• Drug companies, Senate Finance, make deal on drug costs
• House Democrats unveil draft of health care reform legislation
• Baucus Delays Release of Health Reform Mark; HELP Committee Markup Underway
• GOP Lawmakers Unveil Centrist Health Care Reform Plan
• HHS panel begins to define meaningful use of EHR

• Experts unsure if health information technology will actually cut costs
• Americans show support for several health coverage options
• Employers concerned about the President's plans for health care reform
• Medicare beneficiaries face significant out-of-pocket costs, eroding drug coverage

Drug companies, Senate Finance, make deal on drug costs

A pharmaceutical industry trade group has reached agreement with the Senate Finance Committee on a prescription drug price break for Medicare beneficiaries that is estimated to equal $80 billion over 10 years. Under the agreement, announced June 20, drug companies will cover up to 50 percent of the cost of drugs under the Medicare Part D program, for beneficiaries who fall into the “doughnut hole.” Under the Part D program, Medicare covers prescription drug costs up to $2,700 per beneficiary. From $2,700 to $6,100 in drug spending (the “doughnut hole”), the beneficiary is responsible for all drug costs. After $6,100, the Medicare benefit kicks in again.

Under the agreement, drug companies will cover up to 50 percent of the costs of brand name drugs that fall into the doughnut hole.

The agreement is expected to be part of comprehensive health care reform legislation being considered by Congress. According to a release from Senate Finance Committee Max Baucus, D.-Mont., “the agreement would give the Secretary of Health and Human Services the authority to create the new Medicare Prescription Drug Discount Program on July 1, 2010 and the program would be administered by an independent third party. The agreement includes a provision to discourage private employers from dropping prescription drug coverage currently provided to retirees. It also establishes audits of drug company manufacturers to ensure the discounted prices are appropriately set.”

House Democrats Unveil Draft of Health Care Reform Legislation

House Democratic leaders unveiled a comprehensive health care reform plan on June 19, calling for the establishment of a public health insurance program that would compete with private insurers to lower costs. The proposal would create a Health Insurance Exchange to provide a functional marketplace for individuals and small employers to comparison shop among private and public insurers. Few details of how the plan would be paid for were announced, and lawmakers said they were awaiting estimates from the Congressional Budget Office.

In a press conference to announce the discussion draft, House Ways and Means Chairman Charles B. Rangel, D-N.Y., said his committee along with the House Education and Labor and the House Energy and Commerce committees would hold hearings and work out final details in the coming weeks. Ways and Means has already scheduled a hearing on the discussion draft on June 24. President Obama, in a written statement, said the House Democrats’ proposal is “a major step” toward improving the quality of health care and making it more available and affordable.

Almost immediately, the proposal was sharply criticized by the top Republican lawmaker in the House. House Minority Leader John Boehner, R-Ohio, faulted the Democrats’ plan for raising taxes, rationing care, and empowering government bureaucrats to make key medical decisions. “This plan will make health care more expensive, reduce the quality of care for millions of families and small businesses, cost American jobs, and force untold millions of Americans off their current plans and into a government-run nightmare operated by federal bureaucrats,” Boehner charged.

Rep. Henry Waxman, D-Calif., who chairs the Energy and Commerce panel, said the Democrats were considering changes to the Medicare and Medicaid program, such as forcing pharmaceutical manufacturers to repay excessive profits made on drugs sold to Medicare patients. The bill would impose a tax on individuals and families who do not have their own coverage. In addition, small businesses would get a 50 percent health care credit towards the expense of providing coverage to their employees. The discussion draft is accessible here:

http://edlabor.house.gov/documents/111/pdf/publications/DraftHealthCare
Reform-BillText.pdf

Baucus Delays Release of Health Reform Mark; HELP Committee Markup Underway

Senate Finance Committee Chairman Max Baucus, D-Mont., told reporters on June 17 that he would not have his health care reform mark ready by the end of the week as initially promised, and raised doubts that he would hold a markup prior to the July 4 recess. Finance Committee Democrats have been scrambling to find ways to bring down the cost, estimated by the Congressional Budget Office at nearly $1.6 trillion, to under $1 trillion.

Baucus initially downplayed the CBO figures, saying they were based on a plan that was two weeks old and has undergone significant changes since then. He emphasized that he plans to look for more savings through medical spending reductions and other offsets, rather than raising revenue outside of health care related matters. But mounting pressure from Republican opponents to reduce the cost and to find ways to make sure that more people are covered under reform has left Baucus with the difficult task of once again trying to forge an agreement that will gain the approval of his party and appease the loudest GOP critics of the plan.

