticism from both liberals and conservatives, which could be an indication of the "problems other states would have in passing similar legislation." Robert Moffit, director of the health policy center at the Heritage Foundation, said, "Massachusetts is a very liberal state. The political culture in other states is so different. I don't think you can expect employer mandates to go anywhere in other states." However, he added that some elements of the plan -- including the provision to combine individual and small-group insurance policies under a central agency to offer low-cost insurance options -- might work elsewhere. According to Ron Pollack, executive director of Families USA, said the state's "political breakthrough" might encourage other states to take action. He said, "There are significant elements of the Massachusetts proposal that are likely to get serious consideration in a number of states. We have got to find ways to cobble together different approaches. That is the only way I think you can make significant headway." James Mongan, CEO of hospital and physician network Partners HealthCare, said, "I think it's going to be difficult for other states" to implement laws similar to the one in Massachusetts. Stuart Altman, a health policy professor at Brandeis University, said, "Every once in a while, a political person or event comes up and kicks [universal health care] into the mainstream. The Massachusetts plan could become a catalyst and a galvanizing event at the national level, and a catalyst for other states" (Rowland, Boston Globe, 4/14). Opinion Pieces - Scot Lehigh, Boston Globe: Romney "certainly ... owed his legislative partners more respect than he paid them on Wednesday" when he "rejected one of the core principles that [State House Speaker Salvatore] DiMasi [D] brought to the health care bill -- the notion that companies that didn't provide health insurance should make some contribution," Globe columnist Lehigh writes. Although the "effect won't be long lasting" because the "Legislature will override the veto," it "obviously put DiMasi in an odd position on Wednesday," he adds. However, "Romney can legitimately claim a large share of the credit" for the law, as he "proposed many of its important components" (Lehigh, Boston Globe, 4/14).
- Daniel Schorr, Christian Science Monitor: The Massachusetts health care legislation "shines like a nonpartisan good deed in a naughty partisan world," Schorr, a senior news analyst at National Public Radio, writes in a Monitor opinion piece. Schorr writes, "In this era of bitter political animosities, how was it possible to reach this accord?" adding, "For someone as startled as I was by this evidence of political maturity, it was nothing short of a miracle" (Schorr, Christian Science Monitor, 4/14).
- Robert Frank, New York Times: The "primary responsibility for ensuring access to health care, regulating environmental quality and supporting basic scientific research is exercised by national governments" in most nations, but, in the U.S., "these tasks are increasingly managed by state, and even local, governments," Frank, an economist at the Johnson School of Management at Cornell University, writes in a Times opinion piece. Frank writes that Massachusetts recently enacted a health insurance law that will provide coverage to most state residents, and at least 19 other states last year considered legislation to expand health coverage. Frank writes that programs at the state and local levels "create perverse economic incentives" because "borders are completely permeable," adding that, "unless a large number of other states simultaneously enact comprehensive health care legislation of their own, the new Massachusetts program" will "attract uninsured people with chronic conditions" from other states and substantially increase the cost. In addition, Frank writes, "the need to raise income tax rates would induce many of the community's more affluent taxpayers to flee to" other states. "My point is not that states are foolish for having extended their reach," Frank writes, adding, "Again, the federal government has completely dropped the ball" (Frank, New York Times, 4/13).
- David Lazarus, San Francisco Chronicle: The Massachusetts law "comes up short in addressing the core deficiencies of a system that counts 46 million people uninsured nationwide and that squanders hundreds of billions of dollars annually on bureaucratic overhead," Chronicle columnist Lazarus writes. However, "[w]hat Massachusetts has done is commendable for two important reasons: It marks a recognition by political leaders of the need to tackle health care reform, and it represents a refreshingly bipartisan approach to dealing with the problem," he adds (Lazarus, San Francisco Chronicle, 4/14).
North Carolina House Committee Makes Recommendations To Improve State's Health Care System
[Apr 14, 2006]
The North Carolina House Select Committee on Health Care on Tuesday proposed measures to make health care in the state more affordable and accessible, the AP/Wilmington Star News reports. According to the AP/Star News, the committee proposed capping the amount counties must pay to Medicaid each year. Currently, North Carolina is the only state that requires counties to pay a fixed percentage of the state's Medicaid bill, expected to be $470 million for the fiscal year ending June 30. The state would pay $30.4 million to fund the difference created by the cap in 2007, as well as $34.6 million to aid counties with high numbers of Medicaid beneficiaries. In addition, the committee recommended providing incentives -- such as tax credits for small businesses -- for employers to provide health insurance to workers. Other recommendations include creating a high-risk pool to enable medically uninsurable residents to buy health coverage; providing incentives for self-employed workers to insure themselves; reducing premium rates; and reforming various medical malpractice laws. Committee co-chair Bob England (D) said, "It will probably be at least a good step, a major step, in addressing the overall problem, which we've heard about today, our fragmented system." David Thompson, a spokesperson for the N.C. Association of County Commissioners, said the state Medicaid funding would "provide counties a much-needed break from the escalating Medicaid costs that are consuming county budgets and keeping many counties from adequately funding their school facility needs" (AP/Wilmington Star News, 4/12).
The Latest Reports in Health Policy
Issue Brief Compares Medicaid Hospital Waivers; Kaiser Medicare Q&A Column Addresses Part D Assistance Programs
[Apr 14, 2006]
- "Medicaid Hospital Waivers: Comparing California, Florida and Massachusetts," California HealthCare Foundation: A new issue brief -- by Peter Harbage, president of Harbage Consulting, a Sacramento, Calif.-based health policy consulting firm; and Andy Schneider, principal and founder of Medicaid Policy -- examines waivers in California, Florida and Massachusetts that change the funding mechanisms covering care of Medicaid beneficiaries and indigent patients. The brief provides an overview and comparison of each state's waivers and a side-by-side comparison of the each waiver's special terms and conditions, as well as an overview of open issues related to the waiver in each state. The brief is part of a package that includes two other reports -- one highlighting the major changes under California's hospital waiver and another that answers common questions and concerns about the waiver (Harbage/Schneider, "Medicaid Hospital Waivers: Comparing California, Florida and Massachusetts," April 2006).
- Kaiser Medicare Q&A Column, Kaiser Family Foundation/Knight Ridder Tribune News: This week's column, prepared by the Kaiser Family Foundation and distributed by Knight Ridder Tribune, addresses a question about whether seniors who qualify for extra financial assistance under the Medicare prescription drug benefit must sign up for a drug plan by May 15 to receive the assistance. According to the column, beneficiaries who qualify for additional help must sign up for a drug benefit to receive the assistance. Medicare will automatically enroll beneficiaries who qualify for the extra help and do not sign up for a drug plan by May 1. If such beneficiaries are unsatisfied with the plan in which they were automatically enrolled, they can switch to another plan one time before the end of the year, the column says (Kaiser Medicare Q&A column, 4/13).
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