Acting CMS Administrator Kerry Weems on Thursday said that average Medicare prescription drug benefit premiums would be $28 per month in 2009, an increase of 12% over this year’s monthly premium, CQ HealthBeat reports. The increase equals $3 per month. Federal analysts in 2003 estimated that average monthly premiums in 2009 would be $44.12 (Reichard, CQ HealthBeat, 8/14). The new projected premium is about 37% less than what CMS forecasted in 2007 when the drug benefit began, Weems said (LaMendola, South Florida Sun-Sentinel, 8/15).

There are about 17.4 million beneficiaries enrolled in drug-only plans and about 7.6 million beneficiaries enrolled in plans that offer comprehensive coverage, including drug benefits, the AP/USA Today reports (Freking, AP/USA Today, 8/14). The $28 is the average premium for both drug-only plans and drug coverage offered by private Medicare Advantage plans. Monthly premiums for drug-only plans are projected to increase from $27 this year to $31 next year, and premiums for MA drug plans are expected to increase from $18 per month this year to $21 next year (CQ HealthBeat, 8/14). According to CMS, the increase reflects rising drug costs, higher projections for catastrophic drug coverage and the end of a demonstration project.

CMS spokesperson Jeff Nelligan on Thursday said that although premiums are increasing, overall projected spending for the program is less than originally estimated. The 10-year cost of the drug benefit initially was forecasted at $634 billion; however, new estimates put it at about $395 billion, Nelligan said (Bloomberg/Arizona Daily Star, 8/15). Medicare’s actuary estimates that the drug benefit will cost about $37.2 billion this year and about $46.4 billion in 2009, a 25% increase. The actuary originally estimated that the benefit would cost $68 billion this year and $74 billion in 2009 (CQ HealthBeat, 8/14).

Weems said, “Measured by enrollment, lower costs than originally expected and persistently high satisfaction rates, the Part D drug benefit program has in a short time become a stable, familiar and vital part of Medicare” (Young, The Hill, 8/14).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

CMS on Thursday reported that a pilot program paying physicians based on quality and efficiency of care has shown gains in quality of care and in some cases lowered costs, CQ HealthBeat reports. In the second year of the four-year “Physician Group Practice” demonstration, all 10 groups participating improved quality of care to patients with congestive heart failure, coronary artery disease and diabetes, CMS reported. Four of the groups also reduced the cost of care to patients and reduced CMS spending by $17.4 million.

Physicians participating in the project said the success could be attributed to their use of teams that include different types of doctors to provide the right amount of care at the right time to chronically ill patients. Barbara Walters, senior medical director of the Dartmouth-Hitchcock Medical Center, said her health system saw some of the most medically complicated cases in its geographic area but still was able to achieve savings. She added that electronic health records played a critical role in allowing the multidisciplinary team to coordinate services. Other participants said they used a “visit planner” to create “to-do” lists for physicians prior to each patient’s visit. The lists included a one-page summary that showed key clinical and demographic data, test dates and results, and reminders for needed tests and treatments for individual patients (Reichard, CQ HealthBeat, 8/14).

In all, participating physicians received $16.7 million in incentive payments. According to a CMS release, the four groups that lowered costs “earned $13.8 million in performance payments for improving the quality and cost efficiency of care as their share of a total of $17.4 million” in Medicare savings they generated. Acting CMS Administrator Kerry Weems said the results indicate that “by working in collaboration with the physician groups on new and innovative ways to reimburse for high-quality care, we are on the right track to find a better way to pay physicians” (CMS release, 8/14).

The Medicare Payment Advisory Commission and other analysts have said it is important to reward doctors for quality and efficiency and to encourage hospitals and physicians to coordinate on more high-quality, efficient care as a strategy to improve the value of Medicare spending. American Medical Group Association President Don Fisher in a telephone press briefing said the results “have profound implications for shaping health care reform in America” (CQ HealthBeat, 8/14).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

A number of states in response to budget deficits have proposed changes to their Medicaid programs that could affect the eligibility of hundreds of thousands of residents or reduce reimbursements for health care providers, the Christian Science Monitor reports.

