HEALTH CARE REFORM UPDATE

Update #412

May 19, 2008

Copyright:  Jeanne Scott Matthews, 2008

HIGHLIGHTS IN THIS ISSUE

HEADLINE NEWS

1. Battling Budgets: The Democratic Counter Budget - No Cuts in Medicare and Medicaid

2. Physician Medicare Reimbursement Cuts: Now Up to 10.6% and Scheduled for 7/1/ 2008

3. GAO, CRS: Bush Administration Didn’t Limit S-CHIP In the Right Way

4. Employers Passing More and More Health Insurance Costs on to Employees

5. Bush Administration Reneges on Transparency: All Power to the AMA

HIPAA: NOW AND FOREVER

6. Senators Agree on Privacy Rule Changes

7. Obituary: Jerome H. Grossman

8. AMA Agrees on Standards for E-Prescribing

UNIVERSAL HEALTH CARE

9. Handy-Dandy Pocket-Size Summary of the Candidate Positions

THE PHARMACY CORNER

10. Direct-to-Consumer Advertising Comes Under Attack

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Editor:  Jeanne Schulte Scott

(480) 983-5586

jeanne.scott@health-politics.com

Quotes of the Week

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"Our budget moves to balance by 2012 with balanced priorities… It rejects, for example, the huge cuts proposed in Medicare and Medicaid by the president and congressional Republicans."

-- House Budget Committee Chaircritter John Spratt (D-S.C.) describing the Democratic FY 2009 budget they expect to pass this week as opposed to President Bush’s earlier budget plan.[See, Report #1, below]

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"If they pass it, it will be a major accomplishment that we weren't able to achieve when we were in the majority…  But the proof is in the pudding as to whether this blueprint will be implemented. The chances are not very good."

-- G. William Hoagland, who served as a senior budget aide to former Senate Majority Leader Bill Frist (R-Tenn.), commenting on the Democrats budget effort.  [Report #1, below]

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"There are lots of different options on the table. Just don't know yet."

-- Senate Finance Committee Chaircritter Max Baucus (D-Mont, on alternatives that might be used to offset the costs of giving physicians back the scheduled 10.6% cut in their Medicare reimbursement. [See, Report #2, below]

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"The August 17 directive would impose strict new requirements on states and beneficiaries that are not only impossible to achieve but make little, if any, sense."  

-- House Energy and Commerce Health Subcommittee Chaircritter Frank Pallone (D-N.J.) on hearings that he hopes will lead to reversing a Bush administration rule limiting the expansion of state S-CHIP programs.  [See, Report #3, below]

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 “This is the second consecutive year employees' share of spending will increase by double digits.… [The report] is likely to increase pressure on the next presidential administration to address health care costs."

-- Lorraine Mayne, co-author of a new study that reports that employers will continue to shift health care insurance costs to their employees, 10.5% in 2008. [See, Report #4, below]

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"The study adds to the existing gloom and doom related to medical costs as projections by federal analysts show that health spending in the United States will double by 2017."  

-- From a CQ HealthBeat editorial comment on the new study. [Report #4, below]

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“I know the government was under a lot of pressure from the AMA in particular, arguing that the government should appeal. Whether that's the reason the government appealed, I don't know."  

-- Robert Krughoff, president of Consumers' CHECKBOOK, suggesting that DHHS decision to appeal a court decision ordering the public release of Medicare physician payment information was perhaps the result of AMA lobbying. [See, Report #5, below]

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HEADLINE NEWS

 (1)

DUELING BUDGETS: CONGRESSIONAL DEMOCRATS REACH AGREEMENT ON $3.3T BUDGET BLUEPRINT FOR FY 2009 THAT DOES NOT INCLUDE GOP PROPOSED CUTS TO MEDICARE, MEDICAID

 

Congressional Democrats last week announced that they have reached a tentative agreement on a $3.3 trillion fiscal year 2009 budget resolution that rejects reductions in spending for Medicare and Medicaid proposed by President Bush. Bush has estimated that his legislative proposals over five years would reduce spending for Medicare by $178 billion and spending for Medicaid by $17 billion. According to Senate Budget Committee Chaircritter Kent Conrad (D-N.D.), the agreement also would provide about $20 billion more for military and domestic programs than the $991.6 billion requested by Bush. House Budget Committee Chaircritter John Spratt (D-S.C.) declined to disclose additional details about the agreement.

The House and Senate might approve the budget as early as this week, Conrad said. Spratt said that lawmakers should be able to pass the budget resolution before Congress goes home for Memorial Day. If it is approved, it will mark the first time since 2000 that Congress has been able to agree on a budget blueprint in an election year.