As Baucus retreated from his initial deadline, Sen. Chris Dodd, D-Conn., filling in for the ailing Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Edward M. Kennedy, D-Mass., began marking up that Committee’s partially completed bill. That measure has also proved controversial as CBO estimates pegged the price so far at over $1 billion, or approximately $6,250 per newly insured person, and noted that it would only provide coverage for an additional 16 million individuals out of an estimated 46 million uninsured. Moreover, the mark remains incomplete, with scant language addressing how to pay for the health care makeover. The markup is expected to take two weeks.

Meanwhile, a health care reform proposal offered June 17 by Bipartisan Policy Center advisors and former Senators Howard Baker, Tom Daschle, and Bob Dole, received high praise from Baucus and Senate Finance Committee ranking member Charles E. Grassley, R-Iowa. “The proposal not only helps identify areas of clear agreement, it addresses critical reforms, such as tackling cost concerns and ensuring quality coverage while holding insurance companies’ feet to the fire,” said Baucus. "It should encourage current members of Congress that former leaders of both political parties were able to find a compromise on even the most controversial health care issues and demonstrate that bipartisan reform may be achievable,” said Grassley.

GOP Lawmakers Unveil Centrist Health Care Reform Plan

A group of GOP lawmakers called the “Centrist Tuesday Group,” led by Reps. Mark Kirk, R-Ill., and Rep. Charlie Dent, R-Pa., unveiled a comprehensive health reform proposal on June 16. Their proposal, the “Medical Rights and Reform Act,” would guarantee the rights of patients while also reducing the cost of health care, according to Kirk. The plan is meant to be a GOP response to the health care proposals now being developed by House and Senate Democrats. The proposal’s main themes are guaranteeing the doctor-patient relationship, reforming state insurance markets and ending frivolous patient lawsuits. GOP lawmakers said their plan would also provide greater incentives for small businesses, enhanced health savings accounts, and expanded rural health care programs.

A copy of the health plan can be found at http://www.house.gov/apps/list/press/il10_kirk/centrist_leaders_unveil_medical
_rights_and_reform_act.html.

HHS panel begins to define meaningful use of EHR

As HHS begins to implement the health information technology provisions of the American Recovery and Reinvestment Act of 2009 (PubLNo 111-5) (ARRA), it has begun a process to define the “meaningful use” of electronic health records (EHR). ARRA provides $19 billion to reimburse healthcare providers for the expenses of adopting and implementing EHR systems. The recipients must make meaningful use of EHR during each payment year to qualify for incentive payments; under the law, the HHS Secretary must set standards for meaningful use. The Health Information Technology (HIT) Policy Committee, a Federal Advisory Committee (FACA) to HHS, will make recommendations to HHS to consider as it drafts its proposed rule. The committee met June 16th to begin the process.

The committee plans to recommend that the standards for meaningful use be established in three phases: (1) capture and sharing of clinical data; (2) use of the data to support decisions in advanced clinical practices; and (3) achievement of improved health outcomes. The quality reporting requirements are based on goals established for improvements with respect to specific conditions; the quality data to be reported measures the providers' actions and the outcomes for patients.

During the first phase, outpatient facilities and practitioners will be expected to record and share information about the health status of each patient, including current problems and medications, allergies, vital signs and lab results. Computerized provider order entry (CPOE) will be used instead of prescription pads. The system will check the order against dosing standards, other medications that may interact with the prescription and patient allergies and warn the physician of potential problems. The system will allow generation of lists of patients with particular conditions to facilitate quality measurement, clinical disparities and outreach to patients.

In the second phase, best practices are developed based on the clinical data, and practitioners will be expected to make decisions supported by the data and consistent with best practices. In the final phase, minimum quality outcomes will be required and compliance will be measured using the data.

The committee recommends that the first phase of meaningful use include access to physician, lab, and other clinical data by all providers and practitioners and patients' access to their own records. Required reporting of test results should be automatic, without the need for additional action by the provider or supplier.

CMS Release, June 16, 2009

Experts Unsure If Health Information Technology Will Actually Cut Costs

While President Barack Obama has made health information technology (IT) a major part of his health care reform efforts, experts at the Wharton School of the University of Pennsylvania are unsure if IT actually will reduce costs and improve the quality of care. The recent article, Information Technology: Not a Cure for the High Cost of Health Care, warns that IT actually could increase health care costs without improving quality.

"No one has done the careful research to indicate that if one health care system has information technology and the other doesn't, then the care is different. There are no controlled trials," said Mark Pauly, a health care management professor at Wharton. Mr. Pauly believes that the implementation of IT actually could increase costs due to the cost of implementation of the systems, training, and the labor required to maintain the systems. "The best case scenario is that information technology will improve quality but not lower costs. The worst case is that there's no difference at all," he noted.