In February, California announced a 10% reduction in Medicaid reimbursements to providers that took effect in July, and the state in May announced more potential changes to the program that included a proposal to limit eligibility to residents with annual incomes less than 61% of the federal poverty level, compared with 107% currently. In New York, Gov. David Paterson (D) has proposed to freeze Medicaid reimbursement rates for hospitals for the remainder of 2008 and 2009. He also has proposed to reduce Medicaid reimbursement rates for hospitals by 7.2% over the next two years and impose a new tax on their revenue.

Meanwhile, Maine has added a $25 fee for adults who enroll in the state Medicaid program, and California, Arizona and other states have begun to require residents to re-enroll in their programs more often. In addition, New Jersey has reduced funds for charity care in hospitals, and Florida has frozen Medicaid reimbursements for nursing homes.

According to the Monitor, when “state lawmakers look at their budgets, the two largest expenditures are education and Medicaid,” and lawmakers often are “loath to cut education funding, especially during the school year.” Expenditures for Medicaid in 2007 reached $304 billion, a 48% increase from 2000, and enrollment in programs increased by 11% between 2000 and 2002 and by an additional 7% in 2003.

Comments
Iris Lav, deputy director at the Center on Budget and Policy Priorities, said, “Medicaid is very much in jeopardy.”

Stephen Zuckerman, a health care economist at the Urban Institute, said, “This is a recurring problem states have during every recession,” adding, “Last time, Congress allocated more money.”

However, states might not receive additional funds from the federal government this year, according to Dan Hawkins, policy director for the National Association of Community Health Centers. He said, “There is good support for fiscal relief by several key members of Congress,” adding, “But it all depends on whether Congress does a second fiscal stimulus package, and that is looking increasingly doubtful with President Bush saying he would veto any more fiscal stimulus” (Scherer, Christian Science Monitor, 8/15).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

Reducing hospital readmissions by Medicare beneficiaries could play a large role in reducing program spending enough to avoid cutting physician fees, Robert Pozen, a trustee of the Commonwealth Fund, and Cathy Schoen, senior vice president of the fund, write in a Boston Globe opinion piece. According to Pozen and Schoen, Medicare must reduce expenses by $20 billion annually over a decade beginning in 2010 to avoid reducing fees to physicians.

They write that “there is a straightforward way to pay for half of this fix” through reducing hospital readmissions. The authors note that a Medicare Payment Advisory Commission study found that 75% of all 30-day hospital readmissions of Medicare patients in 2007 were potentially preventable — or 13% of total admissions. If these readmissions were eliminated, Medicare could save $12 billion annually, or more than half of its unfunded liability, according to the authors.

According to Pozen and Schoen, in order to achieve these savings, Congress should address three objectives: decreasing complications during hospital stays, improving patient communication during the discharge process and tracking patients after discharge. However, for these measures to work, “Medicare needs to create the right incentives” because hospitals currently receive higher payments for patients being treated twice, according to the authors. The authors write that Congress should require readmission rates to be public. They continue that hospitals whose readmission rates are above the national average should receive lower reimbursements for a beneficiary’s second stay, while hospitals who have rates lower than the national average should receive higher reimbursements for a beneficiary’s first hospital stay.

The authors conclude, “With the right incentives in place, Medicare should generate over $100 billion in savings over the next decade by bringing the high-cost areas down to the national average on 30-day rehospitalizations” (Pozen/Schoen, Boston Globe, 8/14).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

More Nevada specialists are participating in Medicaid, despite recent cuts to some reimbursement rates, according to a state survey, the Las Vegas Sun reports. The state Legislature had allocated $17 million to increase physician reimbursements this month, but state budget cuts prevented the rate increase.

A Nevada Health and Human Services Division of Health Care Financing and Policy survey found:

• 96.3% of the state’s obstetrician-gynecologists have signed up to accept Medicaid beneficiaries, compared with 71% in 2007;
  
  
• 88% of psychiatrists are participating in Medicaid this year, compared with 58% in 2007;
  
  
• Participation among dermatologists, gastroenterologists and neurologists increased by 20% each;
  
  
• Participation declined among general practice physicians from 71% in 2007 to 68% this year, general surgeons from 77% in 2007 to 58% this year and internists from 94% in 2007 to 79% this year; and
  
  
• No urologists in the state participate in Medicaid.
  

