Politics and Policy

The long-sought national interoperable health information system remains far from reality as standards prove difficult to establish, provider uptake goes slowly and privacy concerns continue. A year ago, there were high expectations that Congress would adopt legislation supporting the creation of standards for electronic health records (EHRs). That bill faltered over disagreements about anti-kickback language and new billing codes.

Economists and health experts on all sides are clamoring for more evidence on how medical products and procedures compare in safety, efficacy and cost. Legislative proposals before Congress include a range of initiatives to spur more comparative effectiveness (CE) research.

Despite a mounting clamor for reform from many health policy experts, Senate action to reduce payments to Medicare Advantage may be postponed this year. Influential senators oppose an across-the-board cut, which would reduce MA plan activity in rural and low-cost regions.

The State Children's Health Insurance Program (SCHIP) will expire September 30, 2007, unless Congress approves legislation reauthorizing this popular program offering healthcare services for children and some adults. The deadline puts this issue at the top of the Congressional agenda as an opportunity for Democratic leaders to increase public access to care. Efforts to expand coverage for children and secure the Medicare program are important to the managed care community because the legislators are eyeing "overpayments" to Medicare Advantage plans as a possible source for some $50 billion to fund SCHIP and other healthcare programs.

Rising pressure to reduce federal spending for Medicare has put the spotlight on payments and policies governing the Medicare Advantage program. MA plans are "vastly overpaid," according to Rep. Pete Stark (D-Calif.), chairman of the House Ways & Means Health subcommittee, largely because they sign up more healthy beneficiaries. Senate Finance Committee chairman Max Baucus (D-Mont.) is looking closely at whether "funneling dollars into private plans gets us the most bang for our healthcare buck."

The new House leadership delivered on one of its prime campaign promises last month by pushing through legislation requiring the Health and Human Services (HHS) secretary to negotiate directly with pharmaceutical companies on prices for medications covered by the Medicare drug benefit. The bill (HR 4) repeals the so-called "non-interference" clause in the Medicare Modernization Act (MMA) and replaces it with a provision requiring the secretary to negotiate prices that manufacturers may charge prescription drug plans (PDPs) and Medicare Advantage drug plans (MA-PDs).

The high-profile health policy issues for the new Congress are to reduce Medicare prescription drug prices and expand federal government funding for embryonic stem cell research. Congressional leaders want to enact legislation that will permit the federal government to negotiate drug prices (see Newswire), a move that eventually could alter the role of private plans in providing healthcare benefits to seniors.

The Democrats are back on top in the House and Senate after more than a decade playing second fiddle to the GOP. Although health reform was not a prime issue moving votes this November, health policy is on the Democrats' "100 hours" to-do list.

The emergence of pharmacy benefit management companies (PBMs) as major players in drug benefit design and pricing has generated criticism as well as praise. PBMs previously served as drug benefit administrators for employers and other payers. But as sponsors of Medicare Prescription Drug Plans (PDPs), they now assume risk and design coverage and payment options.

To no one's surprise, Mark McClellan, MD, announced last month that he would leave his job as administrator of the Centers for Medicare and Medicaid Services (CMS) after six years with the Bush Administration.

When the Academy for International Health Studies traveled to Prague in April for its annual trade/study mission, little did the delegates know they were about to enter a healthcare war zone. Weeks in advance of a contentious national election, the country's prime minister recently had fired the minister of health and named a successor with a mandate to implement some quick fixes. Insurers managed their strained cash flows by slowing payments to providers while the new minister, seemingly arbitrarily, mandated price reductions. The result was a physician-organized strike and thousands of angry, untreated patients.

All health plans and providers that do business with Medicare, Medicaid and other federally sponsored health programs soon will have to adopt information technology standards and quality-measurement tools. The Medicare Modernization Act of 2003 (MMA) requires the Department of Health and Human Services (HHS) to establish standards for electronic prescription drug prescribing by 2008, and this policy is driving broader efforts to build health IT systems.

Supporters of consumer-directed healthcare options want Congress to increase tax breaks and coverage limits to broaden the appeal of health savings accounts (HSAs) linked to high-deductible health plans. Health insurers and employers back legislation that would expand tax credits and higher HSA contribution limits plus increase flexibility in the use of HSA funds.

The rhetoric is heating up as health insurers and pharmacy benefit managers (PBMs) try to fend off an escalating attack from retail pharmacists about late or lost payments. Delayed payments are "simply profits these giant corporations will pocket," says National Community Pharmacists Assn. CEO Bruce Roberts. "The PBM industry adds no value to the healthcare delivery system."

The good news from Washington last month was that millions ofseniors have signed up for the Medicare drug benefit, includingsome 6 million through Medicare Advantage prescription drug plans(MA-PDs). But troubling reports indicate that the Medicare programoverall is in poor health and faces insolvency sooner thanexpected. In fact, President Bush may be compelled to proposesignificant cuts in Medicare spending next year if current trendscontinue. The remedies lie in higher taxes, reduced benefits,higher premiums for seniors and lower payments to plans andproviders-none very attractive.