According to Peter Gabriel, medical director of clinical information systems at the University of Pennsylvania Health System, "The focus on IT in health care is a good thing, but there's way too much hype about it and misunderstanding about what the benefits will be and how quickly they will come." He noted that it is easier to focus energy on IT in health care than to focus on more daunting issues, such as the health care payment structure. The payment structure "incents [patients] to spend more money, and providers to see more patients and do more procedures," Mr. Gabriel stated. "To really save, you have to start rationing care."

For more information, visit
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2260.

Americans show support for several health coverage options

As Congress prepares to debate a major overhaul of the nation’s health care system, Americans already have formed opinions in support of several proposals to expand coverage that have been part of the preliminary discussion, according to the 12th annual Health Confidence Survey, co-sponsored by the nonpartisan Employee Benefit Research Institute (EBRI) (www.ebri.org) and Mathew Greenwald & Associates, a market research firm.

Between 68 percent and 88 percent of Americans either strongly or somewhat support health reform ideas such as national health plans, a public plan option, guaranteed issue, expansion of Medicare and Medicaid, and employer and individual mandates, the survey finds. Reaction to capping the current tax exclusion of employment-based health benefits is mixed.

Survey respondents were asked their reaction to a number of options to expand coverage in order to make sure all Americans have access to health insurance. Here are the results:

• 88 percent support (strongly or somewhat) allowing major health insurance companies to offer national plans that anyone can purchase.
• 83 percent support a new public plan option that anyone could purchase.
• 80 percent support requiring insurers to cover anyone who applies—so-called “guaranteed issue.”
• 75 percent support expanding Medicare and Medicaid.
• 75 percent support some form of an employer mandate to subsidize coverage.
• 68 percent support a mandate requiring individuals to obtain coverage, but only 22 percent support fines for those who do not comply.

On another key issue, the survey finds that if the current tax exclusion of health benefits were capped (as some have proposed), 47 percent of respondents would switch to a less costly plan if the exclusion were set at $5,000, 38 percent would keep their plan and pay the taxes, and 9 percent do not know what they would do.

The survey includes a number of other findings. Among them:

• If employers stopped offering coverage and gave workers the money, 17 percent of respondents are extremely or very confident that they could afford to purchase coverage on own, 28 percent are somewhat confident, and 54 percent are not too or not at all confident.
• Only 14 percent of Americans think the health care system needs a major overhaul, but 51 percent agree with the statement there are some good things about our health care system, but major changes are needed.
• A majority rate the nation’s health care system as fair (30 percent) or poor (29 percent). Only a small minority give it excellent (6 percent) or very good (10 percent) marks.
• While half of Americans (56 percent) are extremely or very satisfied with health care quality, far fewer are satisfied with the cost of health insurance (21 percent) or with costs not covered by insurance (18 percent).

The 2009 Health Confidence Survey was conducted within the United States from May 8 to June 2 through 21- minute telephone interviews with 1,000 individuals age 21 and older. The survey has a margin of error of plus or minus 3.5 percentage points. Data collection was funded by grants from 13 private organizations.

Source: EBRI, June 11, 2009

Employers concerned about the President's plans for healthcare reform

By wide margins - and regardless of their personal political affiliation - the people who are responsible for structuring and managing employer-sponsored health plans expressed serious concerns about many features of health care reform that the President and several Congressional leaders have embraced and the absence of sufficient attention to improving the quality of health care and containing the costs of health coverage. This is according to the results the second annual Corporate Health Care Policy Forecast Survey, conducted by Miller & Chevalier Chartered and the American Benefits Council.

"Clearly, this is a group of voters that supports health care reform and supports the President. A higher percentage of this group than the country as a whole - including a quarter of those who are Republicans - voted for President Obama," said James A. Klein, president of the American Benefits Council. "Yet, they are very concerned about several issues that are front and center right now. The people responsible for employer-sponsored health plans covering over 130 million Americans believe it is vital that key elements of reform be properly addressed."

"Democrats, Republicans and Independents, alike, want to reform the health system but are worried about the impact on their employees of proposals to tax health benefits, about mandates on employers that will raise costs, and about a government-run plan that would shift costs to private employers and to families covered by employer plans," Klein noted.

The corporate benefits executives also urged the President and Congress to pay more attention to issues that affect the cost of health coverage and the quality of health services.