Division Director Charles Duarte said he had expected that the state budget cuts would result in fewer physicians participating in the program overall (McGrath Schwartz/Ryan, Las Vegas Sun, 8/13).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

California will not comply with the federal SCHIP directive scheduled to go into effect on Aug. 18 because, according to state health officials, “key requirements articulated in the directive are inconsistent with current California law,” CQ HealthBeat reports (Johnson, CQ HealthBeat, 8/13). According to guidelines issued by CMS in August 2007, before expanding SCHIP eligibility to children in families with incomes greater than 250% of the federal poverty level, states first must demonstrate they have enrolled at least 95% of eligible children with family incomes below 200% of the poverty level (Kaiser Daily Health Policy Report, 7/18).

California’s Healthy Families is the country’s largest SCHIP program, receiving 16% of all federal SCHIP funds. In a letter sent Tuesday to Herb Kuhn, deputy administrator of CMS and acting administrator of the Medicaid program, California Managed Risk Medical Insurance Board Executive Director Lesley Cummings wrote, “MRMIB … is constitutionally obligated to follow state law and cannot unilaterally change HFP operating rules that are embodied in state law.” At least four other states have legally challenged the directive, but the Bush administration maintains that the directive was not a regulation. However, according to a Government Accountability Office report, the directive was an illegally issued rule.

Cummings wrote, “At present, California will continue to operate the HFP, including eligibility, benefits and cost-sharing, in conformance with CMS-approved Title XXI state plan and will continue to claim federal funds accordingly.”

According to Peter Harbage, author of a California HealthCare Foundation report on ways in which the state can proceed, some states hope not complying with the directive will eventually be beneficial under a new administration. However, the states could face the prospect of not receiving any federal money for the program, Harbage said. The report stated, “If other complex program changes are any indication … there is every reason to suspect that the states will be able to continue to claim federal dollars for covered children while efforts to achieve compliance are negotiated.”

In a statement, CMS spokesperson Jeff Nelligan said, “We are determining whether the relevant states are in compliance with the existing requirements, as also clarified in the Aug. 17, 2007, letter. Moreover, we will continue to assist the states in developing policies that will ensure that the most vulnerable, low-income children are covered first, without moving them from private to public coverage.” Nelligan added, “At this time, we are not taking compliance action” (CQ HealthBeat, 8/13).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

Some Medicare beneficiaries still are having incorrect amounts withheld from their Social Security checks for Medicare Advantage and Medicare prescription drug benefit premiums, but the programs have made significant improvements since 2007 in matching their databases to deduct the correct amounts, according to a recent Government Accountability Office report, CQ HealthBeat reports. MA and the drug benefit — known as Medicare Parts C and D, respectively — were created by the 2003 Medicare law and broadened private insurerss role in the Medicare program.

The report states that the introduction of MA and the drug benefit added about 800 different contracts with more than 6,000 plans and multiple payment options. This confusion led to some beneficiaries having too much money taken out of their Social Security checks, while others having too little taken out. According to the report, monthly premiums for Medicare Part B “is a standard amount for most [beneficiaries] and is based on a standard calculation for others,” while “the monthly premium amounts for Parts C and D vary widely by plan.” GAO found that Medicare and Social Security have improved their collaboration on deductions since 2007, but SSA still rejects about 5% of Medicare’s premium deduction requests. The Social Security Administration in 2007 rejected 44.5% of Medicare’s requests for premium deductions, according to the report.

Senate Finance Committee Chair Max Baucus (D-Mont.) on Wednesday said, “Paying Medicare premiums directly from Social Security benefits should be an easy way to make sure seniors don’t have to deal with a bill in the mail and to save taxpayer dollars on administrative costs. But the way it’s set up now, the withholding process is a mess that discourages Medicare recipients from signing up for it” (Reichard, CQ HealthBeat, 8/13).