Just Between You and Me: The budget blueprint is a nonbinding resolution that sets targets for separate spending bills that are normally approved later in the year and sent to the president. This year, however, Democratic leaders have said they are likely to avoid sending most spending bills to Bush, who has again threatened to veto measures that exceed his requests. What they are trying to do is create campaign issues for the fall. Among the Democratic actions:

Medicare and Medicaid: Rejects Bush’s 6-year proposed $178 billion and $17 billion cuts in Medicare and Medicaid. Most of Bush’s Medicare cuts had been directed at hospitals, nursing homes and home health agencies.

Tax Changes: Extends the tax cuts that target the middle class, including a child tax credit, a reduction in the penalty for married couples and adds a new lower 10 percent tax bracket, but sunsets the Bush administration’s higher income tax (above $250,000) cuts starting in 2010.

Alternative Minimum Tax: Revises the AMT formula which would have imp acted as many as 20 million more middle income Americans in 2009 but leaves open the issue of counterbalancing the $70 billion in revenues lost by changing the formula until after the 2998 elections.

New Spending: The Dems budget comes in at $20 billion more in domestic spending than President Bush’s but says it will result in a balanced budget by 2012, three years earlier than Bush says his budget will achieve, through the sunset of higher income tax cuts.

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Legal Quote of the Week

-- Isabella Whitney, A Sweet Nosegay or Pleasant Posye
Containing a Hundred and Ten Phylosophicall Flowers, 1573

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(2)

MEDICARE PHYSICIAN PAYMENT CUTS, WHAT TO DO, WHAT TO DO?

SENATE FINANCE COMMITTEE DISCUSSES OFFSETS FOR ESTIMATED $15M TO $18M COST OF GIVINBG DOCS BACK THEIR MEDICARE PAY; BUSH ADMINISTRATION REQUESTS JUNE 16 DEADLINE

 

Senate Finance Committee Chaircritter Max Baucus (D-Mont.) said a Medicare package that would delay for 18 months a 10.6% cut to physician fees would cost between $15 billion and $18 billion over five years, prompting committee members to begin discussions on how to offset those costs. Senatecritters Olympia Snowe (R-Maine) and Kent Conrad (D-N.D.) said that committee members continue to examine reducing payments to private insurers that administer Medicare Advantage plans as a potential offset for the bill. MA plans, on average, are paid an estimated 113% of what traditional Medicare pays per patient. Last year, when Congress passed a six-month delay for the Medicare fee cuts, Republicans objected to cuts to the MA program.

House Ways and Means Health Subcommittee Chaircritter Pete Stark (D-Calif.) said he expects Baucus to cut indirect medical education payments under MA that are given to insurers that provide coverage in areas with teaching hospitals. Baucus said no decisions were made on Wednesday, but he did not rule out cutting IME payments.

June 16 Deadline: The Bush administration has asked Congress to approve legislation delaying the fee cuts (which are scheduled to take effect on July 1) by June 16 to avoid delays in payments that would result in additional administrative costs. CM² estimated that passing legislation by June 16 would help reduce the possibility of disrupted payments or reprocessed claims that would result in extra administrative costs.

Just Between You and Me: Baucus and Senate Majority Leadercritter Harry Reid (D-Nev.) have pledged floor time for discussion of the legislation in early June. Baucus said that he would "try" to meet the June 16 deadline but would "certainly" be finished by the end of the month.  However, House members are nervous regarding the Senate's timing. "The concern here is if the Senate acts so late and sends us a bill in late June and expects us to rubber-stamp it, they're in for a rude awakening," Housecritter Shelley Berkley (D-Nev.) said. Congress could go beyond the deadline, but some doctors have vowed to see fewer Medicare beneficiaries if payments are reduced, and a disruption in payments could have a similar effect. And no Democrat wants to take the blame for that in an election year.

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Jeanne's Lawyer Joke of the Week

The impressionable new associate at the big city law firm was talking to three senior associates about their preferred marital status.

The estate planning associate extolled the virtues of married life.  “You have a lot more secure home life,” he said; “you can start your family now and have someone to discuss the ups and downs with . . . ”

The litigation associate explained how he preferred to play the field.  “I like the thrill of the chase, getting to know someone new . . . ”

The tax associate discussed his preference,  “You really need a wife and a mistress.  That way, when your wife calls and asks where you are, you can tell her you're with the other woman.  When the mistress calls, tell her you're at home with your wife.  In the meantime you can spend all of your time at the office billing hours.”

