A new report projects the savings to Medicare beneficiaries who sign up for Medicare's new prescription drug benefit in 2006. Prepared by the Actuarial Research Corporation (ARC) for the Kaiser Family Foundation, the report estimates that:

- Low-income beneficiaries who sign up for Medicare drug plans and receive the new federal subsidies (about 8.7 million seniors and persons with disabilities) will pay about 83 percent less for prescription drugs in 2006 than they would have spent if the Medicare drug law had not been enacted.

- Those who enroll in the new drug benefit but do not receive the low-income subsidies (about 20.3 million beneficiaries) will pay on average 28 percent less out of pocket for their prescription drugs.

For more information:

- Executive summary of the report (PDF)
- Full report (PDF)
- Overview in a Powerpoint presentation

Community hospitals outperform teaching hospitals, according to a new study that compares cost and quality of hospitals in six states. The researchers conclude that patients served by lower-cost community hospital for secondary care receive care of similar quality to that provided in academic health centers.

Findings include:

- Inpatient costs per case are 19 percent higher in teaching hospitals, even after even after adjusting for patient case mix, severity, and other controllable characteristics.

- Community hospitals and academic health centers are comparable in their frequency of poor clinical outcomes.

- In terms of the likelihood seven adverse outcomes, the teaching hospitals were best on two and the community hospitals outperformed on three. There was no meaningful difference in two of the adverse outcomes.

- Lengths of stay in the two kinds of facilities are virtually the same.

The study, released by the Pioneer Institute for Public Policy Research, has implications for consumer-driven health plans. As consumers become more sensitive to the cost of care, the superior performance of community hospitals - at least for common secondary conditions that represent the greatest volume of inpatient care - will present new challenges to teaching hospitals and their affiliated clinical programs.

The study was authored by Nancy M. Kane, DBA of the Harvard School of Public Health, Jack Needleman, Ph.D. of the UCLA School of Public Health, and Liza Rudell of MassHealth.

Over nine million American children - 12.8 percent of kids - have special health care needs. They face a wide range of conditions, including congenital anomalies, severe physical disabilities, severe asthma, complex organ system diseases (e.g. cystic fibrosis, sickle cell anemia), major depression, and the devastating effects of physical and sexual abuse.

Medicaid health plans serve a large portion of children with special health care needs. With support from the Center for Health Care Strategies, eleven Medicaid health plans and a primary care case management (PCCM) program collaborated over two years to develop, pilot, and refine best practice models for serving this population. The result is an excellent new toolkit on clinical and administrative best practices.

The toolkit includes specific advice on how to identify children and their needs, create comprehensive medical homes, help parents navigate the delivery system, improve preventive services, establish enhanced care management systems, and ensure coordination among specialists.

It also includes informative case studies of innovations by Health Net of California, Lovelace Community Health Plan in New Mexico, Partnership HealthPlan of California, and Access II Care, a provider-led PCCM program in North Carolina.

In a thoughtful article in The New Yorker, Malcolm Gladwell debunks common assumptions about prescription drug prices. Gladwell, bestselling author of The Tipping Point, cuts through the faulty thinking of the pharma bashers. His 4,000-word piece makes for interesting reading. Known for getting to the heart of matters, Gladwell says it all: "For sellers to behave responsibly, buyers must first behave intelligently."

A new report examines the impact of state budget cuts on Medicaid managed care programs in four states: Florida, Massachusetts, Michigan, and Oregon. Developed by Bailit Health Purchasing LLC for the National Academy for State Health Policy, the study offers valuable insights. It's recommended reading for state Medicaid executives, state budget staff, Medicaid health plans, consultants, and advocates.

Pharmacy benefit managers (PBMs) already administer Rx benefits for most employers and several Medicaid programs. Medicare's voluntary prescription drug benefit, set to begin in 2006, creates a huge new market opportunity for PBMs. However, the Medicare drug benefit will also create significant new challenges to PBMs and other organizations bidding to cover Medicare beneficiaries. And the PBM industry is under increasing scrutiny by regulators and state attorneys general.

Bob Atlas, a leading managed care consultant and former president of The Lewin Group, explores these business challenges in an excellent new article in Health Affairs. Atlas examines the history and business practices of PBMs and the role PBMs may play in the new Medicare drug benefit. He observes that PBMs appear to have "both the capacity and the technical capability to deliver the benefits, although many PBMs will likely partner with others more comfortable taking risk: insurers or the government itself."

Under Medicare's new prescription drug benefit, employers will have several options for maintaining drug coverage for their retirees. Staff at the Centers for Medicare & Medicaid Services (CMS) created a detailed briefing for employers, unions, health benefit consultants, and others interested in understanding the options, including the new retiree drug subsidy.

For the CMS briefing in PDF format, click here. For it in PowerPoint format (1 Mb), email the editor.