The report is available online.

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

Older patients with heart disease and diabetes are getting better treatment than ever at the University of Michigan Health System — even while U-M’s care for Medicare patients is costing less, a new report shows. The data come from the second year of a national project undertaken by 10 large physician groups, including the U-M Faculty Group Practice.

The results were announced in Washington, D.C., by the Centers for Medicare and Medicaid Services. CMS oversees the Medicare system and launched the project to encourage innovation, efficiency and the development of quality improvement efforts that might be used by doctors and hospitals nationwide.

U-M was one of only two participating groups that achieved both of the project’s aims: to provide the highest-quality care on all 27 of the project’s heart and diabetes measures, and to contain health care spending growth for all traditional Medicare patients, including those with costly chronic illnesses.

As a result, U-M will get to keep $1.24 million of the funding that Medicare would have otherwise spent on the care of U-M patients in that year, and will also earn more than $460,000 as an incentive for providing high-quality care.

This is the second year in a row that U-M has achieved both sizable savings and high scores on health care quality benchmarks as part of the project, even as the project was expanded to include patients with heart failure and coronary artery disease. Two more years worth of data remain to be collected and analyzed.

The U-M Faculty Group Practice, part of the U-M Medical School, includes all 1,500 U-M faculty physicians who care for patients at the three U-M hospitals and 40 U-M health centers. Many of the programs and innovations that U-M has put in place for this project involve not only physicians but nurses, social workers, care managers and others who are involved in the care of Medicare patients at all U-M facilities.

The report is based on data from approximately 20,000 Medicare participants who received nearly all their care at U-M during the year that began April 1, 2007. It does not include those who were enrolled in a Medicare Advantage plan offered by a private health plan, nor Medicare participants who received only limited care at U-M. But the improvements made for the project are helping many other patients.

“The U-M Faculty Group Practice funded this project because we thought it was the right way to care for our patients,” says David Spahlinger, M.D., senior associate dean for clinical affairs. “We felt confident we could improve quality but we were uncertain if our interventions would save money. I believe that this project will provide many lessons for policy makers as the nation confronts the rising costs of health care.”

The project’s formal name is the Medicare Physician Group Practice Demonstration. It is Medicare’s first Pay for Performance Demonstration Project to work directly with physician groups. It began by focusing on the quality of care of patients with diabetes, but in the second year was expanded to include heart failure and coronary artery disease - both chronic heart conditions that carry a very high risk of emergency hospitalization, and other care, if not managed appropriately.

Because of its participation in this project, U-M is also automatically participating in another Medicare project, the Physician Quality Reporting Initiative or PQRI. In fact, the $460,000 that U-M earned for achieving high-quality care on 27 benchmarks is being paid through PQRI. The dollars U-M earned for saving Medicare money are calculated using a separate formula.

U-M’s success in both years of the project can be largely attributed to efforts to redesign the way patients are cared for, to enhance coordination and efficiency and reduce the need for emergency care and repeat hospital stays.

Project leader Caroline Blaum, M.D. - associate professor of internal medicine, associate chief of geriatric medicine and a research scientist at the VA Ann Arbor Healthcare System - notes that many faculty and staff from the Faculty Group Practice and Hospitals & Health Centers worked together to make the changes possible. Both entities are under the larger umbrella of the U-M Health System, which makes collaboration easier.

“The innovative thinking and willingness to do what’s right for patients regardless of the prospect of direct reimbursement has truly been exceptional,” she says. “And ultimately, we have been able to show that innovations can pay off in both improved care for patients and savings for Medicare.”

In the first year of the project, U-M implemented a number of new tactics to help improve care for Medicare patients, most of which are still in place today. In the second year, that effort was expanded and a number of new programs made their debut. Among them:

Sub-acute Care Service: This program brings U-M physicians and nurse practitioners specializing in geriatric care directly into certain nursing homes in the Ann Arbor, Ypsilanti, Canton and Plymouth, Mich., areas. The clinicians help patients discharged from U-M hospitals to these nursing homes, and their work has already decreased the number of days patients spend in the hospital.