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(3)

GAO, CONGRESSIONAL RESEARCH SERVICE SAYS BUSH ADMINISTRATION IMPROPERLY ISSUED DIRECTIVE THAT LIMITS STATES' ABILITIES TO EXPAND S-CHIP

According to testimony delivered by the Government Accountability Office and the Congressional Research Service during a House Energy and Commerce Health Subcommittee this past week, the Bush administration improperly issued a policy directive last year that restricts states' abilities to expand their S-CHIP programs, hearing. The August 17, 2007, policy directive requires states to enroll 95% of children in families with incomes up to 200% of the federal poverty level before expanding coverage to children in families with incomes greater than 250% of the poverty level. During the hearing, the GAO and CRS spokespersons said the Bush directive amounted to a regulation and should have been vetted in Congress using the same process as other administrative rules.

The opinions from GAO and CRS lend weight to Democrats' efforts to nullify the directive, something they have promised to do since it was issued. Subcommittee Chaircritter Frank Pallone (D-N.J.) is sponsoring legislation (HR 5998) that would reverse the directive.

States have argued that meeting the enrollment requirement is impossible, and several states have filed lawsuits against the federal government to block the directive. The Bush administration says the directive is aimed at preventing families from dropping private health coverage to enroll in S-CHIP.

Just Between You and Me: While a bill reversing the Bush administration’s S-CHIP policy could possibly pass the House, too many Republicans support the principle behind the directive, so Pallone's bill stands little chance of passage in the Senate, where it would be filibustered.
But there is an option if the Democratic Congressional leadership really wants to do something.  A “disapproval resolution” probably could still be passed by Congress to nullify the directive. Unlike stand-alone bills, disapproval resolutions cannot be filibustered in the Senate. But nyah, they don’t have the will.

The GAO opinion is available online, http://www.gao.gov/docsearch/abstract.php?rptno=GAO-08-785T

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A judge in a semi-small city was hearing a drunk-driving case and the defendant, who had both a record and a reputation for driving under the influence, demanded a jury trial.  It was nearly 4 p.m. and getting a jury would take time, so the judge called a recess and went out in the hall looking to impanel anyone available for jury duty.  He found a dozen lawyers in the main lobby and told them that they were a jury. The lawyers thought this would be a novel experience and so followed the judge back to the courtroom.  The trial was over in about 10 minutes and it was very clear that the defendant was guilty.  The jury went into the jury-room, the judge started getting ready to go home, and everyone waited.  After nearly three hours, the judge was totally out of patience and sent the bailiff into the jury-room to see what was holding up the verdict. When the bailiff returned, the judge said, "Well have they got a verdict yet?" The bailiff shook his head and said, "Verdict?  Hell, they're still doing nominating speeches for the foreman's position!"

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(4)

EMPLOYEE OUT-OF-POCKET COSTS FOR FAMILY HEALTH CARE TO INCREASE 10.5% IN 2008, Says Milliman

The cost of health care for the average U.S. family with employer-sponsored health coverage will increase 7.6% this year, due in part to rising prescription drug prices, according to a Milliman study. The fifth annual Milliman Medical Index analyzed historical claims data and trends in provider contracting and examined the drivers and components of medical spending. According to the study, the cost of medical services, including premiums, will increase by $1,109, from $14,500 in 2007 to $15,609 in 2008 for an average family of four enrolled in an employer-sponsored PPO.

The study also found that the cost of pharmacy services is expected to increase by 10.6% to $2,302, compared with single-digit increases for physician services, inpatient and outpatient care. Drug spending has slowed the past two years, according to the study. However, this year's increase is a trend that Milliman believes will continue.

According to the study, employers are expected to pass on more of the cost to their employees. Employers will shift around 10.5% more of the cost to workers through higher premiums and out-of-pocket costs, such as deductibles, copayments and coinsurance, the study found. Of the total $15,609 cost, employers will pay $9,442, while employees will spend $3,492 on premiums and $2,675 in out-of-pocket costs. In 2008, employers will pay roughly 60% of medical costs, while employees will pay 40%.

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Two of the top partners of a top Houston personal-injury law firm were wooing a hot, young, Ivy League, law school graduate, whom they wanted to recruit very badly.

The firm flew him down, gave him the grand tour, showed him the fabulous suite he'd have, as well as the car and other perks. The grad took all this in, was duly impressed, and told the two partners, "This is all very impressive, and quite generous, but before I could commit to you I have to know one thing: what kind of pro bono program does the firm have?"

The two partners looked at each other, back at the grad, and asked for a minute to confer. In the corner of the conference room, they huddled briefly, then seemed to come to a consensus.  They walked back over to the young graduate; whereupon the older, very distinguished partner said, "What's pro bono?"