Transparency. If that's not the hottest topic in managed caretoday, I don't know what is. So many of the consumer-directedhealthcare advocates I've talked with this year have told me thattransparency will be the big coup for consumers, regardless ofwhich plan design they choose or how much they spend in any givenyear.

The good news from the Centers for Medicare and Medicaid Services(CMS) is that more beneficiaries are joining Medicare Advantageplans, and that the trend is saving money for the federalgovernment. CMS Administrator Mark McClellan, MD, announced lastmonth that nearly 7 million seniors had enrolled in MA (MedicareAdvantage) and MA-PD (Medicare prescription drug) plans, anincrease of nearly 1 million since last fall.

As the Centers for Medicare and Medicaid Services (CMS) tackles a host of start-up problems for the new Medicare prescription drug program, Administrator Mark McClellan, MD, is looking for ways to improve the system for next year. CMS has revised policies and updated information systems for Prescription Drug Plans (PDPs) and Medicare Advantage prescription drug plans (MA-PDs) in preparation for the 2007 contracting process, which begins in June.

The main strategy of the Bush administration for controlling healthcare costs and expanding access to care is to encourage more individuals and employers to adopt consumer-directed healthcare (CDHC) programs. Coverage programs that combine a high-deductible insurance policy with a tax-advantaged savings account for paying healthcare costs are becoming more widespread, according to recent surveys. They can save employers money, provide less-costly insurance to individuals, and they fit conservative Republican policies that shift more responsibility for healthcare decisions from insurers and providers to consumers.

For consumers to make . . . decisions, they need more information on the performance and prices of medical services and products.

The managed healthcare market has been expanding, and the trend is likely to continue as employers and government agencies struggle to rein in spiraling healthcare costs. An aging population and more costly healthcare technology will aggravate current spending trends; these developments, in turn, will spur further consolidation among health plans and providers, stymie efforts to reduce the growing number of uninsured in the United States and drive innovative efforts to make consumers more aware of treatment costs and quality options.

One reason so many insurers and health plans are sponsoring Medicare prescription drug plans (PDPs) is to attract traditional Medicare beneficiaries into the Medicare Advantage (MA) program. While there is considerable uncertainty about how stand-alone prescription drug plans (PDPs) will fare, insurers are willing to invest in the new drug coverage program to expand enrollment in local Medicare HMOs and PPOs, as well as new regional PPOs designed to attract seniors fearful of managed care.

Hundreds of private insurers are marketing Medicare Advantage plans and state-wide PPOs with unexpectedly low prices for expanded drug coverage to gain a bigger slice of the radically changing Medicare pie. While the public has been focused on deciphering new prescription drug coverage options through stand-alone prescription drug plans (PDPs), Medicare officials also note an "enormous rise in MA plans with Part D benefits," reports Medicare Senior Advisor Abby Block. More than 5 million seniors now belong to MA plans, and the number is growing monthly.

Elderly Americans will have to pay higher premiums for Medicare outpatient care next year than originally predicted to cover more doctors' office visits and increased use of hospital clinics. The rising expenditures also will boost payments to Medicare Advantage (MA) plans, further increasing overall program expenditures. While this trend may prompt more seniors to join MA plans, it also is fueling talk of cutting MA rates.

Competition Is heating up among insurers, pharmacy benefit managers (PBMs) and health plans as they ready major marketing campaigns to attract and enroll thousands of seniors in Part D Medicare prescription drug plans (PDPs). Insurers are offering hundreds of stand-alone and Medicare Advantage prescription drug plans (MA-PDs) in every region of the country, many promoting lower costs as a way to build market share.

A few months ago, Medicare officials were worried that insurers and health plans might be reluctant to offer new PPO and prescription drug coverage options created by Medicare reform legislation. Now it looks like the agency's real problem is to help Medicare beneficiaries choose wisely among a multitude of coverage options.

Rising Healthcare costs and growing uninsured populations are prompting state health officials to look for new ways to care for low-income and disabled populations.

Dr. Mark McClellan, administrator of the Centers for Medicare and Medicaid Services (CMS), plans to produce extensive information on how drugs and prescribing decisions affect health outcomes and costs by linking reimbursement data from Medicare prescription drug plans (PDPs) and Medicare Advantage (MA) plans with existing Medicare hospitalization and physician care databanks.

PROVIDING BETTER quality care at lower cost has long been the Holy Grail of healthcare, but reaching this goal has been more difficult and controversial than anticipated.

Officials at the Centers for Medicare and Medicaid Services (CMS) began smiling last month. They were watching the letters and applications roll in from MCOs--;a sign that seniors will be able to obtain care from a large number of local PPOs (preferred provider organizations) beginning next January.