"Particularly in today's economic environment, employers struggle to provide good health care options for their employees as costs become less manageable. Benefits executives told us repeatedly that cost is the biggest burden to providing quality health care to their employees," said Miller & Chevalier lawyer Susan Relland. "Despite the recent months of debate, employers told us they hope that the current health reform discussion will include more meaningful focus on health care cost and quality issues."

Employers continue working to address rising health care costs and have implemented programs designed to improve health care quality, with 92 percent of respondents saying their companies have adopted wellness or chronic care programs. Other programs and policies in wide use include: offering a consumer-directed health plan with a health savings account or health reimbursement arrangement; adopting high performance network strategies that encourage plan participants to use providers with the highest quality and the lowest cost; and requesting public reporting of provider quality.

The survey results also confirm that nearly unanimously, business leaders believe maintaining the federal framework of the Employee Retirement Income Security Act of 1974 (ERISA), is vital to continuing employer-sponsored coverage. Regardless of their company's size, geography, industry or even the respondent's own political affiliation, respondents overwhelmingly support maintaining ERISA standards and oppose individual regulation at the state level.

Survey highlights. In May, the survey was distributed via e-mail to leading corporate benefits executives at a broad cross-section of U.S.-based companies that range in size from fewer than 1,000 to more than 50,000 employees. The survey was completed by 213 respondents who provided opinions on health care reform proposals, tax changes, and health care concerns within their organizations. Some survey highlights include:

• With the taxation of employer-sponsored health benefits now squarely on the table, respondents clearly assert that altering the tax exclusion will affect employer-sponsorship of plans --82 percent want to maintain the current exclusion.
• Respondents would like to see more focus on cost (51 percent) and quality (72 percent) issues.
• Respondents overwhelmingly point to improvements in health care quality, such as reporting of quality outcomes and wellness or chronic care programs, as the areas that could have the most positive impact on their workforce.
• Quality initiatives that employers offer have not diminished since last year, despite the economic downturn. Fully 92 percent of respondents say their companies provide wellness or chronic care programs.
• Like last year, the question of limiting or repealing ERISA preemption received one of the strongest reactions from respondents. Corporate benefits executives overwhelmingly support maintaining ERISA standards (92 percent).
• Three-quarters of respondents say that their company would immediately reduce or cease altogether offering retiree health coverage if legislation were enacted that prevented employers from modifying retiree health care benefits in the future.
• Employers understand that continuing to provide health care to their employees is very important --89 percent of respondents think employees would prefer to receive health insurance through employers even if similarly priced options were available through other sources.

Source: The American Benefits Council; www.americanbenefitscouncil.org.

Medicare Beneficiaries Face Significant Out-Of-Pocket Costs, Eroding Drug Coverage

Medicare beneficiaries spent an average of $4,394 in out-of-pocket expenses for health care services in 2005 --about 28% of their income, according to a June 2009 research report from AARP. At the time of the results, there was no Part D prescription drug coverage, which was implemented beginning 2006. However, since the inception of Part D programs, beneficiaries' Part D coverage has been eroded by rising premiums and by cost-sharing (an average of 35% each), another report from the Kaiser Family Foundation has revealed.

In 2005, Medicare beneficiaries were responsible for a $912 deductible per inpatient hospital stay, a $110 annual deductible for Part B medical services, and 20% coinsurance after they satisfied the Part B deductible, the AARP report noted. Beneficiary out-of-pocket spending rose with age and was higher for women than for men and much higher for whites than for blacks or Hispanics. Although women were more likely than men to have supplemental coverage (93% versus 87%), they spent a much greater share of their income on out-of-pocket expenses (32% versus 23%).

The great majority (90%) of beneficiaries had some supplemental coverage; 32% through their employers. Beneficiaries in fee-for-service Medicare spent an average of $4,394 out-of-pocket, including premiums for supplements, but one-quarter spent less than $1,500 for the year, 10% spent less than $500, and another 10% spent more than $8,000. Disabled beneficiaries younger than age 65 had the lowest out-of-pocket expenses, but they were less likely to have Medigap coverage. On the opposite end, beneficiaries with depression had a much higher out-of-pocket, $16,847, most of it for services.

Expenses for long term care, prescription drugs, and physician services comprised the largest (75%) spending category, but one-third of out-of-pocket spending was for premiums. While beneficiaries enrolled in Medicare Advantage plans spent less for outpatient medical services, they spent significantly more for skilled nursing facilities, the AARP study reported.

The AARP report, Medicare Beneficiaires' Out-of-Pocket Spending for Health Care Services, was prepared in collaboration with the University of Maryland School of Pharmacy, and is available at http://www.aarp.org.

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