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(5)

SO MUCH FOR TRANSPARENCY: DHHS APPEALS COURT ORDER TO RELEASE PHYSICIAN DATA

DHHS has appealed to the U.S. Court of Appeals for the District of Columbia from an August 2007 court decision that requires the department to release Medicare claims data on more than 40 million beneficiaries and 700,000 physicians. In August 2007, the U.S. District Court for the District of Columbia ruled that DHHS must release Medicare physician claims data for Illinois, Maryland, Virginia, Washington state and Washington, D.C. In the case, Consumers' CHECKBOOK/Center for the Study of Services filed a lawsuit to obtain access to the data. DHHS argued that the release of the data would violate the privacy of physicians. However, the court rejected that argument because Medicare claims account for only a portion of the incomes of physicians. According to the court, the release of the data would "help the public make more informed Medicare decisions" and provide "more information of how government funds are spent."

Consumers' CHECKBOOK plans to post the data online for public use. Researchers could analyze the data to determine the number of times physicians perform certain procedures and to compare the mortality rates among patients of certain physicians, and health insurers could use the data to improve their analyses of physician quality.

Consumer groups, employers and health insurers support the decision, and physician groups oppose the decision. The American Medical Association, which has petitioned to join the DHHS appeal, maintains that the data could be misleading because they do not take into account differences in patients treated by different doctors.

Just Between You and Me: In filing this appeal, the Bush administration and GOP candidate John McCain find themselves caught on their own petard. On the one hand, transparency for both price and quality has been until now, a cornerstone of the Republican drive to privatize health care, especially Medicare. DHHS Secretary Leavitt has given literally dozens of speeches calling for more not less health care transparency. Indeed, without greater pricing and quality transparency, the Bush administration’s call for greater consumer control over its proposed high-deductible health savings accounts, and John McCain’s call promise to move the nation away from employment-based health insurance to individually controlled coverage, would be an exercise in futility. How can the consumer make the choices such a system would impose on them when they don’t know the prices they will be charged, have no idea about the quality of the services they are buying, and have no basis to make a comparison or a reasonable choice regarding their care?

The DHHS appeal is further evidence of the enormous power of the Medical industry’s lobby. The AMA and many affiliate medical specialist societies and state and local medical groups have long balked at making their prices public. They have been absolutely adamant in their opposition to quality reporting. Bush and his people have buckled. Trailing the Democrats by more than two- to-one in fund-raising, the GOP feels that it cannot afford to alienate the deep-pocketed medical lobby. Thus transparency goes out the window. Who says money doesn’t talk?

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The hypochondriac lawyer was convinced he was near death, finally dragging himself to yet another physician, he pleaded with the doctor: 

“Give it me straight, doc, how many more billable hours do I have left?”

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HIPAA, NOW AND FOREVER:

HEALTH CARE I.T. STUFF

(6)

SENATE LEADERS AGREE ON PRIVACY PROTECTIONS AMENDMENT TO HEALTH CARE INFORMATION TECHNOLOGY BILL

 

Senate Judiciary Committee Chaircritter Patrick Leahy (D-Vt.) last week announced that sponsors of a bill (HR 1693) that would promote the use of health care information technology have agreed to include an amendment Leahy proposed to help protect patient privacy. Senate Health, Education, Labor and Pensions Committee Chaircritter Ted Kennedy (D-Mass.) and ranking membercritter Mike Enzi (R-Wyo.) introduced the legislation last October. Leahy had raised concerns that the bill, which would extend the medical privacy rule issued after the passage of the Health Insurance Portability and Accountability Act to electronic medical records, did not include adequate privacy protections. The rule allows some health care providers to distribute medical records for marketing purposes.

Under the amendment, providers could not distribute medical records for marketing purposes, and patients would have the right to request electronic copies of their records. The amendment also would require DHHS to develop recommendations for Congress on privacy and security and establish a patient notification system in the event of a breach of their medical records.

Just Between You and Me: Senatecritter Leahy plans to hold a hearing in June on the privacy protections in the legislation. After nearly eight years of virtual silence on the health care privacy issue, the matter is heating up once again. We’re seeing some progress in this draft legislation buy it is far from a done deal. The Bush administration has requested some technical revisions to the bill, and the Congressional Budget Office has not determined a cost estimate for the amendment. All of this could spell doomsday for anything this year.

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A man goes into a pet shop to buy a parrot. The shop owner points to three identical-looking parrots on a perch and says, "The parrot on the left costs $500."
"Why does the parrot cost so much?" asks the customer.
The owner says "Well, the parrot knows how to do legal research."
The customer then asks about the next parrot, to be told that this one costs $1,000 because it can do everything the other parrot can do plus it knows how to write a brief that will win any case.
Naturally, the increasingly startled customer asks about the third parrot, to be told that it costs $4,000. Needless to say, this begs the question, "What can it do?"
To which the owner replies, "To be honest, I've never seen him do a darn thing, but the other two call him 'Senior Partner.'"

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