CHOICES (Creating Healthcare Options to Inpatient Care and Emergency Services): This effort provides a nurse practitioner and social worker who can travel to a patient’s home soon after he or she goes home from the hospital, to help with issues such as diabetes management. This program is available to a large number of U-M patients who need specialized in-home care soon after being discharged from the hospital, to help them until they can see their regular doctor.

Expanded Inpatient Geriatrics Consult Service: This service makes it easier for U-M geriatricians, who specialize in the care of older adults, to assist other U-M physicians in assessing and managing the needs of older hospitalized patients - no matter what their main reason for being in the hospital.

Emergency Medicine Consult/Referral Service: Designed for any patient seen at the U-M Emergency Department who needs follow-up care of any kind, this program helps ensure that they get appointments at U-M clinics. The program’s staff members make telephone contact with patients soon after they return home, and coordinate their scheduling while also alerting their primary care physician and processing insurance authorizations.

U-M’s Faculty Group Practice is the only organization in Michigan taking part in the project. It was chosen for several reasons, including demonstrated success in chronic care management, diabetes quality and organizational structure. For more information on the project, visit http://www.cms.hhs.gov/DemoProjectsEvalRpt. Click on “Medicare Demonstrations” and then search for “Medicare Physician Group Practice Demonstration.”

University of Michigan Health System
http://www.med.umich.edu

Governor David Paterson’s proposal to cut Medicaid would take $974.1 million away from New York’s hospitals and health care providers over the next two years, according to an analysis completed by the Healthcare Association of New York State (HANYS).

A facility-specific breakdown of the impacts is available on the attached chart. “For years, hospitals have struggled just to break even. In today’s economy, that struggle has been made even more difficult,” HANYS President Daniel Sisto said. “Now, the Governor plans to take nearly $1 billion away from an industry whose members are barely treading water. Every hospital loses under this plan, and as a result, every community in New York faces the possibility of losing as well.”

HANYS’ estimates include both the state and federal share of proposed Medicaid reductions. The analysis the cumulative impact on health care facilities for State Fiscal Year (SFY) 2008- 2009 and for SFY 2009-2010.

“Taking funding away from health care providers puts critical services in jeopardy and threatens the viability of institutions that people rely on,” Mr. Sisto said. “Times are tough in New York, and the Governor is making it even tougher to provide the vital health care services New Yorkers deserve.”

Healthcare Association of New York State

New York Gov. David Paterson (D) on Monday proposed cutting this year’s state budget by 1%, or $1.04 billion, including $506 million in Medicaid cuts, to avoid a looming budget deficit, the New York Times reports (Peters, New York Times, 8/12). Paterson has asked state lawmakers to return to Albany, N.Y., on Aug. 19 to reopen the budget and consider his cuts or find their own solutions to avoid a budget deficit that is expected to reach $6.4 billion next year (Scott, New York Post, 8/12). If approved, this year’s budget will be $120.2 billion — a 3.9% increase over last year’s budget but less than the inflation rate, which was 4.2% during the first half of 2008.

Paterson is proposing slowing Medicaid spending growth from the budgeted 4% to 1.7% this year (New York Times, 8/12). According to the Rochester Democrat & Chronicle, because the federal government pays for half of New York’s Medicaid program and local governments pay 16% of the program’s costs, “cuts in programs would have to be considerably above $1 billion to meet Paterson’s state-savings figure” (Gallagher/Sharp, Rochester Democrat & Chronicle, 8/12). The Medicaid cuts include $269 million in funding for hospitals and nursing homes.

Paterson said, “We have got to stop this frenzy about spending and lack of accountability,” adding, “We need from the Legislature real and reoccurring cuts. We need a sense of understanding of how serious this problem can get” (New York Post, 8/12). State Senate Majority Leader Dean Skelos (R) said that instead of cuts, lawmakers should be working to reduce Medicaid fraud and collect tobacco taxes from products sold on American Indian reservations, which could reach $400 million annually (Karlin, Albany Times Union, 8/12).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.